Global Markets Kickstart: Here Comes BATMMAAN
Here Comes BATMMAAN
Chart of the Week:
Stabilizing Inflation and Robust Employment;
Greater Volatility in Dollar and Treasury Yields
In December, U.S. PPI rose 0.2%, below the forecast of 0.4%, and core PPI remained unchanged. CPI increased by 0.4%, slightly above the expected 0.3%, with the annual increase at 2.9% meeting expectations. Core CPI rose 0.2% month-on-month and 3.2% year-on-year, both lower than expected. Energy prices pushed CPI up, but housing, which accounts for a third of CPI, showed moderate growth, easing inflation concerns.
Market Recap:
Markets Experience Range Bound Volatility Amidst Earnings and Inauguration
U.S. stocks saw mixed movements this week. Economic data such as PPI and CPI remained stable, easing inflation concerns. December retail sales increased by 0.4% below estimates of 0.6%, showing strong sales momentum without fueling inflation worries. Earnings season kicked off with positive results for bank stocks, including J.P. Morgan, Citigroup, and Goldman Sachs, driving financial stocks higher.
What’s Trending:
PBOC’s Easing Policy and Rate Differentials Worsen Capital Outflows and RMB Depreciation
China and the U.S. are diverging in economic outlook and monetary policies, with the U.S. fiscal deficit, high bond issuance, and rising Treasury yields widening the long-term interest rate gap by nearly 120 basis points in the past six months, weakening the yuan.
In Focus:
Blue Chip Stocks Show Moat Advantage, Favor Long Term Gradual Accumulation
This year, demand for technology and AI applications remains robust. Despite a decrease in U.S. interest rate cut expectations causing Treasury yields to rise, AI usage has expanded beyond tech stocks to sectors like finance, healthcare, and consumer industries. These sectors use AI to enhance efficiency and customer experience, driving profitability. For example, retail uses AI for inventory management, while healthcare and finance simplify processes with AI. As a result, AI-using companies are expected to see higher revenue growth than those that don’t.
