Preview of US Stock Market | Three major stock index futures rose together. UBS said that a cooling inflation supports the bull market in US stocks.

Pre-market Market Trends 1. In pre-market trading on January 17th (Friday), the futures of the three major US stock indices all rose. As of the time of writing, Dow Jones futures were up 0.41%, S&P 500 index futures were up 0.44%, and Nasdaq futures were up 0.57%. 2. As of the time of writing, the Germany DAX index rose by 1.12%, the UK FTSE 100 index rose by 1.17%, the France CAC 40 index rose by 1.00%, and the Europe Stoxx 50 index rose by 0.78%. 3. As of the time of writing, WTI crude oil rose by 0.24% to $78.04 per barrel, and Brent crude oil rose by 0.09% to $81.36 per barrel. Market News UBS Group AG: Cooling inflation supports US stock bull market, S&P 500 index may reach 6600 points! PPI data on Tuesday and CPI data on Wednesday have eased investors' concerns about inflation and propelled the stock market higher after a difficult start in 2025. Solita Marcelli, Chief Investment Officer for the Americas at UBS Group AG, stated, "The soft inflation data has been reassuring for the market, particularly after a period of high bond yields and a market decline." She added, "We believe a strong US economy, healthy corporate earnings growth, and further developments in artificial intelligence should support a market rebound." In fact, this investment bank predicts that the S&P 500 index will reach 6600 points by December. Marcelli also stated that investors may be underestimating the possibility of further interest rate cuts by the Fed this year and predicts a total cut of 50 basis points this year, possibly starting around mid-year. Don't underestimate it! The recent "minor pullback" in US stocks is actually unusually painful. Since reaching a record high on December 6th last year, the decline in the S&P 500 index has not been rare. By Thursday, the index had fallen by 3%. However, beneath the surface, there has been significant internal turmoil within the S&P 500 index, making the seemingly small drop more painful for investors. Since December 6th last year, as of Tuesday, only 19% of stocks in the S&P 500 index have risen. More than half of the stocks in the index have fallen by at least 5%, with about 20% seeing losses close to or exceeding 10%. Other technical indicators also show that the trading environment for most stocks has been extremely poor in the past six weeks. A popular market breadth indicator, the proportion of stocks in the S&P 500 index trading above their 200-day moving average, has plunged from about 75% on December 6th last year to as low as 50% on Monday, marking the lowest level since November 2023. Adam Turnquist, Chief Technical Strategist at LPL Financial, stated that this popular market breadth indicator has fallen by 25 percentage points, while the S&P 500 index has only fallen by 4%, which is at least a warning signal in the short term for investors. Turnquist warned that if the proportion of stocks in the S&P 500 index trading above their 200-day moving average falls below 48%, future returns could be weak, with historical data showing an average return of -7.3% over the next 12 months in such a scenario. Traders prepare for Trump's inauguration speech, new era of market volatility ahead? Trump's inauguration ceremony next Monday may signal a more volatile period for the market, as the Republican is expected to swiftly act on a wide range of issues including trade and immigration, which are expected to impact asset price fluctuations. Trump's tariff plans may further exacerbate inflation concerns, putting pressure on bond and stock prices, while efforts to strengthen immigration control may also affect these markets. Relaxing regulations may boost assets including cryptocurrencies and bank stocks. Jeff Muhlenkamp, portfolio manager at investment management company Muhlenkamp & Co., stated, "The market will be very sensitive to this speech. Now, everyone is trying to interpret every word and subtle difference that Trump or his closest allies say." Generally, the stock market's response to presidential inauguration ceremonies has been relatively muted, but the unpredictability of Trump and the influence of his comments on the market may make this situation different. Big US banks return over $100 billion to shareholders in 2024, reaching a new high in three years! Due to regulatory concerns, Wall Street's largest banks have been hoarding capital for years, but now they are providing the most returns to shareholders in three years in the form of dividends and buybacks. Compiled data shows that the six largest US banks returned over $100 billion to shareholders through dividends and stock buybacks in 2024, the highest level since 2021. Executives expect to provide even more returns in 2025. The current outlook appears more optimistic. The Trump administration may bring relief by reducing or eliminating plans that force banks to hold more capital on their books, which should free up cash for more lending and provide more funds to shareholders. NY Fed: Liquidity remains ample, no urgent pressure for Fed to stop balance sheet contraction. According to data released by the NY Fed, there is currently no immediate pressure on the Fed to stop reducing its holdings of Treasury securities and mortgage-backed securities. The latest Reserve Demand Elasticity indicator released by the NY Fed on January 7th shows a reading of -0.04, which is stable and in line with recent data. The report stated, "This estimate indicates that reserves remain ample." For the Fed, ample reserves mean that the financial system's liquidity is strong enough to allow for continued reduction of its balance sheet by not reinvesting in maturing Treasury and mortgage-backed securities. This process began in 2022 and is known as quantitative tightening (QT). Since the summer of 2022 when the Fed's balance sheet peaked at around $9 trillion, it has now been reduced to slightly under $7 trillion. While Fed officials acknowledge that the future of balance sheet contraction is uncertain, they do not seem eager to adjust their policy direction at the moment. Stock-specific News TaiwWei Zhejia: The most advanced manufacturing process will not be moved to the United States. