BentinPartner Weekly
Dear Reader,
Please find below our latest Weekly Trend Report.
Have a nice start of the week.
Marc Bentin,
Bentinpartner GmbH
US stocks paused last week trading in a lack luster and trend-less fashion on all three major indices with MAG7 underperforming and the rest of the tape enabling the indices to keep an apparent composure. Europe (and SUPER 7 referenced below) outperformed US stocks while Chinese stocks squeezed higher but in relative indifference despite optimism about DeepSeek’s “supercheap” potential comparative advantage.
In contrast, last week, most US AI names underperformed even as (or perhaps increasingly because) big actors revealed massive further spending plans in the AI space. Chinese tech stocks valuation is currently trading at the bottom end of its historical range as China internet software names trade at 10–15 times earnings vs. large US software names trading at around 25–40 times earnings. ChatGPT currently valued at USD157bn vs. Alibaba current USD245bn valuation does not even give a valuation to Qwen (BABA’s AI model that outperform Deepseek), nor multiple rerating for its cloud business, analysts noted.
Last Friday, the US job report was mixed with nonfarm payrolls climbing by 143,000 (vs. 169,000 expected) with the December job creation revised higher (at 307’000).
However, average hourly earnings growth remained above inflation (+0.5% MoM and 4.1% YoY) while the unemployment rate ticked down to 4% which, combined with the University of Michigan expectations of inflation 1 year forward coming at 4.3% (from 3.3% expected and last) showed consumers expect prices to rise much faster with D. Trump moving forward with tariffs. This inflation picture inflicted some negative spin on bonds late last week as it also comforted the Fed in its “wait and see” mode but US 10 Y yields still closed the week -4 bps lower at 4.49% (underperforming a sharper -9bps move lower seen in EU 10Y yields).
US crude oil dropped for a third week, under pressure by President D. Trump who repeated his intention to drive oil prices down by increasing local production.
Gold was the only asset whose trend remained unquestionably higher, supported by geopolitical concerns, solid central banks (especially Chinese) demand and supply delivery tensions at the Comex due to tariffs, at the same time as BoA noted that global investors allocation to Gold remain extremely low at 0.2% of total AUM. The delivery notices on February Comex Gold futures which total 3 million troy ounces of gold are the second largest ever according to data going back to 1994 with fears of imminent tariffs on imports causing prices for gold futures on Comex to surge over spot prices in London (and borrowing rates on silver climbing over 13%).
On Thursday, Panama’s President rejected as ‘lies’ a US statement that Panama had agreed to allow American warships to transit the Panama Canal free of charge. President José Raúl Mulino said the bilateral relationship with Washington could not be conducted based on ‘lies and falsehoods’. ‘This is intolerable, simply intolerable,’ he said at a weekly news conference. Mulino’s comments came a day after the US State Department said that Panama’s government had agreed to stop charging fees for US government vessels passing through the strategic waterway… ‘This saves the US government millions of dollars a year,’ the department said...
Earlier last week, threats of tariffs against Colombia, Canada and Mexico ended with Trump backing off, following concessions on areas of policy unrelated to trade (immigration and drug). The economic impact of tariffs might prove minor if they are merely a negotiating tactic to extract non-trade-related concessions. But if they become a permanent feature of U.S. policy, they'll have a more lasting impact on the economy, markets, and business decision-making, Axios noted.
President D.Trump on Friday said he would be announcing tariffs this week, matching duties imposed by other countries, shifting from a previous threat to impose an across-the-board tariff on all imports from across the world. ‘I’ll be announcing that next week, reciprocal trade, so that we’re treated evenly with other countries,’ he told reporters… ‘We don’t want any more, any less.’ Trump, who said the tariffs would apply to every country, added that the announcement would likely come ‘Monday or Tuesday.’
D. Trump also proposed the US taking over the Gaza Strip and assuming responsibility for reconstructing the territory during a press conference with Israeli Prime Minister Benjamin Netanyahu.
According to three senior Jordanian officials, Jordan's King Abdullah (who will meet with Trump tomorrow) issued a stark warning that D. Trump’s declared intention to re-settle Palestinians from Gaza in Jordan is a recipe for radicalism that would spread chaos through the Middle East and jeopardize the Kingdom’s peace with Israel and even threaten the country’s very survival.
The Kremlin said contacts between the U.S. and Russia had taken place and recently intensified, the first time Moscow has indicated the two countries are discussing a potential plan to end fighting in Ukraine.
