Good Afternoon. Comeback week for the markets with the S&P 500 crossing 200DMV. All major indices gained 3%+ for the week, with the Nasdaq leading the way with 4.68% gains. As the US and Iran failed to reach a deal this weekend, some of these gains could reverse amid expected volatility. However, the earnings season kicks off next week. Earnings are expected to grow by ~14% in Q1, which will support the markets. This week highlighted the computing power demand story again, with deals between Coreweave+Meta, Google+Anthropic+Broadcom.

Below are the key things to note this week:

Volatility to Continue:

U.S.-Iran talks in Islamabad ended without a deal after 21 hours, leaving a fragile two-week ceasefire at risk. The key sticking points remained Iran’s nuclear commitments, the Strait of Hormuz, reparations, and a broader regional ceasefire.

Anthropic’s Mythos: Compute Constraints and Cybersecurity Risks:

The limited rollout of Anthropic’s new AI model, Mythos, to an exclusive group of just 40 companies has sparked a major debate across the tech and financial sectors. While Anthropic cited the model's immense capabilities and the need to manage security risks, a memo from OpenAI accused Anthropic of insufficient computing power. I believe there are two key issues driving this dynamic that we need to pay attention to:

• The Compute Power Bottleneck – The underlying disagreement between the two leading AI labs centers on computational power. OpenAI projects its compute capacity will reach 30 gigawatts by 2030, while it estimates Anthropic will only reach roughly 7 to 8 gigawatts by the end of next year. OpenAI views this massive scale as a critical differentiator, accusing Anthropic of hiding a severe lack of compute hardware behind their security claims. In contrast, Anthropic is taking a much more conservative approach to capital allocation, criticizing OpenAI’s aggressive, "YOLO approach" to data center expansion.

• Systemic Cybersecurity Threats – The restricted rollout isn’t just about hardware; the cybersecurity implications are drawing serious attention. Wall Street banks are currently stress-testing the model at the urging of the US government to uncover potential vulnerabilities. The risks of cyberattacks and systemic financial disruption are severe enough that Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell have directly warned bank CEOs about the model. With the Bank of England also preparing to launch discussions, managing these unprecedented capabilities against high-stakes security threats is becoming a central focus for financial regulators globally.

In short, I am certain that the demand for computing power will keep surging. If OpenAI is right about Anthropic’s lack of compute power, you know what Anthropic is going to do. It already struck its largest deal this week with Broadcom and Google. Sustained compute demand will benefit all stocks in the supply chain. I have a 20X max plan for Claude and also pro plans for all other 4 major LLMs, as I am building some models. From my personal experience, I can clearly see that Claude is gasping for more computing power. Claude is my favorite among the five, but it throttles, even with the best plan. I believe what OpenAI is saying.

U.S. Consumer Spending Cools: Consumer spending rose 0.5% in February as PCE inflation increased 0.4% month over month and held at 2.8% year over year, showing price pressures remained firm even before the Iran-driven oil shock. Core PCE rose 0.4% for a third straight month, reinforcing the case for higher-for-longer rates.

For the week:

• The S&P 500 is up 3.56%, the Nasdaq is up 4.68%, and the Dow 30 is up 3.04%.

  

  barchart

CNN's Fear & Greed Index now stands at 38 (Fear) out of 100, up 19 points from last week. Details here

The top five trending stocks on Reddit are Palantir, Microsoft, SPY, Jingdong Mall, and ServiceNow. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3.2 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of April 10th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Treasury, Fed Flag AI Cyber Risks: Treasury Secretary Scott Bessent and Fed Chair Jerome Powell warned major bank CEOs about cyber risks tied to Anthropic’s new Mythos model after the company said it could exploit weaknesses across major operating systems and web browsers. Access will be limited to about 40 tech firms. Read

Morgan Stanley Launches Bitcoin ETF: Morgan Stanley became the first Wall Street bank to launch a Bitcoin-tracking ETF, debuting the Morgan Stanley Bitcoin Trust on NYSE Arca, as the market already has more than 10 spot Bitcoin ETFs holding over $85 billion in assets. Read

Fed Probes Bank Private Credit Risk: The Fed is seeking details from major U.S. banks on their exposure to private credit as redemptions rise and troubled loans increase, signaling closer scrutiny of whether stress in the roughly $2 trillion market could spill into the broader financial system. Read

U.S. Banks Set for Capital Relief: Revised draft capital rules could free up as much as $320 billion across 36 U.S. banks, up 20% from the current $266 billion estimate. The Fed said capital levels could fall 4.8% to 7.8%, boosting capacity for lending, dividends, and buybacks, with regional banks and GSIBs among the biggest beneficiaries. Read

Anthropic Expands Compute Partnership: Anthropic signed a new deal with Google and Broadcom for multiple gigawatts of next-generation TPU capacity starting in 2027, marking its largest compute commitment yet. The expansion is aimed at meeting surging Claude demand, with run-rate revenue rising above $30 billion from about $9 billion at end-2025 and $1 million-plus business customers doubling to over 1,000 in under two months. Read

Levi’s Beat: Net revenue rose 14% to $1.742B, with 9% organic growth, led by 16% DTC growth and 21% e-commerce growth as DTC reached 52% of revenue. GAAP EPS was $0.45 and adjusted EPS was $0.42, ahead of $0.38 estimates. FY2026 guidance was raised to 5.5%–6.5% revenue growth, $1.42–$1.48 adjusted EPS, and ~12% adjusted EBIT margin. CFO Harmit Singh will retire after a planned transition.

Delta Airlines Mixed: Adjusted revenue rose to a record $14.2B, up 9.4% YoY, while adjusted EPS of $0.64 landed within initial guidance despite higher fuel costs. Operating cash flow reached $2.4B and free cash flow $1.2B. Adjusted net debt fell to $13.5B, below 2019 levels. Non-fuel CASM rose 6% YoY to 15.13¢, while corporate, premium, and loyalty demand remained strong.

Good Afternoon. Markets recovered this week after 5 week sell-off. As I mentioned last week, the tech stocks had come down from 28x PE to 21x. The war is still going on, and it’s still not clear what will happen over the next two weeks. Macro data is still decent, and no issues with earlings. If geopolitical risk subsides, markets for sure will rally from here.

Below are the key things to note this week:

This week’s data showed a softer hiring backdrop, but firmer realized activity. JOLTS and ADP pointed to weak labor demand, yet retail sales, ISM manufacturing, claims, and payrolls suggested the economy entered April with more resilience than the softer labor indicators implied.

JOLTS Job Openings: Job openings fell to 6.88 million in February from 7.24 million, while hires slipped to 4.85 million. The labor market continues to weaken through slower hiring, not broader layoffs.

ADP Employment: ADP showed private payrolls rose just 62,000 in March. Hiring remained selective, reinforcing the view that labor demand is cooling even if the labor market is not breaking.

Retail Sales: Retail sales rose 0.6% m/m, and core retail sales increased 0.5%. Consumer spending remained firm, suggesting demand held up better than the softer labor data alone would imply.

ISM Manufacturing PMI: ISM manufacturing rose to 52.7 from 52.4, extending the sector’s expansion. Manufacturing looked more resilient in terms of activity, though labor conditions inside the sector remained softer.

Unemployment Claims: Initial claims fell to 202,000 from 211,000. Layoffs remain contained, and the claims data still do not point to a meaningful deterioration in the labor market.

Non-Farm Payrolls: Payrolls rose 178,000 in March, well above expectations and a sharp rebound from February. The report suggested hiring was broader and stronger than earlier private and survey-based indicators indicated.

Unemployment Rate: The unemployment rate fell to 4.3% from 4.4%. But the decline was partly offset by a drop in labor force participation, making the improvement less clear-cut than the headline suggests.

Average Hourly Earnings: Average hourly earnings rose 0.2% m/m, below expectations. Wage growth continues to cool, which should help with inflation but also points to softer labor income momentum.

Takeaway: The week did not confirm a labor market reacceleration, but it also did not support a breakdown narrative. The cleaner read is that the economy remained resilient into April, while the labor market stayed in a slower-hiring, lower-wage-growth phase.

For the week:

• The S&P 500 is up 3.36%, the Nasdaq is up 2.20%, and the Dow 30 is up 1.18%.

  

CNN's Fear & Greed Index now stands at 19 (Extreme Fear) out of 100, up 9 points from last week. Details here

The top five trending stocks on Reddit are SPY, DTE Energy, NVIDIA, Tesla, and VOO. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of April 2nd is $0.75bn.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for April 29th FOMC Meeting:

CME FedWatch

Treasury Flags Private Credit Risks: The U.S. Treasury will meet insurance regulators through early May as concerns over the $2 trillion private credit market broaden to liquidity, leverage, ratings consistency, and offshore reinsurance, amid tighter bank lending and rising private fund withdrawal limits. Read

SpaceX Files for IPO: SpaceX confidentially filed with the SEC, putting it on track for a potential June 2026 listing that could become the biggest-ever IPO and position it ahead of expected public-market moves by OpenAI and Anthropic. Read

Powell Says Fed Can Wait: Powell said the Fed can stay in wait-and-see mode as the impact of the Iran war on inflation remains unclear. He flagged downside labor-market risk against upside inflation risk, said expectations remain anchored, and noted rates were left at 3.50%-3.75%. Read

Trump Says Iran Conflict Nearing Completion: Trump said U.S. operations in Iran were “nearing completion,” and that key military objectives had largely been achieved, aiming to reassure markets and the public. But the address offered no clear end-state or timeline, leaving policy uncertainty intact. Read

Blue Owl Caps Redemptions: Blue Owl limited withdrawals from two funds after historic Q1 redemption requests as AI-related fears hit software credit. Investors sought to redeem 40.7% of its $6.2 billion tech-focused fund and 21.9% of its $36 billion credit fund; the firm plans to meet only 5% of requests. Read

Nike Beat: Revenue was $11.3B, flat reported and down 3% currency-neutral. Wholesale rose to $6.5B, up 5% reported and 1% currency-neutral, while NIKE Direct fell to $4.5B, down 4% reported and 7% currency-neutral. Gross margin declined 130 bps to 40.2% due to higher North America tariffs. Diluted EPS was $0.35, net income $520M, with cash and short-term investments at $8.1B and dividends of about $609M, up 3%.

Good Afternoon. The market sold off for the 5th straight week with all major indices reporting losses. The uncertainty due to the Iran war is putting pressure on all risk assets and valuations, especially for growth tech stocks, which have come down significantly - forward PE of 21x vs 28k at the peak. A prolonged war beyond 2-3 more weeks will be terrible for Oil prices and, by extension, equities. More on this in the curated insights section.

Below are the key things to note this week:

Nasdaq enters correction: 

Nasdaq 100 has entered correction territory, down ~11% from its October peak as the index declined to 23,335. The move marks the first correction since the April 2025 tariff-led selloff, driven by rising Iran-related geopolitical risk and growing skepticism around AI monetization timelines, shifting market sentiment from leadership-driven optimism to caution.

Selloff has been led by mega-cap tech. Microsoft (-34%) and Meta (-29%) have been key drags, with Meta also facing legal pressures. NVIDIA is down ~19% as the durability of AI-driven demand is questioned, while enterprise software names like Workday and Atlassian have fallen >40%, reflecting concerns around AI disruption.

Despite near-term weakness, the earnings outlook remains resilient. The Magnificent Seven are expected to deliver ~19% profit growth in 2026, vs. ~16% for the broader S&P 500. Valuations have reset to ~21x forward earnings from ~28x at the peak, now slightly below historical averages.

Weak 2-Year Auction Reflects Soft Demand: 
The U.S. Treasury’s $69B 2-year note auction cleared at 3.936% with a 2.44 bid-to-cover ratio, a result that pointed to softer demand than markets were looking for. A key sign of weakness was primary dealers taking 24.1% of the issue, well above recent norms, indicating that end-investor participation was light and that dealers had to absorb more supply. The weak auction pushed 2-year yields higher, reinforcing concern that sticky inflation and oil-driven macro risks could keep expectations of Fed easing under pressure.

