OPENING CALL

Stock futures were stalling early Tuesday as the market grapples with possible repercussions from any tariffs imposed by Donald Trump.

Trump quashed reports in the Washington Post on Monday that he would pare back plans to introduce across-the-board tariffs on imports when he takes office later this month.

While such taxes might help some companies that would benefit from foreign firms becoming less competitive in the U.S., on balance the tariffs will probably hurt stocks.

Treasury yields were a fraction lower ahead of a busy few days of economic data, including the November job openings report on Tuesday, the December ADP report and weekly initial jobless claims on Wednesday, and the December nonfarm payrolls report on Friday.

Stocks to Watch

Amesite intends to offer and sell shares of its common stock in a best efforts underwritten public offering. Shares fell 19%.

M-tron Industries received a more than $10 million order from a Defense Department contractor. Shares went up 10%.

MultiSensor AI Holdings reshuffled its executive team in a move that it said is in preparation for rapid growth. Shares rose 40%.

Nvidia unveiled a slew of new AI products at a consumer-electronics showcase in Las Vegas yesterday evening. Shares rose about 1%. Chip stocks including Micron Technology and Marvell Technology also rose.

Stryker and Inari Medical agreed to buy medical technology maker Inari in a deal worth $4.9 billion. Shares of Stryker fell 1%, Inari's stock rose 20%.

Shares in Tencent and CATL fell 7.3% and 2.8% respectively after the Pentagon added them and others to a list of firms designated military in nature.

Uber said late Monday it was working with Nvidia to develop autonomous-driving technology. Uber's shares climbed 3%.

Economic Insight

China's GDP growth likely picked up in the fourth quarter of 2024, thanks to Beijing's stimulus push, according to economists polled by The Wall Street Journal.

The Chinese economy likely grew 5.1% from a year ago in the October-December period, accelerating from the previous quarter's 4.6% expansion.

That would mean the world's second-largest economy met its official growth target of around 5% for 2024, the polled economists say.

They expect Beijing to set the same goal this year. China's statistics bureau is set to release the data next Friday.

Watch For:

Trade for November; Canada Trade for November; speech by Fed's Barkin

Today's Top Headlines/Must Reads:

-Pentagon Labels More Chinese Companies as Military in Nature

-Debt-Ceiling Fight Has New X Factor: Trump

-These EV 'Battery Belt' Towns Are Betting Trump Won't Ditch Them

-Can Boeing Be Fixed? Aerospace Leaders Offer a Repair Manual

MARKET WRAPS

Forex:

The dollar stayed weaker even after Trump denied that his proposed trade tariffs could be less stringent than previously planned.

The dollar's failure to recover its losses likely indicates an adjustment in positioning following the currency's three-month rally, ING said.

It could also reflect the view that there is "no smoke without fire and that the contents of that Washington Post report sounded sensible."

The dollar could see slightly more position rebalancing and consolidation in the near-term, according to ING.

The euro briefly pared gains against the dollar after the latest eurozone inflation data came in line with expectations.

Eurozone inflation rose to an annual rate of 2.4% in December from 2.2%, as forecasts by economists in a WSJ survey. Core inflation held at 2.7%, as expected.

Some analysts saw the potential for the data to exceed expectations after higher-than-expected German inflation data on Monday.

The Canadian dollar rose after Mark Carney said he was considering joining the leadership race for Canada's Liberal party after Prime Minister Justin Trudeau resigned Monday.

"Carney would be the most market-friendly candidate, but the domestic political shake-up will be insufficient to drive USD/CAD materially lower by itself," ING said.

Bitcoin rose back above $100,000 as it regains momentum ahead of Trump's January 20 inauguration.

Bonds:

Treasury yields have remained steady near their recent high but volatility is expected to increase near term ahead of Trump's inauguration on Jan. 20., DHF Capital S.A said.

"Volatility is expected to increase in the coming weeks, potentially impacted by Trump's inauguration and the Fed's upcoming rate decision [on Jan. 29]."

Persistent inflation risks and the Fed's hawkish outlook may continue to support both U.S. yields and the dollar, DHF Capital added.

Energy:

Oil edged lower likely due to a technical correction and weaker global economic news, but prices are still supported by colder weather forecasts and concerns over Russian and Iranian supply.

Both benchmarks settled lower on Monday, ending a five-session winning streak after orders for U.S. manufactured goods fell in November and German inflation rose further above the ECB's target.

