Trading Observations

• Retail sales rose 0.4% m/m in Dec. compared with median est. +0.6%, Census Bureau data show.

• Jobless claims rose 14k to 217k in Jan. 11 week compared with median est. 210k

• TSM – impressive numbers and guidance will fuel a SMH rally today

• UNH earnings will weigh on the DOW, while bank earnings continue to be strong

• Buyback Bid Returning: GS with a reminder about the big buyer waking up soon: "Corporate repurchase window opens on January 24th with 45% of the S&P market cap to return to the market. We are in the middle of the peak blackout window right now"

• Need to reclaim 5950 for bulls to regain control

Futures

DOW -147

S&P +7

Nasdaq +71

10-Year Yield

Oil

BITCOIN

Financials / Retail / Healthcare

Bank/Financial Earnings – After a nothing but strong day yesterday led by Citi’s massive buyback announcement, its more a mixed bag today.

MS – Up 2% - Trading crushed it, which is already a theme three I Banks in (JPM, GS, MS). Solid in all lines outside that.

BAC – Flat – NII 1% better than expected and fees strong. Core PPNR actually missed.

USB – Down 2% - In-line results and guide. Very neutral report. Not a big growth play.

PNC – Down 3% - GS is expecting a positive response, which is so far wrong. Core PPNR was better than expected. Guidance just in-line. Magnitude of beat in capital markets not as impressive as others.

CRE Transaction Volume – Huge jump in the data as +5% y/y has shot up to 21.7% from the RCA. CBD office transactions are the driver, +92% y/y.

UNH falls 3% after reporting higher medical costs for the year than Wall Street expected in its first financial statement since a top executive was killed in New York last month.

Technology

US pre: AMAT+4%, SMCI+3.4%, LRCX+3.3%, KLAC+3%, SMTC+2.6%, VRT+2.4%, CRDO/AVGO/ENTG+2%, ARM/CLS+1.9%, MRVL/MU/LITE/NVDA+1.8%, TER+1.6%, ANET/ALAB+1.5%, DELL/ORCL/HPE+1%

TSMC +5.3%; AI commentary robust / capex @ high end whispers (bullish semicaps); Confirmed no order cuts in COWOS .... Q4 ahead (upside to margins); guide for Q1 higher ($25-$25.8B vs est $24.4B); capex bullish - plans to spend $38-42B (@ high end whispers) .. outlook driven by AI spending cycle, with potential growth from new smartphone chips, AI PCs, and outsourcing orders from Intel

AAPL: lost smartphone market share in China last year as domestic OEMs saw units spike (Reuters)

ADBE: CEO calls his stock an “incredible value” and feels strongly that AI will be nothing but a growth tailwind for the company (he views OpenAI as a partner, like Windows, iOS, or Android, not a mortal threat) (Barron’s)

AMD: +30bps .. another downgrade, Wolfe cuts to Peer Perform - based on a lower expectation for data center GPU rev this year than previously expected; Firm thinks the setup into earnings is difficult for AMD.

GOOGL: Google TPUs lead liquid cooling innovation as Trillium TPU adoption grows in Taiwan (DigiTimes)

NFLX: #s on deck / 8.4% implied move .. bogeys hearing wide range; with 12-13m likely solid outcome. Setup bit more balanced given ~10% pullback but keep in mind stock was $335 2 yrs ago (vs ~$840 currently). FX impact remains debate / focus

SNAP, META - TikTok headline: (1)the incoming Trump administration is considering an executive order that would buy TikTok a 60-90-day reprieve from the Jan 19 deadline, giving the firm more time to find a solution that both satisfies the law and keeps the app operational (WaPost) .... (2)Trump’s incoming national sec advisor, Michael Waltz, said Trump would “preserve” TikTok (Axios) .. (3)the Biden admin is considering ways to keep TikTok operating in the US if SCOTUS fails to intervene in the 1/19 ban-or-sale deadline (NBC News)

Industrials 

Ametek (AME) upgraded to outperform from neutral at BNP Paribas Exane

Ball (BALL) Cut to Underweight at Wells Fargo; PT $49

CACI International (CACI) upgraded to buy from hold at Jefferies

Dana Corp (DAN) upgraded to buy from neutral at UBS

Enphase Energy (ENPH) Cut to Hold at Truist Secs

First Solar (FSLR) Raised to Buy at Seaport Global Securities; PT $274

Heico (HEI) Rated New Sector Weight at KeyBanc

MSC Industrial (MSM) Rated New Outperform at Wolfe; PT $95

Mobileye (MBLY) Rated New Outperform at Oppenheimer; PT $28

Sensata Technologies (ST) initiated buy at Freedom Capital

Southwest Air (LUV) Cut to Sell at Citi; PT $29.50

Symbotic (SYM) Rated New Outperform at Oppenheimer; PT $35

Symbotic (SYM) trading +20%: to acquire Walmart's advanced systems and robotics business and sign related commercial agreement.

SMH back towards high-end of range (has been stuck in $240-260 range since mid-Sept)

NVDA +1.6% …. Surprising not stronger; watch 50D @ 139.63