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Stocks gain. Bonds pare losses.

The ECB’s Boris Vujcic warned that the reversal of globalization could accelerate consumer price increases in the coming years. Meanwhile, the central bank is set to enter a new phase of unpredictability as the terms of seven of its 26 rate setters expire by December.

The Fed’s Lorie Logan said interest rates may already be near a neutral level, potentially obviating the need for further cuts even if inflation continues to cool. Austan Goolsbee said that while fiscal policy uncertainty may lead to fewer cuts, he still sees some reductions over the next 18 months. Investors await US jobs report Friday.

US stocks eked out gains as traders parsed mixed earnings ahead of jobs data. Amazon.com Inc. tumbled in late hours after projecting profit that fell short of estimates, suggesting the company continues to ramp up spending to support artificial-intelligence services.

Bonds pared losses as Treasury Secretary Scott Bessent reiterated his view on a lower path for 10-year yields under the Trump administration. Bessent also said he wants to recalibrate the Treasury Borrowing Advisory Committee.

The new US trade war is further blurring the lines between Hong Kong and Beijing, threatening to erode the city’s main selling point as a global financial hub.

Tariffs to fuel market volatility in 2025, JPMorgan finds

Global financial-market turbulence this week sparked by a series of US tariff announcements looks like just the beginning of a volatile year, according to a JPMorgan Chase & Co. electronic trading survey. Inflation and tariffs will have the biggest impact on markets in 2025, followed by geopolitical tension, according to the annual trading poll. Some 41% surveyed highlighted volatility as their biggest anticipated daily trading challenge, up from 28% last year. (Bloomberg Markets | Feb 6)

Fed releases 2025 bank stress test scenarios

The Federal Reserve announced on Wednesday it would be testing big banks against heightened stress in commercial and residential real estate markets as part of the U.S. central bank's annual stress tests. The Fed added that the annual exams would include an additional exploratory component that would examine shocks in the non-bank sector, as well as the impact of hypothetical shocks of numerous large hedge funds on big bank finances. (Reuters | Feb 6)

Fannie, Freddie privatization, cost-cutting and new name are priorities for HUD chief

Scott Turner, who was confirmed Wednesday to lead the Department of Housing and Urban Development, said a cross-government effort to privatize Fannie Mae and Freddie Mac will be a priority as he takes the helm of the agency. Turner said HUD would work with the Treasury Department and Congress on privatization of the mortgage-finance firms and that he would act as a “quarterback” of sorts in the process. The efforts to free the firms from government control would also involve the Federal Housing Finance Agency, which oversees Fannie and Freddie. (The Wall Street Journal | Feb 5)

CLOs push back on funky private credit tactics in efinancings

The biggest buyers of leveraged loans are welcoming the return of borrowers to the traditional loan market, but they aren’t embracing every aspect of private credit refinancing deals. Managers of collateralized loan obligations have been resisting some of the looser terms often associated with private credit, according to people familiar with the matter. While lots of the big unitranche refinancings have already been snapped up by CLOs, there are smaller and lower-rated deals in the pipeline, and CLOs are getting hesitant about features like higher leverage and undrawn credit lines, the people said. (Bloomberg Law | Feb 5)

CFTC announces prediction markets roundtable

The Commodity Futures Trading Commission will hold a public roundtable in approximately 45 days after its requests for information on certain sports-related event contracts. The roundtable's goal is to develop a robust administrative record with studies, data, expert reports, and public input from a wide variety of stakeholder groups to inform the Commission’s approach to regulation and oversight of prediction markets, including sports-related event contracts. (CFTC | Feb 5)

Hallucinations have been a problem for users since AI chatbots hit the mainstream over two years ago. Illustration: Thomas R. Lechleiter | WSJ

Why Amazon is betting on ‘automated reasoning’ to reduce AI’s hallucinations — and started with cybersecurity

Automated reasoning aims to use mathematical proof to assure that a system will or won't behave a certain way. The technique is a branch of “symbolic AI,” a field rooted in the 2,000-year-old mathematical logic work of Socrates and Plato. The first application of automated reasoning for Amazon Web Services was in cybersecurity, to help prove the correctness of the company’s cryptography for business customers. The proof led to more and more of customers’ data and applications being moved to Amazon’s cloud.

— The Wall Street Journal

How DeepSeek and open source models are shaking up AI.

Tech companies and academics have long wrestled with the risks and rewards of building open source software. But the frenzy around generative artificial intelligence has lent new significance to the debate. The rise of the Chinese AI startup DeepSeek has only added attention to the issue. DeepSeek recently released an open source model that it said rivaled software from the top American AI developers — and it claimed to have done so for a fraction of the development cost, using less powerful hardware.

— Bloomberg Techology

US government websites are disappearing in real time.

Several government websites have been taken down, including the USAID.gov, ForeignAssistance.gov, NeglectedDiseases.gov, and ChildrenInAdversity.gov. An analysis of more than 1,000 federal .gov websites found that at least seven sites linked to a USAID server went offline in a two-hour span on Saturday afternoon. On Friday, Reuters reported that word of sites being taken offline resulted from confusion around new guidelines on language allowed to appear on federal sites. Agencies had been instructed to “take down all outward facing media (websites, social media accounts, etc.) that inculcate or promote gender ideology” by 5 pm EST, Friday, January 31.

— Wired

Photo: Catherine Falls Commercial | Getty Images

Best mocktails to make before bed

Sleep disorders and lack of proper rest are becoming increasingly popular globally. Sleep disturbances often cause significant stress and disruption to daily activities. Long-term sleep problems can also lead to severe health disorders. Although several sleep medications can help you get better sleep, they come with side effects and high costs. People are now looking for natural and cost-effective alternatives that will help them relax and promote sleep. This led the Sleepy Girl Mocktail to gain popularity.

-— CNET

Moscow has $2 billion stuck at JPMorgan. The US isn't sure what to do with it.

A few months after invading Ukraine, Russia sent a series of huge payments to Turkey. In short order, it transferred more than $5 billion with the promise of more to come. To the outside world, the money was to pay for Turkey’s first nuclear-power plant. Over in New York, the transfers caught the attention of Justice Department investigators tasked with policing Wall Street. The reason? Two of America’s pre-eminent banks, JPMorgan Chase and Citigroup handled the flow of money.

— The Wall Street Journal

Mewing, Beta Maxing, Gigachad, Baddie: Parents are drowning in new lingo

Slang is sprouting at a dizzying speed, leaving adults constantly unsure if they’re being insulted. ‘Omega is like the lowest rate you can get.’ Every generation has its own slang. But powered by social media, the youngest generations have taken things to a dizzying new level, adding and dropping phrases so quickly the adults in their lives can’t keep up. A trickle-down effect among siblings has children as young as 4 declaring something “sus,” as in suspect or suspicious.

— The Wall Street Journal