January 14th Market Overview

Happy Tuesday.

A gap up caused from good PPI numbers only to be wiped out as soon as the morning sessions started.

If you were wondering how a weak market behaves today was it!

- a gap higher on good data
-- a failure at pre-market high
--- selling into lunch time, midday low volume recovery —→ then more selling into close with high volume.

Let's dig in...

Executive Summary

• December PPI increased 0.2% vs 0.4% consensus, with core PPI flat for the month
  

• Federal budget deficit reached $710.9B in fiscal Q4, representing a 39.4% year-over-year increase as financing costs rise
  

• $MSFT pauses U.S. consulting unit hiring, restricts internal travel expenses amid broader tech sector adjustments $META cutting expenses where it can as well
  

• Bank stocks advance ahead of tomorrow's earnings from $JPM, $C, $GS, and $WFC

Market Overview

Key Market Drivers

1. Producer prices showed cooling inflation with flat core PPI reading, supporting potential Fed rate cuts
   

2. National debt exceeded $36 trillion as rising financing costs and declining tax receipts pressure federal budget
   

3. Trump administration considering methodical 2-5% monthly tariff increases to manage inflation impact
   

4. Corporate cost discipline spreads across tech sector with hiring freezes and operational adjustments

Stock Spotlight

• $URI expands equipment fleet through $4.8B acquisition of H&E Equipment Services, adding 64,000 units and targeting $130M in synergies
  

• $APLD secures Macquarie partnership for $5B AI data center investment, beginning with $900M North Dakota facility
  

• $HON evaluates split into aerospace/defense and automation units under Elliott Management influence
  

• $LLY declined ▼7.33% to $739.03 after lowering 2024 revenue guidance below $45.4B-$46B October forecast

Big Name Updates

• $AAPL KeyBanc maintains underweight rating citing KFLD data showing 28% month-over-month spending growth vs 36% three-year average
  

• $AMZN receives HSBC price target increase to $270, highlighting AI integration and improving e-commerce margins
  

• $NVDA removed from Citi catalyst watch list over Biden regulation concerns while maintaining buy rating at $175
  

• $GOOGL faces UK Strategic Market Status review focusing on search and advertising dominance

Other Notable Company News

• $TDOC partners with $AMZN to expand chronic care program accessibility
  

• $FTNT downgraded at Raymond James following 70% appreciation since Q2 2024 billings growth
  

• $KTOS price target raised to $40 on hypersonics and drone technology advancement
  

• $ACMR increases 2024 revenue guidance to $755M-$770M from $725M-$745M

Sector Watch

Bond Market

Fed funds futures indicate 77.9% probability of maintaining current rates through March. Treasury yields declined following the PPI report, with markets positioning ahead of Wednesday's CPI data.

The deficit expansion to $710.9B adds pressure to government borrowing costs.

Policy Watch

• Biden administration accelerates AI infrastructure development through executive order

• UK Competition and Markets Authority evaluates $GOOGL Strategic Market Status

• Trump team studies gradual tariff implementation strategy

• Gaza negotiations progress toward potential resolution

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What to Watch

1. CPI Report Wednesday: Key inflation metric for Fed policy direction

   • Economists forecast 0.3% headline increase

   • Core CPI expected at 0.3% month-over-month

   • Technical resistance at SPX 5780 on higher print
     

2. Bank Earnings Season Launch: Major financials report Q4 results

   • Focus on net interest margins amid rate environment

   • Credit quality metrics as recession concerns persist

   • Trading revenue expectations after volatile quarter
     

3. Tech Sector Efficiency Measures: Cost optimization spreading

   • $MSFT internal travel restrictions and hiring pause

   • Watch for similar announcements from peers

   • Impact on sector employment trends
     

4. Digital Asset Institutional Adoption:

   • $BTC stabilizes at $96,000 after volatility

   • $META board considers Bitcoin allocation from $72B cash position

   • Trump signals crypto-friendly executive order plans

Thanks for reading

- John