Summary:DeepMind CEO says China’s AI models are only months behind U.S. counterpartsRapid progress challenges views that China remains far behind in AIChinese firms have shown strong catch-up but limited frontier innovationExport controls still constrain China’s access to top-tier AI chipsLonger-term divergence may emerge as U.S. infrastructure scales fasterChina just months behind US AI models, DeepMind CEO says – via a CNBC reportChina’s artificial intelligence models may be far closer to U.S. and Western capabilities than many assume, with the gap now measured in months rather than years, according to comments from Demis Hassabis, chief executive of Google DeepMind.Speaking to CNBC, Hassabis said Chinese AI developers appear to be only “a matter of months” behind leading U.S. and Western models, a view that challenges the long-held assumption that China remains significantly behind in advanced AI development. He made the remarks on CNBC’s The Tech Download podcast, which launched this week.Hassabis said Chinese models are closer to the technological frontier than many observers believed a year or two ago, citing rapid progress from both established technology giants and newer AI laboratories. He pointed to last year’s market reaction to a model released by Chinese lab DeepSeek, which impressed investors with strong performance despite being trained on less advanced chips and at lower cost than many U.S. counterparts.Since then, Chinese tech heavyweights such as Alibaba, alongside startups including Moonshot AI and Zhipu, have continued to roll out increasingly capable large language models. While the initial shock factor has faded, Hassabis said the pace of improvement has remained notable.However, he drew a clear distinction between catching up and leading. Hassabis said Chinese firms have yet to demonstrate the ability to push beyond the current AI frontier by delivering genuine scientific breakthroughs. In particular, he questioned whether Chinese labs could originate a foundational advance comparable to the transformer architecture developed by Google researchers in 2017, which underpins today’s most powerful AI systems, including ChatGPT and Google’s Gemini.Other industry leaders have also acknowledged China’s progress. Jensen Huang has previously said the U.S. is “not far ahead” in the AI race, noting China’s strength in infrastructure and models, even as the U.S. maintains a lead in advanced chips.Still, structural constraints remain. U.S. export controls restrict China’s access to Nvidia’s most advanced semiconductors, forcing domestic firms to rely on less powerful alternatives. Some analysts argue that over time, this hardware gap could cause U.S. models to pull further ahead as superior infrastructure enables faster iteration.Hassabis, however, suggested the absence of frontier breakthroughs in China may reflect culture rather than capability, arguing that true innovation is far harder than replication — even for teams with world-class engineering talent. This article was written by Eamonn Sheridan at investinglive.com.

