Calendar

This Week –

Wednesday – ADBE earnings

Thursday – PPI, Jobless Claims, COST and AVGO earnings

Friday – Holiday party dead volumes to finish the week most likely.

Trading Observations

• Markets are higher on what pundits are calling a decent CPI (we don’t see it).

• We think the market is spending this week and next rebalancing, which given the S&P is up massively and bonds have gone nowhere, stocks are likely net for sale and bonds to buy.

• Within the stock picture, momentum stocks have clearly stalled out pretty hard, but we will likely have some counter moves to that trade within this two-week period.

• Today feels like a counter trend day, where momentum stocks do well and value worse.

Futures

DOW +104

S&P +26

Nasdaq +129

The Market likes the CPI numbers today, but I’m not sure why. The chart below shows CPI is clearly flat lining in the low 3% Core and up-ticking on “all items”.

Bloomberg’s Rate Cut Markets – Now a 95% chance of 25 bps on December 18^th, but we don’t get our second 25 bps cut until March or May as of now, and the market doesn’t see rates below 4% ever.

Consumer/Financial Healthcare

The GS Financials Conference has been going on this week. It’s been largely positive. The market is bullish on a huge M&A push coming, and hopeful on rates lower, capital requirements lower, regulation lower. That adds up to a lot of hope.

Guides pre-conference presentations – SNV 2025 better top line, higher expense guidance. MTB – In-line, better fee, lower NIM.

TRV, PFG – Cut to underweight at Wells. VOYA was cut to neutral at BofA.

Trump has Andrew Ferguson replacing Lina Khan as FTC head, with hope of friendly M&A markets to come.

COST – Earnings tonight. Trades at a 50x P/E for mediocre growth. I wish all the longs the best of luck, but that is a no-fly zone price IMO.

PLAY – Dave and Busters down on bad earnings, CEO leaving, and this name has never been good for equity holders, ever.

Technology

JPM top Telco picks for 2025 are T, TMUS and USM.

JPM Bullish on SMID Software.

ADBE Earnings Tonight – It is an AI proxy these days.

Mexico passed a gig worker bill that could cost UBER some net income. LYFT has very little exposure. UBER isn’t much more than 2% tied to Mexico.

INTC Credit downgraded to BBB at S&P.

AVGO – Higher on a report of a colab with INTC and AAPL. Strange timing given earnings are tomorrow post close.

Industrials 

Baird saying Defense Spending will not be untouched by DOGE. DOGE has said $500B in spending cuts coming, but what % of the $875B we spend on defense that will be remains the mystery.

Homebuilder downgrades abound post TOL – Today its DHI KBH, LEN, and PHM at Barclays. They upgrade TMHC.

GD – Cut to peer perform at Wolfe.

IR – Cut to hold at Stifel.