January 8th Market Overview

Happy Wednesday.

Markets are treading flat as Fed officials signal a slower path to rate cuts. The prospect of Trump's broad tariff plan and inflation data is casting skepticism across the market today. Fed minutes highlight growing price pressures, prompting traders to dial back rate cut expectations.

The man who “called NVIDIA at $1.10” Alex Green says these are the next AI stocks to focus.

If you figure out what the hell company he is talking about…let me know.


Let's dig in...

Executive Summary

• Private sector job growth slowed to 122,000 in December, the lowest since August
  

• Fed minutes show officials favor gradual rate cuts due to inflation concerns
  

• Trump administration considering national economic emergency for tariff implementation
  

• Quantum computing sector sees record selloff as $RGTI, $IONQ, and $QBTS each down over 44% following Nvidia CEO's 20-year timeline projection at CES tech conference

Market Overview

Key Market Drivers

1. Fed Minutes Release: Officials signal careful approach to rate cuts, citing elevated inflation readings and strength in consumer spending
   

2. Labor Market Data: Private payrolls grew less than expected while jobless claims fell to 201,000, below forecasts of 215,000
   

3. Tariff Concerns: Reports indicate Trump administration may declare economic emergency to implement broad tariffs
   

4. Bond Yields: The 10-year Treasury yield approaches 4.7%, influenced by potential Trump tax and tariff policies

Stock Spotlight

• $EBAY ▲ 9.9%: Shares hit 52-week highs after Meta announces integration with Facebook Marketplace across U.S., Germany, and France

• $EIX ▼ 11.7%: Edison International faces operational challenges with 70,000 customers losing power amid California wildfires

• $RGTI ▼ 45%: Rigetti Computing leads quantum computing sector decline after Nvidia CEO suggests technology remains decades away

• $CEG ▼ 5.0%: Constellation Energy drops on reports of potential $30 billion Calpine acquisition

• $PLTR ▼ 2.0%: Palantir extends losses for third consecutive session despite 340% gain in 2024

Big Name Updates

• $KO: TD Cowen upgrades stock with $75 price target, viewing recent pullback as buying opportunity

• $ALL: Evercore ISI upgrades to outperform with $226 target, citing attractive valuation

• $MRNA ▼ 8.8%: Stock volatile following first U.S. bird flu death and vaccine development focus

• $NVDA: CEO Jensen Huang projects quantum computing viability 15-30 years away

Other Notable Company News

• $GETY ▼ 21%: Getty Images reverses previous day’s gains following $3.7 billion Shutterstock merger announcement

• $WMT: CEO Doug McMillon meets with Trump at Mar-a-Lago, discussing potential tariff impacts

• $IONQ ▼ 44%: IonQ shares decline sharply alongside broader quantum computing sector

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Sector Watch

Bond Market

• 10-year Treasury yield reached 4.7%, touching April 2024 highs

• Trump administration tariff plans drive inflation concerns

• Recent economic data points to persistent price pressures

• Yields show upward momentum amid policy uncertainty

• Market participants project sustained elevated rates through Q1 2025

Policy Watch

Fed Minutes Highlights:

• Nearly all officials note increased inflation risks

• Committee signals slowdown in rate cut pace

• Strong consumer spending data influences stance

• Upside inflation risks require careful policy approach

Fed Governor Waller's Key Points:

• Supports 2025 rate cuts despite tariff concerns

• Projects continued inflation decline

• Acknowledges tariffs as new inflation pressure source

• Emphasizes data-dependent approach to policy decisions

• Maintains optimistic outlook on price stability

What to Watch

1. December Jobs Report (Friday):

• Economists forecast 160,000 new jobs added, down from November's 199,000

• Average hourly earnings expected to moderate to 0.3% from 0.4%

• Unemployment rate projected to tick up to 3.8%

• ADP's lower December print of 122,000 sets cautious tone

• Report crucial for January 30-31 Fed meeting expectations

2. Trump Tariff Developments:

• Sources indicate 10% universal tariff under consideration

• International Economic Emergency Powers Act provides potential legal framework

• White House economic team evaluating implementation timeline

• Market focus on China-specific measures, potential 60% tariff proposal

• Key industries watching supply chain implications

3. California Wildfire Impact:

• Over 70,000 Southern California Edison customers without power

• Four major fires span thousands of acres in Los Angeles County

• $EIX faces potential liability concerns

• Emergency response costs estimated to impact Q1 earnings

• Region's utilities reviewing infrastructure hardening plans

4. Tech Sector Dynamics:

• Quantum computing stocks hit 2024 lows after Nvidia commentary

• $RGTI, $IONQ, $QBTS seek support levels

• Defiance Quantum ETF volume surges 3x average

• Big tech resilience tested as yields approach 4.7%

• AI sector rotation patterns emerge amid valuation reset

P.S.
 
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Thanks for reading 🙂

- John