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR Chairman Wei Zhejia stated that because the research and development center is in Taiwan, China, the most cutting-edge manufacturing process will only be replicated and produced in various locations once it is successful. As for the future layout of factories in the United States, he reiterated that it will still be based on the needs of customers, but strong government support is also necessary. Wei Zhejia stated that due to compliance issues, construction regulations, and several licensing requirements, it is unlikely for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's new factory in the United States to adopt the latest chip technology before the factory in Taiwan. He stated that the time needed to build a new factory in Arizona is approximately double the time needed to build a new factory in Taiwan. He added that the shortage of technical workers, gaps in the supply chain, and lack of regulations in the construction of chip production facilities have extended the time for the Arizona project. Furthermore, in response to recent questioning from the outside regarding the company's future possibility of becoming a "US TSMC," Wei Zhejia firmly responded, "Not even close."Mining giants collide! It is reported that Rio Tinto plc Sponsored ADR (RIO.US) and Jiangneng Corp are discussing the largest mining merger in history. According to sources, the world's second-largest mining company, Rio Tinto plc Sponsored ADR, recently held preliminary talks with Jiangneng Corp regarding a potential merger. If successful, this would be the biggest mining deal in history, creating a mining giant comparable to industry leader BHP Group Ltd Sponsored American Depositary Receipt Repr 2 Shs. Despite the promising prospects of the merger, any deal will face multiple potential obstacles. One source mentioned that Jiangneng Corp's significant coal business may be a stumbling block and could be divested, while its assets in Kazakhstan and the Democratic Republic of Congo may have limited appeal to Rio Tinto plc Sponsored ADR. Furthermore, the two companies have vastly different cultures and histories. As of the time of writing, Rio Tinto plc Sponsored ADR's stock rose over 2% in pre-market trading on Friday. Alphabet Inc. Class C (GOOGL.US) Gemini remains an "AI challenger," with paying users trailing behind ChatGPT and Claude. Despite the recent launch of the official iOS application for its generative AI chatbot Siasun Robot&Automation Gemini, tech giant Alphabet Inc. Class C is still significantly behind its main competitors ChatGPT and Claude in terms of paying users for its AI chatbot Siasun Robot&Automation. Statistics compiled by media outlets show that about 60% of Gemini Advanced users who purchased subscriptions for AI chatbot Siasun Robot&Automation continued to pay for the service six months after signing up. In comparison, over 70% of ChatGPT Plus users and slightly more than 60% of Claude Pro subscribers maintained their paid subscription status after six months. Claude Pro, developed by Anthropic, has received strong support from several other tech giants including Amazon.com, Inc. and Alphabet Inc. Class C. IBM (IBM.US) to acquire Oracle Corporation solutions provider Applications Software Technology. IBM announced the acquisition of Applications Software Technology, a global consulting company that provides Oracle Corporation cloud application suite solutions. The financial details of the transaction were not disclosed. Kelly Chambliss, Senior Vice President of IBM Consulting Americas, stated that the acquisition of Applications Software Technology will enhance IBM's public sector and Oracle Corporation cloud application capabilities, helping clients confidently navigate business transformations. The acquisition is expected to be completed in the first quarter of 2025, subject to customary closing conditions and regulatory approvals. General Motors Company (GM.US) penalized by FTC for selling data without user consent: banned from sharing data for five years. The Federal Trade Commission (FTC) announced that General Motors Company and its subsidiary OnStar have been penalized for selling user location and driving behavior data without user consent, including a ban on disclosing user data to consumer reporting agencies for five years. Media investigations previously found that General Motors Company had been secretly collecting data on its customers' driving habits, such as foot movements and trips, and selling it to insurance companies and third-party data brokers like LexisNexis and Verisk. This led to unexpected increases in insurance premiums for many customers who were unaware that their driving habits were being monitored and shared. Upcoming important economic data and events: 21:30 (Beijing time) - US December Building Permits MoM preliminary 21:30 (Beijing time) - US December Housing Starts MoM annualized 22:15 (Beijing time) - US December Industrial Production MoM