For the week:

• The S&P 500 is down 2.12%, the Nasdaq is down 0.90%, and the Dow 30 is down 3.23%.

  

  Barchart

CNN's Fear & Greed Index now stands at 10 (Extreme Fear) out of 100, down 5 points from last week. Details here

The top five trending stocks on Reddit are SPY, Microsoft, META, Micron, and QQQ. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3.03 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of March 27th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for April 29th FOMC Meeting:

CME Fedwatch

Musk Weighs Large Retail Slice for SpaceX IPO: Elon Musk is considering allocating up to 30% of SpaceX’s IPO to individual investors, roughly three times the typical retail share, to build a loyal shareholder base and support trading after listing. The structure would mark a clear break from the usual Wall Street IPO model. Read

Mortgage Rates Hit Six-Month High: Rising oil prices tied to the prolonged Middle East war have revived inflation concerns, pushing the average 30-year fixed mortgage rate to 6.38% from 6.22% last week, according to Freddie Mac. The fourth straight weekly increase threatens home sales during the key spring season and further pressures housing affordability. Read

Arm’s Strategic Shift: Arm is moving beyond licensing for the first time with the launch of its in-house AGI CPU for data centers, marking a major shift in strategy as it begins competing directly with its own customers. Meta is the first buyer, aligning with its multi-gigawatt AI data center buildout and up to $135 billion in planned capex this year. Read

OpenAI Shuts Sora, Ends Disney Deal: OpenAI has discontinued its AI video-generation app Sora, less than 2 years after its high-profile debut, and will also wind down its $1 billion content partnership with Disney, marking a strategic shift toward robotics and physical-world applications. Read

Gamestop Mixed: Q2 FY2026 delivered record revenue, gross margin, EPS, and free cash flow. Revenue rose to $23.86B from $8.05B a year ago and $13.64B in the prior quarter. GAAP gross margin was 74.4% and operating margin 67.6%. Operating cash flow reached $11.90B, with adjusted free cash flow at $6.90B. The board approved a 30% dividend increase to $0.15 per share. Strong AI demand and tight supply support another record Q3.

Cintas Beat: Revenue rose 8.9% YoY to $2.84B, with 8.2% organic growth. Gross margin reached a record 51.0%, up 40 bps. Diluted EPS increased 9.7% to $1.24, and net income was $502.5M. The company paid a $180.0M quarterly dividend on March 13, 2026, raised FY2026 guidance to $11.21B–$11.24B in revenue and $4.86–$4.90 in adjusted diluted EPS, and announced a deal to acquire UniFirst on March 10, 2026.

Karman Mixed: Q4 revenue rose 47.4% YoY to a record $134.5M. GAAP EPS was $0.06, and non-GAAP EPS was $0.11, in line with consensus. Adjusted EBITDA increased 59% to $42.0M, with a margin at 31.2%. Backlog reached $801.1M, up 38.2% YoY. FY2026 guidance was raised to $715–$730M in revenue and $207–$218M in adjusted EBITDA.

Paychex Mixed: Revenue rose 20% YoY to $1.81B, with operating income up 14% to $792M and adjusted operating income up 22% to $863.2M. Diluted EPS increased 9% to $1.56, while adjusted EPS rose 15% to $1.71. Management Solutions grew 23% to $1.35B, and PEO & Insurance rose 9% to $397.5M. Interest expense climbed to $68.1M on acquisition debt. The company returned over $1.5B to shareholders for the fiscal YTD.

Carnival Beat: Adjusted EPS rose 50% YoY to $0.20, while GAAP diluted EPS was $0.19. Revenue hit a record $6.2B, with gross margin yields up nearly 10% and net yields up 2.7% in constant currency. Bookings reached a record, 2026 bookings are up double digits with ~85% already booked, and fuel consumption per ALBD fell 4.7%. Management also introduced 2029 PROPEL targets and announced an initial $2.5B share buyback.

Good Afternoon. Major indices posted a fourth weekly loss amid a surge in energy prices due to escalating geopolitical tensions. As expected, the FOMC left rates unchanged, and the dot plot shows one possible rate cut in 2026.

Below are the key things to note this week:

Russell 2000 Enters Correction: The index has declined >10% from its recent high, becoming the first major U.S. benchmark to enter correction territory (10–20% drawdown). Small caps are more exposed to oil price volatility and cyclical slowdown, amplifying downside risk.

S&P below 200 DMA: S&P 500 broke below its 200-day moving average on March 19 for the first time in over a year, a key technical signal with mixed historical outcomes. Past breaks have either reversed quickly or extended into deeper drawdowns; with rising geopolitical risks and volatility, near-term price action will be critical in determining direction.

US Wholesale Inflation Hits 1-Year High, Led by Services: PPI rose 0.7% MoM (vs 0.3% est.) and 3.4% YoY (vs 2.9% est.), marking the highest level since Feb 2025, indicating elevated price pressures even before geopolitical risks intensified. Core PPI came in at 0.5% MoM (vs 0.3% est.) and 3.9% YoY (vs 3.7% est.), reflecting persistent underlying inflation.

Services drove the upside, rising 0.5% MoM—significant as tariffs typically impact goods more than services. Within this, portfolio management fees rose 1%, while brokerage, dealing, and advisory services surged 4.2%, pointing to financial services-led inflation. Goods prices also increased 1.1% MoM, adding to broad-based cost pressures.

US-Iran Threats Escalate Around Hormuz and Nuclear Sites: President Trump warned of strikes on Iranian power plants if Hormuz isn’t reopened within 48 hours; Tehran threatened U.S. energy and desalination assets in response, as Iran-Israel attacks intensified near nuclear facilities, including strikes around Natanz and Israel’s main research site.

For the week:

• The S&P 500 is down 1.90%, the Nasdaq is down 2.07%, and the Dow 30 is down 2.11%.

  

  Barchart

CNN's Fear & Greed Index now stands at 15 (Extreme Fear) out of 100, down 5 points from last week. Details here

The top five trending stocks on Reddit are SPY, SMCI, Microsoft, NVIDIA, and QQQ. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.99 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of March 20th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for April 29th FOMC Meeting:

CME FedWatch

Money Market Assets Hit Record Amid Risk Aversion: Geopolitical tensions and war-related uncertainty drove investors toward safe-haven assets, pushing US money market fund assets to record levels. Elevated yields and liquidity preference accelerated inflows, reflecting risk-off positioning across markets. Read

Kalshi Doubles Valuation to $22B on Strong Growth: New funding led by Coatue values Kalshi at $22B, ~2x its $11B valuation in December, driven by rapid scale with annualized revenue reaching $1.5B. Read

US Strikes Target Iran’s Strategic Capabilities: US Central Command hit Iranian assets threatening Strait of Hormuz shipping, degrading targeting capacity, while Natanz nuclear site was also struck per IAEA; despite Trump signaling possible de-escalation, Israel indicated operations will intensify. Read

US Regulators Rework Bank Capital Rules: Fed, FDIC, and OCC move to revise Basel III proposals after industry pushback, signaling lower capital burdens and a more tailored approach for large banks. Debate highlights trade-off between financial stability safeguards and credit availability, with final rules expected to ease earlier requirements. Read

Super Micro Governance Shift: Co-founder exits board amid ongoing scrutiny, signaling internal leadership transition and potential governance reset as the company navigates operational and compliance challenges. Read

Accenture Beat: Bookings hit $22.1B with 41 deals >$100M; revenue $18.0B (+8% YoY) at the top end of guidance. Diluted EPS rose to $2.93 (+4% YoY). Operating margin improved to 13.8% (+30 bps), with free cash flow at $3.7B and DSOs at 46 days. FY26 revenue growth guided at 3%–5% in local currency.

Micron Beat: Record Q2 FY2026 across revenue, margins, EPS, and cash flow: revenue surged to $23.86B (+196% YoY; vs $13.64B QoQ). GAAP gross margin at 74.4% and operating margin at 67.6%. Operating cash flow reached $11.90B; adjusted free cash flow $6.90B. Dividend raised 30% to $0.15/share. AI-driven demand and tight supply support potential Q3 records.

Good Afternoon. Third negative week for the markets, thanks to geopolitical uncertainty and underlying fears for the private credit market. Earnings continued to be good, but geopolitics trumped good earnings, and many companies sold off even after reporting strong results, barring some exceptions like Marvel and Oracle in recent times. Markets need positive news on the war to have a relief rally and go back to fundamentals like earnings strength.

Below are the key things to note this week:

Importance of oil prices - "Wealth Level" Trap: 3% vs. 53%:

While the U.S. often touts its "energy independence," Jeff Currie recently pointed out a glaring vulnerability at the wealth level that investors shouldn't ignore. At the income level, the U.S. is roughly balanced—producing as much oil as it consumes. However, our equity markets tell a different story. Currently, the Energy sector accounts for a mere 3% of the S&P 500, while roughly 53% of the index is effectively "short" energy. This majority—dominated by high-multiple Tech and Consumer sectors—relies on low input costs and cheap credit to justify its valuations. When oil spikes, the "Long 3%" (trading at ~12x earnings) can’t possibly offset the valuation compression in the "Short 53%" (trading at ~36x). In a regime of persistent energy inflation, we aren't just looking at higher gas prices; we are looking at a structural re-rating of the entire U.S. wealth engine.

Hopes of rate cut fade:

Rising oil prices and renewed inflation fears are pushing markets to scale back expectations of near-term Fed rate cuts. Following U.S.-Israel strikes on Iran and oil approaching $100 per barrel, traders have abandoned hopes of a June rate cut; earlier expectations had priced a 25 bps reduction in June, another in September, and a small probability of a third cut, per CME FedWatch.
January core PCE rose to 3.1%, a two-year high and up from 3.0% in December, remaining a full percentage point above the Fed’s 2% target. The reading reinforces the case for the Federal Reserve to hold interest rates steady for now.

For the week:

• The S&P 500 is down 1.6%, the Nasdaq is down 1.2%, and the Dow 30 is down 1.99%.

  

CNN's Fear & Greed Index now stands at 20 (Extreme Fear) out of 100, down 7 points from last week. Details here

The top five trending stocks on Reddit are SPY, USO, QQQ, Micron, and Meta. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of March 12th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Mortgage Rates Jump as Bond Yields Rise Amid Iran War: Escalating tensions in Iran pushed bond yields higher, driving the average 30-year fixed mortgage rate to 6.41%—its highest level since early September, according to Mortgage News Daily, though still below the 6.78% level recorded a year earlier. Read

JPMorgan Tightens Leverage to Private Credit: JPMorgan is marking down collateral pledged by private credit firms and cutting borrowing capacity as falling valuations — particularly in software loans facing AI disruption — trigger a private credit downcycle and elevated redemption pressure at firms such as Blue Owl and Blackstone. Read

SPR and IEA Deploy Emergency Oil to Counter Supply Shock: The U.S. will release 172M barrels from the Strategic Petroleum Reserve while the International Energy Agency plans a 400M-barrel coordinated release after the Iran war disrupted global supplies and pushed U.S. gasoline prices to about $3.58 per gallon. Read

Fed’s Bowman Signals Recalibration of Bank Capital Rules: Speaking at the Cato Institute, Bowman said proposed adjustments to Basel rules and the GSIB surcharge aim to better align capital requirements with actual risk exposure, refining how much loss-absorbing capital large banks must hold. Read

Adobe CEO Shantanu Narayen to Step Down: Long-time CEO since 2007 will exit after a successor is appointed and remain chair, ending a tenure that led Adobe’s shift from software licenses to Creative Cloud subscriptions and its push into generative AI; the failed Figma acquisition resulted in a $1B breakup fee after regulatory opposition. Read

Adobe Beat: AI-first ARR more than tripled YoY. Subscription revenue rose 13% to $6.17B. Q1 operating cash flow hit a record $2.96B. Remaining performance obligations reached $22.22B with 67% current. Business & Productivity subscription revenue grew 16% to $1.78B, while Creative & Marketing subscriptions increased 12% to $4.39B.

