Good morning. Happy Friday.
The Asian/Pacific markets leaned to the upside. Hong Kong, South Korea, Australia and the Philippines did well; China and India were weak. Europe, Africa and the Middle East lean to the upside but are mostly quiet. Poland, Turkey, Portugal and the Czech Republic are up; Denmark and France are down. Index futures in the States point to a moderate gap up open for the cash market.
————— VIDEO: My Favorite Setup —————
The dollar is down. Oil and copper are up. Gold is down; silver is up. Bonds are up. Bitcoin is down.
Stories/News from Seeking Alpha…
Final acts
Having a 123-year-old iconic American steel giant be taken over by a Japanese producer has not gone well in the US of A. Multiple reports suggest that President Biden today will block Nippon Steel’s (OTCPK:NPSCY) $14.9B deal for U.S. Steel (NYSE:X) after interagency committee CFIUS left the decision in his hands. Nippon Steel will have to fork over a $565M penalty payment to U.S. Steel should the deal collapse, in a move that will have reverberations for M&A even among the closest U.S. allies for the foreseeable future. Premarket movement: U.S. Steel (X) is down 8% to $30/share (well below the $55/share buyout price agreed to by Nippon).
Backdrop: Deep-pocketed Nippon hoped the acquisition would expand its global footprint at a time when many Japanese firms are looking for international growth as their country deals with a shrinking population crisis. Recall that the steel industry has been in focus following the approval of the Infrastructure Investment and Jobs Act, which is expected to boost U.S. steel demand for investment in bridges, railways and other projects due to “Buy American” provisions in the legislation. Nippon had estimated that the only major speed bump would be union support, while investment concessions would yield the necessary political leverage.
That didn’t happen. A number of Senators initially voiced opposition, like Pennsylvania’s John Fetterman, who represents one of the most important states involved in the American steel industry. “It’s absolutely outrageous,” he declared. “Steel is always about security – both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign.” Bipartisan support against the takeover later picked up, and one of the final nails in the coffin happened during the election cycle, when both Biden and Trump battled for the blue-collar vote.
What’s next? Prior to the agreement from Nippon, there was a bidding war that saw U.S. Steel reject an unsolicited $7.3B cash-and-stock bid from rival Cleveland-Cliffs (CLF). That deal was less than half of what Nippon would pay for the company only four months later. U.S. Steel would go on to announce a strategic review process and invited several more offers, including one that was reportedly made by U.S.-based Nucor (NUE), which might serve as a basis in the future should a buyer step in to pick up U.S. Steel at a reduced price. (7 comments)
What else is happening…
Popular choice: Nuclear players start year atop S&P 500 leaderboard.
Tesla (TSLA) falls short of Q4 and full-year deliveries expectations.
Samsung refrigerators can now order groceries through Instacart.
Baidu (BIDU) sees AI applications growing ‘explosively’ in 2025.
Weight loss drugs can cut grocery spending by up to 9% – study.
Choppy 2025? Wall Street extends losing streak to five days.
Mortgage rates touch highest levels in almost six months.
Carvana (CVNA) skids as Hindenburg Research issues short report.
Will Biden block more offshore oil drilling before Trump takes over?
Bulls vs. Bears: The Schwab U.S. Dividend Equity ETF (SCHD).
Today’s Economic Calendar
10:00 AM ISM Manufacturing Index
10:30 AM EIA Natural Gas Inventory
11:00 AM Fed’s Barkin Speech
1:00 PM Baker Hughes Rig Count
—————
Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. India, Australia and Indonesia did well while China, Hong Kong, Taiwan, Malaysia and Thailand were weak. Europe, Africa and the Middle East are currently posting solid gains. France is down, but the UK, Denmark, Poland, Turkey, Greece, Finland, Norway, the Netherlands, Portugal and Sweden are up. Futures in the States point to a relatively big gap up open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Heightened threats
Homeland security is back in the spotlight as law enforcement and federal authorities investigate a pair of attacks that occurred over New Year’s 2025. The connections between the two incidents are growing, with the vehicles involved in the events rented from car app Turo, both were EV pickup trucks, and the perpetrators reportedly shared close military links. More information may be available today as the FBI provides an unclassified briefing to the relevant House and Senate oversight committees at 10 AM ET.
