Macrosynthesis
TLDR
U.S. Job Growth Collapses – Hiring slows to 143K in January, down from 307K in December, signaling economic fatigue.
GDP Forecast Slashed – Atlanta Fed cuts Q1 2025 GDP outlook from 3.9% to 2.9%, citing weak labor and investment trends.
Trump’s Tariffs Escalate Risks – 10% tariff on China, 25% threat to Canada/Mexico fuels inflation, trade war fears rise.
Oil Tariff Shock Looms – 10% tariff on Canadian crude risks fuel price spikes, may force U.S. to seek Venezuela/Russia oil.
Palantir Surges on AI Boom – Q4 EPS of $0.14 beats $0.11 estimate, revenue jumps 36% YoY to $828M, stock soars 22%.
U.S. Labor Market Stalls as Economic Cracks Deepen
The U.S. labor market is showing clear signs of exhaustion, with January 2025 payrolls adding just 143K jobs, a significant drop from December’s 307K. While healthcare (+44K), retail (+34K), and social assistance (+22K) contributed to job growth, private-sector hiring slowed significantly, indicating weakened demand for labor. Government hiring (+32K) remained steady, but overall employment trends point to a broader economic slowdown.
Even more concerning, annual benchmark revisions revealed that 2024 payroll growth was lower than previously reported, with an average of 166K jobs per month, down from 186K. The revised data suggests that employment growth has been overstated, raising questions about the labor market’s true strength. Slowing job creation often precedes economic downturns, as declining hiring reduces consumer spending—one of the primary drivers of GDP growth.
Wages Rise, Reigniting Inflation Concerns
Wages rose more than expected: Average hourly earnings increased 0.5% for the month and 4.1% from a year ago, compared with respective estimates for 0.3% and 3.7%. The data changed sentiment on Wall Street late last week, causing a reversal of the market from positive to negative territory as investors embraced the reality that interest rates are not likely to continue falling and support economic expansion.
Foreign Hiring Surges as Native-Born Employment Stagnates
Adding to the labor market’s instability is the growing reliance on foreign-born workers. In January 2025, 1.04 million foreign-born workers entered the workforce, while only 8,000 native-born workers found jobs. This imbalance is part of a broader trend, where native-born employment has remained stagnant since 2019, despite total employment growth.
The latest BLS revisions further underscore this shift, with over 589,000 previously reported jobs erased from March 2024 data, confirming that prior employment figures overstated labor market strength. With native-born workers struggling to find employment, the reliance on foreign labor—both documented and undocumented—raises structural concerns about wage growth, labor participation, and economic resilience. If these hiring trends continue, stagnant wages and weakening household incomes could exacerbate economic fragility.
Atlanta Fed Slashes GDP Forecast as Growth Weakens
The labor market’s weakness is mirrored in broader economic forecasts, with the Atlanta Fed cutting Q1 2025 GDP growth projections from 3.9% to 2.9% in just a week. This follows a weaker-than-expected Q4 2024 GDP reading of 2.3%, marking a slowdown from 3.1% in Q3.
The GDP revision reflects worsening economic conditions, including slower job growth, declining business investment, and weakening manufacturing orders. Rising unemployment claims also suggest that consumers and businesses are tightening spending, signaling that the economy’s post-pandemic momentum is fading. If this trend persists, recession risks will escalate, particularly as the Federal Reserve maintains a restrictive policy stance to combat inflation.
Leading Indicators Flash Recession Warning
The Conference Board’s Leading Economic Index (LEI) fell -0.1% in December, capping a 1.3% decline in the second half of 2024. This continued deterioration signals that the economy is rapidly losing momentum. Key contributors to the decline include weak consumer confidence, falling new orders, higher unemployment claims, and a slowdown in homebuilding—all of which are historically reliable indicators of an impending economic downturn.
Although government spending and industrial production provided some stability, the LEI’s six-month growth rate remains in contraction territory, reinforcing fears that the U.S. is edging closer to a recession. If job growth continues to slow and investment contracts further, the economy could officially enter a downturn within six to nine months.
Consumer Sentiment Collapses as Inflation Fears Surge
As economic conditions weaken, consumer confidence has plunged. The University of Michigan Consumer Sentiment Index fell to 67.8 in February, down from 71.1 in January, reaching its lowest level since July 2024. Sentiment around current economic conditions dropped (-5.3 points), while future expectations declined (-2 points). Additionally, durable goods purchases fell 12%, as consumers grow increasingly wary of higher prices and economic uncertainty.
