Trading Observations

• Futures strong as AVGO should push both into green for 4th consec week (seasonality remains tailwind)

• 10Y knocking on 4.35 as inflation remains sticky

• Stat of the Day:  if you invested $1,000 in S&P in 1945, you would have $4.6mm today.  if that money was only invested from November through April, you would have $460,000.  

• At the end of 2019, US household net wealth was $110tr.  by the middle of this year, US household net wealth was up to $154tr (and, of course, is surely higher today).   Fueled by Fed printing money

• Still wrestling with 6085 resistance area.  6010 below, blue skies above...

Futures

DOW +37

S&P +20

Nasdaq +166

10-Year Yield

Oil

BITCOIN

Consumer/Financial Healthcare

Homebuilders – JPM joined the downgrade of homebuilders today, taking the sector to cautious and downgrading DHI, TOL, and MTH.

UPST – Up 5% on a Needham upgrade. They see cheaper funding coming.

PYPL – Up 2% on a Wolfe upgrade to outperform. They are late to this party.

SCHW – Monthly inflow echo the barrage of new money that came into the market in November post-election. They just announced new AUM of $28.8B in November up 17% m/m, and now hold $10.3T….with a T.

COST EPS largely in line when excluding tax benefit. The stock's valuation sets a high bar, so a muted reaction seems likely. Net, COST's traction with consumers remains best in class

DKNG – JPM bullish heading into 2025

RH jumps 14% after the furniture retailer raised its revenue forecast for 2025 and swung to a profit in the third quarter.

ELF - gains 1.3% after Goldman Sachs initiated coverage with a recommendation of buy.

Technology

AI is alive and well: Broadcom surging on AI commentary/guide ... AI proxies: AVGO +18%, MRVL +5.4%, CRDO +4%, ANET/CLS +3%, ALABA/ARM +2.6%, SMH +2.1%, TSM/MU+2%, DELL/PLTR +1.5%, NVDA/VRT +1.4%, AMD/PSTG +1%

AVGO: +13% WILDLY BULLISH ON AI ... solid qrtr; guide inline which is better than feared ($14.6B versus expectations closer to $14B) .... Bullish commentary - demand for AI-linked chips remains extremely strong (feels its AI opportunity is massive over the coming years, reaching $60-90B in F27 alone, and it disclosed two new hyperscaler customers for its AI XPUs); non-AI semi rev troughs

Apple planning in-house chips for Bluetooth, WiFi connections, replacing current supplier Broadcom - Bloomey

NVDA: relative laggard within megacaps; MSFT CEO Nadella on BG2 podcast. Key quote getting passed around - "is they aren’t supply constrained on chips anymore" .... also Jefferies Asia was out saying Jan/Apr Q continue to be more transitional before BW really ramps up

NOW: -1% downgraded @ Keybanc citing govt spend risks and AI leadership diminishing as other co’s get AI ducks in a row along with expensive valuation

SMCI: Supermicro partners with Nidec on water cooling CDU to enhance NVL72 cooling efficiency (DigiTimes)

UBER: named top pick ystrdy @ GS .. "risk-to-reward balance is among the most attractive heading into 2025; Uber is mired in a series of short-term debates - pricing inflation and competition impact on mobility growth and medium/long term industry concerns - the impact of autonomous vehicles on supply/demand if not outright disintermediation" ...

Industrials 

Boeing will invest $1B in its South Carolina operations to boost production of its 787 Dreamliner jets Boeing Commits $1 Billion to Speed Up 787 Dreamliner Production [msn.com]

D.R. Horton (DHI) Cut to Underweight at JPMorgan; PT $156

Meritage Homes (MTH) Cut to Neutral at JPMorgan; PT $197

Toll Brothers (TOL) Cut to Neutral at JPMorgan; PT $150

TopBuild (BLD) Cut to Neutral at Seaport Global Securities