19th February 2025

MACRO:

• US President Trump said as soon as April 2nd the US could impose a 25% tariff on imported automobiles, pharmaceuticals and semiconductors. Trump threatened these could rise if companies don't build factories in the US, whilst also hinting that countries could negotiate lower tariffs. Said companies in the US may be given a phase-in period to give them time to move production onshore. (Newswires)
• The Senate on Tuesday voted 51-45 to confirm Howard Lutnick as commerce secretary, putting in place a billionaire Wall Street veteran turned avowed protectionist to lead the president’s global trade agenda. (WSJ)
• Trump signed an executive order designed to strengthen White House control over quasi-independent regulatory agencies including the FTC, SEC, and FCC. The order said it wouldn't include the Federal Reserve's handling of monetary policy. (WSJ)
• The Pentagon is sending Trump administration officials the names of probationary workers who could be targeted in an upcoming round of federal employee cuts. (BBG)
• Trump hosted a series of high-priced dinners with healthcare executives at Mar-a-Lago during his presidential transition, raising millions of dollars while discussing industry concerns and policy changes. (WSJ)
• USDJPY is little changed after BoJ's Takata said the central bank must continue to raise interest rates gradually to avoid upside price risks from materialising, whilst later saying he had no preset idea on the timing and level of future rate hikes. (RTRS)
• Japan's exports rose for a fourth consecutive month in January led by auto shipments to the US ahead of potential tariffs. (RTRS)
• Business sentiment for Japanese manufacturers climbed for a second straight month in February and is expected to have improved again by May, albeit modestly, the Reuters Tankan poll found. (RTRS)
• The Kiwi bounced after the RBNZ delivered another outsized 50bp rate cut, but signalled further moves would be smaller in size and the end of the easing cycle was now not too distant. Governor Orr said there was no need to rush to neutral and noted that the currency is now fair value. (Newswires)
• Australian wages rose at the slowest annual pace in more than two years in the fourth quarter even as unemployment stayed near historic lows, suggesting the strong labour market was not a bar to further declines in inflation. (RTRS)
• Home prices in major Chinese cities continued to slightly narrow their declines in January (-0.07% M/M vs -0.08% M/M in Dec; -5.4% Y/Y vs -5.7% in Dec), suggesting that Beijing’s policy blitz may have helped stabilize the beleaguered real-estate sector. (WSJ)
• BlackRock goes tactically overweight eurozone government bonds, reinforcing its preference for them due to tariff risks. Meanwhile, it stays underweight long-term U.S. Treasurys, noting persistent deficits and inflation in the U.S. make BlackRock more positive on fixed-income assets elsewhere. (WSJ)
• Brazil’s Attorney General’s Office charged former President Jair Bolsonaro on Tuesday with plotting to overturn his 2022 election loss as the country’s authorities zero in on one of President Trump’s closest allies in Latin America. (WSJ)

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GEOPOLITICAL:

• US President Trump has criticised Ukraine President Zelenskiy, saying he was “disappointed” that the Ukrainian leader complained about being left out of talks between the US and Russia over ending the Ukraine war. Trump also said Ukraine started the war. (The Guardian)
• EU officials, after meeting with Trump's Ukraine envoy Keith Kellogg, said they had been given little details on what the US wants to see from the Europeans as part of a security guarantee. (WSJ)

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EQUITIES:

• Elon Musk's X is in talks to raise money from investors at a $44 billion valuation, the same price that Musk paid for the company in 2022, which would be a remarkable turn of fortunes for the Co. after many users and advertisers fled the sight after Musk's takeover. (BBG)
• Bill Ackman’s Pershing Square submitted a new $900 million offer for a boosted stake in Howard Hughes Holdings, pledging to turn the real-estate company into a diversified holding company akin to what the billionaire investor called a modern-day Berkshire Hathaway. (WSJ)
• WSJ have profiled LVMH owner Bernard Arnault's relationship with Trump, noting the strong relationship between the two of them and their families, and how he may be able to leverage that relationship, including making some manufacturing pledges in the US, to avoid the sharp end of tariffs. (WSJ)
• Royal Philips reported a swing to a fourth-quarter net loss on the back of a tax charge, and said comparable sales rose despite a double-digit decline in China due to subdued consumer sentiment. (WSJ)
• HSBC Holdings reported a quarterly net profit, supported by higher fee income, and said it plans to start a share buyback of up to $2 billion. (WSJ)
• BP is considering a potential sale of its lubricants business, Castrol, which could be worth about $10 billion in a deal. (BBG)
• Glencore said lower commodity prices had weighed on its earnings last year, but returned $2.2 billion to shareholders, reintroducing a share buyback. (RTRS)
• National Australia Bank tumbled after it said that higher credit impairments against business loans contributed to a small fall in its unaudited December quarter cash earnings. (WSJ)
• Japanese trading house Mitsui & Co said it would acquire a 40% stake in the Rio Tinto-operated Rhodes Ridge iron ore project in Western Australia for $5.34 billion to strengthen its long-term earnings base. (RTRS)