Summary:The White House says semiconductor tariffs announced this week were only “phase one”The initial 25% levy targeted a narrow group of advanced AI chipsFurther tariff announcements may follow pending talks with countries and companiesThe move keeps pressure on global chipmakers and U.S. trading partnersMarkets now face renewed uncertainty over broader semiconductor trade risksThe White House has signalled that newly announced U.S. tariffs on advanced semiconductors represent only the opening stage of a broader trade action, raising the prospect of wider levies across the global chip supply chain.Earlier this week, the Trump administration imposed a 25% tariff on a narrow group of advanced artificial-intelligence chips, citing national security concerns under Section 232 of the Trade Expansion Act. The initial measures targeted select high-performance processors used in advanced computing and AI workloads, a move that immediately raised questions about how far Washington was prepared to go.Those concerns were sharpened on Thursday after a White House official said the Commerce Department’s Section 232 semiconductor tariffs announced on Wednesday should be viewed as a “phase one” action. The official added that further announcements could follow, depending on the outcome of ongoing negotiations with foreign governments and individual companies.The remarks suggest the administration is deliberately keeping pressure on U.S. trading partners and global chipmakers, using tariffs both as a national-security tool and as leverage in broader industrial policy discussions. Section 232 allows the U.S. government to impose trade restrictions on the grounds that imports threaten national security — a justification previously used for steel, aluminium, and autos.While the first phase focused on a limited set of advanced AI chips, the warning of additional measures has revived fears of a wider escalation. Any expansion could potentially encompass a broader range of semiconductors, manufacturing equipment, or downstream technology products, significantly increasing costs across the electronics, automotive, and data-centre sectors.Markets have so far treated the latest comments as a conditional threat rather than an immediate escalation. However, the explicit reference to further “phases” has injected renewed uncertainty into global supply chains already strained by geopolitics, export controls, and reshoring efforts. Industry participants and foreign governments are now likely to intensify lobbying efforts in Washington, seeking carve-outs or exemptions. At the same time, companies may accelerate efforts to localise production or diversify supply chains to reduce exposure to potential U.S. trade actions.For now, the administration’s message is clear: the initial AI-chip tariffs are not the end of the story. With negotiations still underway, the risk of broader semiconductor levies remains live, keeping technology markets, trade partners, and investors on alert. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Retail investors have made silver the most crowded commodity trade, Reuters reportsNearly $922m flowed into silver ETFs over the past 30 days, led by iShares Silver TrustSilver prices have surged above $90/oz, setting multiple record highsSilver mining equities have also soared, with related indices up over 200% y/ySome strategists warn the pace of gains raises risks of volatilityRetail investors have piled into silver at an unprecedented pace, turning the metal into the most crowded commodity trade in global markets, according to a report cited by Reuters (may be gated).Data from Vanda Research show that individual investors have poured nearly $922 million into silver-backed exchange-traded funds over the past 30 days alone. Much of that flow has been directed into products such as the iShares Silver Trust, which has seen a sharp acceleration in retail demand.On Wednesday, the iShares Silver Trust recorded $69.2 million in retail inflows, marking its second-largest single day of buying on record, trailing only the surge seen during the 2021 retail-driven silver rally. The ETF is up more than 31% year-to-date and has gained over 210% in the past 12 months, reflecting a dramatic upswing in investor enthusiasm.Silver prices themselves have climbed rapidly, setting a series of fresh highs. Spot silver was trading around $91.90 an ounce late on Thursday, up sharply from roughly $72.60 at the start of the year. Prices briefly surged above $93 an ounce earlier in the week, according to LSEG data, underscoring the speed and intensity of the rally.Equities tied to the metal have also surged. The MSCI ACWI Select Silver Miners Investable Index, which tracks mining companies with strong exposure to silver prices, has jumped roughly 225% over the past year, amplifying gains seen in the physical market.While comparisons have been drawn to the 2021 “silver squeeze” that coincided with meme-stock speculation in names such as GameStop and AMC Entertainment, Vanda argues the current rally rests on firmer foundations. The firm says the scale and persistence of retail accumulation suggest silver is increasingly being treated as a core macro asset rather than a purely speculative trade.Still, some market participants are cautious. Kathy Kriskey, head of alternatives ETF strategy at Invesco, warned that the speed of the move is striking, noting that silver took decades to break above $50 an ounce before racing past $80 in just a few months. This article was written by Eamonn Sheridan at investinglive.com.

Summary:Long-running U.S.–Iran tensions remain a key geopolitical risk factorFox News reports at least one U.S. aircraft carrier is moving to the Middle EastU.S. military said to be preparing a range of options regarding IranIran says it seeks neither escalation nor confrontationTehran warns any aggression will prompt a strong, lawful responseTensions surrounding Iran remain elevated, with the risk of escalation underscored by fresh signs of U.S. military repositioning alongside renewed diplomatic warnings from Tehran.U.S.–Iran relations have long been shaped by mutual distrust, sanctions, and regional power struggles, spanning Iran’s nuclear ambitions, proxy conflicts across the Middle East, and repeated confrontations with Israel. Periodic flare-ups have routinely drawn in U.S. forces, particularly in the Persian Gulf, where freedom of navigation and energy security are core strategic priorities.That backdrop has become more fragile in recent weeks amid heightened rhetoric and military signalling. According to Fox News, at least one U.S. aircraft carrier is now moving toward the Middle East, citing military sources. The report said U.S. defence officials are preparing a range of military options in relation to Iran, adding to market concerns about potential miscalculation or escalation.While U.S. officials have not publicly detailed the carrier’s mission, the movement is widely seen as a signal of deterrence, reinforcing Washington’s ability to project force rapidly should tensions intensify. Aircraft carrier deployments have historically coincided with periods of heightened risk in the region, particularly when threats to shipping lanes or U.S. assets are perceived.Iran, for its part, has sought to strike a measured but firm diplomatic tone. Speaking at the United Nations, Iran’s Deputy Permanent Representative said Tehran seeks neither escalation nor confrontation, emphasising that Iran does not want a broader conflict. However, the envoy warned that any form of aggression, whether direct or indirect, would be met with a “strong and lawful response,” underscoring Iran’s readiness to defend itself if challenged.The remarks highlight a familiar pattern in U.S.–Iran stand-offs: parallel tracks of military preparedness and diplomatic restraint. Tehran has consistently framed its posture as defensive, while warning that attacks on its territory, forces, or allies would trigger retaliation across multiple domains.Regional actors remain uneasy. Any confrontation involving Iran carries significant implications for global energy markets, given Iran’s proximity to the Strait of Hormuz, a chokepoint through which a substantial share of the world’s oil shipments pass. Even absent direct conflict, heightened military activity tends to lift risk premiums across crude, freight, and insurance markets.For now, the combination of U.S. carrier movements and Iran’s calibrated warnings suggests both sides are attempting to deter escalation without crossing clear red lines. But with military assets repositioning and rhetoric sharpening, the margin for error remains thin, keeping markets and regional partners on alert. ---I don't want to be a panicking headless chook here, but just updating on the latest and staying across developments. Not what I had in mind when I thought about heading out on the boat this weekend ... This article was written by Eamonn Sheridan at investinglive.com.

