Daily Brief Macro: Why Big Oil is resisting Trump’s call to ‘drill and more

• Trump declares a national energy emergency and calls for increased oil production
• The US shale revolution led to a surge in oil and gas production
• Despite Trump’s push for more drilling, the oil industry is hesitant due to current market conditions and oversupply of oil

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• India is becoming a key player in global oil demand growth, with forecasts predicting substantial expansion in the coming years
• The global oil industry is shifting its focus from China to India as the main driver of demand growth
• Challenges for India in meeting oil demand include weather effects, economic activity rhythms, currency strength, and inflation impacts on affordability

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• Equities opened down, with futures showing a decline across various markets
• January saw significant gains in gold and Bitcoin, outperforming equities
• European stocks surged 8.2% in a month, surprising many investors and challenging traditional market outlooks

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• We’ve been tracking the data on approved financing for the projects on the ‘whitelist’ for over a year now, considering it a major factor in addressing the ‘sold-not-completed’ problem
• New data released in January shows the approved loans for the ‘whitelist’ projects exceeded the target in 2024
• There was a big acceleration in approvals in Q4 2024

• December’s US trade deficit of $98.4bn from $78.9bn in November is even wider than expected and the widest since March 2022.
• Exports fell by 2.6% after a 2.7% November increase while imports rose by 3.5% for a second straight month.
• Goods exports fell by 4.2% versus 4.5% in the advance report while goods imports rose by 4.0% versus 33.9% in the advance report.

• Drug / Analysis: China’s rock bottom drug prices spark quality concerns
• PMI /China services growth slows as supply, demand moderate, Caixin PMI shows
• Export controls: China has restricted exports of five metals used in the semiconductor and defense industries to protect its national security.

•  Heavy rain may occur in east Indonesia during one-month period
• Disruption to rubber production may be mostly from heat
• WEF, WMO seek private contribution for early weather warning

• Global uncertainty grows due to U.S. trade policies, impacting investment and slowing economic activity across multiple regions, including Europe and Asia.
• Hong Kong’s retail sector struggles, with falling sales and rents, while India and Indonesia show resilience despite expected slowdowns.
• UK and India cut interest rates, but UK economic policies remain ineffective, whereas India’s growth, though slowing, remains strong.

• There is no imminent inflation threat in our assessment of business cycle indicators.
• We do not buy the mainstream view that Trump’s policies will lead to a structural upshift in inflation. Quite the contrary.
• However inflation is not going back to pre-Covid rates. Around 2.5- 3% will be the norm hereon, which is good for corporate earnings growth and real assets

• The BoE’s 25bp rate cut came with a shockingly dovish vote split as the former hawkish dissenter proved to be an activist in backing an immediate 50bp reduction.
• Bank inflation forecasts are trending up and only touch the target with one or two more cuts as the MPC appears to be more cautiously concerned about persistence.
• We maintain our call for the BoE to hold rates in March before delivering a final 25bp cut in May, assuming conditions that also end the Fed’s cycle in March and ECB in June.