• European bourses are firmer, with significant outperformance in the CAC40 lifted by the Luxury sector, post-LVMH earnings
• Dollar is around flat, EUR modestly firmer with price action contained ahead of US PCE
• Bonds are modestly firmer and in proximity to yesterday’s highs
• Crude benchmarks are pulling back marginally; base metals are a touch softer with specifics light
• Looking ahead, US PCE, Earnings from American Express & Colgate

EUROPEAN TRADE

EQUITIES

• European bourses are in the green, Stoxx600 (+0.6%); with the CAC 40 (+1.7%) outperforming alongside significant strength in the Luxury sector, post-LVMH earnings coupled with Barclays upgrading the sector to Overweight.
• European sectors hold a strong positive tilt; Consumer Products & Services sits highest after strong LVMH earnings, with Food Beverage and Tobacco also propped up post-Remy Cointreau results. Tech lags after weaker Intel guidance.
• US equity futures are on a mixed footing, with the NQ (-0.5%) significantly underperforming as Tech drags the index lower post-Intel earnings after-hours; Co. shares are seen lower by 11% in the pre-market after guiding Q1 revenue to be significantly lower than expectations.
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FX

• DXY is around flat, though initially picked up in the European morning to 103.73 before fading the move in quiet trade as markets await US PCE data; currently holds below the 103.50 mark.
• EUR is largely moving at the whim of the USD and as ECB speakers push back on talk of rate cuts; still some way off yesterday's high of 1.0901.
• USD/JPY has continued to tick higher but the next move will likely come via Fed vs. BoJ divergence/convergence plays with PCE due later today and FOMC next week; currently holds around flat at 147.70.
• NZD suffering vs. the USD to a greater extent than AUD which is possibly being buoyed by sentiment around China post-RRR cut. AUD/NZD looking to test 1.08 to the upside as NZD/USD slips below 0.61.
• PBoC set USD/CNY mid-point at 7.1074 vs exp. 7.1733 (prev. 7.1044).
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FIXED INCOME

• USTs are holding in the green, but only modestly so, with focus entirely on US PCE for December; USTs marginally bull-flattening into this.
• Bunds are contained around the top-end of Thursday's parameters, contracts printed an incremental WTD high of 135.02 this morning, before gradually waning.
• Gilt action has been in-fitting with EGBs, though did not print a fresh WTD peak on the open with the 98.78 current high markedly shy of Monday's 99.45 best, resistance thereafter limited until 100.00.
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COMMODITIES

• Crude benchmarks are pulling back marginally, with specifics light and the complex thus far largely unaffected by USD action; Brent futures are back below USD 82.00/bbl.
• Spot gold is unchanged, in a narrow USD 2018.34-2024.22/oz bound with specifics light and the yellow metal thus far also unaffected by the USD; XAU holding just shy of USD 2025/oz; base metals are a touch softer echoing the tone of US equity futures with overall specifics light.
• US is pausing the pending decisions of new LNG export projects in order to review economic and environmental impacts; Pause comes with exceptions for unanticipated and immediate national security emergencies.
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ECB Speak

• ECB's Kazaks says the ECB is data, not date, dependent, via Bloomberg TV; sees some softening in the labour market. Technical recession is a possibility.
• ECB's Muller says it is still too soon to talk about rate cuts. Too little confidence now that inflation has been defeated.
• ECB's Vujcic says there was no dovish tilt at the January ECB meeting; we are data dependent not date dependent, via Bloomberg. We need patience and must have sufficient data; need reassurance that inflation is headed for 2%.
• ECB's Simkus says does not expect a rate cut in March. The further into 2024, the more likely a rate cut becomes; expectations increases exponentially not linearly.

NOTABLE EUROPEAN HEADLINES

• ECB Survey of Professional Forecasters: 2024 inflation seen at 2.4% vs. prev. view of 2.7%. 2025 2.0% vs. prev. view of 2.1%. GDP: 2024 0.6% vs. prev. view of 0.9%. 2025 1.3% vs. prev. view of 1.5%. Core inflation: 2024 2.6% vs. prev. view of 2.9%.
• ECB Bulletin: Contacts painted a largely unchanged picture of activity stagnating or contracting slightly in the fourth quarter of 2023, with little or no pick-up expected in the first quarter of 2024. Wage growth is expected to ease somewhat this year.
• Maersk (MAERSKB DC) MECL vessels will now also be avoiding the Red Sea region

DATA RECAP

• UK GfK Consumer Confidence (Jan) -19.0 vs. Exp. -21.0 (Prev. -22.0)
• German GfK Consumer Sentiment (Feb) -29.7 vs. Exp. -24.5 (Prev. -25.1, Rev. -25.4)
• Spanish Unemployment Rate (Q4) 11.76% vs. Exp. 11.9% (Prev. 11.84%)
• EU Money-M3 Annual Growth (Dec) 0.1% (Prev. -0.9%); EU Loans to Non-Fin (Dec) 0.4%; EU Loans to Households (Dec) 0.3% (Prev. 0.5%)

NOTABLE US HEADLINES

• Elon Musk AI start-up xAI is looking to raise USD 6bln from investors in a challenge to OpenAI, according to the FT; at a valuation of USD 20bln.

