The Daily Fix – Bravely Climbing and Repricing the Wall of Worry Risk markets climb a tariff wall of worry, with new highs seen in the FTSE100, DAX40, FRA40 and EU Stoxx, while we see bullish breakouts playing out in the HK50 and China-H-shares. The positive flow also supports the ASX200 for an open above 8500 and a potential re-test in the days ahead of the ATHs (of 8566) set on 31 January. We’re seeing positive flows in the S&P500 (+0.7%) and NAS100 (+1.2%), with both indices closing near session highs even if breadth wasn't too flash, with 57% of S&P500 stocks higher on the day. Taking a big picture view, the S&P500 and Dow daily charts highlight choppy underlying conditions, and both need work to get the momentum accounts fired up. It’s the NAS100 which appears to be the preferred long play in the near-term, with a test of the range highs of 22k the clear target for the bulls. The Trump tariff news flow remains deafening and will continue to be so through the week as the reciprocal tariff rates are released either later today or Wednesday. However, with the 25% tariff announcement on steel and Aluminum lacking any trigger for broad portfolio derisking and USD strength, the ability of risky markets to absorb the news and maintain a steady bid is telling. Tariff Risk is So Readily Absorbed We’ve been talking tariff risk for months now, and the markets have had time to price a scenario of frayed international relations, margin compression, a hit to earnings and end demand, with tariffs set to raise the price level - but what is going down just isn’t troubling risk and perhaps this is the sign that Trump is playing the negotiator, we’ve priced in a more troubled scenario or maybe we’re just over it and keen to refocus on the other factors supporting risk. Simplistically, any market at or near ATHs portrays a bullish environment – how can it not be? Naturally, the bulls would like to see a firm breakout to new highs on a higher rate of change and increased participation, but that may still play out with the 12.4% aggregate EPS growth seen from S&P500 companies (in the current quarter) underpinning the buying flows. We look ahead towards Nvidia’s Q425 earnings (26/2) and while still two weeks away, traders are running NVDA longs into the numbers, with shares now eyeing a break of the 50- & 100-day MA, with traders not wanting to get left behind when they beat expectations – the question is always to what extent that beat looks like. Reduced Volatility Supporting Equity Appreciation A calm session in US rates and Treasuries – with limited changes in both US nominal and real yields - would also be helping risk sentiment and equity appreciation and that is spilling over into calmer conditions in the USD, with moves across G10 FX orderly on the day. USDJPY has had one of the bigger percentage changes, and we see the pair +0.3%. Extremely low correlation within US equities is another factor playing into a stock pickers market and the frequent rotation - but it is also reducing S&P500 realised volatility - which, in turn, is seeing new capital from volatility-targeting funds (mostly pension and insurance players) come back into the market. S&P500 1-month ATM implied volatility now trades below 16%, with the VIX at similar levels and the reduction in implied equity vol speaks to a world of trader’s part rolling off downside hedges, and while cautious, active funds would not want to be overly hedged if the equity markets kick into and past Nvidia’s numbers. One could argue that the US economic data flow is also a factor – where we’re seeing the data roll in neither too hot nor cool enough to trouble risk. It feels as though tomorrow’s US CPI print would need to be a real outlier to get the markets really pumping. Commodities Working Well - Gold into $2911 Commodities are also feeding the beast, with a solid rally in energy – with crude +2.1% and Nat Gas +4.2%, while copper is +2.6%. Gold continues to kick with spot trading +1.6% and into $2911 with US-listed gold miners having a solid day’s trade. Momentum buying remains a factor, notably in the futures market, although one suspects CTAs would now be max long in their positioning. Many are fully aware of the buying from EM central banks, and while China hasn’t amassed the quantities of others (such as Poland or Turkey) they are a big psychological driver – additional news that China is eyeing a program to allow insurers to look at gold as an investible market is also fueling the buying. Of course, gold players continue to watch and react to the migration of physical gold to Comex vaults in the US, and the ongoing scramble in London to be able to deliver anything that even looks remotely shiny. Gold and silver may be grossly overbought, but shorting the metal is a tough call for anything more than an intraday trade – Gold is hot, and until we hear some that radically changes the flow dynamics to Comex or improved wait times to receive gold from the Bank of England, then pullbacks should be well supported. A Look Ahead - ASX200 Earnings and Powell in Focus Turning to Asia we see our calls for the equity cash markets higher, but only modestly so. We see the ASX200 opening above 8500, with Macquarie set to offer a Q325 update and CSL set to report 1H25 earnings before the opening bell – typically CSL receives good attention from traders, but they will need to pull a rabbit out of the hat from its results to see investor interest lift, with shares at 12-month lows. Trump will make two media appearances through early Asia trade – on Fox and the Matt Levin show.  Data due out through Asia shouldn’t trouble risk too intently, while in the US we see NFIB small business optimism survey and some interest in Fed chair Powell’s testimony to the Senate Banking Committee (02:00 AEDT). In the UK we hear from BoE member Catherine Mann, who many will recall advocated for a 50bp cut in the recent BoE meeting – so one can expect dovish comments in this speech. Good luck to all. #Trump #gold #tariffs