Oracle Beat: Revenue rose to $17.2B (+22% YoY), led by cloud revenue of $8.9B (+44%). Cloud Infrastructure reached $4.9B (+84%), while multicloud database revenue surged 531%. GAAP EPS was $1.27 (+24%) and non-GAAP EPS $1.79 (+21%). RPO stood at $553B with $9.9B short-term deferred revenue. LTM operating cash flow reached $23.5B (+13%). Quarterly dividend declared at $0.50 per share.

Good Afternoon. Bad week for markets, with all major indices recording losses amid geopolitical tensions, weak labor data, and concerns about private credit. Earnings continued to be strong.

Below are the key things to note this week:

Oil Surges:
Oil surged to its highest level since 2023 amid escalating tensions over the Iran war, while a weak U.S. jobs report signaled a rising softness in the labor market. The S&P 500 fell 1.3% as oil crossed $90 per barrel, capping Wall Street’s worst week since October.

U.S. Labor Market Unexpectedly Contracts:

WSJ

U.S. employers cut 92,000 jobs in February, a sharp reversal from January’s 126,000 gain and far worse than the 50,000 increase economists expected. The unemployment rate edged up to 4.4%, signaling emerging weakness as job growth has slowed across multiple sectors in recent months.
Rising oil prices and a mixed labor market put pressure on both the Fed's inflation and unemployment goals. Rate cuts will depend on which Fed mandate most FOMC voting members prioritize. More on this in curated insights.

Global Equity Funds See First Outflow In Two Months:

Reuters

Global investors cut exposure to equity funds for the first time in eight weeks as the escalating U.S.–Iran conflict reignited inflation fears and weakened risk appetite. U.S. equity funds led the decline, recording $21.9B in outflows—the largest since Jan 7—pushing global equity funds to a net $1.44B outflow.

For the week:

• The S&P 500 is down 2.02%, the Nasdaq is down 3.01%, and the Dow 30 is down 1.24%.

  

  Baarchart

CNN's Fear & Greed Index now stands at 27 (Fear) out of 100, down 16 points from last week. Details here

The top five trending stocks on Reddit are SPY, USO, NVIDIA, Hims & Hers Health, and DTE Energy. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of March 7th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

NVIDIA Signals Final OpenAI Funding Before IPO: NVIDIA CEO Jensen Huang said the company’s recent $30B investment in OpenAI could be the final funding round before the AI startup eventually goes public. Read

Crypto Gains Direct Access To Fed Payment Rails: Crypto moved closer to mainstream finance as Kraken’s banking unit secured access to the Federal Reserve’s core payment systems, becoming the first crypto firm able to move funds on the same payment rails used by thousands of banks and credit unions. Read

SEC Moves To Drop Justin Sun Fraud Case: The SEC moved to dismiss its civil fraud lawsuit against crypto investor Justin Sun, who recently invested in President Trump’s crypto projects while seeking regulatory leniency. A firm allegedly linked to Sun agreed to pay a $10M fine over claims employees manipulated trading in the TRX crypto asset, pending court approval. Read

Robinhood Venture Fund Debut Stumbles: Robinhood’s Venture Fund I fell 11% in its NYSE debut, signaling weaker investor appetite for riskier assets amid rising geopolitical uncertainty. The RVI fund provides retail investors with exposure to private firms, including Revolut and Databricks, aiming to broaden access to traditionally restricted venture investments. Read

BlackRock Limits Withdrawals Amid Private Credit Concerns: BlackRock restricted withdrawals from a flagship debt fund following a surge in redemption requests, highlighting rising investor concerns around the $2T private credit market. Shares of the world’s largest asset manager fell 6.7% during a broader selloff triggered by weak U.S. jobs data and escalating U.S.–Israeli conflict with Iran. Read

Autozone Miss: Net sales rose 8.1% YoY to $4.3B. Net income totaled $468.9M with diluted EPS of $27.63. Same-store sales increased 5.2% overall (3.3% CC), led by domestic growth of 3.4% and international growth of 17.1% (2.5% CC). Gross margin declined to 52.5%, primarily due to a 138 bps non-cash LIFO charge. The company repurchased 85k shares for $310.8M, with $1.4B in remaining authorization, and opened 64 net new stores, bringing the total to 7,774.

Crowdstrike Beat: ARR reached $5.25B, up 24% YoY, surpassing the $5B milestone. Net new ARR rose 47% to a record $331M in Q4. The company reported positive GAAP net income and record non-GAAP net income. Q4 operating cash flow hit a record $497.9M, with FCF at $376.4M. Falcon Flex ARR climbed over 120% YoY to $1.69B. Cash and cash equivalents stood at $5.23B.

Ross Stores Beat: Q4 sales rose 12% YoY to $6.64B with comparable store sales up 9%. Diluted EPS came in at $2.00, above company guidance of $1.77–$1.85, beating consensus by $0.38 (+23.5%). Revenue exceeded estimates by $1.32B (+24.8%). The company authorized a new $2.55B two-year share repurchase and raised its dividend 10% to $0.445. Outlook: Q1 EPS $1.60–$1.67 with comps up 7%–8%; FY2026 EPS $7.02–$7.36.

Broadcom Mixed: Revenue reached $19.3B, up 29% YoY, marking a record quarter driven by AI semiconductors. GAAP net income was $7.35B and non-GAAP net income was $10.19B, with adjusted EBITDA of $13.13B (68% margin). AI revenue totaled $8.4B, surging 106% YoY. The company guided Q2 FY2026 revenue to about $22B with ~68% EBITDA margin and announced a new $10B share buyback after returning $10.9B to shareholders in Q1.

Costco Beat: Q2 revenue rose 9.2% YoY to $69.6B, with net sales up 9.1% to $68.2B. Diluted EPS increased to $4.58 from $4.02 last year (+13.9% YoY). Adjusted comparable sales rose 6.7%, while adjusted e-commerce sales jumped 21.7%. February (4 weeks) sales reached $21.69B, up 9.5% YoY. The company operates 924 warehouses globally, including 634 in the U.S. and Puerto Rico and 114 in Canada.

Marvell Mixed: Q4 revenue reached $2.22B, up 22% YoY and $19M above guidance midpoint. Non-GAAP EPS was $0.80, while GAAP EPS came in at $0.46. Data center generated $1.65B (74% of revenue) and communications & other segments $567M (26%). Operating cash flow was $373.7M with a cash balance of $2.64B. For Q1 FY2027, the company guides to $2.4B revenue ±5% and Non-GAAP EPS of $0.79 ±$0.05.

Good Afternoon. AI and private credit-related fear spooked markets this week, too, with all major indices closing in the red. Good that the US struck Iran over the weekend, as markets would have suffered major volatility if this occurred during the week.

Below are the key things to note this week:

The US and Israel Strike Iran:
The US and Israeli forces struck Iran over the weekend. With the supreme leader dead, I hope the conflict will not escalate a lot more, and markets will be calmer on Monday. As long as there is no major military activity, markets should not react negatively. Iran controls 3% of the world's oil supply, so depending on the scale of the conflict, oil prices may shoot up when trading opens on Sunday night. Eight OPEC+ members—including Saudi Arabia, Russia, and the UAE—are set to meet on Sunday. If supply disruptions appear sustained, the group may raise output to preempt a broader shock to global oil markets.

Treasury yeild fall to the lowest level since November:

Bloomberg

Treasuries rallied as a renewed tech selloff pushed the 10-year yield to its lowest level since November, briefly touching 4.01%. Yields fell at least 3bps across the curve, led by the 7-year sector, reflecting a clear bid for duration. Month-end index rebalancing on Friday could add incremental demand, with passive flows expected to drive above-average buying in Treasuries.

Wholesale prices rose more than expected:

Core PPI (ex-food & energy) rose 0.8% m/m, accelerating from 0.6% in December and sharply above the 0.3% consensus.

Headline PPI increased 0.5% m/m, also topping the 0.3% forecast and 0.1pp above the prior month.

On a y/y basis, core wholesale prices advanced 3.6%, while headline PPI rose 2.9%.

For the week:

• The S&P 500 is down 0.44%, the Nasdaq is down 0.95%, and the Dow 30 is down 1.31%.

  

  Barchart

CNN's Fear & Greed Index now stands at 43 (Fear) out of 100, unchanged from last week. Details here

The top five trending stocks on Reddit are NVIDIA, SPY, Netflix, Microsoft, and QQQ. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of Feb 27th is $0.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Geopolitical Risk: The US and Israel struck Iran, with Israel targeting Iran’s supreme leader, president, and armed forces chief. According to CNN sources, the US is preparing for several days of continued attacks. Read

Netflix Walks Away: Netflix is stepping away from its bid to acquire Warner Bros. Discovery’s studio and streaming assets after the WBD board determined that Paramount Skydance’s revised proposal constituted a superior offer. Read

OpenAI Valued @ $730bn: OpenAI closed a $110B funding round—more than 2x last year’s record raise. Amazon committed $50B, Nvidia $30B, and SoftBank $30B. The deal values OpenAI at a $730B pre-money, up sharply from $500B in October’s secondary round. Read

Financial Times

Mortgage Rates Fall: US mortgage rates fell below 6% this week, breaking a critical threshold after years of elevated borrowing costs that sidelined buyers. The average 30-year fixed rate declined to 5.98% on Thursday, its first sub-6% reading since 2022, according to Freddie Mac. Read

First major AI job losses: Block will cut thousands of jobs and increasingly rely on AI to replace displaced roles. Headcount will fall from 10,000 to just over 6,000, CEO Jack Dorsey said in a shareholder letter Thursday. Read

Home Depot Miss: Q4 sales were $38.2B, down 3.8% YoY, as the prior year included a 14th week (~$2.5B); comparable sales rose 0.4% (+0.3% U.S.). GAAP EPS was $2.58 (adjusted $2.72) vs. $3.02 last year, missing consensus (EPS $3.53; revenue $41.7B). The dividend increased 1.3% to $2.33, marking the 156th straight quarterly payout. FY2026 guides to 2.5%–4.5% sales growth and flat to +4% EPS growth.

Mercadolibre Miss: Net revenues and financial income rose 45% YoY to $8.76B (+47% FXN). Operating income was $889M with a 10.1% margin (9.0% excluding $99M Brazil tax credits). Net income reached $559M (6.4% margin) with a normalized tax rate vs Q4’24. GMV grew 36.8% to $19.9B and TPV 42.1% to $83.7B. Advertising revenue surged 67% YoY (FXN) in Q4’25. Adjusted EBITDA was $1.13B; Adjusted FCF $763M.

Salesforce Beat: Q4 revenue rose 12% Y/Y to $11.2B, with Subscription & Support up 13% to $10.7B. Operating margin was 16.7% GAAP and 34.2% non-GAAP. RPO increased 14% to $72.4B; current RPO rose 16% to $35.1B. Buyback authorization expanded to $50B; dividend raised to $0.44/share. Agentforce ARR surged 169% to $800M, with 29k deals closed (+50% Q/Q). FY27 revenue guided to $45.8–$46.2B (+10–11%) and 34.3% non-GAAP margin.

Lowe’s Miss: Comparable sales rose 1.3%. Quarterly revenue increased 10.9% YoY to $20.6B (vs. $18.6B). GAAP EPS was $1.78; adjusted EPS came in at $1.98 (+2.6% YoY). Results included $149M in pre-tax acquisition-related expenses tied to FBM and ADG. The company returned $673M to shareholders via dividends during the quarter.

NVIDIA Beat: Record quarterly revenue of $68.1B, up 20% Q/Q and 73% Y/Y, driven by Data Center revenue of $62.3B (+22% Q/Q, +75% Y/Y). Returned $41.1B to shareholders, with $58.5B remaining under buyback authorization. GAAP EPS was $1.76; non-GAAP EPS was $1.62. Declared $0.01 dividend payable Apr 1, 2026 (record Mar 11). Q1 FY2027 revenue guided to ~$78.0B (±2%) with ~75% gross margins.

