Good Morning!
Jerome Powell has announced a 25bps rate cut, as expected by analysts. The S&P 500 closed 2.95% lower at 5,872, trading below 6,000 points for the first time since November 27. The NASDAQ dropped 3.56%, closing the day at 19,392. The Dow tanked 1,100 points, experiencing the longest losing streak since 1974, marking the 10th trading session in the red. The DXY jumped 1.16% to 108.20, and the VIX spiked 74% to 27.62. Small caps in the Russell 2000 have erased all gains since the presidential election.
In short, we got parity of the Federal Funds Rate and the 10-year yield, and the market simply sold off. The market wants to see the 10-year yield lower before continuing its march higher. This could lead to a larger sell-off in the debt market and hamper the stock market.
The VIX experienced its largest single-day spike since Volmageddon (February 5, 2018) surging 74% on Wednesday. The largest VIX spike occurred in February 2018 with a 115% jump, and another significant surge (65%) was recorded in August 2024.
Crypto Highlights
Bitcoin Dips Briefly Below $100,000: Bitcoin (BTC) experienced a sharp drop, briefly falling below $100,000 for the first time in 135 days, following the Federal Reserve's cautious stance on future rate cuts. Finance Magnates
Ripple’s XRP Price Drops 18% After Stablecoin Launch: Ripple announced the launch of its RLUSD stablecoin, fully backed by U.S. dollar reserves, aiming to offer a compliant and transparent digital asset. Barron's
Ethereum's (ETH) price dropped 6.35% from its weekly high of $4,109, marking its third rejection at the $4,000 resistance level in 2024. Bearish sentiment in the futures market contributed to the decline, with the long/short ratio falling to 0.9 and short positions outweighing longs. Trading View
Upcoming Earnings
Accenture (ACN) will announce its Q1 fiscal 2025 results on Thursday. Analysts forecast revenue of $17.14 billion and net income of $2.20 billion ($3.41/share), up from $16.22 billion and $2.01 billion ($3.10/share) a year ago. Accenture secured $1 billion in generative AI bookings with shares up 2% in 2024 but dipped slightly on Monday ahead of the earnings report.
Nike (NKE) is expected to report a significant decline in both sales and profit for Q2, with earnings per share projected to drop 37% to $0.64 and revenue forecasted at $12.14 billion, down from $13.39 billion last year. Challenges include customer disinterest due to a lack of innovation and criticism of the direct-to-consumer strategy.
FedEx (FDX) is set to announce its fiscal Q2 earnings after the market closes on Thursday. Analysts are optimistic, with most rating the stock as a "buy" and projecting a 9% upside to an average price target of $308. While revenue is expected to decline slightly year-over-year to $22.14 billion, net income is forecasted to rise 3% due to cost-cutting efforts.
Cintas (CTAS) is projected to report Q2 earnings per share (EPS) of $1.01, a 12.2% increase year-over-year, with revenues expected at $2.56 billion (+7.7% YoY).
Paychex (PAYX) is expected to report Q2 earnings of $1.12 per share, a 3.7% year-over-year increase, with revenues projected at $1.31 billion (+4.4% YoY).
Headlines
Dow Plunges 1,100 Points, Marking Longest Losing Streak Since 1974
The Dow Jones Industrial Average fell sharply on Wednesday, dropping over 1,100 points (2.6%), marking its 11th consecutive losing session—the longest streak since 1974. This decline followed a Federal Reserve announcement lowering interest rates by 25 basis points but projecting only two additional cuts in 2025, down from the four anticipated last quarter.
Fed Projects Fewer Rate Cuts in 2025
The Federal Reserve announced plans for only two quarter-point rate cuts in 2025, down from the four cuts projected in September. The benchmark rate is expected to fall to 3.9% by the end of 2025, with further gradual cuts projected through 2027.
Bank of Japan Holds Rates at 0.25%, Yen Weakens
The Bank of Japan (BOJ) decided to keep its benchmark interest rate unchanged at 0.25%, surprising economists who expected a hike. The decision, made with an 8-1 split, cited uncertainties in economic activity and price stability. The yen weakened 1.27% against the dollar, and Japan’s Nikkei 225 fell 0.69%.
Powell Signals No Rate Hikes in 2025
Federal Reserve Chair Jerome Powell stated that rate hikes next year are unlikely, despite slower progress in achieving the Fed's 2% inflation target and potential fiscal pressures on prices. During a press conference, Powell emphasized that the current federal funds rate range of 4.25%-4.5% remains "meaningfully restrictive" and well-calibrated to reduce inflation while supporting a robust labor market. Powell noted, "You don't rule things completely in or out, but that doesn't appear to be a likely outcome."
US Congress Has Two Days to Avert Shutdown After Trump Rejects Spending Bill
U.S. Congress faces a looming partial government shutdown by Friday at midnight, following President-elect Donald Trump's rejection of a bipartisan spending bill. Trump is urging Republicans to oppose the bill and warned that those who support it should face primary challenges in the 2026 elections. The bill includes funding for government agencies, disaster relief, and farm aid, but Trump and his ally, Elon Musk, argue that it fails to address key fiscal issues, like the nation's debt ceiling.
