The consensus on January's inflation in the United States missed the mark. Data published yesterday showed prices ticked up slightly more than anticipated, leaving the market yearning for a more predictable outcome or, better yet, a gentler rise.

Today, January producer prices rose by 0.4% on a monthly basis, while a 0.3% gain was expected by analysts. On a yearly basis, they grew 3.5% instead of 3.3% expected. yet futures for the S&P 500 Index increased by 0.2%, Dow Jones Industrial Average futures also rose 0.2%, and Nasdaq futures increased by 0.3%.

Despite inflation being the market's biggest worry, the reaction isn't as dire as one might expect. This begs the question: are the stock markets unsinkable?

The short answer is no, but they are certainly proving to be quite resilient. To illustrate the situation as of February 13, let’s use an analogy. When inflation data suggests higher interest rates in the U.S., it's akin to waking up after a night of partying. Initially, markets open with a headache, prices dropping as investors react. As the day progresses, there's a slight recovery—akin to a market taking a breather. But by the end of the session, the initial jitters return, and indices dip once more. In market terms, this means a volatile day with a rollercoaster of ups and downs, ultimately ending on a low note.

I crafted the hangover analogy the night before, mind you, not experienced. It usually fits like a glove, but not this time. Today's session is up to a good start, and yesterday's Wall Street session ended rather flat.

Why? For several reasons. First, because Donald Trump did not unleash his 'reciprocal tariffs' on the world. On Sunday, the market was on edge, bracing for a Monday announcement. Monday rolled into Tuesday, and by Tuesday, everyone was convinced Wednesday would be the day. But then, nothing happened. And nothing today either. Instead, the President of the United States turned his attention to the war in Ukraine, tackling it with his characteristic vigor. He promptly arranged a meeting with Vladimir Putin to discuss the situation, bypassing Volodymyr Zelensky entirely. Zelensky, understandably, was left feeling sidelined. It's never pleasant to be the third wheel in a two-person conversation. Or perhaps the fourth, as Trump also brushed aside the European contingent with ease. 

The prospect of a negotiated end to the conflict in Ukraine, the suspension of reciprocal customs duties and the abandonment of hopes of a short-term rate cut in the United States have given rise to this bizarre in-between state in the financial markets. US bond yields have risen, logically, but the dollar has fallen against the euro, which has been boosted by the prospect of calm at its borders. Gold has risen (the risk remains present) while oil has fallen (an end to the conflict in Ukraine would ease the energy market).

The numerous corporate earnings always trigger exorbitant reactions, such as the more than 14% surges in CVS Health and Heineken yesterday. There will be another batch of quarterly reports today, pending the publication of the US producer price index early in the afternoon. To finish with the macroeconomic news, Donald Trump has nevertheless officially promised that he will announce the famous reciprocal tariffs today or tomorrow.

Nevertheless, everything is green this morning in Asia Pacific. Japan is up 1.4%, Hong Kong is up 2.2%, South Korea 0.7% and India 0.6%. Gains are more fragile in Australia and Taiwan. European indices are bullish, apart from the FTSE 100 and the AEX.

Today's economic highlights:

On the calendar today: Producer Price Index from Japan, the Consumer Price Index from Germany, both EU-harmonized and national, the GDP from the United Kingdom, the Consumer Price Index from Switzerland, the industrial production from the eurozone, US new unemployment claims and the final demand Producer Price Index. See the full calendar here.

  • Dollar: EUR: 0.9620 GBP: 0.8019
  • Gold: US$2,908
  • Crude Oil (BRENT): $74.19 WTI: $70.37
  • Rate United States 10 years: 4.56%
  • BITCOIN: US$965,900

In corporate news:

