Markets waver as Trump will give a remote speech iin Davos

Dow went up 231, advancers slightly ahead of decliners & NAZ gave back 42.  The MLP index held steady in the 321s & the REIT index added 1 to go over 400.  Junk bond funds were mixed & Treasuries had selling which raised yields.  Oil crawled higher in the 75s & gold dropped 20 to 2750.

Dow Jones Industrials

The return of Pres Trump to the White House has raised hopes for a surge of investment in the US economy, with several notable deals already announced in the lead up to Inauguration Day & since his 2nd term began.  The day after Trump began his 2nd term, Trump was joined by OpenAI CEO Sam Altman, Oracle Exec Chair & CTO Larry Ellison & Softbank CEO Masayoshi Son to announce a collaborative project known as Stargate that will focus on developing AM  artificial intelligence (AI) infrastructure.  Stargate will be financed with an initial tranche of $100B, which could rise to a total of $500B over the course of the project.  Earlier this month, DAMAC, an investment & property development company based in Dubai, United Arab Emirates, announced an investment of at least $20B in data centers in the US.  DAMAC founder & chair Hussain Sajwani said the company has been "waiting for years" to increase its investments in the US & added that it will expand its investment beyond that level if the market opportunity allows for it.  Last month, Softbank's Son held a press conference with Trump where they revealed a $100B investment in the US that aims to create 100K jobs in AI & other emerging industries.  During the announcement, Trump jokingly asked if Son would be willing to "make it $200 billion."  Son paused & replied, "I will try to make it happen," which prompted Trump to say, "Alright, 200," & left Son laughing as he called Trump "a great negotiator."  The influx of investments in the tech sector comes amid the rapid rise of AI & other emerging technologies that will help to shape the world economy in the decades ahead.

Prominent private sector investments mount amid Trump's return to the White House

Shares of American Airlines (AAL) are under pressure despite the airline's record revenue performance in its fiscal 4th qtr.  Revenue reached $13.7B, surpassing the forecast of $13.4B, with adjusted EPS of 86¢ topping the 65¢ forecast.   However, the airline's weaker-than-expected first qtr profit outlook disappointed traders, with the carrier projecting a loss between 20 - 40¢ per share.  AAL is catching up to leading competitors, though markets are apprehensive about the first quarter guidance.  It's all about lower capacity, which means higher costs.  The stock fell 1.37 (7%).

American Airlines posts Q4 beat, weak Q1 guide pressures stock

Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report.  The share of active holders just making baseline payments on their cards jumped to a 12-year high, data thru the 3rd qtr of 2024 shows.  The level rose to 10.75% for the period, part of a continuing trend that began in 2021 & has accelerated as average interest rates have soared & delinquencies also have accelerated.  The increase also marked a series high for a data set that began in 2012.  Along with the trend in minimum payments came a move higher in delinquency rates.  The share of balances more than 30 days past due rose to 3.5%, an increase from 3.2%, for a year-over-year gain of more than 10%.  It also is more than double the delinquency level of the pandemic-era low of 1.6% hit in the 2nd qtr of 2021.  The news counters a general narrative of a healthy consumer  who has kept on spending despite inflation hitting a more than 40-year high in mid-2022 & holding above the Fed's 2% target for nearly 4 years.  To be sure, there remain plentiful positive signs.  Even with the rising delinquency rate, the pace is still well below the 6.8% peak during the 2008-09 financial crisis & not yet indicative of serious strains. “A lot remains unknown. We’ve seen in the past few days how quickly things might be changing,” said Elizabeth Renter, senior economist at personal finance company NerdWallet.  “The baseline expectation is consumers in aggregate economywide will remain strong.”  Adjusted for inflation, consumer spending rose 2.9% on an annual basis in Nov, according to Goldman Sachs, which noted that it sees consumers as “a source of strength” in the economy.  The firm estimates that consumer spending will slow some in 2025, but still grow at a healthy 2.3% real rate this year, & Goldman sees delinquency rates showing signs of leveling.  However, if the trend of solid consumer spending holds, it will come against some daunting headwinds.  Average credit card rates have climbed to 21.5%, about 50% higher than 3 years ago, according to Fed data.

A record number of consumers are making minimum credit cards payments as delinquencies also rise

Stocks drifted, easing back on a bid for fresh records as AI optimism waned & investors watched for any remarks on tariffs as Pres Trump spoke remotely at the World Economic Forum in Davos.  The S&P 500 rose 0.1%, coming off a 3-day win streak that saw the benchmark index close yesterday on the cusp of setting a new all-time high & the traded 0.3% higher, with a record not far off.  Investors are still digesting Trump's early-days policy charge, which brought an AI push that invigorated tech names but left unclear when the outlined tariffs on big trading partners, a risk for inflation & stocks, might hit.  The focus turned to Trump's remote speech at the World Economic Forum in Davos for more insight into his trade policy.