EARNINGS

• Intel Corp (INTC) - Q4 2023 (USD): EPS 0.63 (exp. 0.45), Revenue 15.4bln (exp. 15.16bln). Q1 adj. EPS view 0.13 (exp. 0.34).Q1 adj. revenue view 12.2-13.2bln (exp. 14.25bln). REVENUE BREAKDOWN: Client Computing 8.84bln (exp. 8.42bln). Datacenter & AI 4bln (exp. 4.08bln). Network & Edge 1.47bln (exp. 1.55bln). Mobileye 637mln (exp. 627.2mln). Intel Foundry Services 291mln (exp. 342.5mln). KEY METRICS: Adj. operating income 2.58bln (exp. 2.1bln). Adj. operating margin 16.7% (exp. 13.9%). Adj. gross margin 48.8% (exp. 46.5%). R&D expenses 3.99bln (exp. 3.9bln). COMMENTARY: On track to meet the goal of five nodes in four years. (Newswires) Shares -11.3% pre-market
• T-Mobile US Inc (TMUS) - Q4 2023 (USD): EPS 1.67 (exp. 1.90), Revenue 20.48bln (exp. 19.64bln). (Newswires) Shares -2.8% pre-market
• Visa Inc (V) - Q1 2024 (USD): Adj. EPS 2.41 (exp. 2.34), Revenue 8.6bln (exp. 8.54bln). Guides Q2 net revenue growth to upper mid-to-high single-digit (exp. +8.67%). Q2 EPS growth high teens (exp. +12.15%). KEY METRICS: Payments volume at constant currency +8% (exp +8.03%). Cross-border volumes at constant currency +16% (exp. +14.9%). Total Visa processed transactions 57.5bln (exp. 57.77bln). Shares -3.1% pre-market
• LVMH (MC FP) - FY 2023 (EUR): Revenue 86.153bln (exp. 85.626bln); FCF 8.104bln, -20%; Net Income 15.174bln, +8%; Is confident in continued growth in 2024. Q4 RESULTS: Revenue 23.95bln (exp. 23.72bln). Organic revenue +10% (exp. +8.17%). Fashion & Leather Goods organic sales +9% (exp. +9.14%). Wines & Spirits organic sales +4% (exp. -7.47%). Perfumes & Cosmetics organic sales +10% (exp. +9.41%). Watches & Jewelry organic sales +3% (exp. +2.93%). Selective Retailing organic sales +21% (exp. +14%). FY23 OPERATING INCOME: Recurring 22.80B (exp. 22.46bln). Fashion & Leather Goods 16.84bln (exp. 16.9bln). Wines & Spirits 2.11bln (exp. 1.85bln). Perfume & Cosmetics 713mln (exp. 769mln). Watches & Jewelry 2.16bln (exp. 2.02bln). Selective Retailing 1.39bln (exp. 1.51bln). FY23 REVENUE BREAKDOWN: Revenue 86.15bln (exp. 85.88bln). Fashion & Leather Goods 42.17bln (exp. 42.47bln). Wines & Spirits 6.60bln (exp. 6.46bln). Perfume & Cosmetics 8.27bln (exp. 8.3bln). Watches & Jewelry 10.90bln (exp. 10.97bln). Selective Retailing 17.89bln (exp. 17.61bln). Dividend per share 13 (exp. 13.59). Net income 15.17bln (exp. 15.67bln). CEO Arnault does not intend to leave in the near or medium term. CFO says sales trends with Chinese clientele remained good; doesn't expect Chinese groups to return soon to Europe but managing to make 'significant' business with wealthy Chinese in Europe. CEO says Co. is definitely not considering an asset spin-off, it would be a mistake. Co. not planning additional price hikes this year. (LVMH) Co. holds a 6.5% weighting in the Eurostoxx50; 12% in the CAC40; fifth largest in the Stoxx600 Shares +11.5% in European trade
• Remy Cointreau (RCO FP) - Q3 (EUR): Revenue 319.9mln (exp. 320.7mln), Notes major destocking in China ahead of Chinese New Year. Cooperating with the Chinese authorities in anti-dumping investigation. Cuts FY23/24 Organic Revenue guidance to "lower end" -20% to -15% (prev. guidance -20% to -15%). Cognac +31.4% Y/Y, Liqueurs +1.5%, Partner Brands -7.3% Y/Y, Group Brands -22.9% Y/Y. (Newswires) Shares +15.2% in European trade
• Sartorius (SRT GY) - FY23 (EUR): Net 339mln (exp. 655mln Y/Y), EBITDA 963mln (exp. 961mln), Revenue 3.4bln (exp. 3.42bln), Orden intake 3.07bln, -21.5% Y/Y. Guides FY24 Revenue in the "mid to high single digit % range". Expects profitable growth in 2024. (Newswires) Shares +8.4% in European trade