Backdrop: New Year’s revelers were celebrating on Bourbon Street in New Orleans when 42-year-old Shamsud-Din Jabbar rammed a Ford (F) F-150 Lightning into the crowd, killing 15 people and injuring at least 35. He exited the vehicle wielding an assault rifle, but was killed by police within minutes. An ISIS flag and pipe bombs were found in the pickup rented by the U.S. army veteran (who served as an IT specialist), while a local Airbnb (ABNB) rental property was raided in connection with IED manufacturing.
The FBI said they do not believe the terrorist acted alone, with surveillance footage showing several individuals placing explosive devices in the area and postponing the Sugar Bowl at the Caesars Superdome. Hours later, a Tesla (TSLA) Cybertruck exploded outside Trump International Hotel in Las Vegas, with a cargo bed packed with camp fuel, gas tanks and fireworks. Sources have since identified the deceased driver as Matthew Livelsberger, who reportedly served on the same military base as Jabbar.
“We need resources,” FBI Director Christopher Wray told the House Appropriations Committee in April when discussing the budget for 2025. “There was already a heightened risk of violence in the U.S. before Oct. 7. Since then, we’ve seen a rogue’s gallery of foreign terrorist organizations call for attacks against Americans and our allies. Given those calls for action, our most immediate concern has been that individuals or small groups will draw twisted inspiration from the events in the Middle East to carry out attacks here at home.”
Domestic security: There’s been a focus on defense spending and stocks over the past several years due to wars in the Middle East and Russia-Ukraine. However, there is likely to be a renewed focus on the home front, especially as President-elect Donald Trump comes into office. That could include investing in sectors like law enforcement, with stocks ranging from Axon Enterprise (AXON) to Palantir (PLTR), as well as prison operators such as GEO Group (GEO) and CoreCivic (CXW).
What else is happening…
Unity Software (U) takes off after Roaring Kitty shares cryptic post.
Colorado becomes second state to roll out psychedelic therapy.
Ukraine halts Russian gas to Europe after prewar deal expires.
Squid Game Season 2, NFL debut give Netflix (NFLX) a boost.
US Steel (X) rises as Nippon Steel sends new proposal to Biden.
California Resources gets EPA permits for CO2 injection and storage.
Bitcoin’s banner 2024 overshadows uneven performance in crypto stocks.
Chinese U.S. Treasury hack included Office of Foreign Assets Control.
Bullish on real estate? Here are top 10 REITs heading into 2025.
Most of Puerto Rico in the dark following power grid collapse.
Just do it again: Will Nike (NKE) keep its lead or trip on the track?
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index
10:00 Construction Spending
11:00 EIA Petroleum Inventories
4:30 PM Fed Balance Sheet
—————
Good morning. Happy Tuesday.
The Asian/Pacific markets were either closed or weak. China, Taiwan and the Philippines did poorly. Europe, Africa and the Middle East are mostly doing well. The UK, France, Turkey, Greece, Spain, the Netherlands and Israel are up solidly. Futures in the States point to positive open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is up. Oil is up; copper is down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Happy New Year!
Investors are taking out their crystal balls to set up their portfolios for the coming year, but there is much uncertainty out there, especially given how wrong many Wall Street economists and analysts got markets in 2024.
Today’s WSB newsletter will be the last year-end special edition, exploring Seeking Alpha Sentiment and commentary from SA Investing Group Leaders. Join the discussion in the comments section with your top stock picks of the year or investments that gave you the best returns!
What kind of year for the stock market?
