UKRAINE: BBG-US Allies Expect Trump Plan To End War Next Week
Bloomberg reports US allies are expecting President Donald Trump's administration to put forward its plan on how to end the war in Ukraine next week at the high-profile Munich Security Conference. The article claims the president's special representative for Ukraine Keith Kellogg is set to put forward the outline. Kellogg confirmed his attendance at the 14-16 Feb event in a post on X earlier today, saying he looks forward "to speaking about [Trump's] goal to end the bloody and costly war in Ukraine. I’ll meet with America’s allies who are ready to work with us."
- Kellogg, along with Fred Fleitz, published a paper in April 2024 for the America First Policy Institute outlining a broad strategy for how to end the conflict that included a temporary loss of Russian-occupied regions for Kyiv in exchange for unspecified security guarantees from the US.
- Most recently, Trump has indicated that gaining supplies of rare earth metals from Ukraine as a condition of continued US support, saying to reporters on 3 Feb “We’re putting in hundreds of billions of dollars. They have great rare earths. And I want security of the rare earth, and they’re willing to do (that),”
- Ukrainian President Volodymyr Zelenskyy, who broached the topic with Trump ahead of the November election said “We are open to having all of this developed with our partners — those who are helping us defend our land, pushing the enemy back with their weapons, their presence and sanction packages. And this is absolutely fair,”.
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US STOCKS: Chip Makers, Interactive Media Shares Leading First Half Gainers
Stocks are trading higher early Monday, tech sector strength helping SPX Eminis rise to the best levels since December 27. Currently, the DJIA trades 353.54 points (0.83%) at 43082.63, S&P E-Minis up 76.5 points (1.28%) at 6065, Nasdaq up 351.3 points (1.8%) at 19971.12.
Semiconductor makers continued to benefit from news announced late Friday that Microsoft plans to invest $80B in AI-enabled data centers - at least of which are expected to be in the US. Leading gainers included Micron Technology +10.98%, Super Micro Compute +10.17%, Teradyne +6.40% while First Solar, Nvidia, KLA Corp, Applied Materials ad Lam Research all gained 5-6% in the first half.
Meanwhile, interactive media and entertainment shares buoyed the Communication Services sector with Alphabet +3.18%, Meta +2.99% and Paramount +2.44%.
On the flipside, Utility and Real Estate sectors underperformed early Monday, multi-energy providers weighing on the former: Eversource -1.88%, Sempra -1.63%, Ameren -1.60%. Office and Residential investment trusts weighed on the Real Estate sector with BXP Inc -2.34%, Camden Property -1.90%, Kimco -1.64%.
Reminder, the next round of quarterly earnings kicks off mid-January with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 13-16.
FED: Bank Stocks Up, Swap Spreads Wider With Barr Leaving As VC Supervision
- Another question, however, was whether Barr would stay on as a Governor through the full term to 2032 (In 2017, Tarullo resigned both the VC position and his Governorship). Since Barr has decided to stay on, that means there are no vacancies in the Board of Governors for Trump to fill. So absent any governors resigning, Trump will have to choose one of the existing governors as the next VC for Supervision.
- In this context, Gov Bowman - a Trump appointee in 2018, and with ample experience in banking - appears to be the most likely choice. She has advocated a lighter regulatory approach than her colleagues.
- Following Barr's resignation announcement, banking stocks are up 1.5%, while swap spreads - which had moved increasingly negative over Barr's term - moved wider in anticipation of less stringent regulations on banks' balance sheets (10Y swap +1.5bp to -48.3bp).
FED: US TSY 26W BILL AUCTION: HIGH 4.110%(ALLOT 86.16%)
- US TSY 26W BILL AUCTION: HIGH 4.110%(ALLOT 86.16%)
- US TSY 26W BILL AUCTION: DEALERS TAKE 21.55% OF COMPETITIVES
- US TSY 26W BILL AUCTION: DIRECTS TAKE 7.98% OF COMPETITIVES
- US TSY 26W BILL AUCTION: INDIRECTS TAKE 70.47% OF COMPETITIVES
- US TSY 26W BILL AUCTION: BID/CVR 3.20