New Zealand December 2025 Food Price Index -0.3% m/m (prior -0.4%) and +4.0% y/y.Earlier:New Zealand December 2025 Manufacturing PMI (prior 51.4)NZD gained a little on the PMI data and not doing a lot on this data. This article was written by Eamonn Sheridan at investinglive.com.

Summary:New Zealand’s manufacturing PMI rose to 56.1 in December, the highest since December 2021All five sub-indices expanded, led by a sharp rise in new orders and productionEmployment returned to growth after earlier declines during 2025Seasonal demand helped, but confidence, exports, and infrastructure work also supported activityBNZ sees upside risk to near-term GDP growth from the stronger PMI printNew Zealand’s manufacturing sector ended 2025 on a notably stronger footing, with activity rising to its highest level in three years, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).The seasonally adjusted PMI rose sharply to 56.1 in December, up 4.4 points from November and well above the long-run average of 52.5. A reading above 50 signals expansion, making December’s result the strongest since December 2021 and reinforcing signs that the sector has regained momentum late in the year.Encouragingly, all five major sub-components of the index were in expansion territory during December. The improvement was led by New Orders, which surged to 59.8, its highest reading since July 2021, pointing to a meaningful lift in demand as the year closed. Production also recorded a solid increase, rising to 57.4, while Employment climbed to 53.8, continuing a gradual recovery after several months of contraction earlier in 2025.Business sentiment also improved. The proportion of positive comments from survey respondents increased to 57.1% in December, up from 54.4% in November and just 45.9% in October. Manufacturers cited stronger seasonal demand linked to the Christmas period, which boosted domestic sales, orders, and near-term workloads.Beyond seasonal factors, respondents also reported firmer underlying conditions. These included improving business and consumer confidence, increased export and forward orders, and incremental gains from new customers, product launches, and infrastructure-related work. Together, these factors suggest the rebound was not solely holiday-driven, but also supported by broader demand dynamics.Commenting on the data, BusinessNZ Director of Advocacy Catherine Beard said the December result was a welcome way to end the year, noting that eight of the past twelve months had now recorded some degree of expansion. The broad-based nature of the improvement across all sub-indices was particularly encouraging.From a macro perspective, BNZ Senior Economist Doug Steel said the PMI outcome was positive for fourth-quarter GDP calculations and pointed to solid momentum heading into 2026. At face value, he noted, the result suggests upside risk to BNZ’s already constructive outlook for manufacturing activity and near-term economic growth.The stronger PMI supports a firmer near-term growth outlook for New Zealand, potentially reducing downside risks to GDP and reinforcing expectations that the economy stabilises into early 2026. This article was written by Eamonn Sheridan at investinglive.com.

Not much on the data agenda to move markets. The NZ FPI can give the kiwi $ a bit of a wiggle sometimes, but usually fleeting. This article was written by Eamonn Sheridan at investinglive.com.

US initial jobless claims 198K versus 215K estimate.US January Philly Fed +12.6 vs -1.0 expectedNY Fed manufacturing index for January +7.70 vs +1.0 expectedFed’s Paulson: Comfortable holding rates; labor risks "a little bit higher" vs inflationUS and Taiwan clinch trade deal that will lower tariffs to 15%"The economy has two engines: AI and the rich"Fed's Goolsbee: Data points to stability in job marketCanadian November manufacturing sales -1.2% vs 1.1% expectedCanadian November wholesale trade -1.8% vs -0.1% expectedMarkets:Gold down $15 to $4605US 10-year yields up 2.3 bps to 4.16%WTI crude oil down $2.99 to $59.03AUD leads, GBP lagsS&P 500 up 0.25%US initial jobless claims underscored that the Fed has an opportunity to be patient in deciding its next move. Claims sub-200 is the first reading that low since the week ending Nov 1. Excluding that blip, it's the lowest of the Trump administration. That helped to lift the US dollar on the day after left the euro at the lowest since Dec 1.Rate cuts increasingly being priced out with April odds down to 37% in what will be Jerome Powell's final meeting as Fed chair. The less-dovish path has been a tailwind for the US dollar so far this year.Those odds were helped along by oil prices, which fell nearly 5% as the Trump administration backed away from Iran strikes. That theme might not be over yet though as Israel's Netanyahu reportedly asked Trump to delay strikes on Wednesday. The implication is that they could still be coming or the US could sail more force into the region first.Precious metals are on track to finish the day nearly flat. That's a decent bounce for silver as it finishes at $92 after falling as low as $86.33.The stock market was less volatile today as tech stocks led early but were once again outpaced by the Russell 2000. A good chunk of that came from banks as they outperformed following earnings. Goldman Sachs and Morgan Stanley were particularly strong post-earnings. This article was written by Adam Button at investinglive.com.

