December 16th Market Overview

Happy Tuesday

Markets closing mixed as oil crashed below $55 for the first time since early 2021 on peace talk hopes with Ukraine. Russian oil might come flooding back into the market sooner rather than later.

The delayed jobs report that came out this AM showed unemployment hit 4.6%, highest in four years. Worth noting how quickly that unemployment number has climbed.

Let’s dig in...

Today's Big Picture

Oil Falls Below $55 on Peace Talks 
Crude hit $54.98, lowest since February 2021. Trump said we're "closer now than we have been ever" to a Russia-Ukraine deal, which could lift sanctions and put Russian oil back on the market. Down 31% from January's high.

Jobs Report: Unemployment Hits 4.6% 
November added 64,000 jobs, beating estimates. October lost 105,000 as federal payrolls dropped 162,000. Unemployment at 4.6%, highest since 2021. U-6 underemployment jumped to 8.7%.

Credit Markets Turn on AI Companies 
CoreWeave bonds fell to 90.6 cents on the dollar, spreads widened to 8.34 percentage points above Treasurys. Oracle's long bonds also weakened. Bond investors want cash flow, not promises.

Market Overview

Index Performance

Stock Spotlight

Tesla $TSLA ( ▼ 4.24% ) 
closed at its 2025 high after Elon Musk confirmed robotaxis are testing on Austin roads with no driver.

Ford $F ( ▼ 2.63% ) 
expects $19.5 billion in charges as it abandons next-generation electric trucks and shifts to hybrids. $5.5 billion in cash payments through 2027. The automaker is effectively writing off its EV bet.

Circle $CRCL ( ▼ 3.89% ) 
jumped after Visa announced it would use Circle's USDC stablecoin for payment settlement in the US. Visa will operate on Arc, Circle's new blockchain.

Broadcom $AVGO ( ▼ 4.08% ) 
down 16% over three days, worst stretch since March 2020. AI chip momentum trade unwinding after a 75% run earlier this year.

Big Name Updates

United Airlines $UAL ( ▼ 0.27% ) 
and Southwest Airlines $LUV climbed on analyst upgrades citing new pricing strategies and corporate travel recovery.

Roku $ROKU ( ▼ 2.66% ) 
rose after Morgan Stanley upgraded to overweight, raised price target to $135 from $85 on expected platform revenue acceleration.

Humana $HUM ( ▲ 0.83% ) 
fell after its insurance division head announced retirement. Replacement coming from Amazon.

Pfizer $PFE ( ▼ 1.49% ) 
dropped on 2026 guidance of $2.80-$3.00 per share. Analysts expected $3.05.

Other Notable Company News

Kraft Heinz $KHC ( ▲ 0.59% ) 
named former Kellanova CEO Steve Cahillane as CEO starting January 1. The company is splitting into two public entities next year.

Oracle $ORCL ( ▼ 5.75% ) 
signed $150 billion in data center leases through November 30. Total commitments now at $248 billion.

Navan $NAVN ( ▼ 0.62% ) 
dropped after its first public earnings report and CFO departure announcement.

PayPal $PYPL ( ▼ 0.69% ) 
applied to form "PayPal Bank" to expand small business lending.

Sector Watch

Bond Market

The 10-year Treasury yield ended down slightly after the jobs data. Fed funds futures now price in 50% odds of a rate cut by March, up from earlier in the week. January cut odds remain at 24%.

Fed Governor Christopher Waller speaks Wednesday morning on the economic outlook.

Policy Watch

Federal Reserve

• Raphael Bostic was one of six policymakers who opposed last week's rate cut

• Bostic worries cuts might worsen inflation by stimulating spending from upper-income households

• He retires end of February, making next month's meeting his last

Fed Chair Race 
Christopher Waller interviews with Trump on Wednesday for the chair position. Wall Street respects him but he's a heavy underdog. Kevin Warsh has surged in prediction markets from 10% to 46% while Kevin Hassett dropped from 77% to 39%. Powell's term ends in May.

Trade & International 
The US suspended the "technology prosperity deal" it signed with the UK in September, pausing cooperation on AI, quantum and nuclear. Separately, US Trade Representative Jamieson Greer threatened new tariffs on the EU over its fines on American tech companies. EU regulators hit X with a $140 million penalty last week.

Ukraine 
Trump said the US will protect Ukraine from future Russian attacks after two days of talks. A major sticking point remains over Ukrainian territory that Russia wants and Ukraine won't cede.

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What to Watch

Jobs Report Tuesday

November payrolls data drops Tuesday morning. Economists expect 40,000 jobs added - down from September's 119,000. October retail sales also prints Tuesday.

CPI Thursday

November inflation data Thursday morning. Any upside strengthens Powell's tariff narrative. Any downside strengthens Miran's portfolio fee argument.

Nike and FedEx Thursday

Nike $NKE and FedEx $FDX report after the close. Nike's China exposure and FedEx's shipping volumes tell us about global demand.

Micron Wednesday

Micron $MU reports Wednesday after the close. The memory chip maker's results could shift sentiment for AI chips if demand surprises.

Thanks for reading 🙂

- John

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