Good Morning!
On January 8, the S&P 500 closed at 5,918, down 0.12%, while the NASDAQ was flat (-0.03%) finishing at 19,478. The Dow Jones Industrial Average ended at 42,635, up 0.2%. The Russell 2000 rose 0.12%, closing the day at 2,238.
In recent news, the devastating wildfires in the Los Angeles area have captured significant attention. The economic losses from these wildfires are estimated to range between $52 billion and $57 billion, making them potentially one of the costliest natural disasters in U.S. history.
Crypto Highlights
Bitcoin (BTC): Currently trading at $93,539, up 0.73% over the past 24 hours.
Ethereum (ETH): Slid 0.49%, now trading at $3,235 per coin.
Solana (SOL): Down 1.27% in the last day, currently at $185.83.
Ripple (XRP): Up 0.47% over the last 24 hours, currently at $2.29 per coin.
Earnings
Constellation Brands A (STZ)
Constellation Brands Inc. faced a decline in its stock value after lowering its 2025 outlook, citing uncertainties around consumer spending patterns. Despite reporting third-quarter profit growth, the company's CEO expressed concerns about the timing of a return to normal consumer spending behavior. While net income and adjusted earnings per share showed improvement, overall sales figures fell short of expectations. Constellation Brands revised its fiscal 2025 outlook, adjusting growth expectations for different business segments.
Delta Air Lines (DAL)
Delta Air Lines (DAL) reported strong fourth-quarter results, with a 44.5% increase in adjusted earnings per share to $1.85, surpassing expectations. The company's revenue of $15.56 billion marked nearly 10% growth, contributing to a record-breaking financial year for Delta. The airline's optimistic guidance for 2025, with expectations of earnings above $7.35 per share and significant free cash flow projections, indicates a positive outlook for the industry.
Walgreens Boots (WBA)
Walgreens Boots Alliance (WBA) exceeded analysts' expectations for first-quarter adjusted profit, showcasing positive results from CEO Tim Wentworth's strategic initiatives to revamp the company. Despite a reported loss due to one-time charges, the adjusted earnings of 51 cents per share surpassed the estimated 37 cents. The company's sales of $39.46 billion also outperformed estimates, reflecting a positive trajectory for the healthcare firm.
Headlines
Trump May Receive ‘Unconditional Discharge’ in Hush Money Conviction
Former President Donald Trump, convicted on 34 counts of falsifying business records in May 2024, may be sentenced to an “unconditional discharge” today, meaning no prison time, parole, or additional penalties. Justice Juan Merchan, who presided over the case in New York, indicated that this sentence would serve the public interest and allow Trump to pursue his appeals without disruption to his second term as president.
Under New York law, an unconditional discharge can be issued if a judge determines that imprisonment or probation would not serve the ends of justice or the public interest. Merchan cited the unique circumstances of Trump’s presidency and the nature of the charges—business record falsifications occurring before Trump’s presidency—as factors influencing his likely decision. While Trump unsuccessfully argued for dismissal based on presidential immunity, courts at both the state and federal levels ruled that his conduct, being unrelated to official duties, is not protected.
U.S. Payrolls Surge in December, Unemployment Falls to 4.1%
The U.S. labor market showed unexpected strength in December, as nonfarm payrolls surged by 256,000, significantly surpassing the forecast of 155,000 and improving upon November's revised figure of 212,000. The unemployment rate edged down to 4.1%, with a broader measure, including discouraged and part-time workers, dropping to 7.5%, its lowest level since June 2024. Average hourly earnings rose 0.3% for the month, in line with expectations, though the annual gain of 3.9% fell slightly short of forecasts. Sectors such as health care, leisure and hospitality, and government drove job growth, while retail rebounded with a gain of 43,000 jobs after a November decline.
The report, signaling continued labor market resilience, tempered expectations for Federal Reserve rate cuts in 2025. Treasury yields spiked, and stock market futures dipped as investors recalibrated monetary policy outlooks. Despite solid job growth, wage inflation appeared to ease, alleviating some concerns over its impact on prices. Analysts, including Dan North of Allianz Trade, noted that the report gives the Fed less urgency to stimulate the economy further.
10-Year Treasury Yield Hits Highest Level Since 2023 After Robust Jobs Report
U.S. Treasury yields surged to their highest levels since late 2023 following a stronger-than-expected December jobs report. The 10-year Treasury yield climbed nearly 10 basis points to 4.778%, while the 2-year yield rose about 12 basis points to 4.377%. The jump came as nonfarm payrolls exceeded forecasts, adding 256,000 jobs in December compared to the anticipated 155,000, and the unemployment rate edged down to 4.1%.
