1. On February 5 (Monday), the futures of the three major US stock indexes fell sharply before the US stock market. As of press release, Dow futures were down 0.01%, S&P 500 futures were down 0.17%, and NASDAQ futures were down 0.15%.

2. As of press release, the German DAX index rose 0.37%, the UK FTSE 100 index fell 0.04%, the French CAC40 index rose 0.24%, and the European Stoxx 50 index rose 0.32%.

3. As of press release, WTI crude oil fell 0.62% to $71.82 per barrel. Brent crude fell 0.43% to $76.98 per barrel.

Market news

This week's earnings report continues to be hot! McDonald's, Eli Lilly, etc. brought in the financial reports of 104 constituent companies. The stock market returned to near historic highs last week. Last Friday, the S&P 500 closed at 4,959 points, the highest closing price in history. The three major stock indexes all rose. The S&P 500 index and the Dow Jones index rose more than 1%, and the Nasdaq Composite Index rose slightly less than 1%. The trading market was slightly turbulent last week. After the fourth quarter earnings reports of major technology stocks Microsoft and Alphabet were revealed, the stock market declined. On Wednesday, Federal Reserve Chairman Powell said the March interest rate cut was not a “basic situation,” and the stock market was further sold off. However, as earnings results revealed by Meta and Amazon financial reports showed a blowout trend, and the January employment report was stronger than expected, the stock market entered a rebound pattern. This week, investors will welcome a range of corporate earnings reports, including earnings from Eli Lilly, Disney, Spotify, McDonald's, Chipotle, and Pepsi in a slightly dull economic calendar.

The OECD raised its 2024 global economic growth forecast to 2.9%, compared to 2.7% previously. The OECD raised the global economic growth forecast for 2024 to 2.9% (2.7% in November), and expects the global growth rate to be 3% in 2025 (unchanged compared to November). The OECD cut the Eurozone economic growth forecast for 2024 to 0.6% (previously 0.9%) and revised the 2025 forecast to 1.3% (previously 1.5%). The OECD expects Japan's economic growth rate to be 1% in 2024 (same as the previous forecast), reducing the 2025 growth rate from 1.2% to 1%. The OECD expects the Federal Reserve to cut interest rates in the second quarter (this year) and the ECB to cut interest rates in the third quarter, but the monetary policy stance should remain tight for a period of time.

Powell made a cautious statement+ employment surged, and expectations of the Federal Reserve's interest rate cut have cooled down. Bond traders' confidence that the Federal Reserve will implement a series of interest rate cuts this year is being tested. The unexpected surge in employment in January indicates that the Federal Reserve has not yet begun to ease the pressure on monetary policy, giving it time to observe whether inflation will continue to move towards the 2% target. Federal Reserve Chairman Jerome Powell supported this wait-and-see attitude last week, prompting traders to drastically cut their bets on cutting interest rates for the first time before May. However, Powell said that as inflation subsides, it may be appropriate for the Federal Reserve to start cutting interest rates sometime this year. This convinced bond traders that interest rates will fall at some point — despite growing questions about how hard the Federal Reserve is cutting interest rates. According to reports, Federal Reserve Chairman Powell said in an interview last Thursday that the Federal Reserve may wait until after March to cut interest rates.

Legendary Investor Grantham: US stock prices are ridiculously high, the AI bubble will burst, and the US economy will decline slightly. Legendary investor Jeremy Grantham (Jeremy Grantham) recently warned that US stocks are ridiculously high and may be in trouble. He also believes that artificial intelligence is a bubble that is destined to burst, and that the US economy will suffer a slight recession, or even worse. As a co-founder and long-term strategist at fund management company GMO, Grantham advises investors to steer clear of US stocks. “They're almost ridiculously expensive than the rest of the world,” he said. He added that the stock market will go through a difficult year. Compared with foreign competitors, the profit margins of American companies are at historically high levels, which poses a “double risk” situation for stocks, and both earnings and price-earnings ratios are likely to fall. Grantham is famous for predicting the recession of 2000 and 2008.

Goldman Sachs survey: US small businesses are optimistic about the 2024 outlook. A Goldman Sachs survey showed that despite high interest rates, inflation, and a tightening credit market, US small business owners are more optimistic about the outlook for 2024. According to Goldman Sachs's report, out of 1,459 small businesses, 75% are positive about this year's financial outlook. However, 71% of respondents said that inflationary pressure on their businesses has increased in the past three months, and 77% are still concerned about their ability to obtain capital. The percentage of respondents who thought the financial situation was good or excellent increased by 9 percentage points. Additionally, 57% of business owners said they expect jobs to be created this year, and 62% expect profits to increase by the end of this year. As a major Wall Street bank, Goldman Sachs is particularly concerned about the Federal Reserve's proposed Basel III agreement.

