Dear valued client,
Markets are on track to finish in positive territory this week as the U.S. inflation report for December came in at 2.9% (compared to 2.7% in November and 2.6% in October), aligning with market expectations. Higher inflation was driven significantly by a 2.6% rise in energy prices, with gasoline up by 4.4%. Food inflation also ticked up to 2.5% annually, while transportation costs rose to 7.3%. This report will undoubtedly influence the Federal Reserve’s decision on interest rates in 2025.
Israel and Hamas have reached a ceasefire agreement after 15 months of conflict, involving a significant increase in humanitarian aid to Gaza and the release of hostages. The deal, mediated by the U.S., Qatar, and Egypt, was announced by Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani in Doha. It consists of three phases, with the first phase initiating a 42-day ceasefire during which Hamas will release 33 Israeli hostages, including children, women, and the elderly, in exchange for Israel releasing 1,100 Palestinian prisoners. This phase also includes the withdrawal of Israeli forces to create a 1-kilometer buffer zone in Northern Gaza, allowing displaced Gazans to return to their homes and facilitating the entry of substantial humanitarian aid. The subsequent phases will focus on further hostage releases, a complete withdrawal of Israeli troops from Gaza, and the eventual reconstruction of the region. The agreement, which needs approval from Israel’s cabinet, comes after intense negotiations and aims to transition into a long-term truce, with both the outgoing Biden administration and the incoming Trump administration claiming diplomatic success for the deal. However, the implementation faces challenges with over 46,000 Palestinians reported dead, massive displacement, and widespread destruction in Gaza.
In earnings news, big banks are experiencing a surge in profits, with standout performances across the board. JPMorgan has reported the highest full-year profit ever for a U.S. bank at $58 billion, with its fourth-quarter profits increasing by 50% from the previous year. Goldman Sachs saw an even more dramatic rise, with Q4 profits up by 105%. Citigroup and Wells Fargo also delivered robust quarterly results, reflecting a broader optimism about the economy, fueled by increasing employment figures and expectations of a business-friendly environment under Donald Trump’s incoming administration.
“Peace cannot be kept by force. It can only be achieved by understanding.” – Albert Einstein
Have a great weekend,
PW
