PiQ and Zack Eiseman provide you with a consolidated roundup of the overnight news that matters most to markets.
MACRO:
US Treasury Secretary Bessent said if President Donald Trump's tariffs lead to a rise in U.S. inflation, it would be a "one-time slight increase," but caveats that he's not sure it will happen as "a huge amount is absorbed by the currency, big amount is absorbed by the foreign producer". (RTRS)
Trade guru Brad Setser believes there is no way most countries, such as in the EU, can negotiate over their VAT as it is a critical part of their revenue base, saying any cost benefit analysis would show that the cost of "reciprocal" tariffs is much lower than the cost of a fiscal and financial crisis. He believes the market will eventually realize that this is a path to real tariff hikes. (@Brad_Setser)
US President Trump is to sign executive orders on Friday at 13:00EST/18:00GMT. (Newsquawk)
A federal judge on Thursday ordered the Trump administration to restore funding for hundreds of foreign aid contractors who say they’ve been devastated by President Donald Trump’s abrupt — and in their view illegal — 90-day blanket freeze. (Politico)
Investors are bracing for further weakness in the US Treasury market as they bank on President Donald Trump’s tariff threats becoming reality, according to a Bloomberg Markets Live Pulse survey. (BBG)
Chinese President Xi Jinping plans to chair a symposium to boost private sector sentiment next week that will be attended by the country's business leaders including Alibaba co-founder Jack Ma. (RTRS)
China’s money markets are expected to see a liquidity withdrawal of more than $411 billion over the remainder of this month, helping to keep funding costs elevated before key meetings. (BBG)
China’s securities regulator is exploring expanding index-based investing by allowing fund firms to launch multi-asset exchange traded funds and other innovative index products. (FT)
Taiwan President Lai Ching-te pledged to talk with the US about Trump's concerns over the chip industry and to invest more in and buy more from the country, while ramping up defence spending. (RTRS)
In response to the US' latest tariff announcement, EU officials have told the FT that more products could be included in its prepared retaliatory tariffs. Most member states backed negotiations in a trade ministers’ meeting on Wednesday. “We have to respond — it’s better to negotiate from a position of strength,” said one EU diplomat. (FT)
The EU is cutting back tech regulation to spur investments in artificial intelligence, the bloc’s digital chief has said. (FT)
French President Macron has described Donald Trump’s return to power as an “electroshock” for the EU and a moment “to accelerate and execute”, warning that otherwise the project is at risk of failure: “It has no choice. It is running out of road.” (FT)
Bloomberg Intelligence reports Europe’s pharma and car giants are most at risk from Trump Tariffs. Notes tariffs would hurt earnings specifically at companies such as BMW, Mercedes, Sandvik, Diageo. (BBG)
Japan's lower house of parliament approved the government nominee for the central bank's policy board, Junko Koeda, an academic known as a fiscal and monetary hawk, paving the way for full endorsement in the legislature. (RTRS)
Japan has already initiated communication with the US following Trump's order on formulating plans for tariff proposal, a government spokesperson said on Friday. "Our country will respond appropriately while carefully examining the specific details". (RTRS)
Japan's core consumer price inflation likely accelerated in January from the previous month and rose at the joint-fastest pace in 17 months due to high food prices and reduced energy subsidy, a Reuters poll showed. (RTRS)
The number of UK first-time buyers jumped by almost 20 per cent last year and accounted for a record share of new home mortgages, according to research that points to the impact of easing borrowing costs on demand. (FT)
NatWest says customers are continuing to borrow and repay even as the UK economy shows some signs of strain, as the lender beat earnings estimates for 2024. (BBG)
Reuters poll shows majority of economists believe easing inflation has opened the door for the RBA to begin an anticipated brief series of interest rate cuts, starting with a quarter point reduction to 4.10% on Tuesday. (RTRS)
Reuters poll of economists shows the RBNZ will follow through on plans to cut interest rates more with a 50 basis-point reduction on Wednesday to 3.75%, who also expect a further 75 bps of easing this year. (RTRS)
New Zealand’s manufacturing industry expanded for the first time in almost two years, reinforcing signs the economy is starting to respond to lower borrowing costs. (BBG)
New Zealand needs to address its high cost of capital, which is a key driver of its poor productivity growth, Treasury Secretary Iain Rennie said. (BBG)