In an interview with the WSJ, Philly Fed President Anna Paulson explicitly stated she is "comfortable holding interest rates steady" at the upcoming January 27-28 meeting. She also shares the prevailing view that there is no immediate hurry to cut again, something that's implied by the market with pricing at 40% through May.She believes the current rate range ($3.50\% - 3.75\%$) is "slightly above a neutral level" and that maintaining restrictiveness for now is appropriate to finish the job on inflation.She said she placing high importance on January price data (released next month) to see if businesses are resetting prices higher. Paulson noted that business owners tell her they are reluctant to raise prices due to fear of losing market share."The labor market could break quickly… So any sign of breaking versus bending is going to be something that I pay sharp attention to," she said.Looking further out, she could favor cutting rates modestly later this year if inflation data validates her expectations or if the labor market weakens unexpectedly. If her baseline holds (declining inflation, stable growth), she believes policy should return to neutral, which is "a little lower than we are now. That's sounds relatively in line with the 50 bps in easing priced into the market.If there's any notable takeaway, its her view that the labor market is weaker than it looks. She noted that 95% of private-sector job growth last year was in healthcare alone. That's a sobering statistic in an economy that's outwardly healthy.Headlines:Comfortable holding rates steady at Jan. meetingNo hurry to cut rates again; policy is slightly above neutralSees risks to labor market as 'a little bit higher' than inflationCould favor cutting rates modestly later this yearPaying 'sharp attention' to labor market; says it could 'break quickly'95% of private sector job growth last year was in healthcare aloneSupports Powell, says response to investigation was 'strong' This article was written by Adam Button at investinglive.com.

Various reports say the US and Taiwan have clinched a trade pact to cut tariffs to 15% in exchange for a $500 billion Taiwanese commitment. For the money, half of it will be direct investment in US manufacturing and half of it credit guarantees for other investments in the US.The deal is poised to be signed today and would cut tariffs from 20%.A report says that TSMC and other chipmakers have committed to $250 billion in chip investments and credit guarantees, so the bulk of this is investments in FABs in Arizona. As for chip exports, some kind of quota system has been established, bringing tariffs down.As part of the deal, the US will apply a zero percent reciprocal tariff for generic pharmaceuticals, their ingredients, aircraft components and other unavailable natural resources. Commerce Secretary Howard Lutnick outlined that the US wants to be self-sufficient in semi-conductor manufacturing and that this will be a big step towards it, not just with the chips but with the associated components. He said the objective is to bring 40% of Taiwan's semiconductor manufacturing capacity during Trump's term. This article was written by Adam Button at investinglive.com.

Sometimes a Fed official drops a line so good that you have to take a moment to appreciate it. Here is Richmond Fed President Thomas Barkin:The economy has two engines: AI and the richThat's the kind of clarity and succinctness that really pulls it all together.It speaks to the two investment themes that have been working as well. Everything AI-related has been in a boom since OpenAI released ChatGPT 3 to the world. The rich have been doing well for awhile but last year's Big Beautiful Bill from Trump further cut taxes and that's been compounded by huge equity gains that have further driven spending.Delta Airlines further underscored that this week. “We are looking at our seat growth in the coming year. ... Effectively, none of our growth in seats will be in the main cabin; virtually all will be in the premium sector,” Delta CEO Ed Bastian told reporters after this week's earnings release. The company is now making more money in premium than economy as main cabin revenue fell last year by 7% while it expanded by 9% in premium.In the middle, customers are getting squeezed. Target was a market darling for years as it built up a fanbase of middle class consumers who wanted an upgraded experience from Walmart and dollar stores. But in the post-pandemic period, it's been a disasterous stock to own as families are forced to trade back down.Obviously part of that is company execution but the same theme has undermined Starbucks, which saw its $7 lattes go from 'affordable luxury' to any easy way for stretched consumers to save.I think this investment theme isn't going to go away, so continue to look to AI trade to start. There are signs it's filtering down to companies that use AI from just the ones that make them. Financials have a huge opportunity to cut costs and improve lending with data and the market is beginning to reflect that while also staying somewhat cautious about the potential for job losses from AI (and loan losses).There are other areas as well that will continue to benefit from these themes but the real question is whether it will continue. How long it can continue. And whether it will broaden out. This article was written by Adam Button at investinglive.com.