  • Elon Musk: May withdraw his $97.4 billion bid to acquire OpenAI's non-profit arm if it does not transition to a for-profit entity, and is concurrently developing a rival AI chatbot, Grok 3, amidst other global business developments including partnerships and layoffs involving other companies.
  • Reddit: Q4 revenue surpassed expectations at $427.7 million, despite a miss in daily active user growth and a subsequent 13-14% drop in shares, influenced by a Google algorithm change. The company projects a Q1 revenue forecast above analyst consensus and aims to improve gross margins through revised hosting agreements.
  • Cisco systems: Reported a rise in fiscal Q2 non-GAAP net income to $0.94 per share and revenue of $13.99 billion, leading to an increased full-year revenue outlook for FY25 and a higher dividend, amid strong demand for cloud networking gear driven by an AI boom, even as President Gary Steele announced his departure.
  • Apple: Faces regulatory scrutiny in Germany over its app tracking tool while partnering with Alibaba to integrate AI features in iPhones in China, which has boosted Alibaba's shares and influenced tech stock movements.
  • Alphabet: Google has seen the departure of its second India policy head, Sreenivasa Reddy, in recent years, and is also forming an AI partnership with Poland, amidst various industry developments including Apptronik's significant funding for AI robots, Anthropic's new leadership in Zurich, changes to the European Commission's Digital Services Act, and Paramount Global's channels being dropped from YouTube TV due to a contract dispute.
  • Datadog: Reported strong Q4 earnings and revenue that surpassed expectations, but provided lower-than-expected guidance for Q1 and full-year 2025, alongside news of a significant insider share sale.
  • Hanesbrands: Reports fiscal Q4 earnings that beat expectations, forecasts lower-than-expected sales and EPS for fiscal 2025, and announces CEO Steve Bratspies' planned departure at the end of 2025 alongside a leadership succession plan.
  • Deere & company: US stock futures are subdued following an inflation shock, while the company reports a significant drop in Q1 profits and revenues due to weak farm income, high borrowing costs, and slumping sales, despite some earnings surpassing estimates.
  • Robinhood markets: Reports strong Q4 earnings and revenue growth, driven by increased trading in equities, options, and cryptocurrencies following Donald Trump's return to the White House, with plans for continued double-digit revenue growth and an expanding loan book.
  • Mgm resorts international: Exceeded expectations in Q4 with a revenue of $4.35 billion and adjusted EPS of $0.45, surpassing FactSet estimates, despite a decrease in EPS from the previous year, leading to a 9% rise in share price post-announcement.

Analyst Recommendations:

  • At&T Inc.: BNP Paribas Exane upgrades to outperform from neutral with a target price raised from USD 22.50 to USD 28.50.
  • Cvs Health Corporation: Leerink Partners upgrades to outperform from market perform with a price target raised from USD 55 to USD 75.
  • Cytokinetics, Incorporated: Morgan Stanley upgrades to overweight from equal weight with a target price reduced from USD 70 to USD 67.
  • Dell Technologies Inc.: Zacks downgrades to underperform from neutral with a target price of USD 118.
  • Dupont De Nemours, Inc.: Barclays upgrades to equalweight from underweight with a target price raised from USD 85 to USD 89.
  • Gilead Sciences, Inc.: DZ Bank AG Research upgrades to buy from hold with a price target raised from USD 99 to USD 108.
  • Hubspot, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 920.
  • Jazz Pharmaceuticals Plc: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 130 to USD 170.
  • Olin Corporation: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 41 to USD 33.
  • Paramount Global: Zacks upgrades to neutral from underperform with a target price raised from USD 9 to USD 11.
  • Pultegroup, Inc.: Zacks downgrades to underperform from neutral with a price target reduced from USD 118 to USD 91.
  • The Coca-Cola Company: DZ Bank AG Research upgrades to buy from hold with a price target raised from USD 70 to USD 75.
  • Applovin Corporation: Wolfe Research maintains its outperform recommendation and raises the target price from USD 370 to USD 550.
  • Biogen Inc.: TD Cowen maintains its buy recommendation and reduces the target price from USD 275 to USD 200.
  • Bunge Global Sa: HSBC maintains its hold recommendation with a price target reduced from 105 to USD 80.
  • Cisco Systems, Inc.: Piper Sandler & Co maintains a neutral recommendation with a price target raised from 57 to USD 72.
  • Coty Inc.: Grupo Santander maintains its outperform recommendation and reduces the target price from USD 12 to USD 8.50.
  • Doordash, Inc.: Huatai Research maintains its buy recommendation and raises the target price from USD 183.10 to USD 223.
  • Dutch Bros Inc.: Gordon Haskett maintains its buy recommendation and raises the target price from USD 57 to USD 86.
  • Robinhood Markets, Inc.: JMP Securities maintains its market outperform recommendation and raises the target price from USD 60 to USD 77.
  • Spotify Technology S.a.: CITIC Securities Co Ltd maintains its buy recommendation with a price target raised from 520 to USD 686.
  • Super Micro Computer, Inc.: CJS Securities maintains its market outperform recommendation with a target price raised from 40 to USD 73.
  • The Boston Beer Company, Inc.: Deutsche Bank maintains its hold recommendation with a price target reduced from 283 to USD 225.
  • The Trade Desk, Inc.: Guggenheim maintains its buy recommendation and reduces the target price from USD 150 to USD 110.