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President Trump's Feb. 1st tariff deadline is looming large
Jan. ‘25 U.S. Federal jobs data lands on Friday morn, while
Share markets are gauging the new ‘AI’ landscape, and
Two U.S. tech mega-cap firms report Q4 results
Across the Pond:
The Bank of England (BoE) has a policy rate decision to take, and
Major banks based in Europe publish Q4 earnings results
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) Mega-cap Tech Earnings Reports Due from Alphabet (Tuesday), Amazon (Thursday)
Investors have long speculated about what might eventually slow the AI-investment steamroller and now have a new perspective to consider: The emergence of China AI sensation DeepSeek, which has overturned assumptions about the computing power and investment needed to create state-of-the-art models.
This shift pummeled Nvidia's (NVDA) stock, inflicting a record loss in market value. But DeepSeek is also challenging the broader dominance of U.S. technology, raising questions about the competitive advantages of the top seven tech stocks, dubbed the Magnificent Seven.
With upcoming earnings reports from ‘Mag 7’ members Alphabet (GOOGL - Free Report) on Tuesday and Amazon (AMZN - Free Report) on Thursday, investors will have the chance to determine whether recent AI market volatility is a warning of future challenges or an opportunity to reinvest in this rapidly growing sector.
(2) This Week, European Bank Earnings Pick Up
European bank earnings pick up pace in the week ahead, with French lenders BNP Paribas (BNPQY - Free Report) , Societe Generale (SCGLY - Free Report) and Credit Agricole (CRARY - Free Report) , Switzerland's UBS (UBS - Free Report) and Spain's Santander (SAN - Free Report) all reporting fourth-quarter numbers.
Most lenders are expected to have still wrung enough extra cash out of higher interest rates — helped by soaring investment banking revenues — to boost their profits and keep a two-year-long share price rally rolling on. Investors will listen for any hints that a recent burst of deal-making has further to run.
Still, challenges loom. Falling interest rates mean pressure on the difference between what banks earn on loans and what they pay on deposits, and there is economic weakness at home just as the U.S. economy powers ahead.
Germany's Deutsche Bank (DB - Free Report) gave some cause for concern when it reported a sharp drop in profits and ditched a key goal on costs, sending its shares lower.
(3) February Sees U.S. Imports Tariffs Applied to Canada and Mexico
From bond investors and currency traders to Fed officials and foreign powers, everybody wants to know how serious Trump is about tariffs, and how severe they will be.
Saturday Feb. 1st could be the best indication so far, when Trump has promised to slap neighbors Canada and Mexico with 25% levies until both illegal migrants and the drug fentanyl stop crossing their borders.
In scope for tariffs are a combined trillion dollars of U.S.-bound shipments a year.
Canada is hoping to head off any action, launching a fentanyl crackdown, while Mexico scored the biggest fentanyl bust in its history in December.
An arguably more interesting case is China. It's anyone's guess if mooted 10% tariffs are also on the cards.
The White House reiterated it's still seriously considering this, despite Trump's comments he didn't really want to use tariffs with China following a "friendly" phone call with Xi Jinping.
(4) On Friday, January 2025 U.S. Federal Nonfarm Payroll Report Comes Out
The monthly U.S. jobs report due on Friday, Feb. 7th comes as investors assess the prospects for further interest rate cuts and how dramatic new Trump administration policies could reshape the labor market.
December's blowout jobs report raised doubts about whether the Fed would have room to ease monetary policy further and sent Treasury yields shooting higher. Encouraging inflation data did calm market fears, but a hot January jobs report could change all that.
Fed Chair Jerome Powell said he is in no rush to cut rates again until inflation and jobs data make it appropriate.
The big unknown, though, is Trump's labor market agenda, including an immigration crackdown and plans to slash the federal workforce, with the White House offering 2 million federal employees financial incentives to quit.
(5) On Thursday, the Bank of England (BoE) Meets
The Bank of England (BoE) meets on Thursday to set interest rates.
Markets aren't quite fully pricing in a quarter-point cut, but economists seem to think that is the likely outcome.
U.K. data is weakening — multiple measures of employment show cracks appearing in the labor market, and consumer spending unexpectedly shrank in the key holiday shopping period.
Growth flatlined in the third quarter of 2024, and the BoE expects the same in the last one.
