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Warm-Up
- People are catching on - Fed has no clue
- Investors are nervous - lots of intraday volatility
- Correction - could it be?
- USA- Going DEEPER into debt
- DOGE - already making excuses
- Next Monday - Market Holiday and Inauguration day

Markets
- No happy - inflation and jobs (A 1-2 Punch for markets)
- CPI and PPI this week - make it or break it?
- Rates hitting key resistance
- Oil spikes - multi-month high

All of a sudden..
- Microsoft, Facebook and other companies are cutting staff again
- Talk of tough year ahead... What is up?

If they don't cooperate?
- Cut their pay!
- China is set to slash pay for staff at its top three financial regulators, including the central bank, by about half, as part of a regulatory revamp unveiled in 2023 to bring their salaries in line with other civil servants
- Starting from this month, staff at the People's Bank of China (PBOC), National Financial Regulatory Administration (NFRA) and China Securities Regulatory Commission (CSRC) will see total income slashed by about half.

More China - Pull Forward
- China’s trade data in December beat expectations by a large margin, with exporters continuing to frontload shipments as worries over additional tariffs mount, while the country’s stimulus measures appear to be supporting demand in the industrial sector.
- Can it last?

Let's Talk Turkey
- Fed has no idea what is going on
- They simply can move markets, (equity and fixed income) by liquefying markets
- HOPE that they have the general trend and can regulate the flow so not overheat or overcool
- In reality, their forecasting tools are crap
--- BUT, focus on what they do, not what they say or their outlook

Employment Numbers
- Summary: Nonfarm payrolls increased by a stronger-than-expected 256,000, the unemployment rate slipped to 4.1% from 4.2%, average hourly earnings growth year-over-year was a sturdy 3.9%, and more people were employed.
- Much better than anticipated !
- Unemployment rate drops
- So, we see higher prices and better employment - markets spooked that Fed out of touch
- One-Two punch for equities

Result
- Steepening yield curve

Market Sell-off
- NASDAQ 100 off 6% from the highs
- Big names down more (NVDA 13%, Tesla 18%, Apple 10%, NFLX 10%)
- SOOOO - Big Cap Tech is in a correction and dragging down markets
- Markets are in the RED for the year and unchanged/under the pre-election day move.
- More speculative (runners) stocks are down even more...

Quantum Stocks
- DUH!
- Sell-off deepened as Zuck cautioned that the potential is still years (and years) away (on Joe Rogan Show)
--- Zuck looking like he wants to follow in Elon's footsteps

Quantum Stocks

More Zuck
- Bashing Apple...
- No innovation, random rules
- "So how are they making more money as a company? Well, they do it by basically, like, squeezing people, and, like you're saying, having this 30% tax on developers by getting you to buy more peripherals and things that plug into it," Zuckerberg said. "You know, they build stuff like Air Pods, which are cool, but they've just thoroughly hamstrung the ability for anyone else to build something that can connect to the iPhone in the same way."

Oh - and this...
- Meta on Friday told employees that its plans to end a number of internal programs designed to increase the company's hiring of diverse candidates, the latest dramatic change ahead of President-elect Donald Trump's second White House term.
- Among the changes, Meta is ending the company's "Diverse Slate Approach" of considering qualified candidates from underrepresented groups for its open roles. The company is also putting an end to its diversity supplier program and its equity and inclusion training programs.

Light at the End of the Tunnel?
- Cleveland Cliffs is partnering with rival Nucor in a potential bid for U.S. Steel, whose takeover by Japan's Nippon Steel was just blocked by the White House earlier this month, sources tell CNBC's David Faber.
- Cleveland-Cliffs would purchase all of U.S. Steel for all cash and then sell off the Big River Steel subsidiary to Nucor, the sources said. The offer would be in the high $30s a share.
- Not a great deal as the Nippon offer was at $55

Meanwhile...
- The Committee on Foreign Investment in the United States approved an extension of the deadline for Nippon Steel Corp. to abandon its $14.1 billion takeover of United States Steel Corp., according to a statement by US Steel.
- The deadline will be extended to June 18 from Feb. 2 originally, following President Joe Biden’s order to halt the deal earlier this month. A Nippon Steel spokesperson confirmed the extension to Bloomberg News. The new deadline is also the date the two companies had set for completing the merger.