Shares of Boeing traded at a two-year high of $248.75 today as the company shows signs of getting on track after years of disappointment and executive turnover.Bernstein today raised its Boeing target to $298 from $277. They highlighted that free cash flow will ramp up to $9-10 billion annually in the coming years against a market cap of $185 billion.Suseuehanna has a $300 target as it values the company at 12x normalized 2027 EBITDA, arguing that the rich premium is deserved given the lack of aerospace/defense competitors and its strong customer moat in the aftermarket. What most analysts want to see is reliable, repeatable free-cash flow generation, something that analysts see building in the coming years with the consensus at:2026 $2.3 billion2027 $6.8 billion2028 $10.5 billion2029 $14 billionThat's a compelling acceleration, though the out-year estimates are thin and obviously highly variable.It's taken some time to get past the 737 Max disasters but Boeing is now trading at a premium to Airbus on some forward measures, despite much higher leverage (+3x EBITDA vs 1.2x for Airbus).What has the market increasingly enthusiastic (shares up 36% in the past seven weeks) is the growing backlog. Delta this week announced 60 orders (30 firm) for 787-10 Dreamliners and the company's backlog at the end of Q3 was already $636 billion.The company reports Jan 27 and that will likely rise further, including a separate order for 50 737 MAX jets from Aviation Capital Group.Looking at the stock chart above, it would still need to rally 80% to get back to the 2019 highs. That's an enticing prospect but digging into the numbers, it's not a cheap stock by any metric. The bull case relies on generating sufficient margins on the big order backlog and executing on defense.The latter is tricky as Trump said he wanted to boost the defense budget by 50%, but he also said that dividends and share buybacks would be halted until production increased. The latter would take a significant investment in capex.Now we take everything Trump says with a grain of salt but those variables highlight how Boeing isn't exactly well-positioned in any scenario, especially with the company now looking for more in terms of cash harvesting rather than investing and growing the order book. A good portion of the free cash may also go towards bringing down leverage, rather than shareholder returns in any case.It's been a long road back for Boeing but the market has already largely discounted it. In terms of price-to-sales, it trades at 2.26x, which is higher than 1.8x in 2018, before the big bull run started that year. All told, there are decent reasons to buy BA stock and it has some momentum but valuation isn't one of them. Buying shares now already bakes in a turnaround, good execution and growing cash generation. As we know, a lot can go wrong. This article was written by Adam Button at investinglive.com.

Will US President Trump start a war with Iran?That's the big question oil traders are struggling with. Yesterday, a report from Reuters suggested that attacks were imminent and that was combined with the UK closing its embassy and evacuating staff. It led to a jump in oil prices to the highest since October but it was a short-lived pop as yesterday afternoon, Trump seemed to de-escalate.He highlighted that executions for protestors had been stopped, along with the killing in the streets. That's hardly consolation for the protesters that he was encouraging a day earlier."Iranian Patriots, KEEP PROTESTING - TAKE OVER YOUR INSTITUTIONS!!!... HELP IS ON ITS WAY," Trump said in a post on Truth Social.So help is life in prison instead of execution?The oil market no longer seems to think that military help is coming. WTI crude oil is down $2.96 today, to $59.08, nearly erasing the three-day rally as tensions in Iran rose.Notably, though, it's not all the way back to the $56 it traded at last week. Maybe we're underestimating the President's resolve?The Venezuela operation was launched on a Friday night and tied up before Monday's market open. That seems to be a pattern with the President and it argues for buying oil on Friday. I wouldn't necessarily argue for holding it through the weekend as there is the risk of a gap lower if action doesn't materialize but buying early Friday and selling late Friday might capture the weekend nerves without making a bet on what will actually happen in Iran.Taking a larger view in the oil market the problem is oversupply and it's a tough one to solve. Yesterday's weekly EIA report showed a build of 8.6 million barrels of gasoline supplies in the US following 7.7 mb the week before. The chart shows how extraordinary those builds are.In a note today, Scotiabank argues that the global oil market is entering a period of severe imbalance that will prevent prices from recovering without intervention. They forecast that global oil supply will exceed demand by more than 2.0 million barrels per day in 2026. Specifically, they expect the surplus to be nearly 3.5 mmbbl/d in the first half of 2026, narrowing to just under 2.0 mmbbl/d in the second half.Scotia says the market is underestimating Brazilian growth this year, which they peg at 600k bpd.Contrary to consensus, Scotiabank does not believe the market will self-correct. They argue that prices will remain depressed until Saudi Arabia abandons its market share strategy and OPEC+ returns to the negotiating table to implement new cuts, which the analysts do not expect to happen until 2027.These forecasts are hardly a call for buying oil and they help to explain why positioning data is so short:2026 Average: $49.72 per barrel Q1 2026: $54.00 per barrel Q2 2026: $51.00 per barrel Q3 2026: $48.00 per barrel Q4 2026: $46.00 per barrel 2027 Average: $55.00 per barrelI like the idea of buying at $46 for the long term. This article was written by Adam Button at investinglive.com.

