Five things you need to know

• US Treasury Secretary Scott Bessent said he favors a strong dollar and has no plans to alter the government’s debt-issuance plans. Check out the full story from his interview with Bloomberg Television.
• Investors are focusing on the monthly jobs report and away from this week’s tariff drama. A weak print could boost expectations for further Fed easing, while stronger-than-expected numbers may have the opposite effect. Stocks are little changed.
• Amazon issued disappointing earnings guidance and warned it could face capacity constraints in cloud computing, despite plans to invest some $100 billion this year. The stock is down 2.7% in premarket trading.
• Donald Trump told Republican lawmakers he wants to end the carried interest exemption used by legions of private equity fund managers and venture capitalists around the country, arguing it could be used to offset planned tax cuts.
• China’s growing clout in AI has sparked a wave of optimism toward the nation’s tech companies, with the Hang Seng Tech Index entering a bull market. Xiaomi and Alibaba, which have the biggest weighting in the gauge, have each rallied almost 30% since the index’s January low.

Trump trades are misfiring

In December, before Donald Trump’s return to the White House, a market consensus was building: Long the dollar, short government bonds, and favor American stocks over the rest of the world.

Five weeks into the new year, these bets are misfiring. US stocks are up, but the S&P 500 is trailing an index of international equities by roughly 2 percentage points. After an initial spike, yields on 10-year notes have pulled back, sitting below 4.5%. The dollar has weakened by about 1% against a basket of major currencies, marking the worst start to a year since 2018.

Of course, the year is still young and those strategies have a good chance to working out.

Yet it’s the latest case of market whiplash in a week where Trump’s unpredictable trade posture stoked wild gyrations across markets. The president’s trade war has forced traders across asset classes to adopt by increasingly making bets that are more conservative than usual or easily reversed.

“The market is trying to predict and trade off a very unpredictable situation and person,” said Antony Foster, the head of Group-of-10 spot trading at Nomura, who has taken to running smaller positions on currencies. “You could look like a hero one minute, only for the situation to turn on a sixpence and you look like a zero the next.”

And it’s all causing headaches for investors already struggling to get a firm grip on the Fed’s interest-rate stance amid signs of entrenched inflationary pressure.

At one level, an overarching theme embedded in those cross-asset trades is the idea of US exceptionalism, one that was expected to get a boost as Trump vowed to ‘Make America Great Again’ by imposing tariffs while lowering taxes and easing regulations for businesses at home.

Days into his term, however, Trump has appeared to be less aggressive in his disruptive approach on global commerce. That seemingly softer stance, along with questions about America’s dominance in AI, is creating challenges for the so-called Trump trade.

The murky outlook is keeping big money managers on edge, says Jeff O’Connor, head of market structure in the Americas at Liquidnet.

“The volume behavior points to high levels of trepidation with institutional traders and portfolio managers,” he said. “Few things are certain in the current market, but we can be confident that unknown unknowns will continue to throw up surprises.” —Lu Wang

On the move

• Meta is on track to extend gains for a record 15th consecutive session. The shares have added more than $260 billion during this record winning streak and were rising 0.2% in premarket trading.

• Pinterest jumps 22%. The company posted strong holiday-quarter revenue and gave an upbeat forecast for sales in the current period, a sign that its advertising business continues to grow.
• Affirm Holdings rises 18%. The consumer financing company reported results that beat expectations.— Subrat Patnaik

Europe loses out

There’s a growing view in Europe that the region’s markets are broken, and it risks losing out on the next generation of businesses as a result.

As we write in today’s Big Take, the latest example comes from UK payments firm Zilch Technology. The natural choice for its stock-market listing should be its hometown of London. Instead, there’s a real chance the company, last valued at $2 billion, picks the US.

That would put it in the growing list of European companies chasing higher valuations in New York, attracted by its deep financial pools. With start-ups often struggling to access proper funding to grow, there’s widespread unhappiness with Europe’s markets, which have failed to keep up with the needs of businesses.

US stocks on average trade at 22 times earnings, a near 60% premium over Europe. Companies like UK chip designer Arm Holdings and Swedish fintech Klarna have chosen the US for their primary stock market listings, and New York has also caught the eye of France’s TotalEnergies and Britain’s WPP.

“It is now a global competitive landscape and companies will choose to go where their capital is welcome, where their capital is rewarded and frankly where their capital will generate a good return,” said Bobby Molavi, head of EMEA execution services at Goldman Sachs. “The threat is more existential and much nearer than it’s historically been.” —Sagarika Jaisinghani, Pablo Mayo Cerqueiro, Jan-Patrick Barnert and Neil Campling

One number to start your day…

That’s how much the average American consumer spend on sports annually, according to Bank of America

Written by: Lu Wang and Phil Serafino — With assistance from Subrat Patnaik, Sagarika Jaisinghani, Pablo Mayo Cerqueiro, Jan-Patrick Barnert, and Neil Campling @Bloomberg

The post “Almost Every Bet Traders Made on Trump in 2025 Has Gone Awry” first appeared on Bloomberg