Based on the average from Wall Street Breakfast’s Sentiment Survey for 2025, the S&P 500 (SP500) target for next year is 6,241, marking an upside of 5.6% from the current level. However, the biggest cohort of respondents (54%) see the benchmark index climbing to 6,500, which would result in an increase of ~10% for the year. Stocks are also seen as the best asset class in 2025, with four-fifths of subscribers putting most of their investing capital there, compared to bonds, commodities, cash, and crypto.
“Market corrections are normal and help curb speculation,” writes Lawrence Fuller, SA Investing Group Leader of The Portfolio Architect. “Despite market pullbacks and corrections, the underlying economic fundamentals remain strong, presenting a buying opportunity in a bull market expected to last through 2025. The bottom line, regardless of these projections, is that the Fed’s next move will be to lower rates further and not increase them.”
Why not the big returns?
Mid-single digits or even a 10% annual return is not as fiery these days, compared to the 24% advance of the S&P 500 (SP500) in 2024 and the same level in 2023. As seen in the latest SA Sentiment Survey, there are fears of inflation trending higher, or not moderating enough, which could spell more trouble for the Fed’s disappointing policy outlook. Portfolio risks also range from trade policy and tariffs to debt levels and stretched valuations.
“The possible biggest risk, for me at least, could be what some consider potentially disruptive economic and social policies that have been proposed by the incoming Trump administration,” noted Daniel Jones, SA Investing Group Leader of Crude Value Insights. While some consider the policies could potentially prove bullish for the market, at least in the short run, others suggest they may have the potential to significantly alter the health of the economy. For now, I’m going to bank on these more disruptive policies not coming to fruition or being significantly watered down if they do.”
Which stock sectors?
The clear winner according to SA Sentiment is Technology, with trends like artificial intelligence and quantum computing driving the gains. It’s a similar theme to what has played out over the past couple of years, though areas like drones and robotics also received a notable mention. Some other sectors that received positive recommendations included financials and energy, with the latter in high demand due to needs like powering the AI revolution.
“The forecast I released at the start of the year highlighting crucial AI and other tech related companies like Palantir (PLTR), Nvidia (NVDA), Tesla (TSLA), and others proved valuable, as our all-weather portfolio AWP recently achieved its 2024 year-end target return rate of 70-75%,” said Victor Dergunov, SA Investing Group Leader of The Financial Prophet. “There’s a lot of talk of bubbles, but the ‘bubbles’ may be isolated to specific segments like quantum computing, digital assets, and other niche segments. Therefore, it is not likely that the broader is in a ‘bubble’ now.”
Other items to watch?
There is the macro landscape including earnings growth, the housing market, debt levels, consumer spending and employment conditions. As long as those stay in check, the overall market story should stay intact, as well as the staying power of market leading companies like the Magnificent 7. Others are looking for specific stock-focused ideas, especially given the outsized number of growth, value and passive investors that responded to the SA Sentiment Survey for 2025.
“Dividend-paying stocks offer attractive yields as investors confront an ever-changing interest rate environment,” according to SA Quant Strategist Steven Cress. “These five new dividend stocks with an average forward yield of 6.48% offer strong dividend growth and safety characteristics, excellent financials, and great factor grades.” SA Quant also identified five stocks with compelling growth profiles, strong value, high profitability, and other positive factor grades to weather uncertainty heading into 2025, as well as the top 10 small caps for the coming year.
Note: WSB won’t be published with markets closed tomorrow, but tune back in on Thursday.
What else is happening…
Santa Rally? Nasdaq, S&P, and Dow end another session in the red.
Chinese said to hack U.S. Treasury workstations in ‘major incident.’
MicroStrategy (MSTR) adds another 2,138 bitcoins to balance sheet.
Meme stock Faraday Future (FFIE) skyrockets ahead of model reveal.
FDIC gives BlackRock (BLK) early Jan deadline over bank stakes.
Starbucks (SBUX) loses appeal to overturn employee firing decision.
Tempur Sealy (TPX) and Mattress Firm propose remedies for FTC.
SA Sentiment: This energy sector is a popular choice for 2025.
Common stocks of GSEs offer ‘large asymmetric upside’ – Bill Ackman.