GEOPOLITICS

MIDDLE EAST

• Israeli war council discussed a possible exchange deal with Hamas, according to Sky News Arabia.
• Hamas said if the ICJ issues a ruling for a ceasefire, Hamas will abide by it if Israel reciprocates, while Hamas will release all Israeli hostages in Gaza if Israel releases all Palestinian prisoners.
• American weapons arrived in Israel including dozens of F-35 and F-15 fighters and Apache helicopters, according to Al Jazeera.
• US National Security Adviser Sullivan is to meet with Chinese Foreign Minister Wang Yi for talks on Houthi attacks in the Red Sea, according to WSJ. It was later reported that the White House confirmed National Security Adviser Sullivan will travel to Bangkok this week to meet with Thailand's PM and will also meet with Chinese Foreign Minister Wang, according to Reuters.
• Chinese officials asked their Iranian counterparts to help rein in attacks on ships in the Red Sea by the Iran-backed Houthis, or risk harming business relations with Beijing, according to Iranian sources and a diplomat familiar with the matter cited by Reuters.
• US and Iraq are to shift to bilateral military relations and US officials will stay in Iraq to defeat Islamic State, according to Bloomberg.
• US President Biden last week pressed Israeli Prime Minister Benjamin Netanyahu to scale down the Israeli military operation in Gaza, two U.S. officials told Axios.

OTHER

• Kremlin denies Bloomberg reports that Putin is "putting our feelers" to the the US over terms for ending the Ukraine war.
• Russian President Putin is reportedly to signal to the US that he's open to talks on Ukraine and sources added that Moscow is floating ideas on Ukraine security and territory, according to Bloomberg.
• US officials said North Korean leader Kim could take some form of lethal military action against South Korea in the coming months after switching to a policy of open hostility, according to the New York Times.
• Venezuelan President Maduro says the deal with the political opposition for elections this year could collapse after he alleged "conspiracies" against him, according to Reuters.

CRYPTO

• Bitcoin (+1.2%) continues to hold around the USD 40k mark, with overall trade contained.

APAC TRADE

• APAC stocks failed to sustain the broad positive momentum from Wall St with the region mostly lower in quietened conditions amid a lack of fresh drivers and as markets in Australia and India were closed for holiday.
• Nikkei 225 was pressured and retreated beneath the 36,000 level despite softer-than-expected Tokyo inflation data which showed the slowest pace of core inflation in Japan's capital area since March 2022.
• Hang Seng and Shanghai Comp were choppy as the effects of recent Chinese support measures waned.

NOTABLE HEADLINES

• Chinese Commerce Minister said China's trade faces a more complex and severe external situation, while the rise of trade protectionism, intensification of geopolitical conflicts and the risk of spillover has increased significantly, according to Reuters.
• BoJ Minutes from the December 18th-19th meeting stated that members agreed they must patiently maintain easy policy and must confirm a positive wage-inflation cycle to consider ending negative rates and YCC. Furthermore, a few members said the decision on whether a positive wage-inflation cycle is in place must be made comprehensively and not by looking at particular data, while a few members said they don't see the risk of the BoJ being behind the curve and can wait for developments in the spring annual wage talks.Members also agreed they must continue deepening the debate on exit timing and the appropriate pace of hiking rates after the end of negative rates.

DATA RECAP

• Tokyo CPI YY (Jan) 1.6% vs. Exp. 2.0% (Prev. 2.4%); CPI Ex. Fresh Food YY (Jan) 1.6% vs. Exp. 1.9% (Prev. 2.1%); CPI Ex. Fresh Food & Energy YY (Jan) 3.1% vs. Exp. 3.4% (Prev. 3.5%)
• Japanese Services PPI YY (Dec) 2.4% vs Exp. 2.4% (Prev. 2.3%)