Wake up right - Trump will be on Fox in 3hrs time, talking to Bret Baier... also on the radio on the Mark Levin show....keep the kids back from school and watch the great man do his thing

@DexAust I did… 50mins

@wideclops an early Valentines present 😂

@BellmountChase @6Fanboi I just wish markets would trend rather than chop…. Trend needs him to step up harder

@MKTWgoldstein today is all about looking at the closeness of Swift and Kelce... a model for us all.... the football is a sideshow

@kit_lowe @TheKouk talking longer term.... its clear after last weeks announcement that the UST are not looking to do anything on coupons at this point... anyhow, todays news just throws up questions, no news

* TRUMP SAYS HE WILL ANNOUNCE RECIPROCAL TARIFFS ON TUESDAY OR WEDNESDAY TO GO INTO EFFECT ALMOST IMMEDIATELY (BBG) Could be Wednesday now...

AUDUSD off 20 pips or so to 0.6247 on the "*TRUMP: WILL ANNOUNCE 25% TARIFFS ON STEEL, ALUMINUM MONDAY (all countries)"... No specified start date as yet

🇺🇸 A Traders’ Week Ahead Playbook – A New Week and New Tariff Risks To Navigate It promises to be yet another lively start to the week, with market-moving headlines set to roll in throughout trade on Monday and Tuesday, in a week where Trump will be everywhere and all-consuming. A scheduled TV interview to be screened before the Superbowl, a key announcement detailing the reciprocal tariff outcomes and meetings with King Abdullah of Jordan, Modi, Zelensky, Putin and possibly Xi. Trump, never one to fear being centre stage, will be a constant source of headline risk that could throw markets around, and impact sentiment at a time when many were trying to refocus attention to other market themes. The announcement on reciprocal tariffs will perhaps garner the greatest level of attention from those who trade news and must explain the why. Many have spent time reviewing the simple/trade-weighted average import tariff rates currently in place by the US’s key trading partners – with a view to better understand what a reciprocal tariff hike from Trump could look like - and which nations have the greatest import tariff rate premium and imbalance to the US’s 3.3% average tariff rate. Japan, India, Brazil, Vietnam, China and the EU nations are now firmly in the firing line. Looking for the Positives in the Impending Tariff Announcement While we saw a negative reaction in US equity/global equity futures and a rally in the USD to the headlines (on Friday) that we're set to see a reciprocal tariffs announcement this week, once we see the intel and dig into the weeds, the market may indeed see the situation in a more optimistic light. We understand that these 'reciprocal' tariffs will be implemented to address structural trade imbalances, but in the process, there could be an element of negotiations set to play out. Subsequently, those nations that may be subject to a new higher tariff rate to US buyers could respond before a deadline by lowering the tariff rate imposed on key US imports. Voila, this scenario could, over time, be seen as a net positive for global trade and promote a turnaround in market sentiment. China’s Tariffs Set to Kick In on Wednesday We also know that China’s 10-15% tariffs announced last week on a range of US imports are set to kick in on Wednesday. Yet, while markets haven’t been overly troubled by this if there is no firm dialogue between Xi and Trump by mid-week, then it may pose more of a risk to the recent rally and outperformance seen in HK/China equities. USDCNH also needs close attention, as the buyers are starting to regain control of the tape and where a rally back towards 7.3500 would likely see the USD appreciate on a broad basis. Copper is also one for the radar, with price pushing into $4.59 and the best level since October. The move reflective of concerns of a possible future tariff on US copper imports rather than on better growth dynamics, with metals traders pulling copper to Comex vaults and away from the LME. As such, many in the hedge fund community have been actively trading the CME-LME copper arb - i.e. long CME copper vs short LME copper. All the Gold to Comex Vaults Gold traders know the dynamic seen in the copper market only too well, with fears of impending Trump tariffs on gold imports resulting in another 3.28m troy oz of physical gold delivered to Comex vaults in the US last week. The scene in the London markets is