Sector OverviewThe current market heatmap reveals a robust performance in the semiconductor sector, with standout stocks like NVDA and AMD posting impressive gains of 2.02% and 3.27% respectively. As advanced technologies continue to drive demand, this sector appears poised for further growth.On the contrary, the energy sector is facing a downturn, with companies like ExxonMobil (XOM) falling by 1.27%. This decline is influenced by fluctuating oil prices and an increasing shift towards renewable energy.Market Mood and TrendsOverall market sentiment today leans towards optimism, buoyed by tech gains. The strong recovery in technology stocks, notably in software applications, underlines a growing investor appetite for innovation-driven growth. However, the healthcare sector is under pressure, with Eli Lilly (LLY) down by 0.83%, reflecting mixed investor sentiment due to policy uncertainty.Big Winners and Losers? Winners: Semiconductors lead the charge with robust performances from Micron Technology (MU) and Broadcom (AVGO), rising 3.86% and 1.71% respectively.? Losers: The energy sector is the notable laggard, with Chevron (CVX) also down by 0.82%, echoing sector-wide challenges.Strategic RecommendationsInvestors should consider increasing their exposure to the technology sector, particularly semiconductors, given their promising growth trajectory. On the flip side, caution is advised in the energy market due to volatility. Those looking to diversify might explore consumer cyclical stocks, which show resilience, with Amazon (AMZN) up 0.64%.As the markets continue to evolve, staying informed and adaptable is crucial. Visit InvestingLive.com for more insights and analyses on navigating today's financial landscape. ?? This article was written by Itai Levitan at investinglive.com.

The statement from Fed Chairman Jerome Powell on Sunday night was remarkable and continues to resonate. The US Department of Justice -- undoubtedly directed by the President -- opened an investigation into the Chairman of the Federal Reserve in an attempt to coerce him into exiting the institution and giving the President full control over interest rates.Perhaps it wasn't designed just to intimidate Powell but whoever might come to replace him, or whoever might stand in the way. We've already seen signs of this as Fed Governor Kugler was chased out and Fed Governor Lisa Cook is under investigation for a trivial mortgage oversight, something the President has tried to fire her over. It will ultimately be decided by the Supreme Court.This is all rightly setting off alarm bells everywhere and we've seen a spirited (and wise) defense of central bank independence from some Republican Senators who still have some integrity, along with past Fed Chairs and even right-wing media. I'm not going to go into the importance of central bank independence but it's been well proven and allowing politicians to set rates has almost always ended in inflation.So why wasn't there a bigger market reaction in stock markets?Maybe it's because Trump looks like he will fail and that this will backfire, resulting in Powell digging in his heels and staying on the Fed as a Governor after his term ends.I'd argue it's equally because Trump might succeed in stacking the Fed with yes-men. That would result in interest rates lower than they should be and ultimately, inflation. But not inflation right away, at least not runaway inflation. The real tail risk is that Trump succeeds in driving rates to 1% or 1.5%. It doesn't take a long view of history to see what ultra-low rates do for the stock market. We saw it during covid and it was an absolute bonanza as it resulted in asset-price inflation that far exceeded real world inflation. It also allows market participants to indulge in their favourite pastime: leverage. That's the kind of thing that could wreck the bond market but stock markets are a great hedge against inflation. This article was written by Adam Button at investinglive.com.

Fed moved to slowly to combat inflation in pandemicThere's a lot of blame to go around for pandemic inflation surgeServices inflation not yet under controlBest thing about recent inflation data shows possible waning of tariff impactExpects to see Fed rate cuts this year, but needs data to affirm outlookRates can still go down a fair amount but need firm evidence of inflation retreatThe most important thing facing Fed is need to get inflation back to 2%There is still strength in jobs and overall growth is goodData points to stability in job marketI'm not surprised by low claims data If you try to take away the independence of the central bank, you will get inflation roaring backThe Fed has settled comfortably into the sidelines as they evaluate the economy and wait for inflation to fall convincingly towards 2%. Today's initial jobless claims number prompted the comment in the headline from Goolsbee as claims were at 198K compared to 215K expected and 208K a week ago. It's the 'low hiring, low firing' economy that's persisted for awhile and is increasingly static. With GDP growth likely around 2.5% this year, there is no big incentive to let workers go.At some point, there will be that pressure and AI will allow for productivity gains but we don't appear to be crossing that threshold in a rush. So the Fed will wait and likely resist pressure from Trump to cut for at least awhile. Pricing for a January cut is under 10% and it's a 24% for a March cut.The first meeting that's really in play is April but it's down to just 39%. That means the next cut may fall to the future Fed chairman at the June meeting. The name of that chairman is something we could find out within days. The betting market has Kevin Warsh slightly ahead of Kevin Hassett but both are likely to be Trump lackeys. That will set up a showdown between the chair and the board. This article was written by Adam Button at investinglive.com.

