Trump Reversal on Greenland, NatGas, Uranium

Today’s focus turns to U.S. Q4 GDP. While backward-looking, a print near the 4.3% estimate, followed by the PCE price index (the Fed’s preferred inflation measure), would likely prompt markets to question whether further rate cuts are still justified. Recent U.S. data over the past two weeks has consistently surprised to the upside. OIS markets currently price around 44bp of rate cuts by year-end, even as Australia, New Zealand and Japan price hikes, and the ECB and SNB are priced to remain on hold. Any further strength in U.S. data could see these cut expectations unwound, pushing the 2-year Treasury yield higher and reinforcing support for industrial commodities.

Nat gas up another 13.1% today, 62% in 4 days, the largest ever move, as the severe cold snap hits U.S. (and specs stop out of shorts). (Chart 2, Bloomberg)

Uranium up 13 of the last 14 days, and another 4.2% today as Trumps says the U.S. is going heavy into nuclear energy. Nuclear & uranium stocks also jump.

KEN GRIFFIN: ALL GOVERNMENTS ARE SPENDING BEYOND THEIR MEANS

BofA Global Fund Manager survey is the most bullish since July 2021 (Chart 3, BofA Global Research). While cash levels among global investors last week reached their lowest level in the survey's history (since 1999). However, market rotation clearly continues, drawdowns from highs: Oracle -50%, Netflix -39%, Facebook -24%, Palantir -22%, Broadcom -21%, Microsoft -20%, Apple -15%, Nvidia -15%.

Strong Australian unemployment data sees the jobless rate fall from 4.3% to 4.1%.  The futures/OIS market prices 44bp RBA hikes by year end. AUDUSD &AUDJPY have been big recent winners.

Also, strong NZ data, PMIs beat expectations by multiple points, with manufacturing at 2021 and services at 2023 levels, and inflation has moved up from 2% to 3%. OIS prices 46bp hikes this year.

Data today: U.S. Q4 GDP. PCE prices, jobless claims.