SQUAWK BOX, FRIDAY 16TH FEBRUARY, 2024

Inflation in the U.S. unexpectedly ticks higher in February, potentially lengthening the Fed’s path back to lower rates. However, U.S. and European equities hit new highs as investors stick with their June Fed rate cut predictions. In politics, President Joe Biden and former President Donald Trump have both won enough primary delegates to become their parties’ presumptive nominees in November’s presidential election, according to NBC News. In Japan, major companies commit to fully meet union demands for pay hikes, strengthening speculation the Bank of Japan could exit negative rates next week. Boeing suffers a plethora of quality control problems with its top clients complaining of delivery delays, cancelled flights as well as hiring freezes at the U.S. plane maker.    

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Former U.S. President slams both China and the EU, telling our colleagues Stateside that America is being taken advantage of economically. JPMorgan boss Jamie Dimon urges the Federal Reserve to act cautiously on rate cuts, arguing that a U.S. recession is still a possibility as President Biden unveils his budget for 2025, which proposes higher taxes, spending and debt. BoJ governor Kazuo Ueda has dampened optimism about the state of the Japanese economy ahead of a key meeting which could see the central bank raise rates out of negative territory for the first time since 2016 as the 10-year JGB reaches a three-month high. Chinese smartphone maker Xiaomi is to launch its first ever EV, helping to push shares up on the Hang Seng. GOP House leaders move against social media giant TikTok with a bill that could require its parent company ByteDance to either sell the platform or be liable to a fine in the U.S. 

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The Nikkei tumbles, posting its worst day in the more than a year on speculation the BoJ will finally raise rates, helping the yen while hurting exports. In China, sticker prices rise for the first time since lates summer but manufacturing price deflation continues to drag. New Delhi agrees to signs a $100bn free trade deal with the European EFTA bloc, ahead of a spring general election. And in energy news, Saudi Aramco sees FY profit fall by up to 25 per cent but its still manages to posts its second-highest net income ever while increasing its dividend. 

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There’s a new record high for the S&P 500 index – its 16th this year. In a testimony to the Senate, U.S. Federal Reserve Chairman Jerome Powell said the central bank was gaining the confidence it needs to cut rates. In Frankfurt, the ECB keeps rates on hold but signals a mid-year cut with President Christine Lagarde calling for more data by June. President Biden lashes out at former President Donald Trump during his third State of the Union address. Biden called on Congress to stand up to Russia’s Vladimir Putin. Humanitarian assistance to Gaza and the southern border crisis were also featured high on the agenda. Danish drug maker Novo Nordisk overtakes Tesla in market cap valuation, unveiling new trial data as well as plans to sell WeGovy in China.  

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U.S. Federal Reserve Chairman Jerome Powell reiterates to the House Financial Services Committee that the central bank is not yet ready to begin slashing interest rates. Powell said he required more data to be confident inflation would continue falling before dialling back on restrictive policy. Chinese trade numbers beat expectations for the first two months of 2024. Foreign Minster Wang Yi has hit out at ‘lengthening’ U.S. economic restrictions on his country. In Frankfurt, the ECB is expected to keep rates on hold for a fourth consecutive month while in the UK, Chancellor of the Exchequer Jeremy Hunt cuts National Insurance contributions by a further 2 per cent.  

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Former U.S. President Donald Trump dominates the GOP Super Tuesday races. NBC News projects he has won almost all of the 15 states voting in the primary contest. Wall Street stumbles for a second straight day with tech stocks weighing. The Dow is down ahead of Federal reserve Chairman Jerome Powell’s testimony on Capitol Hill. We are live in Westminster ahead of Chancellor Jeremy Hunt’s UK budget later today. Personal tax cuts set to top the agenda. And in IPO news, Swiss-American dermatology company Galderma plans to list in Zurich, aiming to raise $2.3bn. 

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We are live in Beijing at China’s annual parliamentary session where the country has set a growth target of ‘around 5 per cent’ for 2024. Premier Li Qiang has sought to diffuse economic tensions but warned of a tricky path ahead. Tesla sees Chinese sales fall to the their lowest level since December 2022, with increased domestic competition as well as a slowdown in demand weighing on the EV maker. Brussels has slapped Apple with a €1.8bn fine for alleged abuse of its market position within the music-streaming space. And in the U.S., the Supreme Court has ruled that individual states cannot remove former President Donald Trump from the ballot for his alleged involvement in the January 6th 2021 storming of the U.S. Capitol. Delegates in 15 states are due to vote for presidential nominees this Super Tuesday.  

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China hosts its annual legislative sessions with an aim to deepening economic reform. Beijing is grappling with the four issues of deflation, demographics, debt and de-risking. In Japan, the Nikkei 225 hits the 40,000-point level for the first time on the back of strong tech stock performance. Stateside, the Nasdaq, Dow and S&P 500 also hit fresh highs. Hamas delegates are in Egypt hoping to negotiate a Ramadan truce in Gaza. U.S. Vice-President Kamala Harris calls out Israel over the humanitarian situation in the territory. Saudi Arabia has decided to extend its voluntary oil supply cut until the end of Q2. Russia performs its own cuts as Opec+ nations attempt to steady the market.  

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The recent optimism around A.I. helps push the Nasdaq to its first record high in more than 2 years. The Dow and S&P 500 also mark their best start to the year since 2019. Consumer prices Stateside are their slowest rate of increase in six years, raising hopes of a June rate cut. In banking news, shares of NY Community Bancorp plunge by 20 per cent in extended trade on the news that the lender has removed its CEO due to internal control matters. Chinese manufacturing activity is down for a fifth-straight month ahead of next week’s annual legislative meetings where broader policy moves may be on the agenda.  

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U.S. markets are set to notch their fourth monthly gain but investors turn wary on tech stocks ahead of today’s inflation data. There is a tentative deal on Capitol Hill as lawmakers scramble to avert a government shutdown. Long-serving Senate Republican leader Mitch McConnell has announced he will be stepping down from his position after the U.S. election this November. Chinese equities rebound sharply despite recent volatility with the Shanghai Composite is now on track for its best month since November 2022. In tech news, Apple has teased it will be making a major A.I.-related funding announcement later this year. And luxury Italian fashion house Moncler posts a 17 per cent revenue spike due to a strong performance in China.  

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