December 18th Market Overview

Happy Thursday

Four day losing streak broken on softer inflation data, but I’m not reading too much into it. The gov’t shutdown meant no October comparison, so this CPI is basically noise imho.

Micron saying they can't make chips fast enough is the real hero story though.

P.S. I wrote a book on swing trading a couple years ago. It’s as relevant today as it ever was.

Let’s dig in...

Today's Big Picture

Inflation Data Came in “Flawed”
November CPI came in at 2.7% versus 3.1% expected. Core CPI hit 2.6% versus 3% expected. The gov’t shutdown meant no October data, so November compares against September. RSM called it "one flawed report." Pantheon said the trend won't be clear until December.

Micron Says AI Demand Exceeds Supply 
Micron $MU revenue guidance came in 30% above expected, EPS 90% above. Raised HBM market outlook to $100 billion by 2028, two years early. Fiscal 2026 HBM capacity sold out with unmet demand beyond. They can't make chips fast enough.

Cannabis Reclassification Disappoints 
Trump signed an executive order moving marijuana to Schedule III from Schedule I. Market wanted federal legalization and banking access. Instead got a tax break and easier research. Green Thumb dropped 14%, Trulieve fell 18%. Market priced in revolution, got tweaks.

Market Overview

Index Performance

Stock Spotlight

Trump Media $DJT ( ▲ 45.08% ) 
merging with fusion power company TAE Technologies in $6 billion all-stock deal. Close expected mid-2026.

Lululemon $LULU ( ▲ 3.49% ) 
- activist Elliott Management built a $1 billion stake. They're pushing for a new CEO and have a candidate lined up.

Target $TGT ( ▲ 0.63% ) 
on track for 12th straight gain, tying its longest streak since 1972. Trades at 13x forward earnings versus Walmart and Costco above 40x.

Micron Technology $MU ( ▲ 10.15% ) 
raised capex to $20 billion from $18 billion. Company said they're "more than sold out" on high-bandwidth memory with demand exceeding supply.

Big Name Updates

Coinbase $COIN ( ▼ 1.04% ) 
launching prediction markets via Kalshi partnership. Also adding equity perpetuals for non-US traders with 20x leverage.

Rivian $RIVN ( ▲ 13.87% ) 
upgraded by Baird to Outperform, $25 target. R2 launches mid-2026.

Darden Restaurants $DRI ( ▲ 1.63% ) 
raised full-year revenue outlook for second straight quarter. Olive Garden and LongHorn posted positive same-store sales.

Other Notable Company News

Core Scientific $CORZ ( ▲ 7.26% ) 
upgraded by Citizens to Outperform, $30 target. Analyst sees power pipeline securing more HPC clients beyond CoreWeave.

Sable Offshore $SOC ( ▲ 56.35% ) 
- Department of Transportation taking over pipeline regulation from California. Removes major hurdle for offshore oil project.

Rocket Lab $RKLB ( ▲ 11.31% ) 
launched Space Force mission five months early, deploying four spacecraft.

United Airlines $UAL initiated at Overweight by Wells Fargo, $145 target. Cites improving industry dynamics and premium growth.

PayPal $PYPL ( ▼ 0.78% ) 
downgraded by Morgan Stanley to Underweight, $51 target. Sluggish payment volume growth expected through 2028.

Shake Shack $SHAK ( ▲ 5.08% ) 
upgraded by JPMorgan to Neutral. Company improving operations and free cash flow.

Sector Watch

Bond Market

Treasury yields moved lower after the inflation reading. 10-year trading just above 4.1%. Dollar hit highest level since August. Bond traders aren't celebrating - data quality issues are obvious. Markets waiting for cleaner January data.

Policy Watch

Fed

Trump praised Fed Governor Christopher Waller as a potential chair candidate, calling him a "fantastic man." Trump's talking to three or four candidates and expects to announce someone "who believes in lower rates, by a lot." Also expects mortgage payments to drop further.

Cannabis Policy

The executive order moving marijuana to Schedule III eases tax burdens and facilitates research but doesn't legalize recreational use or solve banking access. Gap between expectations and reality drove the selloff.

Housing Reform

Trump will announce the "most aggressive" housing reform plans in 2026. No details yet.

Commodities

• Platinum hit 17-year high, up over 100% in 2025 - biggest gain since 1987

• Ground beef hit $6.78 per pound in November, up 16% year-over-year, as US cattle herd at lowest level since 1950s

International

• Bank of Japan meets tomorrow, expected to hike 25 basis points to 0.75% - highest in 30 years

• OpenAI in talks to raise $100 billion at $750 billion valuation, 50% above last October

• Anthropic and OpenAI both shopping for larger Dublin office space

Today’s Sponsor

Easy setup, easy money

Making money from your content shouldn’t be complicated. With Google AdSense, it isn’t.

Automatic ad placement and optimization ensure the highest-paying, most relevant ads appear on your site. And it literally takes just seconds to set up.

That’s why WikiHow, the world’s most popular how-to site, keeps it simple with Google AdSense: “All you do is drop a little code on your website and Google AdSense immediately starts working.”

The TL;DR? You focus on creating. Google AdSense handles the rest.

Start earning the easy way with AdSense.

Earn with Google AdSense

What to Watch

December CPI Release in Mid-January 
First clean inflation reading without shutdown data gaps. Fed meets late January. Critical for any rate decision.

Triple Witching Friday 
Quarterly expiration of stock options, index futures, and index options. Expect elevated volatility and volume.

Bank of Japan Rate Decision 
A 25 basis point hike would take policy rate to highest level in 30 years. Could impact global liquidity and Yen carry trade.

Fed Chair Announcement
Trump said announcement coming soon. Based on his Waller comments, new chair will have clear mandate for lower rates.

Cannabis Banking Legislation 
Executive action doesn't solve banking access for US operators. Watch whether Congress moves on SAFE Banking Act now that executive action fell short.

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.