US: Speaker Johnson Eyes USD1.5 Trillion In Spending Cuts - Punchbowl
Jake Sherman at Punchbowl reports that House Speaker Mike Johnson’s (R-LA) budget resolution could target USD$1.5 trillion in spending cuts.
- Sherman notes on X that the yet-to-be-finalised resolution could cover USD$4.5 trillion for tax cuts, USD$300 billion increase in mandatory spending, and assumes 2.8% in economic growth.
- Johnson intends to mark up the resolution in the House Budget Committee on Thursday, ahead of a one-week recess. Johnson is targeting the last week of February for a full House vote.
- Senate Republicans, unconvinced the House can legislate the bulk of Trump's agenda in one bill, are petitioning the White House to get behind their two-step strategy that will send a slimmed-down border, defence, and energy bill to Trump’s desk as soon as possible, before turning attention to a tax reform bill later in the year.
- Senate Budget Committee Chair Lindsay Graham (R-SC), who intends to mark up his competing resolution next week, said: “I talked to President Trump over the weekend. He wants to get results,” noting that Trump’s border tsar Tom Homan and OMB Director Russell Vought are “begging” for border money.
- The Senate strategy appears to hold the most risk for markets. Getting two large reconciliation packages through the House will be exceptionally challenging, considering the asymmetrical power held by hardline fiscal conservatives. If Congress legislates popular border and energy items first, the success of the more complex tax reform bill will likely hinge on finding trillions of dollars of spending cuts to appease deficit hawks.
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COMMODITIES: WTI Futures Start the Week on the Front Foot, Trend Remains Bullish
The trend structure in WTI futures remains bullish and the contract is again trading higher, today. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $72.05. This average is seen as a key short-term support. Recent gains in Gold appear corrective - for now. However, the yellow metal is holding on to last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important short-term resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2642.1, the 50-day EMA.
- WTI Crude up $1.14 or +1.49% at $77.67
- Natural Gas up $0.19 or +4.66% at $4.179
- Gold spot down $4.93 or -0.18% at $2685.01
- Copper up $1.7 or +0.4% at $432.1
- Silver down $0.36 or -1.2% at $30.0535
- Platinum down $6.63 or -0.69% at $959.3
EQUITIES: Bear Threat in E-Mini S&P Remains Present, Next Support at $5811.65
A bull cycle in the Eurostoxx 50 futures contract remains intact and price is trading closer to its recent highs. Last week’s rally highlights a reversal of the recent corrective pullback. Resistance at 5040.00, the Dec 9 high, has been pierced. A clear break of this hurdle would confirm a resumption of the bull cycle that started on Nov 21 and open 5068.13, a Fibonacci projection. On the downside, initial firm support lies at 4935.71, the 50-day EMA. A bear threat in the S&P E-Minis contract remains present and the contract is trading lower today. The reversal from the Dec 26 high, confirms the end of the Dec 20 - 26 correction. 5866.00, the Dec 20 low and a key short-term support, has been cleared. This strengthens a bearish theme and opens 5811.65, a Fibonacci retracement. Initial firm resistance is 6107.50, the Dec 26 high. First pivot resistance is seen at 5996.50, the 50-day EMA.
- Elsewhere, in China the SHANGHAI closed lower by 7.769 pts or -0.25% at 3160.755 and the HANG SENG ended 190.15 pts lower or -1% at 18874.14.
- Across Europe, Germany's DAX trades lower by 134.25 pts or -0.66% at 20078.74, FTSE 100 lower by 25.91 pts or -0.31% at 8221.77, CAC 40 down 49.25 pts or -0.66% at 7380.48 and Euro Stoxx 50 down 44.46 pts or -0.89% at 4931.57.
- Dow Jones mini down 138 pts or -0.33% at 42024, S&P 500 mini down 51 pts or -0.87% at 5814.75, NASDAQ mini down 282.5 pts or -1.34% at 20731.75.
MACRO ANALYSIS: MNI US Employment Insight, Jan'25: Questioning Any 2025 Cuts
- We have published and e-mailed to subscribers the MNI US Employment Insight.
- Please find the full report including MNI analysis and analyst view changes here: https://media.marketnews.com/US_Employment_Report_Jan2025_5bde9f0677.pdf?