The robust labor market data has reduced the likelihood of an imminent Federal Reserve rate cut, with Fed funds futures pricing less than a 3% chance of a rate reduction at the upcoming policy meeting. Minutes from December's Fed meeting revealed concerns about inflation and uncertainty surrounding President-elect Donald Trump’s policies, signaling a cautious approach to future monetary easing. The sharp rise in yields underscores investor recalibration as the central bank weighs its next moves.
Business Bankruptcies in the U.S. Hit Highest Level Since 2010
Corporate bankruptcies in the U.S. surged to their highest level in 14 years, with 686 companies filing for bankruptcy in 2024, an 8% increase from the previous year, according to S&P Global Market Intelligence. This marks the most bankruptcies since 2010, driven by high interest rates, inflation, and declining consumer demand. Notable collapses included Party City, which filed for bankruptcy a second time, Tupperware, Red Lobster, Avon, and Spirit Airlines. Many firms struggled with inflationary pressures and cautious consumer spending, especially among lower-income families. Recovery rates for lenders hit an eight-year low, highlighting the financial strain across industries.
While some optimism persists—over a third of workers surveyed expressed confidence in career opportunities—economic caution remains. The Conference Board’s Consumer Confidence Index showed a significant drop, reflecting concerns over tariffs and political factors.
Economic Loss from L.A. Wildfires Could Exceed $50 Billion
The Los Angeles-area wildfires are poised to rank among the costliest natural disasters in U.S. history, with economic damages estimated between $52 billion and $57 billion, according to AccuWeather. Five fires have scorched thousands of acres, forcing 130,000 evacuations, destroying over 2,000 structures, and claiming five lives. With luxury homes in areas like Pacific Palisades valued at over $2 million, J.P. Morgan has raised its estimate of insured losses to $20 billion, though many affected homeowners report losing insurance coverage due to market withdrawal in high-risk areas.
These fires highlight the escalating climate risks California faces, straining its already fragile insurance market. Insurers have reduced or ceased operations in wildfire-prone regions, leaving many residents reliant on state-backed alternatives with rising premiums. The economic toll is expected to surpass the $30 billion Camp Fire of 2018.
Los Angeles Wildfires: Devastation and Investigation Underway
Out-of-control wildfires continue to ravage Los Angeles, leaving at least 10 dead, destroying more than 10,000 buildings, and displacing nearly 180,000 residents under evacuation orders. Five major fires, including the Palisades and Eaton blazes, have consumed vast swathes of land, with the Palisades fire already covering 20,000 acres and threatening to become the most destructive in California’s history. Insured losses are expected to exceed $8 billion due to the high value of properties in affected areas, including celebrity homes. While firefighters battle to contain the flames, investigations into the causes are ongoing, and authorities have arrested one suspect in connection with a new blaze.
The wildfires are fueled by a combination of severe drought—Los Angeles has received only 0.16 inches of rain since October—and the powerful Santa Ana winds, which exacerbate the destruction by drying vegetation and spreading embers at speeds up to 100 mph. Although the immediate danger from strong winds has eased, another Santa Ana event is predicted, and there is no rain forecast for at least a week.
Democrats Join Republicans to Advance GOP-Led Immigration Bill in Senate
In a notable bipartisan move, Senate Democrats joined Republicans on Thursday to advance a GOP-led immigration bill requiring the detention of undocumented migrants charged with certain crimes. The procedural vote passed 84-9, marking a significant step toward potential Senate approval of the legislation. The bill, named after a Georgia student killed by an undocumented migrant, gained traction among Democrats from battleground states following voter concerns over immigration during the 2024 election cycle.
Trump Announces Plans for Meeting with Putin to Address Ukraine War
President-elect Donald Trump stated that a meeting with Russian President Vladimir Putin is being arranged, though no timeline has been set. Speaking from his Mar-a-Lago resort, Trump emphasized the urgency of ending the war in Ukraine, calling it "a bloody mess." The Kremlin confirmed its openness to talks but noted that details are yet to be finalized.
Trump, who has pledged to negotiate an end to the conflict shortly after taking office on January 20, has expressed skepticism about continued U.S. military and financial support for Ukraine. He has nominated retired Lt. Gen. Keith Kellogg as special envoy to Ukraine and Russia, signaling a focus on diplomacy. Kellogg has proposed tying U.S. aid to Ukraine’s willingness to engage in peace talks, while also maintaining support if Moscow resists negotiation.