clearly precarious, with a significant scarcity of physical gold leading to a spike higher in short-term lending rates and even in the borrowing rates in the GLD ETF. We see that stress in the paper market, with electronic claims trading at a decent discount to spot gold or futures pricing, with counterparty risk clearly on the rise. US CPI the Marquee Data Risk This Week Tariff risk aside, the focus falls on the US data flow, and notably on Tuesday’s US core CPI release. After an outsized reaction in US Treasuries, the USD and S&P500 futures on Friday to full 100bp jump to 4.3% in the University of Michigan 1-year inflation expectations survey, it’s clear the market has become just that bit more sensitive to right-tail risk and higher price pressures. With the median estimate from economists calling for US core CPI to come in at +0.3% m/m, a core CPI print that rounds up to 0.4% m/m may negatively impact risk and see the USD well bid. Conversely, a core CPI below 0.2% m/m could see the market's pricing for the next Fed cut brought forward from September to July, with relief buying seen in US equity with broad USD selling. Fed chair Powell will testify to the Senate on Tuesday and again to the House on Wednesday. I suspect increased interest will fall on Powell’s second testimony to the House, given it comes 90 minutes after the US CPI print – so, if the CPI print proves to be an outlier, then Powell may be probed by House representatives on the significance of the inflation outcome and how it would affect the Fed’s thinking. US PPI and retail sales will also garner attention from traders – but again, it may take a sizeable beat/miss vs consensus expectations to get markets pumping. UK Q4 GDP a Possible Market Mover There is little tier 1 data to worry traders too intently in Europe, the UK, China, Japan and Australia, with UK and EU Q4 GDP perhaps the highlight from these regions. GDP is not a data point I have trouble holding positions over, given the overly backwards-looking nature of the release – but given growth in both regions is so anemic, and UK GDP is expected to contract on the quarter, the GBP and EUR could be more sensitive this time around. GBPJPY looks especially interesting, with the spot rate closing at the lowest level since September 2024, with rallies likely to be limited and sold through the week and I remain skewed for lower levels. ASX200 Traders Eyeing CBAs’ Earnings In Australia, the countdown is on to the 18 Feb RBA meeting and the clear prospect of the first rate cut since 2020. With limited economic data out this week to influence market pricing on near-term rate cut expectations, the focus locally turns to ASX200 1H25 corporate reporting with JB Hi-Fi, CSL and CBA the highlights on the calendar this week. CBA (set to report on Wednesday) will be the single-greatest risk from earnings to the ASX200, not just because it has the largest weighing on the index, but with NAB, WBC and ANZ all reporting 1H25 numbers in May, CBAs earnings could influence the share prices of the other banks too. Local insto’s are all in on CBA, and it’s not hard to understand why, as the quality of the business is there for all to see. Valuation remains the primary concern for those wanting to put new money to work in the name and given the strong rally into earnings one suspects the bar to please the market is sufficiently elevated. That said, as long as 1H25 NPAT comes in around $5.1b, margins improve as expected, and the asset quality shows limited signs of deteriorating then pullbacks in the share price should be shallow, and depending on how the macro news flow impacts broad sentiment, CBAs share price and the ASX200 can push further higher. So, another big week for traders, with tariff headline risk and US CPI the obvious landmines to navigate. Good luck to all. #tariffs #Gold #CBA #CPI

The CME-LME copper arb all the rage once again .... with Trump's reciprocal tariff announcement due on Monday or Tuesday, and China's 10-15% tariff counter play to kick in on Wednesday, the HF community are all over this trade...

@PGTAnalytics who doesn’t love a good casino 🫶🏻

@heathmoss83 I guess its Friday and people can get a little excited, but just settle down bruv, take it down a notch.... consider a steak lunch with a punchy shiraz and watch the world go by

@heathmoss83 Folklore has it, when Heathy buys it can take 2 weeks to fill his order