Several banks see the British economy struggling to expand by even +1% this year, in spite of Finance Minister Rachel Reeves' plans to revitalize growth.
And there's the matter of the bond market turmoil earlier this month, which pushed the government's 10-year borrowing costs to their highest since 2008.
Gilt yields have since retreated, but remain uncomfortably above 4.5% — more than any G10 economy aside from New Zealand.
Zacks #1 Rank (STRONG BUY) Stocks
I found three interesting non-U.S. large-cap stocks on our #1 list this week.
These shares are cheap!
$5 for a major Brazilian bank share now. When will traders care?
(1) BioNTech (BNTX - Free Report) : This is a $120 a share stock, with a market cap of $29B. It is found in the Medical – Biomedical and Genetics industry. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of D.
Image Source: Zacks Investment Research
BioNTech SE is a biotechnology company.
It develops and commercializes immunotherapies for cancer and other diseases.
BioNTech SE is based in Mainz, Germany.
(2) Banco Do Brasil (BDORY - Free Report) : This is a $5 a share stock, with a market cap of $27B. It is found in the Foreign Bank industry. I see a Zacks Value score of A, a Zacks Growth score of C and a Zacks Momentum score of C.
Banco do Brasil provides retail and commercial banking services in Brazil and internationally.
The services offered includes consumer, commercial and agribusiness loans, asset management, foreign exchange, insurance, lease financing and Internet banking services.
The company also offers services including credit recovery, consortium administration, development, manufacture, commercialization, rent, and integration of digital electronic systems and equipment, peripherals, programs, inputs, and computing supplies.
Banco do Brasil S.A. is headquartered in Brasilia, Brazil.
(3) Sandvik (SDVKY - Free Report) : This is a $21 a share stock, wit h a market cap of $29B. It is found in the Manufacturing – Tools & Related Products industry. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Sandvik is a high-technology engineering group, with advanced products and a world-leading position within selected areas.
Worldwide business activities are conducted through representation in 130 countries.
Key Global Macro
The major macro print is likely the Friday U.S. nonfarm Federal jobs data.
But this is a busy trading week for macro data, across the board, with the ISM Manufacturing PMI out too.
On Monday, the Caixin Mainland China manufacturing PMI for January comes out. The consensus looks for 50.5. The prior reading was 50.5.
The HCOB Eurozone manufacturing PMI for January comes out. The consensus is for 46.1. The prior reading is 46.1.
The Euro Area core and broad Harmonized Indexes of Consumer Prices (HICP) for January come out. The prior core HICP reading was +2.7% y/y, while the broad HICP was +2.4% y/y.
The U.S. ISM Manufacturing PMI comes out for January. The prior December PMI was 49.3.
On Tuesday, U.S. JOLTS job openings for December come out. The prior data showed 8.098M job openings. ~7M was the pre-COVID data.
On Wednesday, U.S. ADP private monthly job additions for January come out. I see a +122K prior number published for December.
On Thursday, the Bank of England (BoE) likely moves its policy rate to 4.5% from 4.75%.
On Friday, U.S. January non-farm Federal payroll data lands. I see +256K was the prior December reading.
Conclusion
I finish with four fresh Zacks S&P500 Q4-24 earnings season points.
Total earnings for the 112 S&P500 companies that have reported results are up +10.8% from the same period last year, on +5.5% higher revenues. 80.4% beat EPS estimates. 68.8% beat revenue estimates.
The picture emerging from the Q4-24 earnings season continues to be one of strength and improving outlook, with the companies not only coming ahead of estimates, but also providing reassuring guidance for the coming quarters.
If actual 2025 earnings results turn out to be as currently expected, this will be the first time since 2018 when all 16 Zacks sectors achieved positive earnings growth. To be precise, the Zacks Autos sector had modestly negative earnings growth in 2018.
We continue to believe that the best things that can happen this earnings season will be for management teams to validate the robust and broad-based earnings growth expected in 2025.
These four Q4 earnings season points were produced by Zacks Research Director Sheraz Main (on Wednesday, Jan. 29th).
I think it will be tough for the bears until the S&P500 earnings data takes a turn down markedly — and broadly.
Having written that, a broad U.S. share index valuation correction would not surprise me, either.
Have an excellent trading week?