Could Canada Become the 51st US State? Donald Trump Thinks It’s a ‘Great Idea'
US President-elect Donald Trump suggested Canada could join the United States as the 51st state, claiming "many Canadians" would support the move. A recent survey shows only 13% of Canadians favor closer ties with the US, while experts view Trump’s comments as political gamesmanship.
The remarks, not new for Trump, follow a November dinner where he joked about merging the countries with Canadian Prime Minister Justin Trudeau. Reactions have been mixed, with Canadian officials deeming the comments "not funny" and politically destabilizing after Deputy PM Chrystia Freeland's resignation.
Biden Administration Approves California's Zero-Emission Car Mandate
The Biden administration approved California’s plan to phase out gas-powered cars, requiring 35% of new car sales to be zero-emission by 2026, 68% by 2030, and 100% by 2035. The U.S. EPA also approved a related regulation reducing nitrogen oxide emissions from trucks and buses.
DOJ Sues CVS Over Opioid Prescription Practices
The U.S. Department of Justice has filed a nationwide lawsuit against CVS, accusing the pharmacy chain of ignoring clear signs of opioid prescription fraud, contributing to the opioid crisis. The lawsuit alleges CVS filled illegitimate prescriptions, often flagged by pharmacists, while operating dangerously understaffed pharmacies, violating the Controlled Substances Act and the False Claims Act.
NVIDIA Neural Rendering Revolution Teased by Inno3D
"Neural Rendering Capabilities" is among the new AI-driven features in NVIDIA's upcoming GeForce RTX 50 series, slated for unveiling at CES 2025. Touted by Nvidia to redefine graphics processing, alongside advanced DLSS technology (possibly DLSS 4) and enhanced ray tracing.
AMD Invests in GPU Cloud Provider Vultr at $3.5 Billion Valuation
AMD Ventures and LuminArx Capital Management led a $333 million funding round for Vultr, a cloud provider specializing in renting GPUs and other infrastructure, valuing the company at $3.5 billion. Vultr, founded in 2014, supports GPUs from AMD and Nvidia, leveraging the AI boom, and plans to use the funding for international expansion across its 32 data centers. This marks Vultr's first equity financing, adding to its $150 million credit facility from 2021.
Japan Expands Nuclear Power in New Energy Plan
Japan's government has released a draft of its new Basic Energy Plan, marking a significant shift toward expanding nuclear power and renewable energy to meet low-carbon targets. The plan extends the goal of achieving a 20%-22% nuclear power share from 2030 to 2040. To support this, the government will authorize the construction of new reactors, replace decommissioned plants, and remove the policy of minimizing nuclear dependence. Electricity demand is expected to increase by 1.2 times by 2040.
FTC Bans Hidden Junk Fees in Hotel, Event Ticket Prices
The U.S. Federal Trade Commission (FTC) has passed a rule requiring hotels, ticket sellers, and vacation rental sites to disclose total prices, including all fees, upfront. This move is part of President Biden's broader effort to combat "junk fees" that increase consumer costs without adding value. The rule mandates that service fees, resort fees, and other charges be included in advertised prices
Biden Backs Calls to Ban Congressional Stock Trading
President Joe Biden has endorsed bipartisan efforts in Congress to ban stock trading by lawmakers, emphasizing that no member of Congress should profit from the stock market while in office. Biden expressed his support during an interview, stating that such practices undermine trust with constituents. A bipartisan group of Senators, including Democrats Jon Ossoff, Gary Peters, Jeff Merkle, and Republican Josh Hawley, introduced legislation to prohibit members of Congress and their families from trading individual stocks.
DHS Finalizes H-1B Overhaul
The U.S. Department of Homeland Security (DHS) has finalized its H-1B visa overhaul, which includes several key updates. The final rule, effective January 17, 2025, requires adjudicators to defer to prior visa approvals if the same parties and facts are involved, aiming to reduce processing times. It also tightens eligibility by excluding general degrees, like an MBA, unless they are directly related to the position.
China's Bank Lending Growth Hits Lowest Level This Century
China's bank lending growth has recently declined to its lowest levels in decades. In November 2024, outstanding yuan loans grew by 7.7% year-on-year, marking a significant slowdown compared to previous years.
Earlier in the year, in May 2024, outstanding yuan loans rose by 9.3% from a year earlier, which was a record low at that time.
Ohio Lawmaker Proposes Bitcoin Reserve Bill for State Treasury
Ohio House Republican leader Derek Merrin introduced the Ohio Bitcoin Reserve Act (HB 703) on Dec. 17, proposing that the state treasurer be allowed to purchase Bitcoin as part of the state’s treasury reserves. Merrin argues this would protect tax dollars from the devaluation of the U.S. dollar and modernize Ohio's financial strategies.
Tokenized US Treasuries Surpass $3 Billion, Reflecting Explosive Growth
Tokenized US Treasuries have achieved a significant milestone, surpassing $3 billion in total value, a 300% year-over-year increase. The tokenized asset market, excluding stablecoins, grew 32% in 2024, with US Treasuries up 179%, private credit rising 40%, and commodities gaining 5%.
