Feb 2nd Pre-Market

Good morning.

The everything rally just hit a wall. Metals are getting crushed, crypto followed, and the market is finally pricing in that rates aren't dropping anytime soon.

Warsh's Fed nomination on Friday seems to be the wake up call. Markets are dumping the trades that only worked in a rate cut world.

Let's dig in…

Today's Big Picture

1. Metals Blow Up on Warsh Nomination

Silver dropped30% Friday, its worst day since 1980. Gold fell nearly 10%, sliding below $5,000 after touching $5,594 Thursday.

Trump's nomination of Kevin Warsh for Fed chair triggered the selloff. Warsh is a hawk, and the dollar ripped on expectations he'll keep policy tighter than Powell. CME raised margins in response (gold to 8% from 6%, silver to 15% from 11%). Dealers point to Chinese silver futures funds as an accelerant.

Both metals bounced Monday but remain well off the highs.

2. Warsh Changes the Rate Calculus

Markets still price two cuts in 2025. Friday's jobs report (consensus: 55K) could move that. Dollar at 154.8 yen. If strength holds this week, the Warsh trade has legs.

3. Iran Talks Ease Oil Pressure

WTI dropped 4% Monday after Trump said Iran is "seriously talking." A military strike looks less likely. Lower energy prices help the inflation picture and reinforce the slower rate-cut path Warsh implies.

Market Overview

Today’s Sponsor

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In a bombshell interview, Elon Musk declared that AI and robotics are "the only thing" that can solve America's $38 trillion debt crisis.

He predicts it will happen within three years. One Wall Street veteran has identified a single fund at the center of this AI buildout - and you can get in for less than $20.

See what Musk didn't tell you

Stock Spotlight (pre-market)

Oracle $ORCL ( ▼ 3.41% )  

Shares down after announcing a $50 billion raise to build capacity for Meta $META ( ▼ 2.69% ) and AMD $AMD ( ▼ 1.75% ). One of the largest corporate fundraises ever. Stock down on dilution concerns.

Nvidia $NVDA ( ▼ 3.14% ) 

Lower as a massive OpenAI investment appears. Reports say leadership is questioning OpenAI's path to profitability.

MicroStrategy $MSTR ( ▼ 5.21% ) 

Trading at multi month lows following the Bitcoin drop. The company holds 400,000+ Bitcoin on its balance sheet. Stock down 40% from December highs.

Disney $DIS ( ▼ 0.03% ) 

Moving higher after beating earnings. Streaming subscribers came in ahead of estimates and parks revenue stayed strong. A rare winner this morning.

Palantir $PLTR ( ▲ 6.13% ) 

Reporting after the close. The market wants to see if their AI software is actually scaling with commercial customers, not just government contracts.

Estee Lauder $EL ( ▼ 2.11% ) 

Shares are climbing because of the Kevin Warsh connection. Luxury stocks catching a bid on dollar strength and hawkish Fed expectations.

What to Watch

Friday's Jobs Report: 

Economists expect 55,000 jobs. A weak number could force the Fed to move faster on cuts.

Alphabet and Amazon Earnings: 

Both report later this week. If they can't show a clear path to profit from AI, the tech sell-off will deepen. $GOOGL on Wednesday $AMZN on Thursday.

The Government Shutdown: 

Funding ran out Saturday. A long shutdown could delay the economic data we need to read the market.

The Central Bank Sprint: 

The Reserve Bank of Australia, Bank of England, and European Central Bank all meet this week. Global coordination on rates is breaking down as inflation plays out differently across continents.

Thanks for reading 🙂

- John

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