December 12th Market Overview

Happy Friday

The rotation trade continues to hit hard as investors move from AI winners to boring cyclical stocks. Broadcom posted great numbers but sold off anyway because margins matter more than growth right now. I think the market is asking the right questions. This is healthy price action.

Let’s dig in...

Today's Big Picture

AI Trade Shows Cracks
Broadcom sold off double digits despite beating revenue targets because investors didn't like the margin outlook. CEO Hock Tan admitted the AI business has lower gross margins than legacy segments. Bond traders are also punishing tech debt hard. When credit markets get nervous, equity investors should listen.

Cannabis Stocks Explode
President Trump is expected to sign an executive order Monday to reclassify marijuana. This won't legalize it federally but it removes the tax penalty that's been crushing state-legal operators for years. Tilray and Canopy roughly doubled on the news. Biggest single-day cannabis move in a long time.

Value Beats Growth
The Nasdaq got hit hardest today while the Dow held up better on a relative basis. For the week, the pattern is clearer: Dow finished up while Nasdaq and S&P closed lower. Money is rotating into banks, industrials, and healthcare. Looks like healthy broadening rather than panic.

Market Overview

Index Performance

Stock Spotlight

Lululemon $LULU ( ▲ 12.12% ) 
rallied after CEO Calvin McDonald announced he's stepping down in January. The board wants fresh leadership after the stock lost half its value this year. Wall Street clearly likes the decision to start fresh.

Wealthfront $WLTH ( ▲ 1.0% ) 
went public today and traded flat around its $14 offering price. The robo-advisor delayed its IPO due to the government shutdown but pushed through in December anyway.

American Airlines $AAL ( ▲ 0.9% ) 
upgraded to buy at UBS with a $20 price target. Analyst sees corporate revenue recovery driving profits higher over the next few years.

Big Name Updates

Oracle $ORCL ( ▼ 4.8% ) 
fell again despite denying Bloomberg reports of delays at OpenAI data center projects. Bond spreads on its debt have nearly doubled since September as traders worry about spending levels.

Bank of America $BAC ( ▲ 0.79% ) 
finally crossed above its pre-financial crisis highs. Stock touched $55.08, a level not seen since 2008. Only took 17 years.

Costco $COST ( ▼ 0.21% ) 
is reducing product variety this holiday season to dodge tariff costs. Management sourcing more from the US to keep prices steady. Also sold 4.5 million pies in the three days before Thanksgiving.

Other Notable Company News

Quanex Building Products $NX ( ▲ 9.68% ) 
rose after beating fiscal Q4 earnings expectations by a wide margin.

Allegiant Travel $ALGT ( ▲ 3.73% ) 
moved higher after Deutsche Bank upgraded to buy. Management now focused solely on the airline after dumping the loss-making resort.

RH $RH ( ▲ 7.2% ) 
posted mixed quarterly results and softened Q4 guidance. Tariffs causing product delays and items out of stock.

JBS $JBS ( ▲ 1.17% ) 
closing a California plant and cutting 370 jobs as the meat industry struggles with cattle shortages.

Sector Watch

Bond Market

Treasury yields ticked higher to close out the week. The real story is in corporate bonds. Traders are demanding bigger premiums to hold debt from Oracle, Meta, and Amazon. Bank of America put out a note comparing today's hyperscalers to late-90s telecom companies before that bubble burst. Credit markets often sniff out trouble before stocks do.

Policy Watch

Fed Dissent

The rate cut wasn't unanimous. Chicago's Goolsbee said he's uncomfortable front-loading cuts before inflation is fully dead. The voting rotation next year brings more hawks onto the committee. Worth watching how they position heading into the new year.

Cannabis Reclassification

Trump expected to sign an executive order Monday. This is a tax play, not full legalization, but state-legal operators finally get normal business deductions. The industry is treating it like Christmas came early.

Crypto Banking

The OCC approved national bank charters for Circle, Paxos, Ripple, BitGo, and Fidelity Digital Assets. First batch of crypto-focused banks under the Trump administration. Crypto is quietly becoming traditional finance.

China Trade

Beijing plans export controls on some steel products next year. Global steel disputes continue to simmer.

Today’s Sponsor

Exxon and Chevron Have an Unlikely New Competitor

Energy giants like Exxon and Chevron are buying land in America’s lithium hotspot. Now they’ve got a new neighbor. EnergyX has now acquired 35k gross acres in Southwest Arkansas, right next door. With tech that can recover 3X more lithium than traditional methods, they’re aiming for America’s lithium crown. General Motors already invested. Join them and 40k people as an early-stage EnergyX investor today.

Invest in EnergyX Now

_{Energy Exploration Technologies, Inc. (“EnergyX”) has engaged Nice News to publish this communication in connection with EnergyX’s ongoing Regulation A offering. Nice News has been paid in cash and may receive additional compensation. Nice News and/or its affiliates do not currently hold securities of EnergyX.}

_{This compensation and any current or future ownership interest could create a conflict of interest. Please consider this disclosure alongside EnergyX’s offering materials. EnergyX’s Regulation A offering has been qualified by the SEC. Offers and sales may be made only by means of the qualified offering circular. Before investing, carefully review the offering circular, including the risk factors. The offering circular is available at invest.energyx.com/.}

What to Watch

Tuesday Jobs Report

November employment data finally drops after the shutdown delay. The Fed is watching closely for labor market weakness. This is the number that matters most next week.

Thursday CPI

Delayed November inflation print. If this comes in hot, it validates the Fed dissenters. If cool, the rate cut looks smart.

Central Bank Blitz

Bank of England expected to cut Thursday. Bank of Japan expected to hike Friday, bucking the global trend. Yen weakness could reverse fast if they move.

Nike Earnings

$NKE reports Thursday after the close. Consumer health read for both US and China.

Thanks for reading 🙂

- John

Today’s Sponsor

Shoppers are adding to cart for the holidays

Peak streaming time continues after Black Friday on Roku, with the weekend after Thanksgiving and the weeks leading up to Christmas seeing record hours of viewing. Roku Ads Manager makes it simple to launch last-minute campaigns targeting viewers who are ready to shop during the holidays. Use first-party audience insights, segment by demographics, and advertise next to the premium ad-supported content your customers are streaming this holiday season.

Read the guide to get your CTV campaign live in time for the holiday rush.

Learn more.