Morning Bid: Firefighting cash burn

On Wednesday, the Federal Reserve kept interest rates unchanged, but two dissenters raised concerns about tightening financial conditions. Fed Chair Kevin Warsh noted the situation was improving but not yet tight, while hinting at future rate hikes. Meanwhile, the Bank of Canada increased rates for the first time in three years, and the European Central Bank signaled no immediate action.

Interest rate markets reacted more positively to weaker Fed expectations, despite a steepening yield curve. Tech giants like Alphabet and Samsung reported disappointing earnings, raising concerns about cash burn and spending. However, Microsoft showed strength with a strong cloud business beat. Oracle stood out as it expects free cash flow to return to positive levels quickly.

Energy markets were volatile, with oil prices near recent highs and European natural gas futures hitting a four-year high. The ECB meeting on Thursday will be crucial, as the bank aims to balance energy-inflated inflation with mounting debt in France. President Christine Lagarde's departure on February 7 will set off speculation about her successor and their potential impact on ECB policy.

Oil prices dipped slightly on Thursday following reports of mediation efforts in the Iran war. The focus on Big Tech's cash burn continues, with market reactions closely watching AI spending's impact on their cash flow. Key economic data to watch includes US September PCE inflation, Q3 GDP, weekly jobless claims, the ECB interest rate decision, and corporate earnings from Amazon, Intel, Mastercard, Caterpillar, Eli Lilly, and SanDisk.