Stock markets will close on Jan. 9 for National Day of Mourning.
Today’s Economic Calendar
9:00 AM S&P CoreLogic Case-Shiller Home Price Index
9:00 AM FHFA House Price Index
3:00 PM Farm Prices
—————
Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were mixed. New Zealand, Malaysia and Singapore did well; Japan and India were weak. Europe, Africa and the Middle East are mixed and lacking big movers. The UAE and Austria are up; Denmark, South Africa and the Netherlands are down. Futures in the States point to a big gap down open for the cash market.
————— Free Online Course: Mini Masterclass in Trading —————
The dollar is down. Oil is up; copper is down. Gold and silver are down. Bonds are up.
Stories/News from Seeking Alpha…
Top 10
From estimates that showed the U.S. would dodge a recession to forecasts that Donald Trump would win the U.S. election, Wall Street Breakfast surveys have benefited the entire Seeking Alpha community. The polls have been popular in 2024, garnering thousands of weekly responses, and have helped create many SA Sentiment items to assist with investing decisions. In the latest special edition of WSB, we’ll recap the top ten surveys of the year. Enjoy!
Which sector will be the biggest winner this year? (Asked on Jan. 8, 2024)
Energy 13.8%
Financials 11.6%
Healthcare 14%
Information Technology 32.5%
Other choices <10%
It depends on the industry, but do you think the U.S. is ready for a four-day workweek (with fewer working hours) and the economy could adapt successfully?
No (less earnings and too much spending) 55.8%
Yes (productivity and efficiency will improve) 44.2%
Is cash king? Inflation has made many investors rethink keeping around piles of dollars, but what percentage of one’s assets should be left on the sidelines?
<10% – winner
25%
50%
75%
>90%
Which AI innovation has the most power to generate the big bucks?
Chatbots and artificial general intelligence 9.6%
Quantum computing and big data 28%
Business automation and solutions 47%
Advanced robotics and interfaces 15.4%
What does the future look like for lab-grown meat?
Big bucks (biggest disruption since the agricultural revolution) 4.1%
Good alternative (will compete for market share) 16.3%
Niche product (similar to current plant-based offerings) 63.1%
It’s a scam (science is bogus and won’t be affordable) 16.5%
Will the rescheduling of cannabis from a Schedule I drug happen by the end of 2024?
Yes 37.2%
No 62.8%
What is the best way for the U.S. to manage its economic relationship with China?
Rapprochement and trade deals 14.9%
Derisking and diversifying 40.7%
Decoupling and sanctions 18.6%
Focus on domestic industrial policy 25.7%
Should there be any limits on the amount of executive pay?
Yes (should be linked to certain ratios or broader stakeholder interests) 69.9%
No (whatever secures the talent and motivates exceptional leaders) 30.1%
What is the most realistic way to address the U.S. budget deficit?
Slashing the number of federal employees 20.3%
Reforms to government insurance programs 15.1%
Steep discretionary spending cuts 27%
Changing the tax code 24.8%
Other choices <10%
How many rate cuts will the Federal Reserve go for in 2025?
Four (or more) 10.1%
Three 25.8%
Two 37%
One 11.4%
None 8.5%
It will need to hike rates! 7.2%
What else is happening…
Yellen says U.S. debt limit will be reached in mid-January.
2025 rotation: FOMC is getting three hawks and one dove.
AT&T (T) networks cleared after Salt Typhoon hacking attack.
South Korea to inspect Boeing (BA) aircraft after deadly crash.
Google (GOOGL) asks employees to brace for challenging 2025.
More than half of U.S. at high risk of power shortages in next decade.
Jimmy Carter, former president and Nobel Peace winner, dies at 100.
Trump asks SCOTUS to pause TikTok ban, backs Musk on H-1B visas.
UnitedHealth CEO (UNH) reassuring staff in wake of executive’s killing.
Charles Dolan, founder of HBO and Cablevision, dies at 98.
Today’s Economic Calendar
9:45 Chicago PMI
10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey
—————