January 6th Market Overview

Happy Monday.

It's nice to start the week off green with the tech leading the way. Semiconductor companies are up after Taiwanese Foxconn reported solid Q4 revenue. Policy shifts in Washington have traders glued to their screens as Trump makes more tariff commentary.

Let's dig in...

Executive Summary

• Federal Reserve Vice Chair for Supervision Michael Barr announces February departure, boosting bank stocks.
  Michael Barr has been viewed as a strict banking regulator who has pushed for tighter capital requirements and more stringent oversight of banks.

• Chip stocks up as Foxconn reports record Q4 revenue of $64.6B, beating 13% growth estimates
  

• $FUBO confirms definitive agreement with Disney, stock ▲ 243.74%
  

• Trump plans targeted tariffs on critical sectors instead of universal duties

Market Overview

Key Market Drivers

1. Semiconductor Momentum:

• Foxconn reports record Q4 revenue of $64.6B, beating 13% growth estimates

• December revenue surged 42.3% YoY on AI server demand

• Key supplier for $AAPL iPhone and $NVDA AI servers

• Indicates strong tech supply chain health

2. Trump Trade Policy Shift:

• New tariff framework focusing only on critical sectors

• Targeted approach for defense materials (steel, aluminum, copper)

• Medical supplies (syringes, vials, pharma materials)

• Energy components (batteries, rare earths, solar panels)

• Auto stocks rally as broad tariffs appear less likely

3. Banking Sector Catalyst:

• Fed Vice Chair Barr's February departure signals regulatory shift

• Banking stocks surge on potential easing of capital requirements

• KBE Bank ETF jumps 2% on announcement

• Follows period of strict oversight under current leadership

4. Employment Data Focus:

• Markets positioning ahead of key labor reports

• December jobs report on Friday

• JOLTS data Tuesday expected to show continued cooling

• Critical for Fed rate cut timeline

Stock Spotlight

• $NVDA: ▲ 4.2% toward record close as Foxconn highlights strong AI server demand. Partners with $ARBE to enhance radar-based technology for autonomous vehicles

• $FUBO: ▲ 243.74% after confirming merger with Disney’s Hulu + Live TV business, forming second-largest digital pay-TV provider after YouTube TV

• $AAL: ▲ 4% following TD Cowen upgrade to buy with $25 PT, citing strong revenue outlook and distribution recapture potential of $1.5B from 2024

• $MU: ▲ 11.6% despite reports of HBM3E yield below 10% at Taichung plant affecting NVIDIA supply chain

Big Name Updates

• $AAPL: Benefits from Foxconn’s strong Q4 performance in iPhone production

• $TSLA: Stifel raises target to $492 from $411

• $COST: Developing 800-unit apartment complex above Los Angeles store, featuring rooftop pool and fitness center

• $UBER: Launches $1.5B accelerated share buyback, with initial delivery of 18.6M shares

Other Notable Company News

• $PLTR: Morgan Stanley assumes coverage with underweight rating, PT $60, citing valuation concerns

• $CRM: Downgraded to sell amid Agentforce monetization concerns

• $PANW: Guggenheim downgrades to sell, PT $130, noting five consecutive quarters of declining New ARR

• $MDB: Guggenheim upgrades to buy, PT $300, citing strong Enterprise Advanced growth potential

Sector Watch

Bond Market

10-year Treasury yield hovering around 4.6% ahead of employment data this week, including December jobs report and JOLTS survey.

Policy Watch

• Trump tariff plans focusing on critical sectors: defense materials, medical supplies, and energy components

• Fed Vice Chair Barr’s resignation potentially signals shift in banking regulation

• NYSE to close Thursday for former President Carter memorial

• Mike Johnson officially re-elected as Speaker of the House for 119th Congress

What to Watch

1. December Jobs Report (Friday):

• Last major employment data before January FOMC meeting

• Will impact Fed's path on anticipated rate cuts

• Market expects confirmation of cooling labor market

2. JOLTS Survey (Tuesday):

• Previous reading showed 8.73 million job openings

• Key metric for wage inflation pressures

• Fed closely monitors for labor market tightness

3. Tech Earnings Season Kickoff:

• Foxconn's 42.3% December revenue surge signals strong tech demand

• Focus on AI server sales and supply chain impacts

• Semiconductor outlook after record-breaking Q4

4. Banking Sector Developments:

• Regulatory shifts expected after Barr's February departure

• JPMorgan warning on rising repeat defaults reaching 35%

• Bank capital requirements may ease under new supervision

  
  
  Thanks for reading 🙂
  
  - John