By Goldman trader Paolo Schiavone
Key Events – Global Week Ahead: Fed and ECB, Lunar New Year, 20% S&P Earnings
- Monday : China industrial profits and PMI, Germany IFO , US new home sales, Lagarde speak in Budapest, Bessent confirmation. 3rd Feb first QRA.
- Tuesday : US consumer confidence, durable goods, Informal dinner Lagarde and Von der Leyen. GM, Starbucks results.
- Wednesday : Fed, Brazil and Canada rate decision, Spain GDP, Tesla, Microsoft, Meta, ASML earnings, Reeves speech in Oxfordshire, BOJ minutes
- Thursday : ECB, Apple, CAT, Visa, UPS Deutsche Bank, Shell earnings, US Q4 GDP; RBA Jones speaks, BOJ Himino speaks.
- Friday : France CPI, Germany CPI, unemployment, US personal income, PCE inflation, employment cost index, Samsung earnings, Bowman remarks.
Trading markets
- The plethora of events suggest x-asset vol is likely to be back next week. It’s Fed vs Mag7 earnings
- Very opportunity-rich environment if you’re quick on the trigger. But also, plenty of bad volatility (in as, not fundamentally driven, hard to forecast).
- So, you need to be nimble, size at half-75% of normal. Strong convictions weakly held. Weak convictions expressed in a risk efficient, premium down format.
Framework: Technical, Flows, Positioning. Valuation, Sentiment.
- Technical 30% : Top of the channel for US Equities/ Europe Breaking out / Oil and Copper at support / Momentum in bonds sell off seem to have calmed.
- Flows 30% : Global equity funds slowed (+$6bn vs +$13bn last week). Fixed income stronger demand (+$14bn vs +$11bn last week). EM negative flows. FX , USD demand.
- Positioning 20% : Cleaner in Equities/ FI/ FX. Tariffs, strong earnings, healthy thematic, supportive macro have left clients with limited convictions.
- Valuation 10% : Low Equity Risk premia / Neutral for bonds. Would say not very high for the Mag7 given the reset in EPS expectations. Bonds
- Sentiment 10%: AAII stretched, GS Neutral. Despite one of the largest USD weekly drawdowns in years still constructive in Equities, Short oil, Neutral bonds.
Fed view: We are pricing, 7 for March ,14 for May 25 for June. We view “market pricing as a probabilistic statement about possible Fed paths in coming years is too hawkish”
Interesting Trades:
- Fed- Dovish vs pricing- Rec SFRM5Z5
- Rec BOC meeting on Wed- 25 or more than 0
- Deepseek- low quality dip on Nasdaq. Buy dips in NQH5
- Earnings: ASML short MSFT long/ Meta long
- Earnings: Oracle/ Microsoft/ Amazon vs NVDA
- Long Copper into Chinese seasonality and Lunar new year destocking.
Weekend News flow:
- Trump ridicules Denmark and insists US will take Greenland – FT
- Meta’s chief AI scientist says DeepSeek’s success shows that “open source models better vs proprietary ones”
- President Trump said he wants to “clean out” the Gaza Strip and urged Jordan and Egypt
- German Election Taboos Broken as Merz and Musk Flirt With AfD
- Baltic Sea data cable damaged in latest case of potential sabotage
- Reeves seeks to unlock billions from UK pension schemes for investment- FT
Charts:
Chart 1 GS Flow of funds last week:
Chart 2: Mag Seven: EPS expectations slowing- buying opportunity on a lower bar ( BBG)
Chart 3: SPX short and USD shorts capitulation was at full speed.
Chart 4: Corporate Insiders are dumping shares at the fastest pace in history (data going back to 1988)
Chart 5: Gold continues to be one of the highest conviction/ trend trades out of the gates in 2025. (Goldman)
