Trading Observations

• Tough day with ISM JOLTS pushing yields higher)

• I believe the market can handle 4.75% (5% is a serious problem) but need to see some stabilization to get our bearings underneath us

• Puts even more focus on jobs Fri - do we want weaker than expected?  

• NVDA was setup for a sell the news, can it recover or a sign of a trend change? ( I think it recovers, narrative fine)

• Big volume yesterday with the Nasdaq selloff

• Fed minutes likely sound hawkish, but now priced in? 

• SPX CLOSED below 5950, giving bears control, a break below 5860 and they will start to press, with many pointing to 5830 as THE line in the sand.  Hopefully rally and not have to test.... 

• $ due a meaningful pullback ? verrone_chris [x.com]

• Stocks overvalued relative to bonds? Barchart [x.com]

Jan 7-10 is CES…. CES - The Most Powerful Tech Event in the World [ces.tech]

Futures

DOW +6

S&P -1

Nasdaq -12

10-Year Yield

Oil

BITCOIN

Consumer/Financial/Healthcare

COST – Saw this the other day… Real estate developer Thrive Living is preparing to construct the first Costco with apartments in South LA. https://www.entrepreneur.com/business-news/hundreds-of-apartments-are-being-built-on-top-of-a-costco/485190 [entrepreneur.com]

WMT – CEO met with Trump yesterday. “Great conversation…the best”.

Housing Related Downgrades – JELD, LEN, MHK, PHM all downgraded at IBS and Wolfe, TMHC was upgraded.

GS out with a Residential Real Estate Piece – They like INVH, point out UDR looked disappointing, and the Sun Belt looks to be stabilizing, which leads them to MAA as a pick.

Those Phoenix Deliveries made it pretty obvious –

Demand beats supply in green, opposite in red. Bye-bye DC real estate.

Technology

ADBE: another downgrade / sentiment terrible .. investors are increasingly concerned about the competitive risk from AI creative tools sold by OpenAI, Runway, Canva, and others. Have heard of increased investor interest in ADBE heading into 2025, but remain skeptical given slow AI ramp, AI competition in addition to marketing cloud/creative cloud competition and don’t find the valuation that compelling

AMD: -2% catching downgrade @ HSBC ... my commentary from last wk: Bears see another HEAVY YEAR OF INVESTMENTS IN 2025 and areas where AMD has AI penetration - also most likely to be cannibalized by ASIC based solutions ... Feels like classic 'buyers are higher' situation currently + if narrative shifts positively, name can chase 10%+ higher (versus picking bottom)

AMZN to invest $11B in Georga to boost AI infrastructure development – Yahoo

AVGO: Rapidus will supply 2nm products to Broadcom as soon as June as the firm looks to capture share in the chip manufacturing market from TSM (Nikkei)

CART: +5.5% to replace Enovis in S&P 400 at open on 1/14

MSFT TIGHTENING: planning job cuts and focusing more on underperforming employees

NVDA: Jensen says quantum computing is exciting but likely 15-30 yrs away .. Quantum names all gapping lower -- IONQ -11%; RGTI -10%; QUBT -8%

PANW: -2% d/g at Deutsche - "struggle to see fundamentals living up to last year’s multiple expansion which priced in persistent consolidation tailwinds and an alleged firewall refresh cycle beginning in 2025; skeptical of an industry firewall refresh cycle in 2025" ... BTIG also downgrading

PLTR - following the sale of $15M worth of shares by Cathie Wood's ARK Invest ETFs.

Semis Miss: SAMSUNG prelim Q4 profit big miss (KRW6.5B vs est KRW8.96B); not a shocker how terrible non-AI demand remains + Samsung late to HBM chip mkt (where Hynix/Micron are crushing it) ... Micron back on 12/18 warned of a pronounced inventory correction in non-AI end markets, with weakness in PCs, autos, and industrial .. for HBM, Jensen on Tues expressed optimism that Samsung will eventually become a major player

Industrials 

TSLA: UBS says Cocould collect >$1B in compensation from rival automakers that need help meeting tougher pollution standards in the European Union this year

Advanced Drainage Systems (WMS) upgraded to buy from neutral at UBS

Aris Water Solutions (ARIS) downgraded to neutral from buy at Citi

Canadian Pacific Kansas City (CP) upgraded to outperform from peer perform at Wolfe

Ferguson Enterprises (FERG) downgraded to neutral from buy at UBS and upgraded to buy from underperform at BofA

Generac (GNRC) - Citi cuts Generac target, opens 'negative catalyst watch'

Goodyear (GT) to sell Dunlop Brand to Sumitomo Rubber Industries for gross cash proceeds of ~$701M

HA Sustainable Infrastructure Capital (HASI) upgraded to buy from neutral at Citi

JELD-WEN Holding (JELD) downgraded to neutral from buy at UBS

Leidos Holdings (LDOS) downgraded to hold from buy at TD Cowen

Lennar (LEN) downgraded to peer perform from outperform at Wolfe

Martin Marietta (MLM) upgraded to Outperform from Peer Perform at Wolfe Research

Mohawk Industries (MHK) upgraded to outperform from peer perform at Wolfe

PulteGroup (PHM) upgraded to buy from neutral at UBS

RPM International (RPM) upgraded to overweight from equal weight at Wells Fargo Securities

Science Applications International (SAIC) downgraded to hold from buy at TD Cowen

SolarEdge Technologies (SEDG) downgraded to sell from neutral at Citi

Symbotic (SYM) upgraded to buy from neutral at DA Davidson

Taylor Morrison Home (TMHC) upgraded to outperform from peer perform at Wolfe

United Parcel Service (UPS) upgraded to outperform from peer perform at Wolfe