SNB's Tschudin, a new board memeber, said the SNB's toolbox includes FX intervention, and said negative rates are also an important tool. (RTRS)
India and the U.S. agreed on Thursday to start talks to clinch an early trade deal and resolve their standoff over tariffs as New Delhi promised to buy more U.S. oil, gas and military equipment and fight illegal immigration. (RTRS)
Singapore’s economy entered the new year in strong shape, notching its fastest pace of growth since 2021 as exports rebounded. But emerging risks are adding uncertainty to the trade-reliant financial hub’s outlook. (WSJ)
Vietnam says it has no intention of imposing measures that “create burdens or restrict trade” with the US, and is “ready to open its market, increasing imports of US agricultural products,” as it seeks to stave off Trump’s tariff threats. (BBG)
A surge in insurance sales in Taiwan is threatening to spur an increase in capital outflows, potentially dragging the local dollar to levels seen during the global financial crisis. (BBG)
Gold prices gained on Friday and are poised for a seventh consecutive weekly gain. (RTRS)
Goldman Sachs says if Russian gas flows through Ukraine return to pre-war levels, Goldman Sachs expects summer 2025 TTF prices to be 36%-56% below their 50 EUR/MWh base case. (Newsquawk)
Australia’s iron ore export hub is bracing for a major tropical cyclone to make landfall later on Friday. (BBG)
Stocks of cocoa in London and New York have plunged to all-time lows. (FT)
EIA says electricity demand is set to increase sharply in the coming years as people around the world use more power to run air conditioners, industry, and a growing fleet of data centers. (BBG)
GEOPOLITICAL:
Vice President JD Vance said Thursday that the U.S. would hit Moscow with sanctions and potentially military action if Russian President Vladimir Putin won’t agree to a peace deal with Ukraine that guarantees Kyiv’s long-term independence. (WSJ)
China accused Australia on Friday of deliberately provoking it with a maritime patrol in the disputed South China Sea this week, saying the latter was spreading "false narratives", though Australia maintained its action adhered to international law. (RTRS)
Israeli official reportedly said they hope the release of hostages will occur as planned on Saturday, via Axios' Ravid; "It seems that the crisis has been postponed until next week". (Axios via Newsquawk)
EQUITIES:
Apple plans to launch an AI-powered Apple Intelligence platform for China by May, relying on Alibaba and Baidu to adapt its features and comply with government regulations. (BBG)
Applied Materials forecast second-quarter revenue below market estimates, sending shares lower, expecting escalating geopolitical tensions and soft demand for memory chips used in consumer electronics to weigh on sales of its chipmaking equipment. (RTRS)
Meta Platforms Inc. has announced a 5% increase in its quarterly cash dividend, raising it to $0.525 per share. The dividend will be payable on March 26, 2025. (RTRS)
Coinbase beat estimates for fourth-quarter profit on Thursday, driven by higher trading volumes in bitcoin and other digital tokens following the U.S. election. Shares still traded lower in after-hours trade. (RTRS)
Apple and Google restored the TikTok app to their mobile app stores Thursday night, weeks after removing it to comply with a U.S. law requiring TikTok’s Chinese parent, ByteDance, to sell it or shut it down. (WSJ
Airbnb shares advanced after the company swung to a profit in the fourth quarter and said it plans to invest in new businesses later this year. (WSJ)
Palo Alto Networks raised its full-year revenue forecast, on expectations of a surge in demand for the company's cybersecurity solutions to tackle rising online threats. (RTRS)
Bristol-Myers Squibb BMS Phase 3 Relativity-098 trial failed to meet its primary endpoint. (RTRS)
TSMC plans to begin construction of a 3rd Arizona fab in mid-2025, a year earlier than planned, and will invite top US officials to a ground breaking ceremony as early as June. (UDN)
Hermes reported an 18% rise in fourth quarter sales, boosting its shares and the CAC index. Hermes continues to outshine rivals, thanks to its wealthier customers as the industry suffers. Co. said it was "too early to see an inflection" in the industry, despite some positive signs. (RTRS)
Fast-fashion group Shein’s plans for a bumper UK stock market listing are likely to be delayed after Donald Trump’s tariff plans on low-cost parcels. (FT)
NatWest annual profit beat forecasts, boosted by progress in its growth strategy, improving productivity and active management of capital. (RTRS)
UAW Says Union Members At Rolls-Royce Vote To Authorize Strike. (RTRS)
According to sources cited by Digistimes, Chinese AI company DeepSeek has begun a large-scale recruitment drive for semiconductor design talent, hinting at potential plans to develop its own proprietary processor.
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That's all for today's digest. Happy trading, and keep it tight!
Team PiQ