John Blank, PhD. Zacks Chief Equity Strategist and Economist
See More Zacks Research for These Tickers
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Alphabet and Amazon Report: Global Week Ahead
In the Global Week Ahead, in the USA:
Across the Pond:
Next are Reuters’ five world market themes, re-ordered for equity traders—
(1) Mega-cap Tech Earnings Reports Due from Alphabet (Tuesday), Amazon (Thursday)
Investors have long speculated about what might eventually slow the AI-investment steamroller and now have a new perspective to consider: The emergence of China AI sensation DeepSeek, which has overturned assumptions about the computing power and investment needed to create state-of-the-art models.
This shift pummeled Nvidia's (NVDA) stock, inflicting a record loss in market value. But DeepSeek is also challenging the broader dominance of U.S. technology, raising questions about the competitive advantages of the top seven tech stocks, dubbed the Magnificent Seven.
With upcoming earnings reports from ‘Mag 7’ members Alphabet (GOOGL - Free Report) on Tuesday and Amazon (AMZN - Free Report) on Thursday, investors will have the chance to determine whether recent AI market volatility is a warning of future challenges or an opportunity to reinvest in this rapidly growing sector.
(2) This Week, European Bank Earnings Pick Up
European bank earnings pick up pace in the week ahead, with French lenders BNP Paribas (BNPQY - Free Report) , Societe Generale (SCGLY - Free Report) and Credit Agricole (CRARY - Free Report) , Switzerland's UBS (UBS - Free Report) and Spain's Santander (SAN - Free Report) all reporting fourth-quarter numbers.
Most lenders are expected to have still wrung enough extra cash out of higher interest rates — helped by soaring investment banking revenues — to boost their profits and keep a two-year-long share price rally rolling on. Investors will listen for any hints that a recent burst of deal-making has further to run.
Still, challenges loom. Falling interest rates mean pressure on the difference between what banks earn on loans and what they pay on deposits, and there is economic weakness at home just as the U.S. economy powers ahead.
Germany's Deutsche Bank (DB - Free Report) gave some cause for concern when it reported a sharp drop in profits and ditched a key goal on costs, sending its shares lower.
(3) February Sees U.S. Imports Tariffs Applied to Canada and Mexico
From bond investors and currency traders to Fed officials and foreign powers, everybody wants to know how serious Trump is about tariffs, and how severe they will be.
Saturday Feb. 1st could be the best indication so far, when Trump has promised to slap neighbors Canada and Mexico with 25% levies until both illegal migrants and the drug fentanyl stop crossing their borders.
In scope for tariffs are a combined trillion dollars of U.S.-bound shipments a year.
Canada is hoping to head off any action, launching a fentanyl crackdown, while Mexico scored the biggest fentanyl bust in its history in December.
An arguably more interesting case is China. It's anyone's guess if mooted 10% tariffs are also on the cards.
The White House reiterated it's still seriously considering this, despite Trump's comments he didn't really want to use tariffs with China following a "friendly" phone call with Xi Jinping.
(4) On Friday, January 2025 U.S. Federal Nonfarm Payroll Report Comes Out
The monthly U.S. jobs report due on Friday, Feb. 7th comes as investors assess the prospects for further interest rate cuts and how dramatic new Trump administration policies could reshape the labor market.
December's blowout jobs report raised doubts about whether the Fed would have room to ease monetary policy further and sent Treasury yields shooting higher. Encouraging inflation data did calm market fears, but a hot January jobs report could change all that.
Fed Chair Jerome Powell said he is in no rush to cut rates again until inflation and jobs data make it appropriate.
The big unknown, though, is Trump's labor market agenda, including an immigration crackdown and plans to slash the federal workforce, with the White House offering 2 million federal employees financial incentives to quit.
(5) On Thursday, the Bank of England (BoE) Meets
The Bank of England (BoE) meets on Thursday to set interest rates.
Markets aren't quite fully pricing in a quarter-point cut, but economists seem to think that is the likely outcome.
U.K. data is weakening — multiple measures of employment show cracks appearing in the labor market, and consumer spending unexpectedly shrank in the key holiday shopping period.
Growth flatlined in the third quarter of 2024, and the BoE expects the same in the last one.
Several banks see the British economy struggling to expand by even +1% this year, in spite of Finance Minister Rachel Reeves' plans to revitalize growth.
