Trump sets 15% growth target; Alphabet plans $20 billion bond; SMIC earnings report today.

Trump Sets Ambitious 15% Growth Target Amid Fed Pressure

Overview of Trump's Economic Aspirations

Trump has stated that his nominee for the Federal Reserve Chair, Kevin Warsh, could stimulate the economy to grow at a rate of 15%. This optimistic target places significant pressure on Warsh if appointed. It remains unclear whether Trump refers to year-on-year growth or another metric. The U.S. economy is projected to grow by 2.4% this year, with a historical average of 2.8% over the past fifty years.

Economic Context and Labor Market Insights

Historically, the U.S. GDP has only exceeded 15% growth a few times since the 1950s, notably during the reopening phase post-COVID-19 lockdowns. Trump's comments suggest he hopes Warsh can energize the economy ahead of the challenging midterm elections.

The labor market is also under scrutiny, with expectations for January's non-farm payrolls to increase by 69,000, while the unemployment rate is expected to hold steady at 4.4%. A significant revision in employment data is anticipated, indicating a potential downward adjustment of 911,000 jobs over the next year.

Warsh's Potential Policy Adjustments

PIMCO's global economic advisor, Clarida, believes Warsh may adjust forward guidance, balance sheet management, and credit allocation related to mortgages. Unlike his predecessors, Warsh may not provide forward guidance on monetary policy and could support multiple rate cuts this year, depending on inflation trends.

Market Reactions and Stock Movements

On Monday, major U.S. indices rose, with the Dow hitting a new high. Notable stock movements included Oracle rising over 9%, while other tech giants like Nvidia and Microsoft also saw gains.

Google’s Bond Issuance and AI Investments

Alphabet plans to raise $20 billion through a bond issuance, exceeding initial expectations. This funding is aimed at bolstering AI investments, with significant interest from investors.

FDA Actions Against Novo Nordisk

The FDA has flagged Novo Nordisk's advertising for its weight loss drug Wegovy as misleading, leading to a lawsuit against Hims & Hers Health for patent infringement. This has caused fluctuations in stock prices for both companies.

Tesla's FSD Developments in China

Tesla's VP in China, Tao Lin, announced that there is no specific date for the rollout of Full Self-Driving (FSD) in the region, although progress is being made with local training centers.

Conclusion

As the U.S. economy navigates through various pressures, the upcoming economic data releases and corporate earnings will be crucial in shaping market expectations and investor sentiment.