Stansberry Research

Monday Morning Market Headlines

C. Scott GarlissStansberry NewsWire

Five Stories Moving the Market:

Knot says ECB set to raise rates by 50 basis points in February and March – Reuters. The European Central Bank (ECB) is set to raise interest rates by 50 basis points in both February and March and will continue to raise rates in the months after, ECB governing council member Klaas Knot said in an interview with Dutch broadcaster WNL on Sunday.

Fed study says U.S. can slow inflation without unemployment spike – Bloomberg. The U.S. and other industrialized countries may be able to bring inflation down without triggering the huge jumps in unemployment that economists may have predicted prior to the pandemic, according to new research from the Federal Reserve Bank of Chicago.

Fed's Waller, citing "good news," backs quarter-point increase at next meeting – Reuters. U.S. Federal Reserve Governor Christopher Waller, one of the leading inflation hawks and an advocate last year of aggressive rate increases, supports scaling back to quarter-point rate hikes at the Fed's next meeting, all but cementing another step down in the pace of the central bank's monetary tightening.

Fed’s George says a soft landing still possible for U.S. economy – Bloomberg. Kansas City Fed President Esther George, who is retiring this month, said officials don’t want to raise interest rates by so much that policy becomes overly restrictive and that the economy can avoid a sharp downturn.

Fed sets course for milder interest-rate rise in February – WSJ. Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year.

Market Headlines:

Global Macro:

Japanese government representatives at the Bank of Japan’s December policy meeting requested an urgent time out in a likely sign of their surprise at planned adjustments to the bank’s yield curve control program - Bloomberg.

Japanese Prime Minister Fumio Kishida said on Sunday he would nominate a new Bank of Japan governor next month, as markets test whether the central bank will change the ultra low-rate policy of the dovish Haruhiko Kuroda - Reuters.

European Central Bank Governing Council member Olli Rehn said “there are grounds for significant increases” in the key interest rate in the winter and early spring, after which the central bank should decide on rates depending on data received at each meeting – Bloomberg.

After nearly three years of closed borders and strict COVID-19 movement controls, China's frontiers reopened two weeks ago, clearing the way for millions of Chinese to travel the world over the Lunar New Year holidays – Nikkei Asia.

Just when signs point to easing inflation worldwide, China’s economic reopening after years of strict pandemic controls is raising questions about whether it could spur costs higher again - WSJ.

Germany must reduce its dependence on China gradually as decoupling from the Chinese market would cost jobs in Europe's biggest economy, Finance Minister Christian Lindner was quoted as saying on Sunday - Reuters.

Europe is winning its energy war with Russia as the region’s economy and politics are proving more stable than its leaders feared earlier in their confrontation with Moscow, but now the question facing them is whether they want Ukraine to win the shooting war - WSJ.

Britain's National Grid said it would pay customers to use less power and that it had asked for three coal-powered generators to be warmed up in case they are needed as the country faces a snap of cold weather - Reuters.

Germany and France warned that European businesses will need to unleash investments on a nearly unparalleled scale to keep from falling behind U.S. and Chinese firms as countries revamp their economies to make them more climate-friendly - Bloomberg.

Moscow said its forces advanced in Ukraine’s southern Zaporizhzhia region as Kyiv’s Western allies continued pressuring Berlin to allow deliveries of German-made tanks to Ukraine - WSJ.

The Bank of Canada will offer minutes from its policy-setting meeting this week for the first time in its history; some analysts say will help restore credibility lost last year amid soaring inflation and encourage out-of-the-box thinking - Reuters.

Investors and Federal Reserve officials are at odds over the path of U.S. interest rates this year, widening a gap between the forecasts of policymakers and market expectations - FT.

Company Specific:

Tesla’s price cuts on its most popular models in the U.S. are reverberating through the car business, pressuring rivals and affecting purchase decisions for new- and used-car buyers - WSJ.

Western Digital and Kioxia Holdings are progressing in their merger talks and have figured out a rough structure that would eventually involve a dual-listing in Japan, according to people familiar with the matter - Bloomberg.

Apple has so far avoided the job cuts rippling through peers including Microsoft, Google, Meta Platforms, and Amazon in part because it added employees at a much slower clip than those companies during the pandemic - WSJ.