Moody’s: Apartment Vacancy Rises, Office Vacancy Hits Record High in Q4 2024
Moody’s Analytics reported a rise in the national apartment vacancy rate to 6.1% in Q4 2024, up from 6.0% in the previous quarter and marking the highest level since 2011. This increase reflects record-level inventory growth, with over 300,000 new multifamily units expected to be added nationally. Despite strong demand and slight rent growth—national asking rents reached $1,850—the elevated vacancy rate has extended lease-up times and prompted more concessions, slowing effective rent growth to just 0.1% in Q4. Effective rents now average $1,757, $12 below their peak in 2023.
Meanwhile, the national office vacancy rate reached a record 20.4% in Q4 2024, up from 20.1% in Q3. This surpasses the previous peak of 19.3% during the S&L crisis. The office market continues to grapple with long-term shifts toward hybrid and remote work models, leading to a sustained reduction in demand. Shorter and more flexible leases, combined with lease rollovers from both the pre-pandemic and early-pandemic periods, have added to market volatility, leaving the sector struggling to stabilize.
China’s Central Bank Halts Bond Purchases Amid Market Concerns
The People’s Bank of China (PBOC) announced a suspension of government bond purchases to address concerns over plunging bond yields and mounting pressure on the yuan. The 10-year Chinese government bond yield hit a record low this month, while the yuan traded at its weakest level against the U.S. dollar in over a year. Analysts suggest the PBOC aims to slow the rapid decline in yields, which risks further yuan depreciation and financial instability. The move signals the central bank’s concern over speculative market behavior and its intention to stabilize yields.
The halt comes as China faces slower economic growth and capital outflows driven by a widening yield gap between Chinese bonds (1.64%) and U.S. Treasuries (4.68%). The PBOC’s decision is part of a broader strategy to support the yuan, including issuing 60 billion yuan in bills in the Hong Kong market. While the bond yield response was muted, the yuan strengthened slightly after the announcement.
Constellation to Acquire Calpine, Creating America’s Leading Clean Energy Provider
Constellation announced its acquisition of Calpine Corporation in a cash and stock deal valued at approximately $16.4 billion, aiming to form the largest clean and reliable energy producer in the U.S. This merger combines Constellation’s nuclear energy expertise with Calpine’s low-emission natural gas and geothermal assets, creating a diverse portfolio spanning nearly 60 gigawatts of capacity across nuclear, natural gas, geothermal, wind, solar, and battery storage. The deal, expected to close within a year, positions the new entity as a leader in clean energy solutions for 2.5 million homes and businesses nationwide.
The transaction is projected to be immediately accretive to Constellation’s earnings and cash flow, driving over $2 billion in annual free cash flow and supporting double-digit earnings growth through the decade. The merger bolsters Constellation’s competitive edge in renewable energy, strengthens its footprint in high-demand markets like Texas and California, and expands customer offerings, helping businesses achieve sustainability goals while maintaining grid reliability.
Tesla Unveils Refreshed Model Y "Juniper" in China, Featuring Enhanced Range, Design, and Features
Tesla has officially revealed the refreshed Model Y, codenamed "Juniper," in China, incorporating upgrades similar to those of the 2023 Model 3 refresh. The new model includes a quieter cabin, improved efficiency, enhanced performance, and updated design elements, with deliveries starting in March 2025 in China.
The Long-Range AWD version boasts a range of 719km (446 miles) under China’s lenient CLTC standard, translating to an estimated ~350 miles on the EPA scale. Acceleration has also improved, with the AWD model achieving 0-100km/h in 4.3 seconds, down from 4.9. The refreshed design features a Cybertruck-inspired "light bar" front end, a new front bumper camera for improved Autopilot functionality, and electric rear seats operated via a trunk button.
Interior updates include acoustic glass for reduced cabin noise, customizable ambient lighting, and a rear seat screen. The controversial removal of steering column stalks has been partially reversed, with a visible turn signal stalk reintroduced in some regions.