And there's the matter of the bond market turmoil earlier this month, which pushed the government's 10-year borrowing costs to their highest since 2008.
Gilt yields have since retreated, but remain uncomfortably above 4.5% — more than any G10 economy aside from New Zealand.
Zacks #1 Rank (STRONG BUY) Stocks
I found three interesting non-U.S. large-cap stocks on our #1 list this week.
These shares are cheap!
$5 for a major Brazilian bank share now. When will traders care?
(1) BioNTech (BNTX - Free Report) : This is a $120 a share stock, with a market cap of $29B. It is found in the Medical – Biomedical and Genetics industry. I see a Zacks Value score of D, a Zacks Growth score of F and a Zacks Momentum score of D.
Image Source: Zacks Investment Research
BioNTech SE is a biotechnology company.
It develops and commercializes immunotherapies for cancer and other diseases.
BioNTech SE is based in Mainz, Germany.
(2) Banco Do Brasil (BDORY - Free Report) : This is a $5 a share stock, with a market cap of $27B. It is found in the Foreign Bank industry. I see a Zacks Value score of A, a Zacks Growth score of C and a Zacks Momentum score of C.
Banco do Brasil provides retail and commercial banking services in Brazil and internationally.
The services offered includes consumer, commercial and agribusiness loans, asset management, foreign exchange, insurance, lease financing and Internet banking services.
The company also offers services including credit recovery, consortium administration, development, manufacture, commercialization, rent, and integration of digital electronic systems and equipment, peripherals, programs, inputs, and computing supplies.
Banco do Brasil S.A. is headquartered in Brasilia, Brazil.
(3) Sandvik (SDVKY - Free Report) : This is a $21 a share stock, wit h a market cap of $29B. It is found in the Manufacturing – Tools & Related Products industry. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of F.
Image Source: Zacks Investment Research
Sandvik is a high-technology engineering group, with advanced products and a world-leading position within selected areas.
Worldwide business activities are conducted through representation in 130 countries.
Key Global Macro
The major macro print is likely the Friday U.S. nonfarm Federal jobs data.
But this is a busy trading week for macro data, across the board, with the ISM Manufacturing PMI out too.
On Monday, the Caixin Mainland China manufacturing PMI for January comes out. The consensus looks for 50.5. The prior reading was 50.5.
The HCOB Eurozone manufacturing PMI for January comes out. The consensus is for 46.1. The prior reading is 46.1.
The Euro Area core and broad Harmonized Indexes of Consumer Prices (HICP) for January come out. The prior core HICP reading was +2.7% y/y, while the broad HICP was +2.4% y/y.
The U.S. ISM Manufacturing PMI comes out for January. The prior December PMI was 49.3.
On Tuesday, U.S. JOLTS job openings for December come out. The prior data showed 8.098M job openings. ~7M was the pre-COVID data.
On Wednesday, U.S. ADP private monthly job additions for January come out. I see a +122K prior number published for December.
On Thursday, the Bank of England (BoE) likely moves its policy rate to 4.5% from 4.75%.
On Friday, U.S. January non-farm Federal payroll data lands. I see +256K was the prior December reading.
Conclusion
I finish with four fresh Zacks S&P500 Q4-24 earnings season points.
Total earnings for the 112 S&P500 companies that have reported results are up +10.8% from the same period last year, on +5.5% higher revenues. 80.4% beat EPS estimates. 68.8% beat revenue estimates.
The picture emerging from the Q4-24 earnings season continues to be one of strength and improving outlook, with the companies not only coming ahead of estimates, but also providing reassuring guidance for the coming quarters.
If actual 2025 earnings results turn out to be as currently expected, this will be the first time since 2018 when all 16 Zacks sectors achieved positive earnings growth. To be precise, the Zacks Autos sector had modestly negative earnings growth in 2018.
We continue to believe that the best things that can happen this earnings season will be for management teams to validate the robust and broad-based earnings growth expected in 2025.
These four Q4 earnings season points were produced by Zacks Research Director Sheraz Main (on Wednesday, Jan. 29th).
I think it will be tough for the bears until the S&P500 earnings data takes a turn down markedly — and broadly.
Having written that, a broad U.S. share index valuation correction would not surprise me, either.
Have an excellent trading week?
John Blank, PhD.
Zacks Chief Equity Strategist and Economist