January 15th Market Overview

Happy Wednesday.

The market had a strong rally today a on the back of solid inflation data and great banking earnings.

December’s core inflation dropped to 3.2%, and the middle east conflicts are calming down with Israel-Hamas reaching a ceasefire agreement.

Let's dig in...

Executive Summary

• Core inflation dropped to 3.2% versus 3.3% consensus, headline CPI at 2.9% year-over-year
  

• Financial sector leads market rally with $JPM net income reaching $14.0B versus $11.47B expected
  

• Quantum computing stocks up after Microsoft declares 2025 “the year to get quantum-ready”
  

• Breaking: Israel-Hamas reach ceasefire agreement, reducing geopolitical tensions

Market Overview

Key Market Drivers

1. Core CPI printed at 3.2% year-over-year versus 3.3% expected, headline inflation at 2.9%
   

2. $JPM reported Q4 revenue of $43.74B versus $42.01B expected, driving financial sector momentum
   

3. Quantum computing sector momentum after Microsoft’s strategic 2025 initiative announcement
   

4. WTI crude touched $80.04, Brent reached $81.90, highest levels since August 2024

Stock Spotlight

• $JPM: Revenue $43.74B (▲ 18% YoY), FICC revenue $5.01B, investment banking revenue $2.60B, net income $14.0B
  

• $WFC: Net interest income $11.84B vs $11.7B expected, EPS $1.43 vs $1.34 expected, efficiency ratio 68%
  

• $GS: Q4 EPS $11.95 vs $8.22 expected, revenue $13.87B vs $12.39B expected
  

• $BLK: AUM reached $11.551T from $11.475T QoQ, EPS $11.93 vs $11.19 expected
  

• $C: Announces $20B stock buyback program, shares ▲ 7%

Big Name Updates

• $NVDA: Taiwan suppliers confirm GB200 shipments on schedule, CEO Jensen Huang to discuss CoWoS capacity expansion on 1/17
  

• $TSLA: Model Y production pause in China, SEC files securities violation lawsuit against CEO
  

• $META: Strategic 5% workforce reduction targeting efficiency improvements
  

• $MSFT: Pauses U.S. consulting unit hiring amid broader cost optimization

Other Notable Company News

• $AVGO: Pursues HBM4 supply diversification with Samsung for AI chip production
  

• $NFLX: BMO raises PT to $1000 from $825 on WWE partnership performance
  

• $IONQ: Partners on $1B “Capital of Quantum” initiative, plans 100,000 sq. ft campus
  

• $HOOD: Morgan Stanley adds to Financials’ Finest List, $55 PT represents significant upside

Sector Watch

Bond Market

Treasury yields dropped post-CPI report, with the 10-year yield declining 13 basis points to 4.663%.

Jamie Dimon noted inflation persistence concerns despite consumer resilience, citing healthy holiday spending and relatively low unemployment.

Policy Watch

• IEA revises 2025 oil surplus forecast to 725k b/d from 950k b/d
  

• U.S. intensifies semiconductor restrictions, pushing TSMC, Samsung, and Intel to enhance customer screening
  

• BOJ signals potential rate hike at January 23-24 meeting, market pricing 68% probability. The Bank of Japan (BOJ) has kept interest rates negative (-0.1%) since 2016, making it the last major central bank to maintain ultra-loose monetary policy.
  

• President-elect plans fossil fuel executive orders and External Revenue Service creation for tariffs/duties

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What to Watch

1. Bank Earnings Continuation:

• $C, $BAC report tomorrow

• Focus on investment banking revenue after $JPM's 49% YoY growth

• Net interest income trends following $WFC's 1-3% guidance

2. Quantum Computing Momentum:

• $IONQ doubling workforce to 250+ over five years

• $DWAV potential partnerships following 34% surge

• Microsoft’s quantum development tools rollout

3. Energy Sector Developments:

• WTI crude maintaining above $80 level

• Impact of reduced IEA surplus forecast

• Presidential policy shift effects on U.S. production

4. Asia Market Catalysts:

• BOJ January 23-24 meeting implications

• $TSM CoWoS capacity allocation between $AMD, $NVDA

• China chip access restrictions impact

5. DOT sues Southwest, fines Frontier for ‘chronically delayed flights’

Thanks for reading

- John