January 17th Market Overview

Happy Friday.

Great momentum to close the week out. Markets will be closed Monday for MLK Day, which aligns with President-elect Trump's inauguration.

Tuesday's session will be a doozy but we'll all get through it! I’ll be putting out a deep dive on Sunday so keep a look out for that.

Let's dig in...

Executive Summary

• Major indices head for best weekly gain since November, driven by tech sector revival and strong bank earnings
  

• Supreme Court upholds TikTok ban effective January 19, affecting 170 million US users and digital advertising landscape
  

• December housing construction rises 15.8% to 1.49 million annual rate despite 7.04% mortgage rates, driven by multifamily builds
  

• Bitcoin tops $105,000 ahead of expected crypto-friendly Trump administration policies

Market Overview

Key Market Drivers

1. Inflation Data Fuels Rate Cut Optimism: Both core CPI and PPI readings show continued moderation in price pressures. Treasury yields respond with 10-year rate dropping 20 basis points since January 14, supporting the case for multiple Fed rate cuts in 2025.
   

2. Construction Activity Outperforms: Housing starts jumped to 1.49 million annualized rate versus 1.32 million forecast. Multifamily construction surged 62% while single-family starts increased 3.3% to 1.05 million units, marking the strongest pace since Feb. 2024.
   

3. Industrial Sector Shows Strength: December industrial production rose 0.9%, quadrupling expectations of 0.2%. Capacity utilization improved to 77.6%, beating estimates of 77% and signaling robust manufacturing activity.
   

4. Banks Set Strong Earnings Tone: Financial sector leads weekly gains as $GS and $C surge over 10%. $JPM adds 6% while $GS gains 8.5%, with strong trading revenue and improved lending margins driving results.

   
   

Stock Spotlight

• $TSLA ▲ 4.7%: Wedbush analyst Dan Ives notes ByteDance exploring potential sale of TikTok’s US operations to Musk/X platform. Stock has surged 75% since Election Day on potential robotaxi acceleration under Trump administration.
  

• $INTC ▲ 8.7%: SemiAccurate report sparks acquisition speculation. Company faces critical turnaround moment after losing over 50% market value and Dow Jones removal in November.
  

• $COIN ▲ 4.3%: Bitcoin breaches $105,000 on anticipated Trump executive order prioritizing crypto policy. Platform benefits from increased trading activity in smaller cryptocurrencies.
  

• $NVO ▼ 5.0%: GLP-1 drugs Ozempic and Wegovy targeted for 2027 Medicare price negotiations. Company holds 55% market share after generating $50 billion revenue in first three quarters.
  

• $QRVO ▲ 13.9%: Activist investor Starboard Value reveals 7.7% position, marking largest single-day gain since March 2020. Push for strategic changes to boost shareholder value.

Tech Leaders Watch

• $META ▲ 0.5%: Supreme Court decision on TikTok creates potential $170 million user market opportunity. Platform positioned to capture shifting digital ad spend.
  

• $MSFT ▲ 2.6%: Ends four-week decline on strong cloud computing demand. First weekly gain since August positions stock for AI-driven growth.
  

• $NVDA ▲ 3.1%: Leads semiconductor rally despite CEO’s inauguration absence. Data center and AI chip demand remain robust.
  

• $AAPL ▲ 0.7%: Rebounds from steepest August drop but remains down 3.2% this week. Faces near-term growth challenges in key markets.

Corporate Developments

• Vanguard agrees to $100+ million SEC settlement after 2020 retirement fund changes triggered unexpected capital gains distributions and tax liabilities for retail investors.
  

• $J.B. Hunt ▼ 6.0%: Q4 earnings miss ($1.53 vs $1.61 expected) reflects broader freight sector challenges. Revenue declined across all major business segments.
  

• $AAL gains after Bank of America upgrade highlights $1.5 billion market share opportunity in recovering corporate travel sector. Domestic routes show particular strength.
  

• Spirit Airlines cuts 200 jobs amid Chapter 11 restructuring. Bankruptcy proceedings continue as carrier seeks operational stability.
  

• $SNAP ▼ 3.0%: Shares fall as Supreme Court TikTok ruling raises questions about social media platform regulation and competition.

Sector Watch

Bond Market

The 10-year Treasury yield pulls back to 4.6%, marking its steepest weekly decline since November with a 20 basis point drop since January 14. Major bond players signal caution - both Nomura and T. Rowe Price warn yields could test 6% under Trump’s fiscal agenda.

Strong economic data has markets recalibrating rate cut expectations. The bond market prices in growing confidence around inflation control while eyeing potential tariff impacts on price pressures.

Policy Watch

• Crypto Initiatives: Trump team readies sweeping executive order to establish national crypto framework. The plan envisions a U.S. crypto reserve, dedicated crypto czar, and regulatory overhaul to accelerate adoption - signaling clear break from current policy.

• Healthcare Policy Shift: Medicare unveils second round of drug price negotiations, targeting 15 key medications including popular GLP-1 drugs. While 2027 timeline stands, incoming administration hints at framework changes.

• China Relations: Beijing tops 5% GDP growth target following stimulus push. Treasury pick Scott Bessent’s aggressive trade stance raises inflation concerns amid proposed tariff expansion.

• Financial Deregulation: New administration targets major banking regulation rollback to boost M&A. Plans focus on easing capital requirements and stress test reforms, setting stage for regional bank consolidation.

What to Watch

1. TikTok Sale Deadline:

• ByteDance faces January 19 divestment deadline

• Potential buyers include $TSLA's Musk through X platform

• Watch social media ad spend shifts if ban takes effect

2. Rate Cut Trajectory:

• Fed minutes reveal heightened inflation concerns from trade policy changes

• Markets price multiple cuts for 2025

• Next week’s economic data critical for rate outlook

• Watch 10-year yield resistance at 5%

3. Housing Market Resilience:

• Multifamily construction surged 62% in December

• Single-family starts up 3.3% to 1.05 million annual rate

• Monitor impact of mortgage rates back above 7%

4. Bank Earnings Continue:

• Regional banks report next week

• $JPM and $GS set high bar with 6% and 8.5% weekly gains

• Focus on deposit costs and corporate lending outlook

P.S. 

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- John