Intuit Beat: Total revenue was $4.7B, up 17% YoY. GBS rose 18% to $3.2B, led by Online Ecosystem at $2.5B (+21%). Consumer grew 15% to $1.5B; Credit Karma increased 23% to $616M; TurboTax added 12% to $581M. GAAP EPS climbed 49% to $2.48; non-GAAP EPS rose 25% to $4.15. The company repurchased $961M of stock, set a $1.20 quarterly dividend, and reiterated FY2026 guidance, with Q3 GAAP EPS of $10.56–$10.62 and non-GAAP EPS of $12.45–$12.51.

TJX Beat: Q4 comps rose 5% with net sales of $17.7B (+9% YoY). Adj EPS was $1.43 vs $1.39 est; GAAP EPS $1.58. Pretax margin 13.5% (12.2% adj); gross margin 30.9% (31.1% adj). Returned $4.3B in FY26; guiding $2.50–$2.75B buybacks in FY27. Board plans a 13% dividend hike to $0.48 (subject to approval). Q1 FY27 EPS seen at $0.97–$0.99; FY27 EPS $4.93–$5.02.

Good Afternoon. A positive week for the market, with all major indices recording gains. Macro data was weak, especially on GDP, but it was blamed on the government shutdown last quarter, and markets shrugged it off. The Supreme Court's ruling on tariffs sparked excitement, but I think the administration will find ways to continue its agenda, and no material policy change should occur. It will increase the volatility in the short term.
NVIDIA is set to report next week, and I have no doubt that earnings and guidance will be great, given that hyperscalers almost doubled their AI capex for 2026. NVIDIA stock hasn’t performed well over the last few quarters, so I expect it to gain momentum and pull markets in its direction.

Below are the key things to note this week:

GDP and PCE: Headline Noise vs Underlying Trend

Growth: Q4 real GDP printed at 1.4% vs 2.8% consensus, triggering slowdown fears. But the 43-day federal shutdown materially distorted the data. Federal outlays alone subtracted 1.15pp from growth; CEA estimates total drag near 2pp. Adjusted for that, growth was likely north of 3%. Expect a 1–1.5pp mechanical rebound in Q1, though some lost activity is permanent.

Inflation: Q4 PCE printed at 2.9% YoY (core 3.0%), with core running 2.7% annualized and December up 0.4% MoM. On the surface, that looks firm.

But context matters:

• Lag Effect: PCE typically trails CPI at turning points. With CPI trending softer, pipeline disinflation may not yet be fully reflected in PCE.

• Base Effects: Elevated prints from a year ago are still embedded in the YoY comparison. As they roll off, inflation should mechanically ease.

• Imputed Components: PCE includes estimated costs (e.g., portfolio management fees) that rise with equity markets, inflating readings without broad consumer price pressure. Market-based PCE is lower.

Bottom line: Growth is stronger than 1.4% suggests. Inflation is cooler than 3% implies.

Primal Thesis

Private Credit Stocks Under Pressure:
Shares of Blue Owl and other alternative asset managers came under pressure after the firm restructured redemptions in one of its retail-focused credit funds. Management pushed back on headlines suggesting “gating,” clarifying that quarterly redemptions are being replaced with episodic payouts — and that capital returns are actually being accelerated.

To facilitate this, Blue Owl sold $1.4B of loans across 128 names — roughly 35% of the fund — at 99.7 cents on the dollar. The portfolio slice represented a broad cross-section of sectors and loan types. Management framed the sale at near-par as third-party validation of credit quality and valuation marks.

Investors are set to receive ~30% of their capital back within 45 days — significantly more than a standard 5% tender offer would have delivered.

Some scrutiny emerged around a portion of the sale involving an insurer tied to the firm’s broader business. Blue Owl emphasized that the assets were sold to four institutions at identical prices amid strong demand and argued that the transaction reflects liquidity, not stress.

Income Inequality: 

Walmart's CEO highlighted on the earnings call that the majority of the revenue-share gains came from households earning more than $100,000. For households earning below $50,000, wallets remain stretched, and in some cases, people are managing spending paycheck to paycheck. Walmart is banking on higher-than-expected tax refunds this year.

For the week:

• The S&P 500 is up 1.12%, the Nasdaq is up 1.28%, and the Dow 30 is up 0.35%.

  

  Barchart

CNN's Fear & Greed Index now stands at 43 (Fear) out of 100, up 8 points from last week. Details here

The top five trending stocks on Reddit are SPY, Microsoft, NVIDIA, QQQ, and DTE Energy. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of Feb 20th is $0.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Amazon Surpasses Walmart Revenue: For the first time, Amazon has overtaken Walmart as the largest company by annual revenue. Walmart reported $713.2B in revenue for its latest fiscal year, trailing Amazon’s $716.9B. The shift had been building for months, after Amazon first surpassed Walmart in quarterly sales about a year ago. Read

New Tariffs: President Donald Trump said Friday evening he signed an executive order imposing a 15% “global tariff,” after the Supreme Court struck down his sweeping “reciprocal” import duties in a major setback to his trade agenda. The “Section 122” tariffs will take effect almost immediately. Read

Stablecoin Adoption: SEC’s Division of Trading and Markets issued an FAQ clarifying how broker-dealers should treat payment stablecoins under the net capital rule. Commissioner Hester Peirce, chair of the Crypto Task Force, said staff will not object to applying a 2% haircut—rather than a punitive 100%—on proprietary positions in qualifying payment stablecoins when calculating net capital. Read

OpenAI Lowers Compute Spend Estimates: OpenAI is now guiding to ~$600B in total compute spend by 2030, down from the $1.4T infrastructure ambition previously outlined by Sam Altman. The revised target introduces a clearer timeline and a more defined capital plan as investor concerns grow over whether the expansion scale aligns with future revenue potential. Read

NVIDIA-OpenAI Revise Deal: NVIDIA is finalizing a $30bn investment in OpenAI, replacing last year’s $100bn long-term commitment as part of a broader capital raise. The deal could close as soon as this weekend. The $30bn equity check is part of a funding round targeting over $100bn, valuing the ChatGPT maker at $730bn pre-money. Read

More Business for NVIDIA: Meta will deploy millions of Nvidia chips across its AI data centers, including the company’s new standalone CPUs and next-gen Vera Rubin systems, under a broad partnership announced Tuesday. CEO Mark Zuckerberg said the expansion advances Meta’s ambition to deliver “personal superintelligence” globally, a vision unveiled in July. Read

Medtronic Beat: Revenue of $9.0B rose 8.7% reported and 6.0% organic, exceeding Q3 guidance by 50 bps. Cardiac Ablation Solutions surged 80% YoY, with U.S. growth of 137% driven by PFA. CE Mark was received for Sphere-360, and the U.S. pivotal trial was launched. The FDA cleared the Hugo robotic system and the Stealth AXiS for spine applications. Acquisitions include CathWorks and Anteris.

Palo Alto Beat: Fiscal Q2 revenue rose 15% YoY to $2.594B. Next-Generation Security ARR climbed 33% to $6.3B, while RPO increased 23% to $16.0B, signaling strong forward visibility. GAAP EPS was $0.61 and non-GAAP EPS was $1.03, with a 30.3% non-GAAP operating margin. Integration progress continues with Chronosphere and CyberArk.

ADI Beat: Revenue of $3.16B, with growth across all end markets led by Industrial and Communications. TTM operating cash flow reached $5.1B (43% of revenue) and free cash flow $4.6B (39%). Returned $1.0B to shareholders in Q1; dividend raised 11% to $1.10, marking 22 consecutive years of increases. Bookings increased with record Data Center orders. Gross margin was 64.7%, operating margin 31.5%, and adjusted operating margin 45.5%.

Booking Holding Beat: Q4 2025 room nights rose 9% YoY. Gross bookings increased 16% to $43.0B. Net income margin expanded to 22.5% from 19.5%, while adjusted EBITDA margin improved to 34.6% from 33.8%. A 25-for-1 stock split takes effect April 2, 2026. The company repurchased $2.1B of shares, with $21.8B remaining under authorization.

Deere Miss: Worldwide sales rose 13% YoY to $9.61B. Net income was $656M with diluted EPS of $2.42. Segment sales: Production & Precision Ag +3%, Small Ag & Turf +24%, Construction & Forestry +34%. Financial Services net income increased 6% to $244M. FY2026 net income guidance raised to $4.5B–$5.0B. Q1 shipments exceeded plan as order books improved.

Newmont Mining Mixed: Q4 revenue rose 21% YoY to $6.82B. Adjusted EPS of $2.52 missed estimates by $0.21; GAAP EPS was $1.19 with net income of $1.30B. Free cash flow reached $2.81B and operating cash flow totaled $3.62B. The company declared a $0.26 quarterly dividend and ended the year with ~$2.1B in net cash and ~$11.6B in total liquidity.

Southern Company Miss: Q4 2025 operating revenue rose 10.1% YoY to $7.0B (vs. $6.3B). GAAP EPS declined to $0.38 from $0.49, while non-GAAP EPS improved to $0.55 from $0.50. Q4 net income: Traditional Electric $588M, Southern Company Gas $183M, Southern Power $64M. Total regulated utility customers reached 9.005M (4.590M electric; 4.415M gas).

Walmart Beat: Revenue rose 5.6% YoY to $190.7B (cc +4.9%). Operating income increased 10.8%, ahead of sales growth. Global eCommerce surged 24%, driven by pickup, delivery, and marketplace. GAAP EPS was $0.53; adjusted EPS was $0.74. Authorized a new $30B buyback. FY27 guides net sales up 3.5%–4.5% (cc) and adjusted operating income up 6%–8% (cc).

Good Afternoon. It's a down week for the markets, especially for the tech stocks. Wall Street is turning increasingly jittery as AI disruption risks spread across a broader set of industries. Earnings remain strong, and macroeconomic data are mostly positive.

Below are the key things to note this week:

Softer CPI:

WSJ

January CPI came in better than expected, extending the Treasury rally and bringing Fed rate cuts more firmly into play this year. Headline inflation rose 0.2% m/m, driven by softer gasoline and a rare decline in electricity costs. Annual CPI eased to 2.4%, the lowest since last spring.

Food prices rose a modest 0.2% m/m, with grocery inflation normalizing to 2.1% y/y. Shelter cooled to 0.2% m/m as rent pressures eased. Used-car prices fell for a second consecutive month, while new-vehicle prices remained contained, signaling limited tariff impact. Core goods were flat for a second month, trimming the annual rate to 1.1% despite dollar weakness.

Core CPI rose 0.3% m/m, slightly firmer but largely in line with expectations given recurring January seasonality distortions.

Retail Sales Stall:

U.S. retail sales growth stalled in December as consumers hit the pause button. Retail sales were virtually unchanged following an unrevised 0.6% gain in November—an unwelcome stumble for consumers that started the holiday season at a solid pace. The consensus forecast was expecting a far stronger 0.4% gain.

Strong Non-Farm Payroll:

January payrolls surprised to the upside, with 130K jobs added—nearly double Bloomberg’s 68K estimate and well above December’s downwardly revised 48K.

The data suggests labor market resilience despite recent soft reports. The unemployment rate edged lower to 4.3% from 4.4%.

For the week:

• The S&P 500 is down 1.39%, the Nasdaq is down 2.1%, and the Dow 30 is down 1.23%.

  

  Barchart

CNN's Fear & Greed Index now stands at 36 (Fear) out of 100, down 9 points from last week. Details here

The top five trending stocks on Reddit are SPY, Amazon, Microsoft, QQQ, and NVIDIA. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of Feb 13th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Anthropic at $380bn valuation: Anthropic closed a $30B funding round at a $380B post-money valuation — marking the second-largest private tech raise on record, behind OpenAI’s $40B+ round last year. The round was led by Coatue and GIC, with participation from Microsoft and Nvidia.

