As we approach the end of 2024, U.S. monetary policy is once again the center of attention, with forecasts for interest rates becoming increasingly murky. A quick nod to Ben Bernanke, who celebrates his birthday this week.

Fifteen years ago, he was named Time Magazine's Person of the Year for averting a financial disaster of his own making. The era of easy money that followed made the 2010s a golden age for the stock market. Fast forward to 2024, and Donald Trump is Time's Person of the Year, a title he first held in 2016. Back to the present, investors have already factored in a 25-basis-point rate cut in the U.S. on Wednesday, bringing the Fed Funds rate to a range of 4.25% to 4.50%. This is a far cry from the days of Bernanke's easy money.

The market is now concerned that the Fed will struggle to continue cutting rates in 2025, thanks to Trump's policies, which are seen as inflationary. High interest rates are a tool to combat inflation by cooling down the economy. The market's skepticism about the Fed's ability to ease policy is reflected in the 10-year government bond yield, which has risen to 4.38%. The CME's FedWatch tool shows only a 17% chance of a rate cut at the January 29 meeting, and 60% for March 19. Not long ago, most investors expected cuts at both meetings.

In summary, the uncertainty surrounding Trump's upcoming term, starting in mid-January, has rattled financial markets. Most sectors took a hit, with healthcare, commodities, and real estate feeling the brunt. Amidst the turmoil, two stocks helped the Nasdaq stand out. Tesla surged 12%, thanks to Elon Musk's close ties with Trump, and Broadcom's AI-driven results propelled its stock up 25% in five sessions. Broadcom, now valued at $1,050 billion, has overtaken Berkshire Hathaway to become the eighth-largest U.S. company by market cap. Broadcom is in the antechamber of the Magnificent Seven, which will now change name to become BATMMAAN. This performance contributed to the Nasdaq's 0.73% gain for the week, while the Dow Jones fell 1.8%.

Elsewhere, Moody's downgraded France's long-term issuer ratings from Aa2 to Aa3, maintaining a stable outlook. Meanwhile, South Korea's president faces a second impeachment for unilaterally declaring martial law. China's promises have fallen short, with little detail on its stimulus plan. Recent statistics on consumption and real estate prices offer little reassurance.

This week is packed with macroeconomic indicators, including PMI, U.S. retail sales, and Germany's Ifo index. However, the focus will be on monetary policy decisions in the UK, Japan, and the U.S., with the Fed's decision taking center stage. Stay tuned for Wednesday.

On the corporate front, quarterly results are expected from Hennes & Mauritz, Micron, Lennar, Accenture, FedEx, and Nike.

In the Asia-Pacific region, the week began with declines across major stock markets, except for Taiwan. Losses were under 0.5% in Japan, India, and South Korea, while Australia fell 0.6% and Chinese markets dropped slightly more. In Europe, the Stoxx Europe 600 is down 0.3%. On Wall Street, futures are up 0.1% for the Dow Jones, 0.3% for the S&P 500, and 0.5% for the Nasdaq 100.

Today's economic highlights:

The leading PMI indicators for the major economies in December will be published throughout the day. We'll also be following the Empire State index in the United States. The full calendar is here. 

  • Dollar: EUR 0.9525 GBP 0.7900
  • Ounce of gold: USD 2662
  • Brent crude: USD 73.97
  • 10-year US bond: 4.36
  • Bitcoin: USD 104,000

In corporate news:

  • Honeywell International is contemplating the separation of its aerospace division, a move supported by activist investor Elliott Investment Management, following demands for the company's breakup and the initiation of a strategic review.
  • UK employers are reducing their workforce and growing more pessimistic due to budget constraints, while consumer confidence also fell in December, hitting a three-month low as disposable income decreases and debt levels rise.
  • Court documents reveal a Meta contractor dismissed threats to moderators by Ethiopian rebels, while Xiaohongshu experiences growth in e-commerce.
  • Procter & Gamble has committed to providing shareholders with more detailed disclosures about its auditing processes for wood-pulp suppliers.
  • Tesla's market capitalization is projected to hit $2 trillion by 2025, driven by significant opportunities in artificial intelligence.
  • Vitesse Energy has acquired Lucero Energy in an all-stock transaction valued at $222 million.
  • Insiders at TKO Group Holdings are actively purchasing shares of the company.
  • Goldman Sachs Asset Management has acquired Synthon for $2.1 billion.
  • Edgewise Therapeutics' stock price surged by 22% after positive phase 2 trial results for sevasemten in treating Becker muscular dystrophy, while Sidus Space shares soared 65% pre-bell on Monday.

Analyst recommendations:

  • Biogen Inc.: Stifel downgrades to hold from buy and reduces the target price from USD 275 to USD 175.
  • Broadcom Inc.: CICC upgrades to outperform from neutral with a price target raised from USD 164 to USD 220.
  • Cbre Group, Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 120 to USD 163.
  • Eagle Materials Inc.: Jefferies downgrades to hold from buy with a target price reduced from USD 330 to USD 310.
  • Equifax Inc.: BNP Paribas Exane upgrades to outperform from neutral with a target price of USD 305.
  • Exxon Mobil Corporation: Baptista Research upgrades to outperform from hold with a target price of USD 132.90.
  • Ford Motor Company: Jefferies downgrades to underperform from hold with a target price reduced from USD 12 to USD 9.
  • Keysight Technologies, Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 170 to USD 200.
  • Masco Corporation: Jefferies downgrades to hold from buy with a price target reduced from USD 96 to USD 89.
  • Netapp, Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 150 to USD 160.
  • Netflix, Inc.: Loop Capital Markets upgrades to hold from buy with a price target raised from USD 800 to USD 950.
  • Robert Half Inc.: BNP Paribas Exane downgrades to underperform from outperform with a target price reduced from USD 70 to USD 64.
  • Teradyne Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 145 to USD 158.
  • Unitedhealth Group Inc.: Baptista Research upgrades to outperform from hold with a price target raised from USD 567.30 to USD 579.
  • Affirm Holdings, Inc.: Deutsche Bank maintains its hold recommendation with a price target raised from 45 to USD 75.
  • Applovin Corporation: Wolfe Research maintains its outperform recommendation and raises the target price from USD 235 to USD 370.
  • Arista Networks Inc: BNP Paribas Exane maintains its outperform rating and reduces the target price from USD 495 to USD 123.80.
  • Chart Industries, Inc.: BTIG maintains its buy recommendation and raises the target price from USD 170 to USD 210.
  • Dutch Bros Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 45 to USD 60.
  • Freshworks Inc.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 16.50 to USD 20.
  • Palo Alto Networks, Inc.: Morgan Stanley maintains its overweight rating and reduces the target price from USD 446 to USD 223.
  • Servicenow, Inc.: Wolfe Research maintains its outperform recommendation and raises the target price from USD 1010 to USD 1225.
  • Symbotic Inc.: Deutsche Bank maintains its buy recommendation and reduces the target price from 45 to USD 31.
  • Tesla, Inc.: Wedbush maintains its outperform rating and raises the target price from USD 400 to USD 515.
  • Twilio Inc.: Wolfe Research maintains its outperform rating and raises the target price from USD 95 to USD 140.
  • Bunzl Plc: RBC Capital upgrades to outperform from sector perform with a price target raised from GBX 3350 to GBX 4000.
  • Dcc Plc: RBC Capital downgrades to sector perform from outperform with a target price of GBX 5800.
  • Diageo Plc: AlphaValue/Baader Europe upgrades to add from buy with a price target raised from GBX 3265 to GBX 3283.
  • Diploma Plc: RBC Capital downgrades to underperform from sector perform with a target price of GBX 3900.