The commencement of the Hamas ceasefire-hostage release deal, while slower than the agreement plan, saw three young Israeli girls released. In the first phase, over six weeks, 33 hostages (alive and dead) including US citizens are to be released. In return Israel is to release 1,904 Palestinians. That still leaves 66 hostages to be released in phase two which is being negotiated. Will the deal hold and all hostages released or does a new phase of the war break out. Hopefully rational behavior occurs and sufficient food aid arrives to help the beleaguered citizens of Gaza as the phases unfold.

The President’s key cabinet and other lieutenants continue to go through the Senate confirmation process. The first 100 days that Trump wanted to see major directional and policy changes is unfolding. Hopefully the divergent political views don’t make progress glacial.

Some of the recent tug of war economic data includes:

• US Retail Sales rose 0.4% in December up from 0.2% in November. Optimism about the economy has improved as Inauguration day neared.
• US core CPI has risen 3.3% and will make it hard for the Fed to lower their Fed Funds rates next week Wednesday. Among the culprits, higher gasoline prices, grocery staples such as eggs (now up around US$7 per dozen due to the bird flu) and airfares up 3.9% in December and up 7.9% over the last 12 months.
• The outgoing Treasury Secretary on January 17th said that the debt limit would be hit on January 21st. The incoming Secretary will need to use ‘extraordinary measures’ to keep the government funded until a new higher limit is approved. This includes suspending investment in federal retirement funds and other accounting maneuvers (gimmicks) to free up borrowing capacity. A deal to remove the debt limit would be the wisest decision so this ongoing stress point is removed. Fiscal hawks like the measure as they want to use it to cut government spending and move to a balanced budget. A far cry away!
• US mortgage rates are now above 7% making housing affordability more of a challenge.

Regarding energy,

Our WTI price target of US$66-69/b was reached in September and is likely to test that level again in the coming weeks. Today WTI is at US$75.94/b (down US$3.50/b from last week) as the tariff fears subside. We expect a period of backing and filling for WTI crude in the coming weeks and another test of the lows (US$66-68/b). When this occurs we should see another BUY signal triggered. We plan to add additional BUY ideas at that time. Subscribers please watch your emails on weak market days as this is when such an Action Alert would be issued.