Bank CEO Compensation: CEOs of the largest U.S. banks collectively earned $258 million in 2025, as a resilient economy and strong Wall Street activity drove their institutions to record performance. Read

Rising Electric Bill: Electricity prices rose 6.9% YoY in 2025—more than double the 2.9% headline inflation rate, per Goldman Sachs. The bank expects continued growth through the end of the decade, with data centers accounting for 40% of demand growth. Higher power costs will erode disposable income, weigh on consumer spending, and modestly slow economic growth. Read

Asset Managers Merger: Schroders agreed to a £9.9bn takeover by a US investor, ending over 200 years of family control at the historic UK asset manager. Chicago-based Nuveen will acquire the firm, creating one of the world’s largest fund managers with ~$2.5tn (£1.8tn) in AUM. Read

U.S. Consumer Delinquencies Rise: Delinquency rates rose to 4.8% of outstanding U.S. household debt in Q4, the highest since 2017. Mortgage stress in lower-income zip codes and student-loan defaults drove the increase. Total household debt climbed 1% QoQ to $18.8T, while the share of credit-card balances 90+ days past due jumped to 12.7%. Read

Source: NY Fed, Bloomberg

Gilead Beat: Q4 revenue rose 5% YoY to $7.9B, with ex-Veklury product sales up 7% to $7.7B. HIV sales increased 6% to $5.8B, driven by Biktarvy (+5% to $4.0B) and Descovy (+33% to $819M) on higher pricing and PrEP demand. Liver Disease grew 17% to $844M, led by Livdelzi. Veklury declined 37% to $212M amid lower COVID hospitalizations. Cell Therapy fell 6% to $458M, with Yescarta and Tecartus both down.

Coca-Cola Miss: Q4 net revenues rose 2% to $11.8B, with organic growth of 5%. Comparable operating margin expanded 48 bps YoY to 24.4%, while currency-neutral comparable operating income increased 13%. GAAP operating income declined 32% due to a $960M BODYARMOR trademark impairment. GAAP EPS was $0.53 (+4%), and comparable EPS reached $0.58 (+6%). The company gained value share in global NARTD beverages for both Q4 and the full year.

Cisco Beat: Record revenue of $15.3B with double-digit revenue and EPS growth, exceeding guidance. Product orders rose 18% YoY, with networking orders accelerating above 20%. GAAP gross margin was 65.0% (67.5% non-GAAP). GAAP operating margin reached 24.6% (34.6% non-GAAP), above the high end of guidance. AI infrastructure orders from hyperscalers totaled $2.1B. Dividend increased to $0.42 per share.

T-Mobile Mixed: Revenue increased 11% YoY to $24.3B, with service revenue up 10% to $18.7B. Diluted EPS was $1.88, including a $0.26 severance impact. Q4 postpaid net adds reached 2.4M; broadband adds were 558K, including 495K from 5G. Earned first-ever J.D. Power top network quality ranking in five of six U.S. regions. Q4 Core Adj. EBITDA was $8.4B; Adj. FCF $4.2B. 2026 guides Core Adj. EBITDA of $37.0–$37.5B and Adj. FCF of $18.0–$18.7B.

McDonald’s Beat: Q4 global comparable sales rose 5.7%, with positive guest counts across all segments. Revenue increased 10% to $7.0B (+6% constant currency). Diluted EPS was $3.03; adjusted EPS was $3.12, excluding restructuring. Systemwide sales grew 11% in Q4, with full-year sales surpassing $139B. Quarterly dividend increased 5% to $1.86. Loyalty sales reached nearly $37B, with ~210M 90-day active users at year-end.

Applied Materials Beat: Revenue was $7.01B, down 2% YoY, with GAAP gross margin at 49.0% and non-GAAP at 49.1%. GAAP EPS rose 75% YoY to $2.54, while non-GAAP EPS was flat at $2.38. Semiconductor Systems posted a record in DRAM revenue, and Applied Global Services achieved a record in services and spares revenue. Operating cash flow was $1.69B, with $702M returned to shareholders ($337M buybacks; $365M dividends).

Arista Networks Beat: Q4 revenue rose to $2.49B, up 7.8% QoQ and 28.9% YoY, with non-GAAP operating margin at 47.5%. The company launched its R4 AI/data center series, acquired Broadcom’s VeloCloud SD-WAN portfolio, surpassed 150M cumulative ports shipped, and delivered over $1B in quarterly non-GAAP net income.

Good Afternoon. Dow hit 50k fr the first time this week, thanks to rotation out of tech. Nasdaq dropped ~2% amid concerns about AI capex and also investors’ sudden reassessment of disruptive potential following Anthropic’s Feb 5 release of Claude Opus 4.6. Earnings remain strong, and eventually, stocks follow earnings. Macro data indicated a softening labor market, but the manufacturing PMI was strong, and services have been doing well for a while.

Below are the key things to note this week:

Selloff in enterprise software and SaaS stocks:
The selloff in enterprise software and SaaS stocks—erasing billions for incumbents like Salesforce, Workday, and Thomson Reuters—erupted after Anthropic's February 5 launch of Claude Opus 4.6, which showcased agentic AI capabilities (autonomous coding, multi-step orchestration, seamless tool integration) and Claude Cowork plugins tailored for finance, legal, and marketing workflows, directly threatening to automate or erode the human-assisted moats of legacy tools. Investors, already jittery from earnings season, saw this not as vague hype but as a credible, scalable path to revenue cannibalization—e.g., AI agents handling comprehensive legal research or end-to-end financial modeling—prompting a rapid "wake-up call."

Manufacturing Resurgence:

Manufacturing PMI rebounded to 52.6 in January from 47.9, marking a return to expansion and extending overall economic growth to a 15th month. New Orders surged to 57.1, the strongest reading since February 2022, while Production rose to 55.9, its highest level since early 2022. Prices remained elevated at 59; Backlogs turned expansionary for the first time since August 2022, at 51.6; and Employment improved but remained in contraction at 48.1.

For the week:

• The S&P 500 is down 0.10%, the Nasdaq is down 1.84%, and the Dow 30 is up 2.50%.

  

  Barchart

CNN's Fear & Greed Index now stands at 45 (Neutral) out of 100, down 13 points from last week. Details here

The top five trending stocks on Reddit are Microsoft, SPY, Reddit, MicroStrategy, and Amazon. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) as of Feb 6th is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

Bank Merger: Banco Santander is acquiring Webster Financial in a $12.3B cash-and-stock deal, accelerating its push to scale in the U.S. The transaction positions Santander to compete with large regional banks and meaningfully strengthens its U.S. franchise. Webster, with over $80B in assets and a strong Northeast branch network, anchors the expansion strategy. Read

OpenAI-Amazon Deal: Amazon is in talks to invest up to $50B in OpenAI, marking a major bet on the AI leader, according to people familiar with the matter. OpenAI is seeking up to $100B in new funding, a round that could value the company at as much as $830B, according to a report from The Wall Street Journal. Read

SpaceX-xAI Merge: SpaceX has acquired xAI in a landmark deal valuing the combined entity at $1.25 trillion, according to confirmation Tuesday from CNBC’s David Faber. This record-setting transaction is the largest merger in history. According to documents reviewed by CNBC, the deal values SpaceX at $1 trillion and xAI at $250 billion. Read

Anthropic’s Funding Round: Anthropic PBC is finalizing a funding round expected to exceed $20 billion, with a potential close as early as next week. Initially targeting $10 billion, the raise has more than doubled amid strong investor demand, valuing the company at nearly $350 billion. The round would nearly double Anthropic’s prior valuation just five months after a $13 billion raise, underscoring investor enthusiasm driven by rapid revenue growth. Read

Disney Mixed: Revenue rose 5% YoY to $26.0B, while income before taxes was roughly flat at $3.7B. Diluted EPS was $1.34, and adjusted EPS was $1.63. Total segment operating income declined 9% to $4.6B. Entertainment revenue grew 7%, with operating income of $1.1B; SVOD delivered $450M at an 8.4% margin. Sports operating income fell to $191M, down $56M YoY, reflecting an estimated $110M impact from the YouTube TV suspension. Experiences posted record revenue of $10.0B and operating income of $3.3B, with domestic operating income up 8%.

Palantir Beat: U.S. commercial revenue surged 137% y/y to $507M, while U.S. government revenue rose 66% to $570M. Total revenue increased 70% y/y to $1.407B, with customer count up 34%. TCV hit a record $4.262B (+138% y/y), including $1.344B in U.S. commercial TCV (+67%). Rule of 40 reached 127%. GAAP net income was $609M (43% margin); adjusted EBITDA totaled $805M (57% margin).

AMD Beat: Q4 revenue hit a record $10.27B, up 34% Y/Y and 11% Q/Q. Data Center revenue reached $5.38B on strong EPYC and Instinct demand, while Client and Gaming totaled $3.94B, up 37% Y/Y. Results included a ~$360M MI308 reserve release and ~$390M in MI308 China sales. Adjusted non-GAAP gross margin was ~55% excluding MI308 items. Non-GAAP EPS came in at $1.53 versus $0.70 expected, with revenue also beating estimates.

Abbvie Beat: Q4 revenue was $16.6B, up 10.0% YoY reported and 9.5% operational. Immunology grew 18.3% to $8.6B, led by strong gains in Skyrizi and Rinvoq, partially offset by a 25.9% decline in Humira. Neuroscience rose 17.9% on Vraylar and Botox Therapeutic, while Oncology declined 1.5% despite growth in Venclexta and Elahere. GAAP gross margin was 72.6% (83.6% adjusted) and operating margin 27.3% (38.3% adjusted). FY2026 adjusted EPS guidance is $14.37–$14.57, excluding acquired IPR&D and milestones.

Google Beat: Q4 revenue came in at $113.8B, up 18% YoY, with EPS of $2.82. Results exceeded expectations, with EPS beating consensus by $0.29 and revenue ahead by nearly $10B. Google Cloud delivered $17.7B in revenue (+48% YoY) and $5.31B in operating income. YouTube's annual revenue crossed $60B. AI traction remains strong, with Gemini scaled to 750M+ monthly active users. A quarterly cash dividend of $0.21 per share was declared.

Eli Lilly Mixed: Q4 2025 revenue rose 43% to $19.3B, driven by Mounjaro and Zepbound volumes. GAAP EPS was $7.39 (+51% YoY) and non-GAAP EPS was $7.54 (+42% YoY). FDA milestones included tirzepatide KwikPen approval, Jaypirca label expansion, and orforglipron submissions. Pipeline progress included Taltz+Zepbound, oral GLP-1 or forglipron, and retatrutide Phase 3 studies for obesity and OA pain. The company also reached an agreement with the U.S. government to expand access to obesity drugs. 2026 guidance calls for $80–$83B revenue and non-GAAP EPS of $33.50–$35.00.

Amazon Beat: Net sales rose 14% to $213.4B (+12% ex-FX). AWS revenue grew 24% to $35.6B with operating income of $12.5B. Net income was $21.2B, delivering diluted EPS of $1.95. North America sales increased 10% to $127.1B, while International rose 17% to $50.7B. Operating income totaled $25.0B, or $27.4B excluding special charges. Advertising services reached $21.3B in Q4, up 22% YoY.

Linde Mixed: Sales reached $8.8B, up 6% YoY, with underlying growth of 3% driven by 2% pricing and 1% volume. Adjusted EPS rose 6% to $4.20, beating consensus by $0.21. Operating cash flow increased 8% to $3.0B, with free cash flow of $1.6B. Adjusted operating profit grew 4% to $2.6B, though margin slipped 40 bps to 29.5%. Americas led growth at 8%, followed by EMEA at 6% and APAC at 3%, while Engineering declined 2%. Total backlog stood at $10.0B, and $2.1B was returned to shareholders in Q4.

Philip Morris: Q4 net revenues were $10.4B, up 6.8% reported and 3.7% organic YoY. Adjusted diluted EPS came in at $1.70, up 9.7% YoY versus $1.55 last year. FY2025 revenues totaled $40.6B, with the smoke-free business contributing $16.9B (41.5%). A $1.47 quarterly dividend was declared. 2026 adjusted EPS is guided at $8.38–$8.53, with reported EPS of $7.87–$8.02.

