December 22nd Market Overview

Happy Monday everyone.

Santa rally in full effect? All indices are looking like they will close green.

Wall Street is finding its footing in tech - economic data is painting a more cautious picture beneath the surface. My brain is starting to shutoff and get into full holiday mode. 🎄

No brief on Christmas and tomorrow it will come early as market’s close at 1pm.

A personal ask from me - each time someone checks out today’s sponsor it buys me a sip of coffee.

Let's dig in...

Executive Summary

• Market enters holiday week with tech leading gains, $NVDA and $AVGO drive semiconductor momentum
  

• Consumer confidence tumbles to 104.7 from November's reading, falling well short of the 113.0 forecast, indicating weakening consumer sentiment heading into 2025. Durable goods orders saw their steepest monthly decline since June at -1.1%, suggesting softening in manufacturing activity.
  

• Potential 25% tariff on Canadian auto imports emerges as major concern for North American auto industry
  

• Government shutdown averted as funding bill extends into 2025
  

Market Overview

Key Market Drivers

1. Consumer confidence drops to 104.7 in December, well below consensus of 113.0
   

2. Durable goods orders decline 1.1% in November, marking largest monthly drop since June
   

3. Natural gas prices reach two-year highs amid supply concerns
   

4. U.S. population grows at fastest pace since 2001, with immigration accounting for 84% of the 3.3M increase
   

Stock Spotlight

• $AVGO ▲ 5%: UBS raises price target to $270 from $220, projecting 20-40% higher AI revenue for FY26/27

• $XRX ▲ 9%: Announces $1.5B Lexmark acquisition, set to double company size and expand global services

• $HMC ▲ 11%: Enters merger talks with Nissan, targeting 2026 completion to create world’s third-largest automaker

• $PLTR: Forms defense consortium with SpaceX and OpenAI to compete against traditional defense contractors

• $DESP ▲ 33%: Prosus to acquire Latin American travel platform for $1.7B at $19.50 per share

Big Name Updates

• $AAPL: Wedbush maintains $300 target, citing strong iPhone 16 demand and upcoming AI rollout in China

• $META ▲ 2%: Shares up alongside broader tech sector gains. Trump separately indicates openness to keeping TikTok operating in U.S. "for a little while," according to Reuters.

• $TSLA: Analysts project potential 43% downside for 2025 despite recent 67% post-election rally

Other Notable Company News

• $LLY: FDA approves Zepbound for treating sleep apnea in adults with obesity

• $QCOM: Wins federal jury decision regarding ARM licensing dispute

• $RUM: Secures $775M strategic investment from Tether

• $SQ: BofA names top payments pick for 2025, citing robust SMB backdrop

Sector Watch

Policy Watch

• USTR launches investigation into Chinese legacy semiconductors, potentially leading to additional tariffs

• President-elect signals plans to demand NATO members increase defense spending to 5% of GDP

• Government funding bill signed, averting shutdown and extending current levels for three months
  

What to Watch

1. Auto Industry Tariff Impact: Proposed 25% tariff on Canadian imports could add $600-$2,500 per vehicle for parts and $1,750-$10,000 for assembled vehicles

• Ontario produces 1.54M vehicles annually, primarily for U.S. consumers

• Five major automakers operating in region: $F, $GM, Stellantis, $TM, $HMC

2. Holiday Trading Patterns: Historical data shows S&P 500 gains average 1.3% during last five trading days and first two of January

• December historically second-strongest month in presidential election years

• 83% success rate for December gains in election years

3. Semiconductor Sector Momentum: Chinese chip probe developments and continued AI-driven growth

• USTR investigation targeting mature technology chips

• Focus on automotive and appliance segments

P.S. 

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Happy Holidays 🙂

- John