Calendar

This Week – There are 7 Central Bank Rate Decisions this week and the US enters a quiet period for its decision next week. CPI Wednesday is the last important data point. The market likes 25 bps.

Monday –

Tuesday – Unit Labor Costs

Wednesday – CPI (Important)

Thursday – PPI, Jobless Claims

Friday –

Trading Observations

• China with a dovish pivot

• CPI and PPI later in the week

• ORCL MDB tonight.  ADBE Wed. AVGO Thurs highlight

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

• Yardeni has been a big bull - The market rally may experience a hiccup in the beginning of 2025 as signs of froth appear in the market. “For the here and now, there may be too many charged up bulls,” Yardeni wrote in a Thursday note....

• Key reports this week -> ORCL (tonight), GME, ADBE, COST, AVGO, M

• A few things of note (skew toward caution but again, maybe a 2025 problem) 

  • Breadth not great (firmly into overbought so some churn not surprising) WillieDelwiche [x.com]

  • Citi panic/euphoria at extremes neilksethi [x.com] and LizAnnSonders [x.com]

  • S&P price/book at dot com levels Barchart [x.com]

  • Retail has NEVER  been this bullish, going back to 1987 JeffWeniger [x.com]

  • S&P dividend yield lowest since 2000 charliebilello [x.com]

• Upgrades – BX, BK, CHRW, CCEP, CMI, EHAB, EQH, HES, JD, KVUE, KOD, MKC, MC, NWL, NTRS, OHI, PYPL, REAL, RDDT, HOOD, ROK, SCHW, STT, SYF, TKR, VRSN, VRTX, VSCO, XYL

• Downgrades – AMD, BAC, BIIB, CTRE, CBOE, DOCU, FTV, DINO, HLI, BZ, LAZ, MYGN, PAYO, PBF, RWT, RF, FOUR, SLM, SOFI, NOVA, VAL, VSCO

Futures

DOW +30

S&P -4

Nasdaq -39

10-Year Yield

Oil

BITCOIN

Consumer/Financial Healthcare

OMC, IPG – Let the M&A parade begin. OMC has said they want to buy IPG for ~$36 which is a scant 12.8x P/E. Billboard advertisers unite.

SYF – Upgrade to overweight at JPM. They are cautious on the group given its pricing in regulatory help. They think SYF has a relative discount worth of the rating regardless.

Upgraded at MS – RF, NTRS, BNY, STT and they cut HLI to underweight.

MS bullish on large cap banks, but downgraded BAC.

SCHW, HOOD – Upgraded to overweight at Barclays. They also cut CBOE.

S&P inclusion winners were APO Up 5% and WDAY up 8.5%. Losers were SQ, COIN and ARES.

China – Pushing a large stimulus agenda and saying they want to accelerate offshore IPOs for domestic companies.

SOFI – Down 2% - Downgraded at BAC on valuation.

BX – Up 2% - Upgraded at TD Cowen.

 PYPL: +2% BofA upgrading - demonstrating increased turnaround progress just over a year after C-level management change; sees potential 2025 acceleration in underlying transaction profit growth, argues that recent holiday season e-commerce spending data points have been encouraging

LVMH – Could see upside today with China stimulus.

Health insurance stocks have slumped in the last few days amid concerns of a more stringent regulatory pushback toward the industry over practices such as prior authorization following the murder in NYC of Brian Thompson - WSJ

Technology

AI / US DOMINATION: PLTR CEO from the Reagan National Defense Forum ... "America is in the very beginning of a revolution that we own- the AI revolution. We own it. It should basically be called the "US AI revolution. Every single relevant company in the world, is in this country .... There is no other place to do technology really at scale besides America. Europe has basically decided to regulate its basically anemic and nonexistent tech scene out of production. All of those people want to come to America. The American tech community is booming"

• NOTE: PLTR IS UP 6.5% on a one-year 36.8M extension of US Special Operations Command Contract. Getting hard to wrap your head around the valuation at this level (Trading ~50x 2025 revs)

NVDA/CHIP WARS: NVDA -1.9% as Chinese regulators opening up probe into anti-monopoly practices. Nvidia, Apple amongst others easy targets for China

NVDA just cont to chop around ... catalysts ahead: Blackwell ramp; Jensen keynote @ CES Jan 6; #'s 2/26; GTC March 17-20 in San Jose .. since June 19, NVDA up 5% (vs SOX -12%, AMD-10%, MRVL+55%, ANET+27%, AMD unch)

AAPL vs. QRVO – Apple will begin utilizing a new proprietary RFFE chip that could eventually take business away from Qualcomm and QRVO (Apple is set to continue its relationship w/SWKS and AVGO for RF filters) – Bloomey

DDOG: -1.8% to Sell $775 Million Convertible Senior Notes Due 2029

AMD: -2% d/g @ BofA - sees downside risks to the chipmaker’s 2025 expectations. Cites greater competitive risks in AI against best-of-breed Nvidia’s dominance, alongside increasing cloud preference for custom chips from Marvell/Broadcom

MSFT: up six sessions in a row ... stock has been funding short for better part of the 2H, signs of exhaustive / investor shift into 2025?

ORCL: #s tonght / 8% implied move .. sentiment / positioning pretty bullish (8 out of 10) as checks remain constructive across the board; Co has outsized exposure to TikTok but many expct Trump to shoot down a ban

RDDT: +4% MS upgrades post mgmt meetings - platform’s engagement and advertising pipelines are in early stages of growth; company is shipping engagement and ad products rapidly and has multiple levers to drive outsized growth

SMCI: +7.5% received an extension from the Nasdaq and now has until Feb 25 to file its 10K and 10Q

WDAY added to S&P 500

Industrials 

LMT – the Air Force will leave a major decision on the future of fighter jets to the incoming Trump administration, where several officials have spoken critically of manned planes, and specifically LMT’s F35 – WSJ

BA’s chief lobbyist and the head of its powerful Washington, DC operation, Ziad “Z” Ojakli, has left the company