Good Afternoon. A volatile week for the markets, but all major indices closed almost flat. Metals, i.e., Gold and Silver, experienced wild swings and corrections from elevated levels as markets digest the appointment of the new Fed chair and ongoing news flow on tech earnings and AI-related investment concerns. Bitcoin fell to its lowest levels since April 2025.

Below are the key things to note this week:

FOMC Decision: The Fed left rates unchanged as expected. Steven Miran and Chris Wallar dissented, favoring rate cuts. More on this in curated insights.

Tech earnings and uneven market reaction:
Mag Seven's earnings underscored how unevenly AI investments are being monetized. Microsoft was repriced as the market questioned near-term returns at the application layer, despite owning the most vertically integrated AI stack across GPUs, models, cloud, and Copilot. Capex scale is no longer the differentiator—revenue conversion is. Meta, by contrast, was rewarded as AI continues to directly translate into higher engagement and ad efficiency, driving upside even before generative AI meaningfully contributes. The market is signaling that clear cash flow visibility matters more than AI ambition.

Apple’s results reinforced its positioning as a demand-driven hardware franchise rather than an AI story. Strong iPhone momentum carried the quarter, but rising memory costs introduced a new trade-off between margins and pricing power. Tesla continued its pivot away from autos toward robotics, autonomy, and physical AI, increasingly valued as a long-duration optionality play. The key inflection remains execution—visible, paid robotaxi adoption at scale. Until that materializes, valuation rests more on belief than fundamentals.

Trump announces new Fed chair: President Donald Trump named Kevin Warsh to succeed Jerome Powell as Federal Reserve chair.

Gold and Silver Correct:
Gold, after surging to nearly $5,600 on Thursday, fell as much as 11% on Friday to around $4,800 per ounce, extending a sharp reversal after a record run driven by safe-haven demand amid global turmoil and inflation fears. The selloff spilled across precious metals, with silver posting a record 26% one-day drop and platinum sliding 18%.

Financial Times

OpenAI attracting investments:

• OpenAI is assembling a mega funding round (up to ~$100bn) to finance AI compute, data centers, and long-term scale

• The widely cited $100bn Nvidia deal was non-binding and is now on pause, as structure, sizing, and capital intensity are reassessed

• NVIDIA has not walked away — management reiterated plans for a large OpenAI investment, but within a broader multi-investor round, not a standalone pact

• Capital is shifting from a single bilateral deal to multi-partner “capital stacking”, reducing execution risk and spreading infrastructure burden

• Amazon is in talks to invest up to ~$50bn, signaling hyperscaler competition to anchor AI workloads and future cloud rents

• SoftBank is discussing up to ~$30bn more, doubling down on AI as a capital-intensive supercycle

• Microsoft remains a strategic backer, though expected to contribute less incremental capital than Amazon or SoftBank

For the week:

• The S&P 500 is up 0.34%, the Nasdaq is down 0.42%, and the Dow 30 is down 0.17%.

  

  Barchart

CNN's Fear & Greed Index now stands at 58 (Greed) out of 100, up 6 points from last week. Details here

The top five trending stocks on Reddit are SLV, Scandisk, GLD, SPY, and Microsoft. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The SRF balance as of Dec 12 is almost zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for March 18th FOMC Meeting:

CME FedWatch

New Fed Chair: President Donald Trump named Kevin Warsh to succeed Jerome Powell as Federal Reserve chair, marking the end of a long and turbulent chapter for the central bank. The decision follows a process that formally began last summer but traces back to Trump’s sustained criticism of the Powell-led Fed since Powell assumed the role in 2018. Read

NVIDIA-OpenAI Pause $100bn deal: Nvidia’s plan to invest up to $100 billion in OpenAI to support training and deployment of next-gen AI models has stalled, after internal concerns emerged at the chipmaker, according to people familiar with the matter. The agreement, unveiled last September, included a memorandum under which Nvidia would build at least 10 gigawatts of compute for OpenAI, with OpenAI leasing the chips as part of the arrangement. Read

Potential Merger: Elon Musk’s SpaceX and AI startup xAI are planning to merge into a single company, further consolidating Musk’s business empire, according to people familiar with the matter. SpaceX executives have begun informing select investors about the proposed tie-up. Read

OpenAI funding round: OpenAI is in discussions to raise nearly $40bn from Nvidia, Microsoft, and Amazon as part of a landmark $100bn funding round. NVIDIA may commit up to $20bn, Amazon has explored an investment of $10bn or more, and Microsoft, which already owns a 27% stake, could add several billion dollars. Read

Metal Sold off: Gold and silver sold off sharply on Friday after reports that President Donald Trump selected Kevin Warsh to replace Jerome Powell as Fed chair. Gold futures suffered their worst one-day drop on record, settling at $4,745, down 11%. Silver plunged 31% to $78.53, its steepest same-day fall since March 1980. Read

Apple Beat: Record highs in total revenue and EPS. iPhone delivered its strongest quarter ever, with records across every geography. Services revenue hit an all-time high, growing 14% year over year. Operating cash flow approached $54B, with roughly $32B returned to shareholders. The installed base crossed 2.5B active devices. The board declared a $0.26 per share cash dividend.

RTX Beat: Q4 sales reached $24.2B, up 12% year over year and 14% organically. Adjusted EPS was $1.55, up 1% year over year, with GAAP EPS of $1.19. Operating cash flow totaled $4.2B and free cash flow $3.2B. Backlog stood at $268B, led by $161B in Commercial and $107B in Defense. Pratt & Whitney sales rose 25%, Raytheon 7%, and Collins 3%. The company completed the divestiture of Collins’ Simmonds Precision Products business.

UnitedHealthcare Mixed: FY2025 revenue reached $447.6B, up 12% YoY, with operating cash flow of $19.7B. Q4 revenue was $113.2B; GAAP EPS came in at $0.01 and adjusted EPS at $2.11, excluding a $2.8B pre-tax charge related to cyber issues, divestitures, and restructuring. For 2026, management guides to revenue above $439B, operating earnings over $24B, and an operating margin of near 5.5%. UnitedHealthcare delivered $344.9B in revenue (+16%), while Optum generated $270.6B (+7%).

Lam Research Beat: Revenue was $5.34B with non-GAAP EPS of $1.27 and GAAP EPS of $1.26. Cash and equivalents declined to $6.2B from $6.7B last quarter, while deferred revenue fell sequentially to $2.25B from $2.77B. Revenue mix was China 35%, Taiwan 20%, and Korea 20%. Systems revenue totaled $3.36B, and customer support-related revenue totaled $1.99B. The company returned $1.47B through share repurchases and paid a $0.26 per share dividend.

Meta Beat: Q4 revenue reached $59.9B, up 24% YoY, with diluted EPS of $8.88 versus $8.02 last year. Advertising strength drove results, with ad impressions up 18% YoY and average pricing up 6%. Free cash flow totaled $14.1B in Q4, operating cash flow was $36.2B, cash and marketable securities stood at $81.6B, while Reality Labs posted a $6.0B operating loss.

Microsoft Beat: Microsoft Cloud revenue topped $50B, driven by Azure and cloud services up 39% YoY. Total revenue reached $81.3B, up 17% GAAP and 15% in constant currency. GAAP net income surged 60% to $38.5B; non-GAAP rose 23% to $30.9B. More Personal Computing fell 3%, with Xbox content down 5%. The company returned $12.7B to shareholders, up 32% YoY.

Tesla Mixed: Quarterly revenue reached $24.9B with operating margins of 5.7%. Energy storage posted record deployments, driving segment gross profit to roughly $1.1B. APAC achieved a record quarter for vehicle deliveries. Driverless Robotaxi testing began in Austin in December, and safety monitors were removed starting in January. AI training capacity continues to scale with the Cortex 2 buildout in Texas.

Apple Beat: The company delivered record revenue and EPS. iPhone had its strongest quarter ever, setting records across all regions. Services revenue hit a new high, growing 14% year over year. Operating cash flow was nearly $54B, of which about $32B was returned to shareholders. The installed base crossed 2.5B active devices, and the board declared a $0.26 per-share cash dividend.

Caterpillar Beat: Delivered record quarterly sales with Q4 revenue up 18% YoY to $19.13B. Q4 GAAP EPS was $5.12 and adjusted EPS was $5.16, slightly above last year. Operating margin declined to 13.9% (15.6% adjusted) from 18.0% (18.3%) due to tariffs and restructuring, with operating profit at $2.66B. Returned $7.9B via buybacks and dividends in 2025, ending the year with $10.0B in cash and $11.7B in operating cash flow.

Mastercard Beat: Adjusted EPS of $4.76 beat estimates by $0.43, while revenue of $8.80B exceeded expectations by $512M. Value-added services and solutions grew 26% in Q4, with GAAP operating margin expanding 320 bps to 55.8%. Card issuance reached 3.7B, and Q4 capital return totaled $4.3B through buybacks and dividends.

Thermofisher Beat: Q4 revenue rose 7% YoY to $12.21B, with organic growth of 3%. GAAP diluted EPS increased 9% to $5.21, while adjusted EPS grew 8% to $6.57. GAAP operating margin expanded 80 bps to 18.5%, though adjusted margin eased 30 bps to 23.6%. The company announced a strategic collaboration with OpenAI to scale AI across operations and products, alongside major launches including Orbitrap Astral Zoom, Krios 5 Cryo-TEM, and Helios MX1. Capital deployment for 2025 is ~$16.5B, with $13B committed to M&A, including the Clario agreement.

Visa Mixed: Net revenue reached $10.9B, up 15% YoY (13% constant-dollar). GAAP EPS grew 17% to $3.03, while non-GAAP EPS rose 15% to $3.17. Payment volume increased 8% on a constant-dollar basis, with cross-border volumes up 12%. Processed transactions totaled 69.4B, up 9% YoY. Shareholder returns were $5.1B through buybacks and dividends, with a $0.670 dividend declared. GAAP operating expenses rose 27% YoY, primarily due to a litigation provision.

American Express Mixed: Q4 revenue was $19.0B, up 10% YoY (9% FX-adjusted). GAAP EPS of $3.53 missed estimates by $0.46. Card Member spend grew 9% (8% FX-adjusted). Provisions totaled $1.4B, with net write-offs at 2.1% vs 1.9% last year. FY2026 guidance calls for 9–10% revenue growth and EPS of $17.30–$17.90, alongside a planned ~16% dividend hike to $0.95 per share.

Chevron Beat: Q4 2025 earnings totaled $2.8B, or $3.0B on an adjusted basis. Sales and other operating revenues reached $45.8B, while CFFO came in at $10.8B, marking a record annual level. Worldwide production rose 12%, with U.S. output up 16% to record highs. The reserve replacement ratio was 158%. The quarterly dividend was raised by 4% to $1.78 per share, and the Hess integration delivered its initial $1B in synergies.

Exxon Mixed: Q4 earnings totaled $6.5B with GAAP EPS of $1.53 and non-GAAP EPS of $1.71. Revenue came in at $82.3B, down ~1.3% YoY from $83.4B last year. Operating cash flow was $12.7B, with free cash flow of $5.6B. Shareholder returns reached $9.5B in Q4, including $4.4B in dividends and $5.1B in buybacks. Upstream Q4 production was 4,988 koebd, delivering the highest full-year output in over 40 years.

Good Afternoon. A volatile week for markets amid geopolitical news, strong earnings, and decent macro data. All major indices recorded minor losses and ended almost where they started the week. FOMC rate cut decision and major tech earnings will be the focus for next week.

Below are the key things to note this week:

In line PCE: The Fed’s preferred inflation gauge, the PCE price index, came in at 2.8% for both headline and core, matching consensus. October was revised at 2.7% on both measures, with monthly inflation running at a steady 0.2%; the BEA released October and November data together due to disruptions from the government shutdown.

