After a turbulent week in markets, gold is still shining. While the immediate threat of an intra-NATO trade war is off the table, there are plenty of reasons for investors to stick with the precious metal as the focus shifts to the Federal Reserve.
Gold is hovering around the $5,000-an-ounce mark, just months after topping the $4,000 threshold for the first time. The price pulled back slightly after tensions between the U.S. and Europe eased following President Donald Trump’s backtrack on Greenland—but that didn’t last long. The metal resumed its rally as the message from the World Economic Forum in Davos became: brace for a less stable world order.
But it’s not just the future of an Arctic island that has made gold more attractive. Somewhat lost in the noise over Greenland were messages that a new Fed chair announcement could come as soon as next week, and that the White House projects the U.S. economy will grow between 4% and 5% in inflation-adjusted terms, twice as fast as consensus forecasts. That suggests there will be political pressure on the new central bank leader to let the economy run hot by lowering interest rates.
Gold benefits from lower rates, as its lack
of a yield is less of a disadvantage. It also acts as a hedge against the possibility of a spike in inflation. While the Fed is expected to hold rates steady next week, that will likely be overshadowed by expectations of more cuts under the leadership of a new chair.
If the Fed’s policy direction is in question, there is little doubt what other countries’ central banks are doing—buying up gold as fast as they can. The National Bank of Poland this month approved a plan to add another 150 metric tons to its gold holdings. Gold recently surpassed Treasuries as a share of global reserves, making it the second‑largest holding behind the dollar, according to analysts at LPL Financial.
Add it all together and gold looks ever-more alluring. The Fed and the start of Big Tech earnings, with updates from Meta and Microsoft, will take the spotlight next week, but expect the yellow metal to keep dazzling investors.
—Adam Clark
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Intel Beats Expectations But Supply Constraints Continue
Intel, the chip maker trying to stage a turnaround, continues to see strong processor demand but it faces constraints and forecasts weaker-than-expected first-quarter revenue even after beating
expectations for the fourth quarter despite industrywide supply shortages.
- CFO David Zinsner told Barron’s it worked through much of its prior inventory and was still facing “supply constraints,” but he expects chip supply will improve each quarter for the rest of the year. A rise in memory prices could be “a bit of a challenge” in the second half.
- Fourth-quarter revenue of $13.7 billion fell 4% from the prior year, and adjusted earnings were 15 cents a share. First-quarter
revenue is forecast at $11.7 billion to $12.7 billion, with break-even EPS on an adjusted basis or an unadjusted 21 cent a share loss.
- CEO Lip-Bu Tan said the company was working aggressively to grow its supply to meet demand and that its priorities are to sharpen execution, reinvigorate engineering excellence, and fully capitalize on the vast opportunity artificial intelligence presents.
- Intel’s data center and AI revenue rose 9% in the fourth quarter, to $4.7 billion, and its client computing group revenue fell 7% to $8.2 billion. Its foundry revenue rose 4% to $4.5 billion. The adjusted gross margin for the quarter narrowed slightly to 37.9%.
What’s Next: Despite its struggles, investors have plowed cash into Intel, including the Japanese conglomerate SoftBank and the U.S. government, and it has signed deals to develop chips with Nvidia. Its shares have nearly doubled in price since last summer and reached another 52-week high on Thursday.
—Tae Kim and Liz Moyer
Trump Vows Big Retaliation as ‘Sell America’ List Grows
One of the world’s biggest public funds has trimmed its U.S. asset exposure as the “sell America” trade spreads. Jo Taylor at the Ontario Teachers’ Pension Plan with $200 billion in assets under management told
Bloomberg TV it scaled back its investment in U.S. assets early last year.
- Taylor said they felt exposed to the dollar and Treasuries, so it cut them. The U.S. is still around 30% of its overall portfolio “and remains an important territory for us in terms of further capital.” But that might not mean more Treasury
purchases. Others have expressed a similar view.
- Denmark’s pension fund for teachers is selling $100 million in Treasuries, while the Greenland-based SISA Pension fund has said it may follow suit. But the world’s biggest sovereign-wealth fund, the $2.1 trillion Norges Bank Investment Management, is staying put, reflecting the size of the U.S. market.
- President Donald Trump has some harsh words for those who are selling America, saying it would invite “a big retaliation” when asked at Davos if he was concerned that European countries might dump U.S. Treasuries. “We have all the cards,” he said.
- The U.S. debt could rise past $50 trillion over the coming decade, the Committee for a Responsible Federal Budget said, much of it owned by foreign investors. Some are starting to balk at ballooning deficits and an American president blustering about Canada statehood and threats over Central and South America.
What’s Next: A market sensitive to political risk explains why global investors are reassessing their exposure to U.S. assets, says John Murillo, chief business officer at B2Broker. Capital rotating out of U.S. equities and Treasuries results in higher bond yields, tighter financial conditions, and reduced liquidity.
—Martin Baccardax
Airlines Brace for Chaos as Winter Storm Barrels Across U.S.
Airlines are bracing for several days of major travel disruptions as a powerful winter storm barrels its way across much of the U.S., promising heavy snowfall and potential power outages. The storm, which is also plunging much of the U.S. into subzero temperatures, could hit retailers, too.
- More than 120 million Americans are under a winter storm watch for this weekend. Major carriers including