HSBC Turns Bearish on AMD, Citing AI GPU Roadmap Challenges
HSBC has slashed its target for AMD’s share price by 45%, from $200 to $110, signaling concerns over the company’s ability to compete effectively in the AI GPU market. Analyst Frank Lee cited AMD's "less competitive than anticipated" AI GPU roadmap and lukewarm demand for its MI325 GPU as key reasons for the downgrade. Issues such as lower-spec HBM3e memory, due to Samsung's production challenges, and delayed availability of an AI rack solution comparable to NVIDIA’s NVL platform further limit AMD’s near-term momentum. HSBC’s new price target implies an additional 11% downside from AMD’s current share price.
This bearish stance aligns with broader skepticism on Wall Street. Wolfe Research and Bank of America have both flagged AMD’s challenges, including weaker AI guidance for 2025 and rising competition from Arm-based server CPU vendors. While AMD’s MI350 GPU is expected in late 2025, analysts suggest the chipmaker may struggle to regain significant AI market share until its MI400 GPU launches in late 2025 or early 2026, leaving NVIDIA dominant in this critical growth area.
TSMC Q4 Revenue Surpasses Forecasts on AI Demand Surge
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported fourth-quarter 2024 revenue of T$868.42 billion ($26.36 billion), exceeding market expectations of T$853.57 billion ($25.90 billion) and meeting its own projections. This marks a 34.4% year-on-year growth, driven by robust demand for artificial intelligence chips despite a decline in consumer electronics demand. TSMC's key customers, including Apple and Nvidia, continue to propel its leadership in the AI sector.
In December alone, TSMC’s revenue jumped 57.8% year-on-year to T$278.16 billion, underscoring the ongoing AI-driven growth. The company’s stock surged 81% in 2024, far outperforming the broader market's 28.5% gain. TSMC’s full earnings report and updated outlook are expected on January 16, with analysts closely watching for its guidance on AI-driven growth and market trends. The strong performance aligns with similar gains by other Taiwanese tech firms, such as Foxconn, which also reported record revenue for Q4 2024.
Nvidia CEO's Comments Send Quantum Computing Stocks Plummeting
Quantum computing stocks, including IonQ and Rigetti, saw steep declines after Nvidia CEO Jensen Huang tempered expectations for the technology during his address at CES 2025. Huang stated that "useful quantum computers" are likely still 15 to 30 years away, sparking a sell-off in quantum-focused companies. IonQ's shares plunged 45%, Rigetti's dropped more than 48%, and Quantum Computing and D-Wave Quantum also suffered declines of nearly 50%.
Despite the bearish outlook, Huang emphasized Nvidia's role in accelerating quantum computing development. Meanwhile, industry advancements continue, such as Google’s recent unveiling of its "Willow" quantum chip, which demonstrated major progress in error reduction—a longstanding challenge in the field.
D-Wave CEO Refutes Nvidia’s Quantum Computing Outlook
D-Wave Quantum CEO Alan Baratz pushed back against Nvidia CEO Jensen Huang's assertion that "useful" quantum computers are decades away, calling Huang “dead wrong.” Baratz highlighted that D-Wave’s quantum computing systems are already in commercial use, with clients such as Mastercard and Japan’s NTT Docomo leveraging its technology to optimize business operations. He emphasized, “Not 30 years from now, not 20 years from now, but right now today.”
Baratz acknowledged that Huang’s timeline may apply to gate-based quantum computing but argued that D-Wave’s annealing-based approach is already delivering tangible results. He also asserted that D-Wave systems can solve problems beyond the capabilities of Nvidia’s most advanced GPU-equipped systems. Baratz offered to meet with Huang to clarify the current capabilities of quantum computing.
Boeing, Google, and Other Major Firms Contribute $1M Each to Trump Inauguration Fund
Boeing and Google have each pledged $1 million to support President-elect Donald Trump's second-term inauguration fund, joining a growing list of major U.S. corporations contributing to the event. Other prominent donors include Chevron, Meta, Amazon, Uber, Ford, General Motors, and Toyota.
Supreme Court Considers TikTok Ban: National Security vs. Free Speech
The U.S. Supreme Court is set to debate whether TikTok can be banned in the United States, weighing national security concerns against the First Amendment's guarantee of free speech. The Biden administration argues that TikTok's ties to the Chinese government present a significant risk, citing potential data collection on Americans and manipulation of content to influence public opinion. The law at the center of the case would require TikTok to sever ties with China or face a nationwide ban, impacting Google, Apple, and internet providers’ ability to distribute the app.
Critics, including TikTok creators and college students, argue that banning the app infringes on free speech and disproportionately affects millions of users who rely on it for news, creative expression, and livelihoods.
