US STOCKS: Late Equities Roundup

Reported inflationary pressures remained fairly steady across Fed districts in the January Beige Book vs November's edition, though this time no districts reported a downtick in prices (New York did in November).

• Eight districts characterized price increases as "moderate", with four calling them "modest / slight".
• There were increasing signs of tariff passthrough apparent in this report, with businesses no longer willing to suffer compressed margins.
• "Looking ahead, firms expect some moderation in price growth, but anticipated prices to remain elevated as they work through increased costs."

• Precious metals have rallied to fresh record highs on Wednesday as geopolitical risks around the world continue to escalate.
• Spot gold has risen a further 1.2% to $4,639/oz, taking YTD gains to over 7%, while silver has spiked by another 6.5% to $92.6/oz, taking gains there this year to almost 30% already.
• For gold, the trend structure unsurprisingly is bullish, with sights on $4,696.3 next, a Fibonacci projection.
• Similarly for silver, moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Having traded through the $90 handle, price has already tested next resistance at $92.878, a Fibonacci projection. Above here, sights are on $94.374 next, another Fibonacci projection.
• Meanwhile, copper has also rallied to another all-time high today, due to supply concerns amid the ongoing tariff threat.
• Copper is currently up by 1.1% at $608/lb, just below the high of $615.4 reached earlier in the session.
• Elsewhere, oil prices have risen further due to an increasing geopolitical risk premium in the middle east.
• WTI Feb 26 is up by 1.4% at $62.0/bbl, as Trump has promised "very strong action" if Iran goes ahead with executing protesters.
• A bull cycle in WTI futures is in place, with price trading through a key short-term resistance at $61.25, the Oct 25 high. A clear break of this hurdle would open $62.59 next, a Fibonacci retracement point.

The Federal Reserve's Beige Book for January portrays a slightly stronger take on economic activity in the mid November-December period compared with the prior release (November). In this regard it's only going to reinforce conviction on the FOMC that there is no hurry to cut rates.

• This is one of the strongest Beige Books in this respect in the last several cycles, in terms of breadth at least: 8 of 12 districts (the exceptions being NY, Chicago, Minneapolis, Dallas) saw activity rise at a slight/modest pace, compared with just 4 in the previous report. (See table below - MNI categorizes the results using the verbatim commentary in individual regional Federal Reserve banks' reports).
• In November's Beige Book, 4 of 12 regions reported declines in activity, whereas it was just 1 declining region (NY) this time.
• The Fed's national summary reports decent if mixed consumer spending overall: "Most banks reported slight to modest growth in consumer spending this cycle, largely attributed to the holiday shopping season. Several Districts also noted that spending was stronger among higher-income consumers with increased spending on luxury goods, travel, tourism, and experiential activities. Meanwhile, low to moderate income consumers were seen to be increasingly price sensitive and hesitant to spend on nonessential goods and services. Auto sales were little changed to down across most Districts."
• However manufacturing was mixed (in line with most data/surveys we've seen, incorporating the regional Fed manufacturing surveys), while services demand appeared steady and credit dynamics were mixed: "Manufacturing activity varied with five Districts reporting growth and six reporting contraction. Nonfinancial services demand was generally seen as steady to increasing somewhat. Banking conditions were generally reported as stable or improving, with some increased demand coming from credit cards, home equity loans, and commercial lending. Residential real estate sales, construction, and lending activity softened in the majority of Districts that report on the sector.
• Commodity sectors were also mixed: "Agriculture conditions were largely unchanged with only Atlanta reporting a modest decline due to weaker demand for exported commodities. Energy demand and production was flat to down slightly."
• And the outlook was cautiously positive: "Outlooks for future activity were mildly optimistic with most expecting slight to modest growth in coming months."