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Clouds are gathering over the Nasdaq as concerns rise about the speed and cost of Chinese AI development, highlighted by Alibaba's new model outperforming American competitors. The Trump administration is reportedly considering restrictions on Nvidia's H20 chip exports to China, while inflation remains a key issue, with PCE inflation at 2.8%, complicating the Fed's outlook on rate cuts. Jobless claims fell to 207,000, reinforcing the Fed's cautious approach, with markets not anticipating further rate cuts before June, potentially impacting technology and other sectors.
Warren Buffett's Berkshire Hathaway has amassed a record $325 billion in cash, surpassing the combined reserves of major tech companies, as stock valuations soar. The S&P 500's price-to-earnings ratio is 67% above historical norms, prompting Buffett to adopt a cautious investment strategy, selling over $100 billion in stocks in 2024. This cash reserve serves as a safeguard against potential economic downturns, reflecting Buffett's commitment to fiscal conservatism.
Investors remain unimpressed following ECB President Christine Lagarde's rejection of Bitcoin as a potential reserve asset for eurozone central banks. Hopes are now pinned on US President Donald Trump, who is expected to unveil plans for strategic Bitcoin reserves. Attention is also on the upcoming PCE deflator data, which could provide crucial inflation insights, while Ethereum's price needs to surpass the $3,500 mark to aim for $4,000, with $3,700 acting as a potential resistance level.
Core PCE inflation, the Fed's preferred measure, remained stagnant at 2.8%, failing to progress towards the 2% target for five consecutive months. This lack of improvement has prompted a shift in rhetoric from Jerome Powell, and if upcoming figures show no change, investor disappointment may reinforce a "double top" technical pattern, potentially pushing prices closer to the 23.6% Fibonacci retracement level.
Three years ago, Raiffeisen shares were priced at EUR 24.78. An investment of EUR 1,000 would have resulted in 40,355 shares, now valued at EUR 870.06, reflecting a loss of 12.99%. Currently, Raiffeisen's total worth stands at EUR 7.12 billion.
The FTSE 100 has surged nearly 6% this year, surpassing 7,450 points, driven by optimism in cyclical companies following strong results from major US banks and Shell. With 75% of STOXX 600 companies exceeding sales estimates, the index is poised to target 9,000 points, contingent on maintaining support above 8,250 points. A pullback below this level could jeopardize the current bullish trend.
Felix Brill, Chief Investment Officer at VP Bank, highlighted ongoing concerns about inflation in the financial sector during a recent event at the TAK Theater in Schaan. The discussion focused on the fluctuations affecting various markets as the industry prepares for the challenges ahead in 2025.
US stock markets faced volatility amid key earnings reports and competition from China's AI advancements, while the ASX 200 reached a record high following a favorable inflation report. In the US, Q4 GDP growth was 2.3%, below expectations, and jobless claims fell to 207,000. The Federal Reserve maintained interest rates, while the European Central Bank cut its deposit rate. In Australia, inflation eased to 2.4%, prompting speculation of an interest rate cut by the RBA.
US inflation is on track for 2%, with the core PCE deflator rising 0.2% MoM and 2.8% YoY in December, while the employment cost index increased by 0.9% QoQ. However, President Trump's impending tariffs on Canadian and Mexican imports create uncertainty, prompting the Fed to maintain steady rates until the economic impact is clearer. The administration argues that tariffs may not be inflationary as reduced consumer spending could offset price increases on imports.
The ECB has cut key interest rates by 25 basis points, with the deposit rate now at 2.75%, citing a disinflation trend in the Euro Zone. Despite this move, inflationary pressures, particularly in the services sector, suggest that further rate cuts may be limited to one or two this year. The upcoming report on the neutral R* rate will provide additional insights into the ECB's future actions.
Inflation and Monetary Impact
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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