Macro

A strengthening dollar and OPEC's refusal to cut output collapsed oil and iron ore in the second half, deepening the commodity bear and keeping gold and base-metals prices falling.

Credit Suisse pleaded guilty to US criminal charges of helping American clients evade taxes and agreed to pay $2.6 billion, the largest bank in decades to plead guilty to a US criminal charge. The bank continued operating despite the plea, a notable departure from precedent. It signaled a tougher US stance on offshore tax-evasion facilitation by global banks.

Credit Suisse’s guilty plea on tax evasion has weighed on the sector’s reputation, reinforcing regulatory scrutiny on cross-border banking practices. However, the market has priced in the penalty as an isolated legacy issue, with broader financial conditions supported by resilient capital markets and strong deal pipeline visibility. Sentiment edged up as systemic implications were deemed limited, allowing near-term fundamentals to drive a modestly positive read.

Brent crude touched roughly $115 a barrel in June 2014, marking the peak before a historic price collapse over the following six months. Strong non-OPEC supply growth, especially US shale, was already building even as prices held near multi-year highs. The peak became the reference point for measuring the scale of the later crash.

Energy sector sentiment is sharply negative this month, driven primarily by oil prices falling below $60 on the back of surging global production. The oversupply has pressured margins and dampened near-term outlooks across upstream and integrated majors. Broader market concerns over demand growth are secondary to the immediate impact of supply expansion.

Russian President Vladimir Putin formalized Crimea's annexation following a disputed referendum, defying Ukraine and Western sanctions. The move has sparked international condemnation, with the U.S. and EU imposing targeted sanctions and NATO expressing security concerns. While Russian markets initially rallied on assurances of no further territorial moves, broader economic repercussions and potential escalation remain key risks for global markets.

Defense sector sentiment is modestly positive this month, driven primarily by the NATO Summit's reinforcement of the 2%-of-GDP defense-spending target amid ongoing tensions related to the Ukraine crisis. This commitment signals sustained or increased procurement across member nations, supporting near-term revenue visibility for defense contractors. While geopolitical risk provides a supportive macro backdrop, the concrete policy signal from the summit is the key driver of sector confidence.

General Motors is expanding its recall by 824,000 vehicles in the U.S. due to defective ignition switches, affecting Chevrolet, Pontiac, and Saturn models. The defect, linked to at least a dozen deaths, raises safety concerns and potential legal liabilities, impacting GM's reputation and possibly triggering financial penalties and declining investor confidence.

Industrial sector sentiment is positive this month despite GM’s recall of 824,000 vehicles over faulty ignition switches, which weighed on near-term confidence. The broader industrial outlook remains resilient, supported by steady manufacturing demand and stable production metrics across the sector. Sentiment reflects underlying operational strength even as isolated product safety issues create short-term liabilities.

An extreme cold outbreak dubbed the "polar vortex" sent natural gas demand and spot prices sharply higher across the US Midwest and Northeast, straining utilities and grid operators. Some regions saw record electricity demand and localized price spikes. The event became a recurring reference point for winter energy-grid stress in subsequent years.

Utilities are under seasonal strain as the polar vortex drives sharp increases in natural gas demand and prices, pressuring generation margins. However, heightened electricity demand for heating and stable power supply performance have supported revenue visibility, lifting near-term sector sentiment. The extreme weather-driven volatility is tempered by utilities' resilient infrastructure and regulated revenue streams, allowing the sector to absorb the event without broader deterioration.

A steady, moderating recovery: low rates (the 10-year fell through the year), rising home prices, and strong commercial real estate with compressing cap rates kept the owner solidly positive.

Comcast is acquiring Time Warner Cable in a $45.2 billion all-stock transaction, creating a dominant cable entity with nearly 30% of U.S. video subscribers. The merger, pending regulatory approval, will expand Comcast's footprint in key markets and boost broadband and video offerings, while raising antitrust concerns. Time Warner Cable shareholders will own about 23% of the combined company, and Comcast plans a $10 billion share buyback upon closing.

A strong tech/comm year: Facebook's $19B WhatsApp buy, Alibaba's record IPO, Netflix scaling and a robust ad market. Consistently positive.

Burger King Worldwide is merging with Canadian coffee chain Tim Hortons to form a global quick-service restaurant giant with $23 billion in system sales, relocating its headquarters to Canada for tax advantages. The deal, financed in part by Warren Buffett’s Berkshire Hathaway, aims to boost Burger King’s breakfast offerings and international growth while benefiting from lower Canadian corporate tax rates. The combined entity will list on both the TSX and NYSE, with 3G Capital retaining majority control.

Cheap-gas windfall boosts discretionary spending

Pfizer confirmed it had approached UK-based AstraZeneca with an unsolicited takeover proposal valuing the drugmaker at roughly $117 billion, which would have been the largest-ever foreign takeover of a British company. AstraZeneca's board rejected the offer as too low. The bid also drew political scrutiny in the UK over potential job losses and tax inversion motives.

Peak euphoria: Gilead's hep-C drugs became record launches, ACA coverage expansion began in January flooding hospitals and insurers with new customers, and Pfizer's $117B AstraZeneca bid capped a mega-M&A year.

Apple introduced the iPhone 6 and 6 Plus with larger screens, alongside its first wearable device, the Apple Watch. The iPhone 6 launch went on to become one of Apple's best-selling models ever. The event signaled Apple's push into a new wearables product category.

The tech sector is sharply positive this month, driven by Alibaba’s record-setting $200 billion NYSE debut, which has reinvigorated sentiment around large-scale tech listings and global growth potential. Apple’s launch of the iPhone 6 and Apple Watch further boosted momentum, reinforcing confidence in sustained innovation and consumer hardware demand. These catalysts together outweigh broader market uncertainties, underpinning a +0.50 sector read.