The “Big Seven” are really expensive! But Goldman Sachs reassured: the current high position is not a bubble. Recently, Goldman Sachs said in a report that one of the most frequently asked questions from customers is whether the “Big Seven US stocks” can continue to outperform the market, and the agency also responded accordingly. Seven companies, Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla, have always performed very well. “The Big Seven have returned 8% this year, while the 493 remaining stocks in the S&P 500 have a return of 3%.” Strategist David Costin wrote in a report. “Investors often ask us if the 30-fold price-earnings ratio of these seven companies is sustainable, given that the index's remaining stocks have a price-earnings ratio of 18 times. As shown during the Internet bubble boom, stocks must surpass the high standards set by market consensus if they want to continue to perform well.”

Individual stock news

Vodafone (VOD.US) service revenue grew by nearly 5% due to strong demand from cloud computing and enterprise customers. British telecom giant Vodafone's latest fiscal quarter sales were higher than market expectations, mainly due to the company's accelerated growth in sales to cloud computing customers and enterprise-level customers, which greatly mitigated the pressure the mobile operator faced after refusing to merge its Italian business with Iliad SA (Iliad SA). Vodafone's overall endogenous service revenue for the third fiscal quarter increased 4.7% year over year to 9.38 billion euros (approximately US$10.1 billion). In contrast, analysts' average expectations were 4.3% year-over-year growth. Among them, endogenous service revenue from the German market reached 2,892 million euros, achieving a year-on-year increase of 0.3%, while endogenous service revenue from the UK market reached 1.4 billion euros, achieving a year-on-year increase of 5.2%.

Buy diet pills out of your own pocket! Novo Nordisk (NVO.US) CEO: European demand is very strong. The CEO of Danish pharmaceutical company Novo Nordisk said the company found Europeans “very willing” to buy diet pills. In an interview, Lars Fruergaard Jørgensen said: “We were initially surprised by the level of acceptance we saw. We want to know, is this just an American phenomenon? We tested in Denmark and Norway and the results were about the same. This is probably the first time you've seen so many people willing to buy medicine out of their own pocket.” Wegovy, a diet drug, and Ozempic, a diabetes treatment, are the drivers behind Novo Nordisk's record sales results in 2023. Wegovy works by curbing appetite and launched in the UK last year, when the company was expanding more widely in Europe. It's also available in the US, Norway, Denmark, Iceland, Switzerland, the UAE, and Germany.

Another new problem has been discovered! Approximately 50 Boeing (BA.US) 737 MAXs had to be reworked due to drilling errors. Boeing has discovered more drilling errors in the fuselage of its 737 MAX aircraft. This problem may further slow the delivery of this critical aircraft. Currently, the project has been limited by regulators due to quality issues. Boeing commercial director Stan Deal said in a report to employees that the latest manufacturing error stemmed from a supplier, and about 50 undelivered 737 aircraft would need to be reworked to repair defective rivet holes. Although he did not reveal the identity of the contractor, a spokesperson for airframe supplier Spirit AeroSystems (SPR.US) said the company is aware of the problem and will carry out repairs. Deal said in a memorandum that the extra time required for inspection and repair work could delay recent aircraft deliveries. Prior to that, Boeing had a series of manufacturing errors.

The Dutch parent company of “Russian Google” Yandex (YNDX.US) agreed to sell Russian assets for about 5.2 billion US dollars. Technology company Yandex NV (YNDX.US) said on Monday that it has agreed to sell its Russian assets to a consortium composed of Russian investors for 475 billion rubles (US$5.21 billion) in cash and stock transactions, including a fund under oil giant LUKOY.US (LUKOY.US). According to information, Yandex, often known as the “Russian version of Google,” has developed leading online services, including search, advertising, and online car-hailing services. Before the Russian-Ukrainian conflict broke out in February 2022, the company was one of the few Russian companies with the potential to become a global enterprise. The deal will allow Russia's largest tech company to be fully owned by Russia, solidifying Yandex's exit from the Western tech world it once sought.

Key economic data and event forecasts

23:00 Beijing time: US ISM non-manufacturing PMI for January.

23:00 Beijing time: 2025 FOMC ticketing committee and Chicago Federal Reserve Chairman Goulsby was interviewed by Bloomberg TV.

The next day at 03:00 a.m. Beijing time: 2024 FOMC voting committee and Atlanta Federal Reserve Chairman Bostic delivered a welcome speech at a conference on the labor market.

Performance Forecast

Tuesday morning: NXP (NXPI.US), Palantir (PLTR.US), BEDU.US

Tuesday pre-market: British Petroleum (BP.US), UBS (UBS.US), Toyota (TM.US), Lilly (LLY.US), Autohome (ATHM.US)