Highest GDP in two years: Inflation-adjusted GDP was revised up to a 4.4% annualized pace, the fastest in two years, driven by stronger exports and investment that more than offset a slight downgrade to consumer spending. The revision itself was immaterial, with growth edging up just 0.03pp from an unrounded 4.34% to 4.37%.

FOMC Next Week:
The Fed is expected to keep the rates unchanged next Wednesday. The CME FedWatch probabilities stand at ~96%.

Reuters Poll

Gold - All Time High:
15 months ago, on September 1st, I wrote how Gold was the best-performing asset for 2024. The Gold price on that day was $2502. I was sure the Gold would continue to surge amid the looming geopolitical uncertainties, but even I never imagined it would rise at this pace.

Just three months after breaching $4,000/oz, gold is now flirting with $5,000. January futures jumped 8.5% this week to a record $4,976, marking the largest weekly dollar gain ever and the biggest percentage surge since the March 2020 Covid panic. Gold is up over $650 this month, driven by tariff fears and rising concern over Federal Reserve independence, with longer-dated futures already pricing above $5,000.

The rally is being powered by a mix of structural and cyclical factors:

1. Safe-haven demand & macro uncertainty
   Investors are piling into gold amid geopolitical tensions, tariff/policy risk, and market volatility — classic risk-off buying.

2. Monetary policy / lower yields
   Expectations of future Fed rate cuts and lower yields reduce the opportunity cost of holding a non-yielding asset like gold, making it more attractive.

3. Weak dollar & currency concerns
   Fears about U.S. dollar strength and fiscal policy uncertainty are prompting both investors and central banks to hedge with gold.

4. Equity market caution/alternative to stocks
   Elevated valuations in equities — especially in tech — have pushed some risk capital into alternatives such as gold.

5. Supply constraints
   Gold supply is relatively inelastic: new mining adds only a few percent annually. When demand surges — from investors and official buyers — there’s limited displacement by producers.
   

Major Tech Earnings Next Week:
Four out of seven Mag 7 stocks are scheduled to report earnings next week. These will be crucial for the market, along with the FOMC press conference. The market will look to hear more about the AI Capex plans and ROI updates.

For the week:

• The S&P 500 is down 0.42%, the Nasdaq is down 0.12%, and the Dow 30 is down 0.70%.

  

  Barchart

CNN's Fear & Greed Index now stands at 52 (Neutral) out of 100, down 10 points from last week. Details here

The top five trending stocks on Reddit are SLV, SPY, Intel, ICE, and enCore Energy. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operations (primarily reflecting SRF take-up)  as of Jan 23 is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for Jan 28th FOMC Meeting:

CME FedWatch

Another piece of good news for Crypto: The US Securities and Exchange Commission plans to drop its 2023 lawsuit against Gemini Trust Co., which alleged that the firm illegally raised billions through an unregistered crypto-lending program. Read

Cap One Scoops Brex: Capital One Financial agreed to acquire fintech Brex for $5.15 billion in a cash-and-stock deal, strengthening its push into corporate clients. Founded nearly a decade ago, Brex provides technology for managing corporate cards, expenses, and rewards, and oversees about $13 billion in deposits across partner banks and money-market funds. Read

Liquidity issues with JGBs: Just $280 million of trading triggered a breakdown in Japan’s government bond market, erasing $41 billion across the curve. The scale mismatch between minimal traded volume and massive valuation losses underscores how illiquidity has turned JGBs into a growing fault line in the global financial system. Read

JPM’s $2bn AI Budget: The world’s largest bank has moved AI from “discretionary innovation” to core infrastructure, putting it on par with data centers, payment rails, and risk controls. Of its roughly $17 billion annual tech budget, JPMorgan is committing about $2 billion to AI with the same non-negotiable priority as cybersecurity and operational resilience. Read

Netflix Beat: Q4 revenue rose 18% YoY to $12.05B; operating income increased 30%. EPS of $0.56 topped consensus, with revenue ahead by ~$82M. 2025 ad revenue exceeded $1.5B, more than 2.5x YoY. Paid memberships surpassed 325M in Q4’25. 2026 guidance calls for $50.7–$51.7B in revenue and a 31.5% operating margin. The Warner Bros. acquisition is advancing under an amended all-cash structure.

JNJ Beat: Q4 sales rose 9.1% YoY to $24.6B. GAAP EPS was $2.10 and adjusted EPS $2.46, both reflecting a $0.10 impact from the Halda acquisition. The quarter saw key approvals for CAPLYTA in MDD and RYBREVANT FASPRO with LAZCLUZE in NSCLC, alongside landmark data for TECVAYLI with DARZALEX FASPRO, and submission of the OTTAVA robotic surgical system to the FDA. Regionally, growth was led by International (+11.3%) versus the U.S. (+7.5%), while Innovative Medicine and MedTech grew 10.0% and 7.5% YoY, respectively.

PG Beat: Net sales rose 1% to $22.2B, with flat organic growth. Diluted EPS was $1.78, down 5%, while Core EPS held steady at $1.88. Gross margin declined 120 bps to 51.2% and operating margin fell 200 bps to 24.2%. Operating cash flow totaled $5.0B, with adjusted FCF productivity at 88%. The company returned $4.8B to shareholders and reaffirmed FY26 sales and Core EPS guidance, updating GAAP EPS to reflect restructuring.

Abbott Labs Beat: Adjusted EPS came in at $1.50, up 12% YoY, with GAAP EPS at $1.01. 4Q25 sales were $11.46B, up 4.4% reported and 3.0% organically. Medical Devices grew 12.3%, driven by EP, HF, Diabetes, and Rhythm Management, while Diagnostics declined 2.5% as COVID testing sales fell to $89M from $176M last year. For 2026, management guides to organic growth of 6.5%–7.5% and adjusted EPS of $5.55–$5.80. The company extended its dividend growth streak to 54 years, with a $0.63 payout scheduled for February 13, 2026.

GE Mixed: Q4 revenue grew 18% to $12.7B, with adjusted revenue up 20%. Adjusted EPS was $1.57 and GAAP EPS $2.31. Orders jumped 74% to $27.0B, lifting backlog to roughly $190B. CFOA reached $2.1B and FCF $1.8B, exceeding 100% conversion. Engine wins hit a record, while full-year services revenue rose 26%.

Intel Beat: Q4 revenue was $13.7B, down 4% YoY. GAAP EPS came in at -$0.12, while non-GAAP EPS was $0.15. Cash from operations totaled $4.3B in the quarter. Intel introduced 18A products and is ramping high-volume manufacturing in Arizona and Oregon. The company announced a partnership with Cisco to develop distributed AI workloads using the Xeon 6 SoC and completed a $5.0B common stock sale to NVIDIA.

Cap One Mixed: Q4 2025 net income was $2.1B, with GAAP EPS of $3.26 and adjusted EPS of $3.86. Total net revenue reached $15.6B, up 1% QoQ. Credit costs remained elevated, with $4.1B in provisions, $3.8B in net charge-offs, and a $302M reserve build. Non-interest expense was $9.3B, driven by a 38% QoQ jump in marketing and 8% higher operating costs. CET1 stood at 14.3% as of December 31, 2025. The firm agreed to acquire Brex Inc. for $5.15B, split evenly between cash and stock.

United Airlines Beat: United delivered record quarterly revenue of $15.4B, the highest in its history. Q4 GAAP EPS was $3.19, with adjusted EPS of $3.10 in line with guidance. The airline carried 181M passengers in 2025, ranking #2 in on-time departures with the lowest seat cancellation rate. A government shutdown cut Q4 pre-tax income by ~$250M, though a customer-friendly refund policy drove record November NPS. Capacity rose 6.5% YoY, supporting the strongest quarterly unit revenue of the year.

Good Afternoon. Major indices ended slightly negative for the week. CPI inflation was better than expected, but bank earnings were not up to par. The good thing is that the small caps did well this week, which shows the market is broadening. However, it will be interesting to see if this small-cap rally sustains, as in the past, small caps have gained in the short term but failed to sustain momentum.

Below are the key things to note this week:

Bank Earnings Disappoint: Major banks reported earnings this week, which failed to meet expectations. Overall, there are no signs of any issues, but the bar was higher for this quarter. More details in the curated insights section below.

Small caps finally shine: Rising confidence in the economic outlook is driving a sharp rotation into small caps. The Russell 2000 has now outperformed the S&P 500 for 11 straight sessions—its longest streak since 2008—and is up 7.9% YTD, far ahead of the sub-2% gains in large-cap benchmarks. Supported by strong GDP growth and solid earnings, investors are rotating out of mega-cap tech and into cyclicals, industrials, energy, and small caps positioned for an economic reacceleration.

WSJ

Inflation under control:
Inflation held steady into the year-end. Headline CPI rose 2.7% year over year in December, unchanged from November. The data is somewhat noisy due to distortions from the recent government shutdown, but price pressures in consumer staples—particularly food and electricity—remain elevated. Based on CPI data, the Fed’s preferred gauge, the PCE, is expected to be ~2.6% and will be released at the end of this month.

For the week:

• The S&P 500 is down 0.38%, the Nasdaq is down 0.66%, and the Dow 30 is down 0.29%.

  

  barchart

CNN's Fear & Greed Index now stands at 62 (Greed) out of 100, up 11 points from last week. Details here

The top five trending stocks on Reddit are AST Spacemobile, Immunity Bio, SPY, Micron, and Rocket Lab. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Facility (SRF): The New York Fed’s standing repo operations (primarily reflecting SRF take-up)  as of Jan 16 is zero.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for Jan 28th FOMC Meeting:

CME FedWatch

Boeing outsold Airbus: Boeing logged 1,173 net aircraft orders last year, beating Airbus for the first time since 2018—a clear sign its recovery is gaining traction. December deliveries reached 63 jets, taking full-year deliveries to 600, the highest in seven years, including 44 737 Max aircraft. Read

Banks push back: JPMorgan Chase CFO Jeremy Barnum warned that banks could push back against President Donald Trump’s proposed credit card rate controls. Industry executives argue a 10% cap would shrink card availability and weigh on U.S. consumer spending. Corporate and political leaders began weighing in on the potential fallout this week. Read

Raymond James Acquisition: Raymond James Financial (RJF) has agreed to acquire Philadelphia-based Clark Capital Management, which oversees $46 billion in assets. The transaction is expected to close in the third quarter. Read

Private credit: JPMorgan Chase is building a dedicated team within its investment bank to help companies raise private capital rather than go public, signaling its view that private markets will remain dominant even as some large IPOs return. Public markets have weakened structurally, with fewer IPOs, longer private holding periods, more secondary funds, and greater institutional focus on private capital. JPMorgan sees this as a lasting shift in capital formation, not a cyclical pause. Read

JP Morgan Mixed: Net income totaled $13.0B on a GAAP basis and $14.7B excluding a significant item. Managed revenue was $46.8B, up 7% year over year, with reported revenue of $45.8B. Markets revenue rose 17%, driven by 7% growth in Fixed Income and 40% in Equity. The firm recorded a $2.2B reserve tied to the forward purchase of the Apple credit card portfolio. Credit costs were $4.7B, reflecting $2.5B in net charge-offs and a $2.1B net reserve build. Shareholder returns included $1.50 per share in dividends, totaling $4.1B, and $7.9B in net buybacks.

Bank Of America Beat: 4Q25 net income was $7.6B with EPS of $0.98, up 18% YoY. Revenue reached $28.4B (+7%), driven by Net Interest Income of $15.8B (+10%). Average deposits rose to $2.01T (+3%) and loans to $1.17T (+8%). $8.4B was returned to shareholders. BVPS was $38.44; TBVPS $28.73. Segment income: Consumer $3.3B, GWIM $1.4B, Global Banking $2.1B, Global Markets $1.0B. CET1 stood at 11.4% with average global liquidity sources of $975B.