Trouble in Consumerville?
- Abercrombie & Fitch (DOWN -18%) loses much of its appeal today despite raising its Q4 (Jan) sales outlook following upbeat holiday spending trends.
- The clothing retailer focused on a younger demographic lifted its Q4 net sales forecast to +7-8% from +5-7%, pushing its FY25 revenue growth guidance to around +15% compared to its previous +14-15% forecast.
- Additionally, ANF reiterated its operating margin projections for the quarter and full year, anticipating around 16% and 15%, respectively.
- According to Briefing.com: Shares are lower because ANF's sales trends weakened this year compared to the previous holiday season.
----In 2023, ANF raised its Q4 net sales growth outlook to a high teens percentage from low double-digits, suggesting around a 5-9 pt bump due to a robust holiday shopping season.
-----A similar development is unfolding for rival American Eagle (AEO), whose total revenue is tracking around 5% lower for Q4 compared to a low double-digit jump during the year-ago period.
- (Disclosure: Core holding for H&C Clients)

Takes a Turn
- Southwest Airlines is pausing corporate hiring and promotions, suspending most of its summer internships and going without some employee team-building events that date back to the 1980s in order to cut costs and improve margins, CEO Bob Jordan told staff Monday.
- As part of the cost cuts, Southwest is pausing its employee "rallies," a company team-building tradition that dates back to 1985 in which staff hear from the airline's leaders about the year's goals and are treated to food and entertainment.
- Pushed by activist Elliot Management, the airline last year charted out a plan to increase profits that includes ditching its more than 50-year-old open seating model in favor of assigned seats and creating a section with extra legroom, flying overnight flights and more aggressively cutting back unprofitable routes.

Deep in Debt
- Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling and have pushed the national debt past the $36 trillion mark.
- The three-month fiscal year 2025 deficit rose to $710.9 billion, some $200 billion more than the comparable period in the prior year, or 39.4%.
- Rising financing costs along with continued spending growth and declining tax receipts have combined to send deficits spiraling, pushing the national debt past the $36 trillion mark.
- Though short-term Treasury yields have held fairly steady over the past month, rates at the far end of the duration curve have surged. The benchmark 10-year note most recently yielded close to 4.8%, or about 0.4 percentage point above where it was a month ago.

Robinhood - Hand Slap
- $45 million penalty
- The violations by Robinhood Securities LLC and Robinhood Financial LLC related to failures to report suspicious trading in a timely manner, failing to implement adequate identity theft protections, and failing to adequately address unauthorized access to Robinhood computer systems, the SEC said Monday.
- Stick up 8% on the day...

More bad actors
- Capital One is being sued by the US government’s consumer watchdog agency for “cheating millions of consumers” and not paying more than $2 billion in interest to holders of its high-interest savings accounts.
- Stock up 2% on the day...

Hmmmm
- Eli Lilly struggles to meet sky-high expectations as Q4 Mounjaro and Zepbound sales fall short
- STRONG, just not what was expected...
- Also, some talk about weight loss pill by LLY (next year)
- Stock down 7% on the day....

DOGE - Dogged
- Tech billionaire Elon Musk said Wednesday that his budget-cutting effort on behalf of President-elect Donald Trump would most likely not find $2 trillion in savings, backtracking on a goal he set earlier as co-head of a new advisory body, the Department of Government Efficiency, or DOGE.
- Musk told political strategist Mark Penn in an interview broadcast on X that the $2 trillion figure was a "best-case outcome" and that he thought there was only a "good shot" at cutting half that.
- Next goal?? $420 Billion?

Cracks in the AI $$ game
- Alibaba is cutting prices on its large language models by up to 85%, the Chinese tech giant announced Tuesday.

 

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FED AND CRYPTO LIMERICKS