Trading Observations

• Finally a reversal and some relief, hopefully PPI benign but fading off initial pop.  More watched CPI tomorrow am.

• Timiraos suggesting inflation likely ok? https://tinyurl.com/3f57ksjy [tinyurl.com]

• KBH higher on earnings and encouraging given rate backdrop and homebuyer demand at 1995 levels https://tinyurl.com/2rary225 [tinyurl.com]

• Quietly under the surface have transports up 5 of last 6 days, even with big rally in oil

• Oscillators pushing toward max oversold again

• Reclaimed 5830 and need to hold for few days or more significant 5675 support comes into play

• If we can rally above 5950 will ease some fears and put bulls back in control

• Small businesses optimism highest since Oct 2018 and 2-month jump since at least 1985 https://tinyurl.com/9cj8f28h [tinyurl.com]

Futures

DOW +103

S&P +17

Nasdaq +85

10-Year Yield - Even with a cool PPI, not getting a pullback (CPI tomorrow)

Oil

BITCOIN

Financials / Retail / Healthcare

JPM Healthcare conference this week, and it’s a big deal. JNJ is buying ITCI to kick things off, which should help Biotech in general. They like LLY and BMY. MRK remains the most controversial, but JPM is positive on valuation. Obesity remains a theme. UNH is reporting Thursday and not in attendance. 

HOOD: +1% Robinhood named new Best Idea in Global Digital Assets at Bernstein -

KBH – Up 14%. Let’s start with the P/E, which was 8x walking into the print. Housing stocks cannot get a multiple because the market thinks about 2008 a lot. That said KBH and the other home builders have been executing fairly well despite the rate picture. 8.5% of the KBH float is short, and hurting today (who shorts an 8x P/E?).

Restaurant Comps – “slightly worse than expected despite easy comparisons”. Weather being blamed.

KSS – Reaffirms guidance and out with color on store closures. All looks like good management.

V, MA – Earnings preview from JPM expects reiterated guidance, but also expects a slight acceleration on consumer spending data in the US.

Bitcoin related – All higher this morning on risk back on. BTDR up 7%, COIN up 4%.

SIG – Down 15% on weak holiday diamond sales. The prices of diamonds are strangely lower the last few years despite inflation. Lab grown likely an issue.

LLY Sees 2025 Revenue $58.0B to $61.0B, Est. $58.72B: Snapshot

Technology

AAPL: is in the process of qualifying “Made in the USA” chips from TSMC’s plant in Arizona (Nikkei)

AMD – Rated New Buy at Loop

ADBE files mixed shelf

AMZN - Amazon is gearing up to relaunch its Alexa voice-powered digital assistant as an artificial intelligence “agent” that can complete practical tasks, as the tech group races to resolve the challenges that have dogged the system’s AI overhaul

ARM - has discussed raising prices as much as 300%, Reuters reported.

CART: +2.5% sell side love; BTIG upgrade - "immediate catalyst for the upgrade is a step-up in estimates with BTIG's tracking pointing to strong order growth, putting it above consensus for Q4 and 2025" ... Mizuho +VE: "competitive concerns are overstated given the company's deep technology integration with grocers on inventory, combined with its largest transactions data and specialized delivery workforce"

Big Tech/EU: tech giants hope the incoming Trump 2.0 admin will spur the EU to dial back on aggressive regulatory actions and fines against the industry (FT);

NFLX: sell-side mixed ... Piper lifts PT to $950 - ad-tier should continue to ramp in 2025, with 2026 as an inflection year. Piper continues to see margin upside too ... Wells Fargo more neutral on near-term setup being less favorable

NVDA: held 100D as negative checks / The Information article - ppl have been discussing Blackwell ramp issues for weeks/months.

SNAP: -1.6% on Tiktok headlines / potential Musk involvement; Meta higher in pre but relative laggard within megacaps

Tiktok Timeline: awaiting SCOTUS ruling - likely reaffirm ban (Wed is scheduled opinion day); the app would “go dark” in the US on 1/19 - wont disappear for existing users but wont get any updates; although ISI points out legal experts say that would mean TikTok still available to US users

TDOC – higher after the company said its diabetes, hypertension, pre-diabetes and weight management programs will be accessible via Amazon’s Health Benefits Connector.

Industrials 

Caterpillar (CAT) Raised to Inline at Evercore ISI; PT $365