Citigroup Miss: Revenue was $19.9B, up 2% YoY, or 8% excluding Russia. GAAP EPS was $1.19, while adjusted EPS excluding Russia was $1.81. The firm returned ~$17.6B to shareholders in 2025, a 133% payout ratio. CET1 stood at 13.2%, with TBVPS of $97.06 and BVPS of $110.01. Services rose 15%, Banking surged 78%, USPB grew 3%, and Markets declined 1%. The Q4 2025 effective tax rate was ~34%.

Wells Fargo Mixed: Net income was $5.4B, or $1.62 per share, with non-GAAP net income of $5.8B, or $1.76 per share. Total revenue reached $21.29B, driven by a 4% YoY increase in net interest income and 5% YoY growth in noninterest income. Noninterest expense declined 1% YoY to $13.73B, including $612M in severance. The firm repurchased $5.0B of shares in Q4 2025. CET1 stood at 10.6% and LCR at a preliminary 119%. Average loans were $955.8B and average deposits totaled $1.38T.

Blackrock Beat: AUM reached $14T after record FY net inflows of $698B, including $342B in Q4. Q4 as-adjusted EPS of $13.16 beat estimates by ~10%, with revenue of $7.0B up 23% YoY and ahead of consensus. Organic base fees grew at a 12% annualized pace; the dividend rose 10% to $5.73, with $5B returned to shareholders in 2025. Technology services benefited from Preqin, driving ACV growth of 31% YoY.

Goldman Sachs Miss: Q4 revenue was $13.45B, down 3% YoY and 11% QoQ. Diluted EPS rose to $14.01 from $11.95 last year. Global Banking & Markets revenue increased 22% YoY to $10.41B. Platform Solutions reported a $(1.68)B loss driven by Apple Card markdowns. Credit loss provisions reflected a $2.12B net reserve release. The quarterly dividend was raised to $4.50, payable March 30, 2026.

Morgan Stanley Miss: Q4 net revenues were $17.9B, up 10% year over year from $16.2B. EPS rose to $2.68 versus $2.22 last year. ROTCE was 21.8%, ROE 16.9%, with a 32% pre-tax margin. The firm declared a $1.00 dividend and repurchased $1.5B of common stock in Q4. CET1 stood at 15.0% at year-end.

Good Afternoon. Good start to the year, with all major indices posting gains in the first full trading week of the year. Macro data was mixed, with good news on the unemployment rate and deficit numbers.


Below are the key things to note this week:

Record Corporate Debt Issuance:
FT reported that the U.S. companies are tapping the bond market at the fastest pace since the Covid era, as AI investment and merger financing drive what’s shaping up to be a record year for debt issuance. More than $95bn was raised across 55 investment-grade deals in the first full week of January—the largest weekly total since May 2020 and the strongest start to any year on record, per LSEG data.

Source: Financial Times

Exactly a year ago, we had similar news, which I covered here. Back then, there was also a record in IG debt issuance, and I wrote that it was a positive sign that IG corporates with strong management were raising funds, indicating they believe good times are ahead.

Supreme Court Holds Tariff Decision:
The Supreme Court did not rule Friday on the legality of President Trump’s broad tariffs, leaving markets in limbo over a decision with significant trade and fiscal implications. Expectations for a Friday ruling proved premature, as the Court issued only one unrelated opinion. Timing remains uncertain, with the next rulings due on Wednesday.

Meanwhile, the U.S. trade deficit in goods and services narrowed sharply to $29.4B in October from $48.1B the prior month, as tariffs continued to reshape global trade, according to Commerce Department data. This marked the lowest monthly deficit since June 2009, driven by weaker imports and resilient exports, aligning with a key Trump administration objective.

AI Investments Continue:

• Elon Musk’s xAI raised $20 billion, surpassing its earlier $15 billion target. CNBC reported in November that the funding would value the AI startup at roughly $230 billion.

• Anthropic has signed a term sheet for a $10B funding round at a $350B valuation, CNBC confirmed Wednesday. The round is being led by Coatue and Singapore sovereign wealth fund GIC, according to a source familiar with the confidential discussions.

For the week:

• The S&P 500 is up 1.57%, the Nasdaq is up 1.88%, and the Dow 30 is up 2.32%.

  

  barchart

CNN's Fear & Greed Index now stands at 51 (Neutral) out of 100, up 7 points from last week. Details here

The top five trending stocks on Reddit are SPY, Nvidia, Oklo, DTE Energy, and Tesla. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $3 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The SRF balance as of Jan 9th is $3.75 billion.

Here is a summary of this week’s key economic releases:

Target Rate Probabilities for Jan 28th FOMC Meeting:

CME FedWatch

Walmart-backed app valued at $4bn: OnePay, the Walmart-backed fintech building the retailer’s customer-facing super app, repurchased employee shares in a recent transaction that values the closely held company at over $4 billion, according to a person familiar with the matter. Read

Walmart to join Nasdaq 100: Walmart Inc. will join the Nasdaq 100 Index, replacing AstraZeneca Plc, Nasdaq Global Indexes announced Friday. The change takes effect before markets open on Jan. 20, following the Jan. 19 U.S. market holiday. The inclusion follows Walmart’s shift last year from the NYSE to Nasdaq, the largest exchange transfer on record. Read

JPMorgan to take over Apple Card: JPMorgan Chase will take over as issuer of Apple’s credit card under a deal announced Wednesday, with the card staying on Mastercard as Goldman Sachs exits consumer lending. The roughly $20 billion portfolio pairs Apple’s massive device user base with the largest U.S. bank’s scale and expertise in consumer lending. Read

Record Convertible Bond Issuance: Global convertible bond issuance is at a 24-year high, fueled by accelerating AI investment. Issuance reached about $166.5 billion in 2025, with AI-linked companies accounting for roughly 40% of benchmark convertible bond returns last year. Strong refinancing needs and higher equity prices are expected to keep the market robust into 2026. Read

Barclays invests in crypto startup: Barclays, one of the UK’s Big Four banks, has taken a stake in U.S. stablecoin settlement startup Ubyx. Ryan Hayward, Head of Digital Assets and Strategic Investments, said interoperability is critical to unlocking the full potential of digital assets. Financial terms were not disclosed. Read

Saks closes on bankruptcy financing: The parent of Saks Fifth Avenue and Neiman Marcus is nearing a ~$1.25B bankruptcy financing package as it prepares to file for Chapter 11 in the coming days, according to people familiar with the matter. A bondholder group led by Bracebridge Capital and Pentwater Capital has proposed a $1.25B debtor-in-possession loan, expects to take control, and requires the termination of Saks Global’s management team. Read

Constellation Brands: Reported EPS came in at $2.88, with comparable EPS of $3.06. The Beer business gained both dollar and volume share across U.S. tracked channels, while Wine & Spirits outperformed the higher-end wine segment. YTD operating cash flow totaled $2.1B, with free cash flow of $1.45B. FY2026 EPS is guided to $9.72–$10.02 reported and $11.30–$11.60 comparable, with FCF of $1.3–$1.4B. The company repurchased $824M of shares YTD and declared a $1.02 quarterly dividend.

Good Afternoon. Happy New Year! A negative week for the markets, with no major macroeconomic news aside from the FOMC meeting minutes, which were released on Wednesday. The S&P 500 and Dow Jones Industrial Average closed higher on the first trading day of the year, while the Nasdaq was flat.

Below are the key things to note this week:

Mortgage rates hit their lowest level in a year: Freddie Mac’s latest Primary Mortgage Market Survey shows the average 30-year fixed mortgage rate edged down to 6.15% from 6.18% last week. The benchmark rate began the year near 7%, highlighting a meaningful easing in borrowing costs.

Key point for 2025: Despite significant concerns throughout the year about US policy uncertainty and tariff impacts, US assets remain in high demand. There is a lot of talk, but when it comes to putting money to work, the US is where global investors come.

Apollo

For the week:

• The S&P 500 is down 1.06%, the Nasdaq is down 1.60%, and the Dow 30 is down 0.72%.

  

  Barchart

CNN's Fear & Greed Index now stands at 45 (Neutral) out of 100, down 11 points from last week. Details here

The top five trending stocks on Reddit are SPY, Tesla, Micron, Nvidia, and Amazon. Read More

Liquidity:

• Banking Reserves + ON RRP: Banking reserves remain at approximately $2.8 trillion. ON RRP balance remains immaterial.

• Standing Repo Operations: The New York Fed’s standing repo operations (primarily reflecting SRF take-up) saw increased usage on Wednesday, as eligible financial institutions tapped the facility to manage balance sheet and funding needs on the final trading day of 2025. On 12/31, usage was ~$74bn; it has since dropped to ~$23bn.

  

Here is a summary of this week’s key economic releases:

Initial jobless claims fell, signaling layoffs remain contained even as labor-market momentum cools. Claims for the week ending Dec. 27 declined by 16,000 to 199,000 from 215,000, undershooting the 208,000 consensus estimate, according to the Labor Department.

Target Rate Probabilities for Jan 28th FOMC Meeting:

CME FedWatch

Record Gains for Gold and Silver in 2025: Gold and silver opened the year steady after their strongest annual gains since 1979, as markets weighed an upcoming benchmark commodity index reweighting. While further U.S. rate cuts and a weaker dollar could support prices in 2026, near-term pressure may emerge from index rebalancing. Record gold prices, central bank buying, easier Fed policy, and dollar weakness drove last year’s surge. Read

Best Year Since 2020 for Treasuries: The Treasury market in 2025 delivered its strongest performance since 2020, as shifts in US trade policy slowed economic activity and prompted the Fed to cut rates amid a weakening labor market. Yields fell most at the front end, while the 30-year edged higher on expectations of further cuts in 2026. For 2026, Wall Street strategists broadly expect yields to remain stable or rise as the easing cycle ends. Read

Big central banks signal rate-cut cycle is ending: Major central banks are pivoting. The Bank of Japan raised rates to a 30-year high, the ECB signaled an end to easing, and the Bank of England cut rates on a narrow vote, with dissenters warning that inflation risks persist. Read

Reuters

Worst Year for Dollar in 8 Years: The dollar closed 2025 with its steepest annual decline in eight years, and investors expect further weakness if the next Fed chair delivers deeper-than-expected rate cuts. The Bloomberg Dollar Spot Index fell ~8% this year, with markets already pricing at least two rate cuts next year. Read

Tesla Miss Deliveries: Tesla said a company-compiled consensus posted on Dec. 29 showed analysts expecting deliveries to fall 15% year over year to 422,850 vehicles. Q4 2025 deliveries declined about 16% versus Q4 2024, when the company reported 495,570 vehicles, while production fell 5.5% year over year from 459,445. For the full year, deliveries fell 8.6% to 1.64 million, down from 1.79 million in 2024. Read

No major earnings reported this week.

Good Afternoon. A good short week for the markets, with all major indices posting decent gains thanks to better-than-expected macro data on GDP and unemployment claims.

Below are the key things to note this week:

Strongest GDP in two years:

U.S. consumers powered a stronger-than-expected economic rebound in Q3, delivering the fastest growth pace in two years. Real GDP rose at a 4.3% annualized rate, up from 3.8% in Q2 and well above the 3.2% consensus forecast, reflecting momentum that was firmly in place before the government shutdown.

Growth was driven primarily by consumer spending, led by healthcare services, international travel, legal services, and tech-related outlays such as PCs and software. AI-linked investment continued to contribute, though at a slower pace than in Q2, as overall business investment decelerated to 2.8% from 7.3%.

Within consumption, services spending accelerated sharply to 3.7%, primarily driven by higher-income households, while durable goods spending cooled to 1.6% from 2.3%. The mix indicates that consumers are still spending, but it is increasingly skewed toward services over goods. High-income consumers, who primarily spend on services, are doing well; lower-income households are struggling.
 

For the week:

• The S&P 500 is up 2.29%, the Nasdaq is up 2.55%, and the Dow 30 is up 1.58%.

  

  Barchart

CNN's Fear & Greed Index now stands at 56 (Greed) out of 100, up 11 points from last week. Details here

The top five trending stocks on Reddit are BlackRock, SPY, Nvidia, Micron, and Tesla. Read More