Morning Note

Calendar

This Week – Zero earnings in the S&P. Almost Zero economic Data, this only leaves positive Christmas vibes against a potentially snuck in negative news story

Tuesday – GDP Second Release, Core PCE, Durable Goods, Industrial Production

Wednesday – Friday – No Economic Releases

Trading Observations

• MU feels like changed the narrative and AI worries subdued (at least until year end) https://tinyurl.com/5yrcyva8 [tinyurl.com]

• NVDA to ship H200 too China by Mid Feb

• And hopefully provides a calmer markets from a technical perspective https://tinyurl.com/358td7wc [tinyurl.com]

• We SHOULD be set up for Santa (which officially starts Wed), VIX fall suggests protection has been positioned https://tinyurl.com/k4we8tvy [tinyurl.com]

• Recall we had a negative Santa period in 2023 + 2024, have NEVER had 3 years in a row down https://tinyurl.com/bde2t3sf [tinyurl.com]

• While positioning a headwind https://tinyurl.com/y2cwbryb [tinyurl.com]

• Re-acceleration coming? https://tinyurl.com/bdhmj8pa [tinyurl.com]

• Midcaps https://tinyurl.com/456tkxby [tinyurl.com]

• While IWM has fewer loss leaders https://tinyurl.com/2r7km7vk [tinyurl.com]

• Time for a long oil/short silver pair? https://tinyurl.com/mrxj8zz9 [tinyurl.com]

Futures

DOW +82

S&P +35

Nasdaq +190

Financials / Consumer / Healthcare

JHG – Up 4% - To go Private in a $7.4B deal. Janus Henderson traded at 12x P/E, yielded 3.5%, and was a Frankenstein amalgamation of business that couldn’t get a multiple, mostly due to asset losses. This should be an easy go private to make work.

CWAN – Up 9% on an $8.4B take private deal. Big growth software in Boise, ID.

Baird Top Picks in Apparel include ONON and like the turnaround stories at NKE and VFC.

V, MA – Reached a proposed litigation settlement for ATM fee litigation that was initially filed in 2011. $167MM won’t hurt either name,

Crypto – Up 2-4% on risk on.

DIS “Avatar” movie performed a bit below expectations at the domestic box office with $88MM in ticket sales, but the int’l tally was about inline (the global total was $345MM)  

Technology

AI Wars/China Access: both FT/Barrons reported that Tencent is accessing Nvidia’s most sophisticated chips via a neocloud partner located outside of China (this isn’t technically illegal, but it does point to the fact that China’s tech giants are able to get their hands on Blackwell processors despite significant US restrictions)

OpenAI - Softbank is scrambling to secure the cash needed to close its $22.5B funding commitment to OpenAI by the end of the year (already divested stakes in Nvidia and T-Mobile, and could borrow against its Arm position

AMZN: Amazon’s ASIC Set to Accelerate: Annapurna Labs will continue to be the core of the architecture design and should rely on Alchip for the tile integration. BofA estimates the 5nm+3nm and CoWoS capacity consumed by Trainium project could reach 85k and 135k wafers respectively in '26

CRM/AI: another negative piece from The Info - reports Salesforce is recommending customers dial back the use of LLMs within Agentforce amid concerns about the reliability of the underlying technology

AVs: Waymos out of service in SF post blackouts (UBER +1.1%) ... BAIDU will begin testing its autonomous driving ride-share vehicles with Uber and Lyft in the UK

GOOGL: Morgan Stanley estimates Google’s GOOG TPU shipments could reach 5 million in 2027, up 67% from its prior forecast for 3 million, and rise further to 7 million by 2028, up 120% from its prior forecast

META: shrs of Meta has still UNDERPERFORMED GOOGL by ~80% in 2H

NVDA: Nvidia GB300 server rack shipments are forecast to rise 129% year-on-year to 55,000 units in 2026, after small end-of-year shipments now, with Nvidia’s next-gen Vera Rubin 200 rack shipments to begin in the 4th quarter 2026, media report, noting strong demand from Microsoft, Meta, Oracle and Dell ... GB300 has not faced design or production yield issues like GB200 did, making it seen as a more stable, profitable and upgraded system

TEAM – Baird is designating TEAM as a Bullish Fresh Pick. While Atlassian is a controversial name with many moving parts, a more bullish view of AI as TAM expander coupled with poor sentiment and low valuation (~20x our FY'27E FCF) drive our positive thesis.

Industrials 

AI / Data Center / POWER UP: Brookfield estimates that AI-dedicated data center capacity will reach 82GW by 2034, up more than 10X from 8GW in 2024, with inference taking majority share of this capacity

Cummins (CMI) upgraded to outperform from market perform at Raymond James; $585 PT

Honeywell (HON) trading down 1.5% - HON adjusts 4Q25 and f25 guidance to account for reporting its Advanced Materials unit as discontinued operations; guides Q4 EPS $2.48-2.58 vs prior guidance $2.52-2.62; updates on Flexjet litigation

Sealed Air (SEE) downgraded to market perform from strong buy at Raymond James

Latest Media

River1’s CIO on Schwab Network

Levered ETFs, market perspectives, etc.