TRUMP: CONSIDERING SENDING A SECOND AIRCRAFT CARRIER TO THE MIDDLE EAST: INFINITYHEDGE

TRUMP: EITHER WE MAKE A DEAL, OR WE’LL HAVE TO DO SOMETHING VERY TOUGH, LIKE LAST TIME

TRUMP SAID HE EXPECTS THE SECOND ROUND OF U.S.-IRAN TALKS TO TAKE PLACE NEXT WEEK: AXIOS

JAN NFP PREVIEW: INFINITYHEDGE

CONSENSUS: +65K
HIGH: +135K
LOW: -10K

BBG: 0k (?)
GS: 45K
JPM: 70k

S&P 500 reaction:
>110k: -0.5 to -1%
60k to 100k: +0.25% to 1%
30K to 60k: ±0.25%
<30k: -0.5% to -1.25%

JPM: We think the print falls in the Goldilocks zone, but one that is too hot will trigger a repricing of the yield curve higher and the elevated bond vol likely produces a down day for stocks, and one that is too cool will have the market on edge that the Fed is late to resuming its easing cycle and with Powell unlikely to cut before his term as Fed Chair ends, means that first cut would be in June.

GS: We estimate that the unemployment rate was unchanged at 4.4% in January, but we see the risks as skewed to a decline: the bar for rounding down to 4.3% is not high from an unrounded 4.38% in December and the January unemployment rate appears to suffer from modestly negative residual seasonality (the unrounded unemployment rate has declined in each of the last three Januarys).

BBG & GS both estimate that the updated birth-death model could contribute to fewer jobs

*BLS will also release it's final benchmark revisions, and BBG expect that almost 1M jobs erased between 2024 and 2025: infinityhedge

Views from Trump Adminstration ahead of NFP release:
*TRUMP: OUR EMPLOYMENT NUMBERS ARE REALLY GOOD
*HASSETT: LOWER JOBS NUMBERS SHOULDN'T TRIGGER PANIC
*NAVARRO: WE HAVE TO REVISE OUR EXPECTATIONS DOWN SIGNIFICANTLY FOR WHAT A MONTHLY JOB NUMBER SHOULD LOOK LIKE

*US JAN. NONFARM PAYROLLS RISE 130K M/M; EST. +65K
*US JAN. UNEMPLOYMENT RATE 4.3%; EST. 4.4%

*US JAN. TWO-MONTH PAYROLL NET REVISION SUBTRACTS 17,000

*US ANNUAL BENCHMARK REVISION SUBTRACTS 862K JOBS; EST. -825K

*US JAN PRIVATE SECTOR PAYROLLS +172K AND GOVERNMENT PAYROLLS -42K

TRADERS FULLY PRICE IN FED RATE CUT BY JULY VS JUNE PREVIOUSLY

US Treasuries Slump Across Maturities After Jobs Data

January saw the first increase in manufacturing payrolls since September 2024

Morgan Stanley’s Michael says this report is “largely the real deal.” The economist adds that the average hourly earnings number suggests that these are quality jobs that were created.

Goldman Sachs: an upside surprise in the CPI on Friday could tilt the balance of risks in a hawkish direction

PENTAGON PREPARES SECOND AIRCRAFT CARRIER TO DEPLOY TO MIDDLE EAST, SOURCES SAY -- WSJ

ORDER TO DEPLOY COULD BE ISSUED IN A MATTER OF HOURS: WSJ

⚠️ UPDATE: WORLD’S LARGEST AIRCRAFT CARRIER USS GERALD R. FORD ORDERED TO DEPLOY IMMEDIATELY TO THE MIDDLE EAST FROM CARIBBEAN, IT WILL TAKE ABOUT 10 DAYS TO REACH: INFINITYHEDGE

U.S. JAN CPI PREVIEW: INFINITYHEDGE

Forecast:
*headline: 0.26% vs 0.31% M/M prev.
*headline: 2.5% vs 2.7% Y/Y
*Core CPI: 0.34% vs 0.24% M/M
*Core CPI: 2.5% vs 2.6% Y/Y

SPX rxn on Core MoM:
> 0.45%: -1.25% to -2.5%
0.4 to 0.45%: -0.7% to +0.2%
0.3 to 0.4%: +0.25% to 1.5%
< 0.3%: +1.2% to 1.7%

Citi Recommends Betting on Higher US Inflation

*US JAN. CONSUMER PRICES RISE 0.2% M/M; EST. +0.3%
*US JAN. CONSUMER PRICES RISE 2.4% Y/Y; EST. +2.5%
*US JAN. CORE CPI RISES 0.3% M/M; EST. +0.3%
*US JAN. CORE CPI RISES 2.5% Y/Y; EST. +2.5%

One caveat with Jan’s data is that it usually comes in hot compared to other months of the year. In fact, researchers at the Fed calculated in a study last week that Jan’s avg inflation rate since 1985, once seasonally adjusted, was 0.03% higher than at any other point in a given year. This likely going to prompt officials at the Fed to call for more data to gain greater clarity on how inflation is faring. Unless there is a dramatic shift in the economic outlook in the intervening weeks, officials at the FED are likely to once again hold rates steady at that meeting, extending a pause in cuts that began last month

Happy Chinese New Year

- infinityhedge

TWITTER (X) DOWN: INFINITYHEDGE

The Week Ahead: infinityhedge

Tue:
*Saylor expected announce another BTC purchase
*Lunar New Year begins, marking the Year of the Horse
*Iran-US negotiations will take place in Geneva

