Public Markets 8-Hour Briefing
×Market Sentiment & Fed Policy
Federal Reserve Bank of St. Louis President Alberto Musalem said the labor market has cooled but is stabilizing while inflation is on a downward trajectory during an event in St. Louis. The Bull Case for Bitcoin is hiding in the $1 trillion wreckage as the cryptocurrency has been cut almost in half since its October high. Goldman Sachs Chief US Equity Strategist Ben Snider said economic acceleration is the clearest tailwind for markets amid jitters over AI disruption.
AI Disruption & Private Markets
Fears that artificial intelligence may spell bad news for software giants have been pressuring stock market valuations for months. Now, those same fears are creeping into private markets too. French private equity firm Ardian said it may avoid certain types of private credit investments in software as the sector grapples with AI disruption challenges. Citigroup Inc. has formed a group focused on the artificial intelligence infrastructure boom comprised of leaders from its investment banking and corporate banking teams.
Corporate Earnings & Guidance
Brookfield Business Partners-backed CDK Global reported a double-digit earnings decline in the fourth quarter, a sign of struggles at the company right as Wall Street scrutinizes how the software sector is handling AI disruption. TJX Cos. posted a jump in profit and sales during the fourth quarter as it continued to scoop up market share, but the discount retailer guided for growth to slow slightly over the coming year. Sandoz shares jumped after the company bumped up its revenue guidance thanks to growth in its biosimilar product range.
Energy & Commodities
Saudi Arabia and Iran are both accelerating oil exports, adding barrels to global markets at a time when the US is deploying military assets in the Middle East, creating uncertainty about future supply. The North Sea crude market is flashing signs of weakness as heavy buying from Vitol Group and Total Energies SE subsides, removing a key pillar of support just as more supply is set to return to the Atlantic Basin. US crude oil stockpiles rose by 16 million barrels, posting their biggest weekly increase in three years as imports rose, exports fell and refineries cut their capacity use.
Debt Markets & Credit
Strong demand for US corporate bonds has created the most competitive conditions on record across primary markets, spurring more trading in the secondary market too, according to Barclays Plc. Coller Capital agreed to buy $477 million of assets from New Mountain Finance Corp. as the private credit fund looked to boost its financial flexibility. Vestel Elektronik, a Turkish home-appliance and electronics manufacturer that has reported losses every quarter for the past two years, is in talks with banks to restructure more than $500 million of debt.
Tech & AI Infrastructure
US data center construction fell for the first time since 2020 despite soaring demand for artificial intelligence computing capacity, as developers face delays in permitting, zoning and power connections. Emirates Global Aluminium, the United Arab Emirates' top producer of the metal, is boosting shipments to the US despite stiff tariffs, as growing shortages drive American prices to levels that offset the levies. The AI-powered capex growth rate is expected to peak later this year, according to Goldman Sachs estimates.
Market Strategy & Investment
Investors fleeing AI upheaval may turn to euro bonds, says ING Groep NV, as European government bonds could prove attractive to those seeking shelter from swings in US stocks caused by artificial intelligence developments. The threat to software-backed businesses from artificial intelligence should prompt investors to shift focus from technology to companies that toil in the physical world, like miners and power producers, according to UBS Wealth CIO. Citi Wealth's Kate Moore says she is not bearish on equities but remains cautious on taking risk in duration in her portfolio.
International Markets
Colombia is preparing a regulation to shift billions of dollars in private pension savings to its public retirement system, a move that could help ease a funding shortfall that is adding to the nation's fiscal strain. Turkey's Vestel is in talks with banks to restructure more than $500 million of debt as the home-appliance maker has reported losses every quarter for the past two years. Switzerland will pay Crans-Montana nightclub fire victims $56,000 as the government agrees to one-off payments to survivors and families of the dead.