To The Moon

On 26 Jan 2025, I have posted the estimates for US personal consumption expenditure (PCE) inflation numbers for December 2025. Click here ! for forecasted numbers.

On Fri, 31 Jan 2025, the PCE actuals were released before trading began.

PCE December 2025.

Headline inflation.

• Monthly: was 0.2% vs forecast 0.23% vs 0.1% (November 2024).

• Annual: was 2.6% vs forecast 2.39 vs 2.4% (November 2024).

Monthly headline inflation aligned with forecast but ticked higher by +0.1% than November’s data.

Annual headline inflation rose marginally by +0.2%, compared to November’s data.

Core Inflation.

• Monthly: was 0.2% vs forecast 0.27% vs 0.1% (November 2024).

• Annual: was 2.8% vs forecast 2.55% vs 2.8% (November 2024)

Similarly, monthly core inflation aligned with forecast but ticked higher than November’s data by +0.1%

Annual inflation was higher than estimates by +0.25% and remained changed against November’s data.

Summary:

US inflation increased by the most in 8 months in December, amid robust consumer spending on goods and services.

US’s Commerce Department PCE reports showed a modest gain in core inflation monthly prices (excluding volatile food & energy components), while annual increase in core inflation has not slowed since October 2024.

In short, disinflation progress stalled in Q4 2024.

Employment Costs Index report.

Fri, 31 Jan 2025 also saw the release of the Employment cost index (ECI) report by the Bureau of Labour Statistics.

For Q4 2024, ECI rose at a seasonally adjusted 0.9%, in line with expectations though slightly ahead of the third-quarter reading. It is a sign that disinflationary trend remained intact, unfortunately.

On an annual basis, the ECI increased 3.8%, one-tenth of a point below the Q3 reading.

All 3 Composite indexes trader higher intraday.

However, from 1:00pm (US time) onwards, they began to dip.

By the time market wrapped up January 2025: (see above)

• DJIA: -0.75% (-337.47 to 44,544.66). For the week, it is up +120.41 points, or +0.3%.

• S&P 500: -0.50% (-30.64 to 6,040.53). For the week, it is down -60.71 points, or -1%.

• Nasdaq: -0.28% (-54.31 to 19,627.44). For the week, it is down -326.86 points, or -1.6%.

For week beginning 03 Feb 2025, US market should be bracing for a correct or worse a crash. (see below)

• Mon, 03 Feb 2025, pre-market indicators for all 3 Composite indexes are already down -1.32% and more. (see above)

This is largely owing to Mr Trump’s threat on Friday and executive order signed into action over the weekend. (see below)

With effect from Tue, 04 Feb 2025, US will impose the following tariffs on 3 of its largest trading partners:

• Mexico - 25%.

• Canada - 25%. with the exception of oil @ 10% because US needs Canadian oil cheap.

• China - 10%.

Tariffs would remain until a national emergency over the drug fentanyl & illegal immigration to the US ends.

The moves follow through on a repeated threat Trump has made, shortly after winning last year's presidential election.

This comes despite the tariffs imposed will likely trigger retaliation and risk igniting a trade war that could cause broad economic disruption for all countries involved.

Tariffs Aftermath.

According to EY, Chief economist, Greg Daco:

• A model gauging the economic impact of Trump's tariff plan suggests it would reduce US growth by -1.5% in 2025.

• At the same time, with retaliations factored in, both Canada & Mexico would slip into recession and usher in "stagflation" at home.

Volatility have been evident since Friday, when Mexican peso and Canadian dollar slumped after Trump vowed to fulfil his threats.

US stock prices also fell on Friday, while Treasury bond yields rose.

Fight Backs.

In true tit-for-tat spirit, Canada will retaliate with 25% tariffs on $155 billion in US goods.

It includes beer, Kentucky bourbon and orange juice, for a start.

Mexico said it also would respond in kind.

China took the muted route said it would file a lawsuit with the World Trade Organization (WTO).

Like the on-going California wildfire, the trade war could widen as Mr Trump also threatened tariffs on the European Union and the UK. (see below)

Quarterly Earnings.

In the midst of discords sow by US President, creating chaos domestically and with its century old allies, the quarter earnings season is still in full swing.

I think their earnings (even if fantastic) may not mean much and definitely will not lead to rallies, given a fading prospect for next quarter earnings.

Still, companies reporting this week:

• Monday - $Palantir Technologies Inc.(PLTR)$.

• Tuesday - $Alphabet(GOOG)$ (pm), $Pepsi(PEP)$ (am), $Advanced Micro Devices(AMD)$ (pm), Pfizer, Inc(PFE)$, UBS Bank (UBS)$, Spotify (SPOT)$.

• Wednesday - $Novo-Nordisk A/S(NVO)$ (am), Alibaba (BABA)$, Walt Disney (DIS)$ (am), Arm Holdings (ARM)$ (pm), TotalEnergies (TTE)$ .

• Thursday - Amazon (AMZN)$ (pm). Eli Liy & Company (LLY)$

• Friday - Plains All American Pipeline, L.P (PPA)$.

Nvidia Continues To Tumble.

Dark clouds continue to hover above Nvidia (NVDA)$ in the near term.

For Monday, Nvidia’s pre-market price is slated to fall a further -3.71% to $115.61 per share, at the start of trading day. (see above)

Nvidia had a turbulent performance on the last week of January 27 -31.

The stock experienced significant volatility, closing at $120.07, down -3.82% from the previous week

This decline was primarily driven by concerns over the emergence of Chinese AI startup DeepSeek, that sparked worries about competition in the AI market.

Catalysts:

Thumbed Nvidia DOWN:

1. Competition from DeepSeek: The launch of DeepSeek's free open-source large language model (LLM) raised concerns about Nvidia's dominance in the AI market and its possible overvaluation.

2. Export Restrictions: In an effort by US to further curtail AI development by China, new restrictions maybe imposed on AI-chip leader Nvidia to prevent advanced AI-technology from finding its way into China’s hands.

3. Market Sentiment: Broader market concerns, over an escalating trade war waged by newly reinstated President Trump is never far from Wall Street’s concerns.

4. CEO’s selloff: It does not help (at all) to instill / restore investors’ confidence during testing times when the CEO himself decided to sell off $14 millions worth of Nividia’s shares. (see below)

Pulled Nvidia UP:

1. Strong AI Demand: Despite the competition, Nvidia's AI products and services continue to be in high demand, with major tech companies relying on their GPUs.

2. New AI Data Centre. The Joint venture announced by Mr Trump after his 20 Jan 2025 inauguration on the private sector (OpenAI, Nvidia, Oracle and Microsoft) spearheading accelerated AI development and adoption over the next 5 years should continue to fuel Nvidia’s long term future.

3. Technological Advancements: Nvidia's continuous innovation and development of new technologies, such as the Blackwell architecture, are expected to drive future growth.

While Nvidia faced challenges for week ended 31 Jan 2025, its strong foothold in the AI market and upcoming catalysts could help it recover in the near future.

If Nvidia reports a stellar set of earnings on Wed, 26 Feb 2025, it might just be the one-way ticket needed to break through the glass ceiling, paving the way for recovery and restoration.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• PLTR Mon's Rally Derail by Trump's Tariffs ?

• VRT, ANET, EQIX - Trump's Stargate AI winners ?

• NVDA, MSFT, TSLA impacted by DeepSeek !

• Do you think US market will crash big time this week ?

• Do you think Nvidia will be able to dig itself out of the “valuation” doubts Market has over ?

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