Friday closed with the Mag7 stocks working their magic to hold indexes while internally more stocks were declining rather than advancing.  Friday’s big bank reports produced mixed results but they will have another chance today to inspire the bull or bears with reports from the likes of GS and MS before today’s bell.  We will also get figures from Empire State Mfg., have some Fed speak as well as short-term bond auctions to inspire.  The geopolitical tensions in the Red Sea add considerable uncertainty looking forward so plan carefully.

Overnight Asian market closed mostly lower with only the Shanghai exchange eking out a small gain of just 0,27%.  European markets trade lower across the board this morning as they monitor ECB members talking about rate cuts at Davos.  U.S. futures point to a lower open though we have rallied significantly off the overnight lows as earnings results roll in. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include CVGW, FULT, GS, HWC, IBKR, MS, PNFP, PNC, & PRGS.

News & Technicals’

Vodafone and Microsoft have announced a 10-year strategic alliance to deliver cutting-edge AI, digital, enterprise, and cloud solutions to millions of customers in Europe and Africa. Vodafone will leverage Microsoft’s Azure OpenAI and Copilot technologies to create customer-centric AI applications and will migrate its data centers to the Azure cloud platform to reduce costs and increase efficiency. Microsoft will also take a stake in Vodafone’s IoT business, which will be spun off as a separate entity by 2024, and will support Vodafone’s expansion of its mobile money service in Africa.

Elon Musk, the CEO of Tesla and SpaceX, wants to increase his voting power over Tesla to 25%. He currently holds about 13% of the electric car maker’s shares. In a post on Monday, Musk said he felt uneasy about Tesla’s future as a leader in AI and robotics without having more say in the company’s decisions. Musk’s move comes after he and Tesla faced a lawsuit from shareholders in Delaware, who claimed that Musk’s 2018 compensation package was too generous and that the board that approved it violated its duty to the company.

The Allianz Risk Barometer, a report that assesses the most pressing risks facing businesses and societies, revealed that political risk reached its highest level in five years in 2023. According to the report, about 100 countries faced a high or extreme likelihood of civil unrest, such as protests, riots, or violence, due to social and economic grievances. The CEO of Allianz, Oliver Bäte, attributed this situation to the growing gap between the political elite and the working class, which he regarded as the biggest threat to social stability.

Chinese Premier Li Qiang urged the world to avoid using tech innovations as tools of geopolitical rivalry and containment. Speaking at the World Economic Forum in Davos, Switzerland, on Tuesday, Li said that the only way to foster healthy competition and unleash the potential of innovation was to enhance cooperation among countries. Li did not single out any country in his speech, but his remarks came amid the ongoing tensions between Beijing and Washington over technology issues. China has repeatedly called on the U.S. to lift its sanctions on Chinese firms that block their access to advanced technology from American suppliers. The U.S. has imposed these measures in the past two years, citing national security concerns and accusing China of using high-end semiconductors for artificial intelligence to boost its military power.

The week ended on a positive note though more stocks were declining than advancing, the effect of the Mag7 stocks. The S&P 500 gained 0.1% and the Dow lost 118 points with UnitedHealth’s leading the selling, as we slide into the uncertainty of a three-day weekend.  In the commodities markets, gold and oil prices increased, as geopolitical tensions escalated and bond yields moved higher. The big bank reports produced mixed results on Friday but with several more coming our way this morning be prepared for just about anything.  We will also have to keep an eye on reports coming out of Daovs as the so-called political elite pontificates the future rest of us, underlings.  Along with earnings we have Empire State numbers, Fed speaks, and bond auctions for the bulls or bears to find inspiration as we begin this holiday-shortened week.

Trade Wisely,

Doug