Initial Jobless ClaimsInitial claims: 198,000, ↓ 9,000 from the prior week (revised to 207,000)Prior week revision: ↓ 1,000 (from 208,000 to 207,000)4-week moving average: 205,000, ↓ 6,500 on the weekTrend signal: Lowest 4-week average since January 20, 2024, highlighting continued labor-market resilienceContinuing ClaimsInsured unemployment rate: 1.2%, unchangedContinuing claims: 1.884 million, ↓ 19,000 from the prior week (revised to 1.903 million)Prior week revision: ↓ 11,000 (from 1.914 million to 1.903 million)4-week moving average: 1.889 million, ↓ 250 on the weekTrend signal: Stability with mild improvement, no sign of sustained labor-market deteriorationMarket takeaway: Jobless claims remain low and trending lower, reinforcing the view of a resilient U.S. labor market, which limits the urgency for aggressive Fed easing and keeps the USD supported on dips.There is some chatter that the claims may be impacted by seasonally adjustments.Looking at the markets, the broader S&P and Nasdaq are higher with the S&P up about 36 points and the Nasdaq up 254 points. In the US debt market, yields are higher and trading near the high:2 year yield 3.558%, +4.2 basis points5 year yield 3.755%, +4.0 basis points.10 year yield 4.161%, +2.2 basis points. 30 year yield 4.766%, +1.0 basis pointsFed's Goolsbee is talking on CNBC and says that we need to get inflation down to 2%. He says there are some things in the recent CPI and PPI data that there are some things are encouraging, but some things that are still disturbing.The USD is moving higher as well. Of interest is that the GBPUSD is trading between the 100 and 200 day MAs between 1.33645 and 1.33965. The price has moved below the 200 day MA at 1.33965 but remains above the 100 day MA at 1.33645. The low just reached 1.3373. Initial jobless claims track the weekly number of Americans filing for unemployment benefits for the first time and are one of the most timely indicators of U.S. labor-market health and overall economic momentum. Rising claims can signal increasing job losses and a slowing economy, while declining claims suggest that hiring is outpacing layoffs, pointing to underlying economic strength. Released every Thursday by the U.S. Department of Labor, the report is closely watched by economists and markets alike, with particular emphasis on the four-week moving average, which helps smooth out weekly volatility and provides a clearer view of underlying labor-market trends. This article was written by Greg Michalowski at investinglive.com.

Prior was -8.8Details:Employment: +9.7 vs +12.9 last monthPrices paid: +46.9 vs +43.6 last month New orders: +14.4 vs +5.0 last monthShipments: vs +3.2 last monthUnfilled orders: vs -6.2 last monthInventories: vs +6.5 last monthAverage workweek: vs +14.7 last monthSix-months from now indicators:6 month index: vs +41.6 last monthCapex index 6-month forward: vs +30.3 last monthThe Philly Fed is a solid look at manufacturing in the region but the entire US manufacturing sector is increasingly irrelevant in terms of national employment, GDP and markets. It represents something of a broader look at overall economic sentiment, so it still has some value but it's rarely an FX market mover or anything else.Separately, the import/export price indexes were released for November:Import prices +0.4% vs -0.1% expected (prior 0.0%)Import prices y/y vs +0.3% priorExport prices +0.5% vs +0.2% expected (prior was 0.0%)There is some inflation hidden in these numbers and all of this is coming with oil prices at very low levels. This article was written by Adam Button at investinglive.com.

