January 12, 2025

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Notable market news this past week (12-Jan-25)

Here is the Skeptivest roundup of the latest market headlines for the week

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🇺🇸 Strong US job growth highlights economic resilience, while bond yields have risen as expectations for rate cuts diminish

Job growth exceeds expectations...: The US economy added 256,000 jobs in December, far exceeding expectations of 155,000. The unemployment rate dropped to 4.1%. In fact, December marked the 48th consecutive month of net job creation, tied for the second-longest streak on record

... Demonstrating the resilience of US economy: The labor market has shown resilience and stability after recovering from a once-in-a-generation pandemic and navigating the dual pressures of fast-rising prices and high interest rates.

Rate cut expectations down to just one, sending bond yields up: Investors have tempered expectations for aggressive Fed rate cuts in 2025, with the CME FedWatch Tool now projecting just one additional cut, likely in June. This is a stark reversal from anticipating cuts in January, March, and May, as the same market anticipated just a few months ago. That’s sent bond yields soaring around the globe in recent weeks - e.g. the 10-year US Treasury yield, the benchmark for borrowing costs across the economy, spiked to its highest level since late 2023

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☕️ Quick fire happenings to note

🌏 Global macro

• Trudeau to step down as Canada faces economic and political crossroads: Canadian Prime Minister Justin Trudeau announced he will resign after nine years in office, amid dwindling approval ratings (22%) and economic struggles, including high inflation, rising unemployment, and surging housing costs. Trudeau’s exit follows Finance Minister Chrystia Freeland’s resignation over spending concerns and pressure from within his party. With elections likely before October, Conservative leader Pierre Poilievre, leading in polls, is poised to address US trade tensions and prioritize resource development to bolster Canada’s economy.
• California wildfires push insurance system to Its limits: Wildfires in Los Angeles, which have claimed five lives and damaged over 2,000 buildings, could lead to record insured losses exceeding $20 billion, per JPMorgan. With private insurers retreating from the state, California's FAIR plan faces a funding shortfall, leaving policyholders at risk of delayed reimbursements and soaring premiums.
• Musk revises Federal budget cut goals: Elon Musk, co-head of the Department of Government Efficiency, scaled back his $2 trillion budget cut target, acknowledging it exceeds the $1.7 trillion discretionary budget. Musk now aims for a more feasible $1 trillion in cuts, which experts warn may require reductions to programs like Medicaid.
• China faces slow recovery in tourism despite Visa easing: China has significantly eased visa requirements for 1.9 billion potential tourists from numerous countries, yet the expected influx of foreign visitors has been sluggish. Despite extending visa-free entry to 38 countries, only a fraction of tourists, primarily from nearby Asian nations and less-developed markets, have arrived. Visitor numbers remain far below pre-pandemic levels, with foreign entries totaling just 63% of 2019 levels.

🏦 Individual stocks/companies

• TikTok steer users to Lemon8 ahead of US ban: Lemon8, ByteDance’s social app, has soared to the top of Apple’s free app chart, fueled by TikTok’s login integration and a 150% spike in December downloads. However, claims of Lemon8 as a "post-TikTok refuge" are misleading, as the pending US ByteDance ban would impact both apps, with SCOTUS set to hear critical arguments tomorrow.
• eBay (+5.02% past 5 days) stock rise at the back of Meta partnership: Meta Platforms and eBay announced a partnership to integrate "some" eBay listings into Facebook Marketplace. Investors cheered the move as it boosts eBay’s visibility, while Marketplace users welcomed the convenience of skipping awkward parking lot meetups for transactions.
• Getty Images (+23.47% past 5 days) stock rise on merger with Shutterstock: Getty Images and Shutterstock are merging to form a $3.7 billion company, with Getty owning 55% of the combined firm. Shutterstock shareholders can opt for cash, Getty stock, or a mix of both, ensuring flexibility while satisfying both parties’ interests
• Tencent (-10.91% past 5 days) tanks as US designates it as a Chinese military company: Inclusion on the Pentagon list does not result in any immediate sanctions, but it could affect the reputations of the companies named and hinder their commercial progress, particularly if they want to do business in the United States.

🇸🇬 Singapore related

• S’pore, Malaysia sign agreement on Johor-S’pore Special Economic Zone; 20,000 jobs to be created: Prime Minister Lawrence Wong and his Malaysian counterpart Anwar Ibrahim witnessed the exchange of the agreement on Jan 7 during the 11th Malaysia-Singapore Leaders’ Retreat in Putrajaya. The JS-SEZ agreement signed on Jan 6 will allow investors to tap Singapore’s capital and technology and Malaysia’s vast resources and cost benefits across nine “flagship zones” catering to different economic sectors. More here.