Over the past week, the S&P500 dropped -0,2% (2,5% YTD) while the Nasdaq100 gained 0,1% (2,3% YTD). The US small cap index dropped -0,2% (2,3% YTD). AAPL sold off by -3,5% (-9,1%).
The Equally Weighed SP500 dropped -0,6% (2,8% YTD), underperforming the S&P500 by-0,4%. The median SP500 YTD return closed the week at 2,8%.
Cboe Volatility Index gained 0,7% (-4,7% YTD) to 16,54.
The Eurostoxx50 gained 0,7% (8,7%), outperforming the S&P500 by 0,9%.
Diversified EM equities (VWO) gained 1,1% (1,9%), outperforming the S&P500 by 1,3%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -0,3% (0,0%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,4% (0,8%).
10Y US Treasuries rallied -4bps (-7bps) to 4,49%. 10Y Bunds dropped -9bps (1bps) to 2,37%. 10Y Italian BTPs rallied -9bps (-6bps) to 3,47%, matching Bunds.
US High Yield (HY) Average Spread over Treasuries climbed 3bps (-23bps) to 2,64%. US Investment Grade Average OAS climbed 4bps (3bps) to 0,90%.
In European credit markets, EUR 5Y Senior Financial Spread was unchanged (-5bps) to 0,59%.
Gold rallied 2,2% (9,0%) while Silver gained 1,6% (10,1%). Major Gold Mines (GDX) rallied 4,9% (20,5%).
Goldman Sachs Commodity Index gained 0,5% (3,3%). WTI Crude sold off by -2,1% (-1,0%).
Overnight in Asia…
S&P future +13 points; Hong Kong +1.3%; Nikkei -0.2%; China +0.1%
US share futures dropped early on Monday after President D. Trump repeated warnings of imminent tariffs including on steel and aluminium (with the inflation impact likely to delay rate cuts) but the gap lower was immediately bought back and held in check.
January China's CPI rose 0.5% from a year earlier, for the first time since August, driven by a burst of household spending around the Lunar New Year holiday.
Canadian Prime Minister J. Trudeau told executives gathered at an economic summit on Friday that he believes D. Trump genuinely wants to annex the northern nation due to its abundance of critical minerals, a senior government official said. Canada is rich in nearly three dozen critical minerals that are essential to modern technology.
D. Trump said he wanted the US to eliminate its trade deficit with Japan during a meeting with Prime Minister Shigeru Ishiba that saw the visiting Japanese leader highlight new potential investments by some of his country’s automotive giants. One reason for the bilateral US/Japan deficit has got to do with the artificially low level of JPY which was dragged down by years of ZIRP while other countries raised interest rates. One way to reduce the trade imbalance is to get JPY to revalue. To the extent that the USD needs to devalue, it will do so vs. JPY, in our view.
Swiss voters rejected massively a set of rigid emission limits in a plebiscite, dismissing a call for more climate protection over fears that it would stymie the economy, Bloomberg reported. The plan demanded, among other things, that greenhouse gases emitted through consumption be reduced to 10% of their 2018 levels within the next 10 years. According to a pollster, citizens worried about jobs and a loss of prosperity, and feared a competitive disadvantage for Swiss companies. The country already has a plan to be climate neutral by 2050.
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© Copyright by BentinPartner LLC. This communication is provided for information purposes only and for the recipient's sole use. Please do not forward it without prior authorization. It is not intended as a recommendation, an offer, or solicitation for the purchase or sale of any security or underlying asset referenced herein or investment advice. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situation, investment horizon, and particular needs. This report does not include information tailored to any particular investor. It has been prepared without any regard to the specific investment objectives, financial situation, or particular needs of any person who receives this report. Accordingly, the opinions discussed in this report may not be suitable for all investors. You should not consider any of the content in this report as legal, tax, or financial advice. The data and analysis contained herein are provided "as is" and without warranty of any kind. BentinPartner LLC, its employees, or any third party shall not have any liability for any loss sustained by anyone who has relied on the information contained in any publication published by BentinPartner LLC. The content and views expressed in this report represent the opinions of Marc Bentin and should not be construed as a guarantee of performance with respect to any referenced sector. We remind you that past performance is not necessarily indicative of future results. Although BentinPartner LLC believes the information and content included in this report have been obtained from sources considered reliable, no representation or warranty, express or implied, is provided in relation to the accuracy, completeness, or reliability of such information. This Report is also not intended to be a complete statement or summary of the industries, markets, or developments referred to in the Report.
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