Oil prices surge to two-week winning streak as Iran supply fears grip markets
Fed Governor Stephen Miran is still pushing for more Fed rate cuts in the wake of the stronger than expected January payroll report. Specifically, Bloomberg reported that “Miran said planned supply-side reforms such as a reduction of business regulations, along with an expectation that housing inflation will slow, will clear the way for policymakers to continue lowering their benchmark rate.”
Treasury bond yields rose after the payroll report on the anticipation that the Fed may not cut key interest rates until May, when Kevin Warsh takes over as the new Fed Chairman. The Labor Department on Wednesday announced that payrolls rose 130,000 in January, which was substantially above economists’ consensus expectation of a 75,000 increase. The unemployment rate declined to 4.3%. Average hourly earnings rose by 0.4% to $37.17 in January and 3.7% in the past 12 months.
The strong sales growth for Taiwan Semiconductor Manufacturing (TSM) likely means that the AI boom is still accelerating, which bodes well for Nvidia’s (NVDA) guidance on February 25th after it announces its latest quarterly results. TSM reported that its January sales rose 37%, which is its fastest growth in several months and well above its 2026 guidance for 30% sales growth. TSM makes the high-end chips for Microsoft Surface laptops, Apple computers, and of course, Nvidia’s GPUs.
Additionally, in the wake of Super Micro Computer’s (SMCI) 123% sales growth, Nvidia (NVDA) has also woken up, and expectations for its quarterly announcement on February 25th remain high. Due to a replacement cycle since the Vera Rubin GPUs are five times more powerful and ten times more energy efficient, the long-term outlook for Nvidia remains amazing, so it will likely be a $10 trillion market cap company by the end of the decade. I should add that Nvidia remains approximately 15% of my Large Cap Growth portfolio.
On Fox Business, President Trump told Larry Kudlow that if Warsh “does the job that he’s capable” of, then “we can grow at 15%, I think more than that.” Trump said, “I think he is going to be great, and he’s a really high-quality person.” In the meantime, Warsh’s Senate confirmation may be delayed, since Senator Thom Tillis, a retiring Republican from North Carolina, is pledging to block any Fed confirmation as long as the Trump Administration is pursuing a Justice Department probe into Powell and a Fed building renovation project.