Inflation concerns have surged alongside this pessimism. One-year inflation expectations jumped from 3.3% to 4.3%, one of the sharpest increases in the past 14 years. Long-term expectations rose to 3.3%—the highest since June 2008, reinforcing fears that inflation is becoming more entrenched.
The Federal Reserve is taking notice. The FOMC’s Inflation Risk Diffusion Index—a strong predictor of one-quarter-ahead PCE inflation—jumped significantly in January, suggesting that policymakers expect inflation to remain stubbornly high. This increases the likelihood of prolonged higher interest rates, which could further strain the economy.
Economic Fragility Intensifies
The combination of slowing job growth, foreign labor dependency, downgraded GDP forecasts, deteriorating leading indicators, and collapsing consumer sentiment points to a U.S. economy on increasingly shaky ground. With inflation risks resurfacing and the Federal Reserve maintaining tight monetary policy, the risk of a 2025 recession is rising. Markets and policymakers face a precarious balancing act as economic momentum continues to erode.
Trump’s Tariffs Threaten Economic Stability and Energy Security
As the U.S. economy weakens, President Donald Trump’s latest tariff push is amplifying economic uncertainty. In an effort to curb foreign competition and force trade concessions, Trump has imposed a 10% tariff on all Chinese imports and threatened 25% duties on Canadian and Mexican goods—though enforcement on North American trade partners has been temporarily delayed. The administration insists that the "short-term pain" is necessary to address trade imbalances, fentanyl trafficking, and illegal migration, but the economic repercussions are already unfolding.
China has retaliated with tariffs on U.S. crude oil, liquefied natural gas, and agricultural machinery, escalating tensions. Trump also announced that the U.S. plans to place "reciprocal tariffs" of the exact same value on any country placing tariffs on American exports in an effort to ensure fair trade.
Meanwhile, Canada and Mexico are preparing countermeasures should negotiations fail. The risk of a full-blown trade war is rising, with potential consequences for supply chains, business investment, and inflation. Instead of boosting domestic industry, these policies risk accelerating economic fragility at a time when GDP growth is slowing, labor markets are softening, and consumer confidence is deteriorating. On the hand, they have served to date as a starting point for negotiations and gaining greater investments into America, as just announced by the Japanese government. Japan's largest Venture Capital firm, Softbank, also announced a $100 Billion investment into U.S. companies.
Perhaps the biggest takeaway from these meetings is Japan's plan to start purchasing more LNG from the U.S., and its intention to launch a joint venture to build a new gas pipeline across Alaska from North to South Coastlines in order to build an LNG export terminal for shipping gas to Japan. Current shipments leave from Texas and Louisiana.
Tariffs on Canadian Oil Could Send U.S. Fuel Prices Soaring
Despite being the world’s largest oil producer, the U.S. remains heavily dependent on Canadian crude, particularly the heavy oil that its refineries are built to process. Unlike light shale oil from Texas and North Dakota, Canadian oil is thick, viscous, and essential for U.S. refining infrastructure. Canada supplies over 60% of America’s crude imports, making it an irreplaceable trade partner for energy security.
Trump’s 10% tariff on Canadian oil threatens to raise fuel prices across the U.S. by increasing costs for refiners, particularly in the Midwest and Gulf Coast. Without access to cheaper Canadian crude, refiners may have to source heavy oil from Venezuela or Russia, introducing new geopolitical risks and supply chain disruptions. At a time when inflation is already accelerating, these tariffs could exacerbate cost pressures, weaken consumer sentiment, and further strain the fragile economic outlook.
Upcoming Events This Week
Investors will be closely monitoring next week’s Consumer Price Index (CPI) report, which could provide critical insight into inflation trends and influence Federal Reserve policy expectations. Adding to the focus, Fed Chair Jerome Powell is set to testify before Congress, where his remarks on inflation, interest rates, and economic risks will be scrutinized for signals about the Fed’s next moves.
Beyond inflation data, markets will also react to key economic releases, including producer prices (PPI), retail sales, and industrial production, which will help gauge the strength of consumer demand and business activity. Meanwhile, corporate earnings will be in the spotlight, with reports expected from McDonald's, Vertex Pharmaceuticals, Coca-Cola, S&P Global, Gilead Sciences, Cisco Systems, Applied Materials, and Deere & Co. These updates will provide a clearer picture of consumer spending trends, supply chain dynamics, and sector-specific growth prospects.
