Here is how things look as we kickoff trading this week.
February 3 (King World News) – Peter Boockvar: With regards to the Federal Reserve, in answer to a question Jay Powell was again dismissive of the easy financial conditions we currently have and how it influences their policies even though he historically reacted to the tightening of financial conditions. As heard on Friday, Michelle Bowman has a different take. She said “I continue to be concerned that easier financial conditions over the past year may have contributed to the lack of further progress on slowing inflation. In light of the ongoing strength in the economy and with equity prices substantially higher than a year ago, it seems unlikely that the overall level of interest rates and borrowing costs are exerting meaningful restraint.”
All this news just as the Citi Panic/Euphoria index continues to get more euphoric and to a multi year high at .72, well above the .41 threshold that classifies as such.
Public Remains Euphoric About Stocks
Europe Desperate To Turn Economic Stagnation Around
I read something positively about the sclerotic European economy over the weekend and it was the realization of it and the need to do something about it. ECB president Christine Lagarde and European Commission president Ursula von der Leyen both penned an opinion piece in the Financial Times titled “Europe has got the message on change…We can no longer squander our strengths with self-imposed handicaps. There is too much at stake.” They propose three cures, “First, we need to make the EU an easier place for innovative companies to grow…Second, we need to make Europe a better place to invest. Two out of three EU companies say that regulation is a key obstacle to investment, while just 14% of them are using AI…Third, we need to make doing business in Europe cheaper, especially in terms of energy costs.” Amen.
These are very important acknowledgments and hopefully we’ll see actions addressing them as the world needs a more economically vibrant European economy. https://www.ft.com/content/fba6b27a-3a72-4451-8c75-ea8533c62681
The Eurozone manufacturing index was revised up a touch to 46.6 from 46.1 initially and vs 45.1 in December. The last time it was above 50 was in June 2022. The UK manufacturing index was 48.3, up from 47 last month.
The Eurozone also reported its January CPI and it rose 2.5%, up one tenth from the December pace and one tenth more than expected. The core rate was higher by 2.7%, also one tenth above what was estimated and vs 2.7% in December. With an ECB deposit rate of now 2.75%, the ECB is back to ZERO real rates again but at least not yet is it negative. The ECB has obviously shifted their focus to regenerating economic growth rather than stick to its sole mandate of price stability.
Comments About Tough Economy
… earnings call comments of note from Friday.
From WW Grainger, the big distributor of many things selling into the industrial/manufacturing space:
“In the US, we expect market volume for the full year to remain muted. This is consistent with what we’re seeing in the current short cycle environment and does not assume a step change macro recovery that some are projecting for the back half of the year.”
From Lyondell, the big specialty chemical company:
“Across our key businesses, fourth quarter industry margins are about 60% of historical averages, underscoring the depth of the current downturn.”
“We recognize that current dynamics represent more than just typical cyclical pressures. They also reflect some structural shifts in the industry relative to prior cycles. Slower global growth, particularly in China, structurally higher energy costs, regulatory impacts in Europe and other regions, along with the potential for capacity additions to outpace demand have introduced sectoral challenges. These shifts are contributing to the depth and duration of the current downturn and will likely moderate future mid-cycle margins relative to the prior decades.”
GOLD & SILVER: One Of Greyerz’s Greatest Interviews Ever!
To listen to one of Egon von Greyerz’s greatest interviews ever CLICK HERE OR ON THE IMAGE BELOW.
Gold Price Hits All-Time High!
To listen to Alasdair Macleod discuss gold hitting new all-time highs as well as silver, miners and much more CLICK HERE OR ON THE IMAGE BELOW.
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