"The move higher in crude oil prices appears to be running out of momentum," ING said.

"While there has been some tightening in the physical market, fundamentals through 2025 are still set to be comfortable, which should cap the upside."

European natural-gas prices eased further.

"Now that the market has confirmation of the stoppage of Russian pipeline flows through Ukraine, speculators who built a record net long through last year could be starting to take some risk off the table," ING said.

Metals:

Gold futures rose, though they remain broadly rangebound in thin trading.

Gains may be modest in recent weeks, but increased buying flows are likely to come, as investors seek portfolio protection from incoming tariff hostilities, Pepperstone said.

While Trump's proposed tariffs are firmly priced into the market, the size and scope of counter-responses and retaliatory measures are less clear, Pepperstone added.

Canada could preannounce a list of U.S. goods that will face retaliatory tariffs and China is doubtless preparing for the worst.

While it remains to be seen how each party ultimately reacts, it could create a new level of noise and uncertainty that could see higher market volatility and push gold back toward $2,800.

Copper and aluminum prices went up.

Copper is very vulnerable to global macroeconomic events, though the market should enter a deficit from the end of 2025, which would boost prices , Deutsche Bank said.

Base Metals Outlook

There's a mixed picture for base metals prices in the months ahead, according to Morgan Stanley.

"Into Q2, we see upside to copper and zinc prices, are more neutral on nickel and aluminum, and are cautious on lead."

For copper and zinc, tight supplies of concentrate are expected to keep a lid on refined metal production. For nickel, the supply outlook hinges on policy in Indonesia.

In that market, "the balance could tighten meaningfully if we don't see additional quotas."

Morgan Stanley said the lead market is likely to record a surplus in 2025, after a likely surplus last year.


TODAY'S TOP HEADLINES


Microsoft Plans to Invest $3 Billion on AI, Cloud Infrastructure in India

Microsoft plans to spend $3 billion over the next two years to expand its cloud and artificial-intelligence infrastructure in India, the latest in a string of investment pledges by U.S. tech giants amid booming AI computing needs.

Microsoft Chief Executive Satya Nadella said at an event in Bengaluru, India, on Tuesday that the investment marks the company's single largest expansion in the country to date.


Phillips 66 to Buy EPIC NGL for $2.2 Billion

Phillips 66 said it would buy EPIC NGL for $2.2 billion in a deal to help the Houston oil refiner grow its Permian midstream business.

The agreement for EPIC-which owns various subsidiaries and long-haul natural gas liquids pipelines, fractionation facilities and distribution systems-consists of two fractionators near Corpus Christi, Texas; approximately 350 miles of purity distribution pipelines; and an approximately 885-mile natural gas liquids pipeline that links production supplies in the Delaware, Midland and Eagle Ford basins to refinery complexes, Phillips said Monday.


McDonald's is retreating from diversity goals. An HR group says to expect more pressure this year.

After a broader corporate retreat from diversity goals last year, McDonald's Corp. on Monday became the first big company to do so this year, citing a 2023 Supreme Court ruling and other companies rethinking their equity programs.

The burger chain, in a message to employees and suppliers on Monday, said it was "retiring" setting representational goals and would instead focus on "continuing to embed inclusion practices that grow our business into our everyday process and operations." McDonald's MCD also said it would pause "external" diversity surveys to focus on internal efforts to expand the business.


U.S. Steel, Nippon Steel Challenge Biden's Move to Kill $14.1 Billion Deal

U.S. Steel and Nippon Steel filed a pair of lawsuits Monday accusing President Biden, the president of the steelworkers union and the chief executive of a rival company of conspiring to scuttle their $14.1 billion tie-up.

Biden on Friday rejected Nippon Steel's purchase of the storied American steelmaker, citing national-security concerns.


Your Fancy, New ETF Might Be a Little Too Fancy

History teaches that financial complexity always creeps upward. Lately that trend has reached investor-friendly exchange-traded funds.

Last year, U.S.-based ETFs broke a record, surpassing $1 trillion in total inflows. They are cheap, liquid and, crucially, far more tax-efficient than traditional mutual funds. If you want to hold stocks and bonds, the flagship trackers from industry giants BlackRock, Vanguard and State Street Global Advisors already do the trick for very low fees. It is tough, and not especially rewarding, to compete with those industry behemoths head-on.


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