Prior was -3.90Full report hereDetails:New orders 6.6 vs 0.0 priorShipments 16.3 vs -5.7 priorEmployment -9.0 vs 7.3 priorAverage employee workweek -5.4 versus 3.5 priorPrices paid 42.8 vs 37.6 priorPrices received 14.4 vs 19.8 priorUnfilled orders -8.2 vs -14.9 priorDelivery times 0.0 vs -5.9 priorInventories -2.1 vs 4.0 priorSupply availability -4.1 vs -6.9 priorThe agency said: "Manufacturing activity increased in New York State, according to the January survey. The general business conditions index rose eleven points to 7.7, returning to positive territory after a small dip below zero in December. New orders and shipments increased, with the new orders index rising eight points to 6.6 and the shipments index climbing twenty-one points to 16.3, its highest level in over a year. Unfilled orders decreased. Inventories edged down and delivery times were unchanged. The supply availability index came in at -4.1, suggesting supply availability was slightly worse than last month."Six-month outlook:General business conditions 30.3 vs 35.7 priorNew orders 33.3 vs 38.0 priorShipments 34.9 vs 33.3 priorNumber of employees 14.9 vs 8.8 priorAverage employee workweek 17.5 vs 12.9 priorPrices paid 52.6 vs 55.4 priorPrices received 36.5 vs 46.5 priorCapital expenditures 10.3 vs 6.9 priorUnfilled orders 10.3 vs 12.9 priorThe agency said: "Firms remained fairly optimistic about the outlook. The index for future business conditions came in at 30.3, with about half of respondents expecting conditions to improve over the next six months. New orders and shipments are expected to increase. Supply availability is expected to be unchanged. Firms continue to anticipate significant price increases, though somewhat less so than in recent months. The capital expenditures index rose three points to 10.3, pointing to ongoing modest capital spending plans."WHAT IS THE NY FED MANUFACTURING INDEX?The New York Fed Manufacturing Index (officially known as the Empire State Manufacturing Survey) is a monthly economic indicator that gauges the health of the manufacturing sector in New York State.Because it is released very early in the monnth, usually around the 15th, it is considered a "bellwether" or leading indicator for the broader U.S. manufacturing industry and the overall economy. It's a low-tier indicator though, meaning it's not as market-moving as the ISM Manufacturing index.It's a diffusion index, meaning it represents the difference between the percentage of companies reporting an increase in activity and those reporting a decrease:Above 0.0: Indicates that manufacturing activity is expanding.Below 0.0: Indicates that manufacturing activity is contracting. This article was written by Giuseppe Dellamotta at investinglive.com.

Japan MOF faces a tall order in getting any yen intervention to stick - MUFUS-Iran tensions have been capping US stocks all along: Trump’s comment triggered a rallyPrecious metals regain some poise after sharp drop earlier in the dayBoJ rate hike odds rise as the central bank is said to focus more on the weakening yenTrump's comments lead to sharp drop in oil prices: what's next for crude oil?German gross domestic product was 0.2% higher in 2025NASDAQ Technical Analysis (did you exit your short)?USDJPY falls back below the 2025 high following intense verbal intervention. What's next?Spain December final CPI +2.9% vs +2.9% y/y prelimFrance December final CPI +0.8% vs +0.8% y/y prelimPBOC to cut rates on various structural policy tools by 25 bpsWhat are the main events for today?China new bank lending stumbles once again in 2025UK November monthly GDP +0.3% vs +0.1% m/m expectedFX option expiries for 15 January 10am New York cutECB policymaker Kazaks says attack on Fed raises new risks to economic outlookSilver pulls back from the highs, major currencies steady ahead of European tradingThe main highlights of the European session on the news front were the monthly UK GDP data and a Bloomberg report raising the possibility of an earlier than expected BoJ rate hike. The UK data beat expectations across the board but the market reaction was muted. The main reason is the fact that the BoE is mostly focused on inflation for the next rate cut decisions. We then got a Bloomberg report saying that the BoJ officials were paying more attention than before on the weakening yen and its potential impact on inflation. According to people familiar with the matter, this could have implication for future rate hikes even though the central bank is likely to hold rates steady next week.The Japanese Yen strengthened on the headlines as the odds of a rate hike in March jumped to 22%. This would be much sooner than expected and could keep the JPY supported in the short-term if speculations of an earlier hike keep increasing.In the markets, US stocks have been the most notable movers. S&P 500 and Nasdaq futures have been rallying strongly since Trump's comment yesterday where he said that the killing in Iran was stopping and there were no plans for executions. It certainly looks like the upside was capped by US-Iran tensions all long. In fact, a war with Iran would trigger a massive rally in oil prices which would eventually weigh on economic activity and inflation. Without the risk of a military action in Iran, we should see new all-time highs soon.In other markets, FX has been kinda boring with most major pairs seeing slight changes on the day. US Treasury yields continue to bounce around in a range given the limited changes in interest rate expectations. Gold and silver recouped some of the losses triggered by easing US-Iran tensions although they remain negative on the day. Lastly, oil is consolidating near yesterday's lows when Trump's comment caused a massive and quick dip.In the American session, the main highlight is going to be the US Jobless Claims data. Initial Claims are expected at 215K vs 208K prior, while Continuing Claims are seen at 1893K vs 1914K prior. Jobless Claims continue to point to a "low firing, low hiring" labour market with some minor improvement.The data is unlikely to change much in terms of expectations unless we get big deviations from the estimates. We have also the Philly Fed index and the November import/export prices on the agenda but those aren't market moving releases. This article was written by Giuseppe Dellamotta at investinglive.com.