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Natural Gas
+8.84% (1W Chg)
70.07% (YoY Chg)
Gasoline
+1.5% (1D Chg)
+4.72% (1M Chg)
Copper
+3.04% (1D Chg)
+8.55% (1M Chg)
Coffee
+9% (1W Chg)
+28.4% (1M Chg)
Company News
LevelFields AI Stock Alerts Last Week
This week, LevelFields alerts identified several major stock surges tied to dividend announcements. CTSDF saw a remarkable 55.33% single-day jump after announcing a dividend reduction, signaling a market revaluation. IDCC surged 16.05% in one day following a 33% dividend increase, while G gained 11.23% after unveiling an 11% dividend hike alongside a $500 million stock buyback program. YUMC also rallied 9% after announcing a 50% dividend increase, reinforcing the market's strong reaction to shareholder returns. These moves highlight the impact of dividend policies and capital allocation strategies on stock performance, presenting lucrative opportunities for investors tracking such catalysts.
Trump's Media Company (DJT) Files for ETFs
Trump Media announced plans this week for the "Bitcoin Plus ETF," part of a new lineup of ETFs under its Truth.Fi brand. The company has filed to register trademarks for several ETFs, including the "Made in America ETF" and the "U.S. Energy Independence ETF."
“Our goal is to provide investors with opportunities to support American energy, manufacturing, and companies that offer an alternative to the woke funds and debanking issues prevalent in today’s market,” said Trump Media CEO Devin Nunes in a press release.
Nunes also noted that the company is exploring unique strategies to differentiate its products, including those focused on bitcoin. This is a show of cards, where Trump plans to make money by selling access to the very equities and cryptocurrencies his administration will invest in and prop up through policies and with a sovereign wealth fund.
This is very bullish for Bitcoin and all commodity companies exporting American products.
Amazon Earnings: Strong Results Overshadowed by Cloud Constraints
Amazon (AMZN) reported Q4 revenue of $187.8B, a 10% YoY increase, and EPS of $1.86, surpassing estimates of $1.49. However, shares dipped 3% after the company issued lower-than-expected Q1 revenue guidance of $151B–$155.5B (vs. $158.6B expected). Amazon Web Services (AWS) revenue grew 19% to $28.8B, but CEO Andy Jassy warned that capacity constraints on power and AI chips could limit further acceleration until the second half of 2025. The company spent $26.3B in capex last quarter, primarily on AI and cloud infrastructure, and plans $100B in 2025 investments to maintain its leadership in AI computing.
Palantir Earnings: AI Growth Drives 22% Stock Surge
Palantir (PLTR) posted Q4 EPS of $0.14, beating expectations of $0.11, with revenue surging 36% YoY to $828M (vs. $776M expected). The company also raised its 2025 revenue guidance to $3.74B–$3.76B, ahead of estimates ($3.52B). Shares soared 22% in response. CEO Alex Karp emphasized Palantir’s expanding role in AI-driven software, citing strong demand across commercial and government sectors. U.S. commercial revenue jumped 64% YoY to $214M, while government contracts climbed 45% to $343M.
Alphabet Earnings: AI Investments Overshadow Revenue Miss
Alphabet (GOOGL) reported Q4 revenue of $96.47B, slightly missing estimates of $96.56B, while EPS of $2.15 beat expectations of $2.13. However, shares dropped 9% as the company announced $75B in 2025 capital expenditures—far exceeding forecasts of $58.8B. AI spending weighed on sentiment despite 12% YoY revenue growth. YouTube ad revenue rose to $10.47B, but Google Cloud revenue of $11.96B missed the expected $12.19B, raising concerns about its AI-driven expansion. CFO Anat Ashkenazi defended the AI investments, stating that Alphabet is in a “tight supply-demand situation” for AI capacity and plans aggressive data center expansion. Analysts remain split—some see long-term AI leadership, while others cite rising costs and slowing ad growth as headwinds.
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Upcoming Earnings
MONDAY
McDonalds (MCD), CoreCivic (CXW), Astera Labs (ALAB)
TUESDAY
Coca-Cola (KO), AutoNation (AN), Carlyle Group (CG), Marriott International (MAR), Shopify (SHOP), Leidos (LDOS), Energy Transfer (ET), Lyft (LYFT), Zillow (ZG)
WEDNESDAY
CME Group (CME), Dominion Energy (D), Generac (GNRC), Vertiv (VRT), Cisco Systems (CSCO), Paycom Software (PAYC)
THURSDAY
Deere (DE), Duke Energy (DUK), Crocs (CROX), Datadog (DDOG), US Foods Holding (USFD), Roku (ROKU), Airbnb (ABNB), Draftkings (DKNG), Coinbase (COIN), Palo Alto Networks (PANW)
FRIDAY
Moderna (MRNA), Portland General Electric (POR)
This is not financial advice. All information represent opinions only for informational purposes. Given the vast number of stocks we cover in these reports, assume staff covering stocks have positions in stocks discussed.
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