Wed:
*FOMC Minutes
*FTX will begin repaying creditors

Thu: Trump set to unveil his reconstruction plan for Gaza

Fri:
*China: interest rate decision
*U.S. Q4 GDP
*U.S. PCE
*Supreme Court potential Opinions on Trump’s tariffs

TBA/Whole Week: Middle East

ICYMI:
*South Koreans Bail on Crypto: Monthly trading value on the Kospi surged 221% in Jan from a year earlier. Over the same period, trading on Korean crypto exchanges fell about 65%.
*Option Trading on IBIT ETF Hit Record Amid Crash
*Banks have formalized their opposition to giving crypto firms direct access to the Fed’s payment systems
*Canada’s Carney constructs a mega anti-Trump trade alliance, EU and CPTPP bloc are opening talks to explore proposals to form one of the largest global economic alliances
*US conducts first air transport of small nuclear reactor

https://infinityhedge.substack.com/p/the-7-days-31a

KHAMENEI: MORE DANGEROUS THAN A US WARSHIP IS THE WEAPON THAT CAN SEND IT TO THE BOTTOM OF THE SEA: INFINITYHEDGE

IRAN'S KHAMENEI: US PRESIDENT SAYS THEIR ARMY IS THE WORLD'S STRONGEST, BUT THE STRONGEST ARMY IN THE WORLD CAN SOMETIMES BE SLAPPED SO HARD, IT CANNOT GET UP

Amazon Web Services experienced a 13-hour interruption to one system used by its customers in mid-December after engineers allowed its AI coding tool to make certain changes

The agentic tool determined that the best course of action was to “delete and recreate the environment”.

Amazon blamed ‘user error, not AI error’ for incident in December involving its Kiro tool: FT

“Following the December outage, AWS implemented numerous safeguards”, including mandatory peer review and staff training, Amazon added: infinityhedge

TETHER'S USDT SUPPLY SET FOR BIGGEST MONTHLY DECLINE SINCE FTX COLLAPSE: INFINITYHEDGE

*US DEC. PCE PRICE INDEX RISES 0.4% M/M; EST. +0.3%
*US DEC. PCE PRICE INDEX RISES 2.9% Y/Y; EST. +2.8%
*US DEC. CORE PCE PRICE INDEX RISES 0.4% M/M; EST. +0.3%
*US DEC. CORE PCE PRICE INDEX RISES 3% Y/Y; EST. +2.9%

TRUMP SAYS HE IS CONSIDERING LIMITED STRIKE ON IRAN

TRUMP’S GLOBAL TARIFFS STRUCK DOWN BY US SUPREME COURT

SUPREME COURT STRIKES DOWN THE BULK OF PRESIDENT TRUMP’S TARIFFS

COURT HOLDS THAT IEEPA DOES NOT AUTHORIZE THE PRESIDENT TO IMPOSE THE TARIFFS

SUPREME COURT DOES NOT ADDRESS ELIGIBILITY FOR TARIFF REFUNDS: INFINITYHEDGE

IEEPA TARIFFS ARE ~70% OF CURRENT TARIFF REVENUE. OTHER TARIFFS REMAIN IN PLACE

TRUMP: I HAVE A BACKUP PLAN FOR TARIFFS

Bessent said in December they could “recreate the exact tariff structure” through those other authorities, but acknowledged that the “IEEPA authority gave the president and our team much more negotiating room

TRUMP'S OTHER OPTIONS:

Trump has at least five fallback options to impose tariffs in different ways. In general, these alternatives come with more limits and procedural restrictions, meaning there’s less leeway for Trump to impose tariffs virtually immediately and set the rates as high as he chooses.

* Trump used Section 232 to set tariffs on steel and aluminum imports in 2018 during his first term in office

* Trump used Section 201 to place tariffs on imports of solar cells and modules, as well as residential washing machines in 2018.

* Trump used Section 301 to impose tariffs on imports from China in 2018

* Section 122 & 338 has never been used before: INFINITYHEDGE

GS: This won’t be the end of tariffs…trump will almost certainly roll out other legal frameworks. Net result is probably slightly fewer tariffs, materially more trade uncertainty, & some incremental deficit concerns. Net-net, that’s mildly supportive for equities & mildly -ve for bonds… but largely priced for both

TRUMP: I HAVE TO DO SOMETHING ABOUT THE COURTS

TRUMP PREPARED CONTINGENCY PLANS INCLUDING POTENTIAL ACROSS-THE-BOARD TARIFFS

SECTION 122 COULD ALLOW 15% BASELINE TARIFF FOR 150 DAYS WITHOUT CONGRESSIONAL APPROVAL

SECTION 122 FROM 1974 TRADE ACT HAS NEVER BEEN INVOKED BY ANY PRESIDENT: INFINITYHEDGE

TRUMP: 10% GLOBAL TARIFF TO BE IMPOSED ON TOP OF OTHER TARIFFS UNDER SECTION 122 FOR A PERIOD OF ABOUT 5 MONTHS EFFECTIVE STARTING THREE DAYS FROM NOW: INFINITYHEDGE

TRUMP ON TARIFF REFUNDS: WE'LL BE IN COURT FOR NEXT FIVE YEARS

ALL COUNTRIES WITH TRADE AGREEMENTS NOW DROP TO A 10% TARIFF RATE

JPM: IEEPA tariffs struck down Replaced with Section 122 tariff....many trade deals negotiated to date have relied on IEEPA tariffs and have not yet been formalized as trade agreements. With the legal basis for these tariffs now invalidated, the fate of these deals is in question. These may need to be renegotiated

UPDATE: TRUMP SAID HE WILL INCREASE GLOBAL TARIFFS TO 15% FROM 10% (MAXIMUM ALLOWED IN THE SECTION)