December 23rd Market Overview

Happy Tuesday

The economy printed its best quarter in two years. Markets should be worried about rate hikes. Instead we're at all time highs as the Santa Rally comes down the chimney.

GDP hit way above the 3.2 forecast everyone expected. Consumer spending accelerated. Jobs are solid. Inflation isn't dead. All the ingredients for the Fed to pause.

Let’s dig in...

Today's Big Picture

The GDP Report that’s Hard to Believe 
Third quarter GDP hit 4.3…. well above the 3.2 forecast and the fastest pace in two years. Consumer spending climbed from 2.5 in Q2 to 3.5 in Q3. Markets opened red on the news, then made new highs by afternoon. Why? IMO traders think Trump's next Fed chair will cut rates no matter what the economy does.

Gold, Silver, Copper All Break Records 
Gold crossed $4,500. Silver hit $70 for the first time ever. Copper broke $12,000 in London. Currency trust continues to erode in the “anything but the dollar” market. Gold has now set 53 record closes this year.

Novo Gets the Pill First 
1 pill for weight loss. Eli Lilly $LLY ( ▼ 0.54% ) is still working on theirs. Pills are easier than injections, this opens up the market significantly. The trial showed 16.6 weight loss with high adherence. First mover advantage is real. We got the “lose fat” pill, when will we get the “gain muscle” pill?

Market Overview

Index Performance

Stock Spotlight

Tesla $TSLA ( ▼ 0.41% ) 
got a $551 price target from Canaccord despite Europe sales falling and deliveries dropping. The analyst's view: the market doesn't care about car sales anymore, only robotaxi.

Nvidia $NVDA ( ▲ 2.69% ) 
faces US investigation over Singapore-based Megaspeed smuggling chips to China. Their inventory numbers don't match their data center footprint.

Nvidia $NVDA ( ▲ 2.69% ) 
separately is building AI storage with SK Hynix targeting 100 million IOPS - ten times current server speeds. Prototype ships in 2026.

Big Name Updates

Reddit $RDDT ( ▼ 2.08% ) 
became Needham's top pick at $300. Added to their conviction buy list.

Micron $MU ( ▲ 0.09% ) 
target raised to $320 from $210 by Argus Research.

Rocket Lab $RKLB ( ▲ 0.52% ) 
won $805 million in defense satellite contracts. Largest in company history. Needham raised target to $90 from $63.

Live Nation $LYV ( ▲ 1.85% ) 
is Evercore's top media pick for 2026 at $188. Live event demand staying strong.

ByteDance (Tiky Tok)
planning $23 billion AI capex for 2026, up from $21.6 billion this year. About $12.2 billion going to advanced chips.

Other Notable Company News

Johnson & Johnson $JNJ ( ▼ 1.07% ) 
hit with $1.56 billion talc verdict in Baltimore. Jury said they failed to warn about asbestos in baby powder.

Huntington Ingalls $HII ( ▲ 0.52% ) 
climbed after Trump announced two new battleship classes and told defense contractors to speed up production.

Compass Minerals $CMP ( ▲ 4.29% ) 
approved $44.6 million for mine portal construction at their Nebraska critical minerals project. Work starts Q1.

Visa $V ( ▲ 0.48% ) 
retail spend monitor shows US holiday spending up 4.2 over seven weeks starting November 1.

Sector Watch

Bond Market

The 10-year yield barely budged after GDP came in hot at 4.3. Dollar dropped early then recovered once the data hit.

Tomorrow's $22 billion 30-year auction will be the real test. If the economy is growing this fast, why lock in 30-year paper at current yields?

Markets close early Wednesday at 1pm for Christmas Eve.

Policy Watch

Fed & Rates

Trump posted on Truth Social about how markets now react to good economic news: when data is strong, markets drop because traders assume the Fed will hike rates. He said his next Fed chair must cut rates when the economy is doing well, not "destroy the market for no reason." Then added: "Anybody that disagrees with me will never be the Fed Chairman."

He's leaning toward Kevin Hassett or Kevin Warsh for the job.

Trade

Indonesia says US tariff talks are done. Deal could be signed late January when the presidents meet. US exempts Indonesian palm oil, tea and coffee in exchange for access to critical minerals.

Defense Production

Trump meeting with defense contractors next week to accelerate weapons production. He announced:

• Two new battleship classes named after himself

• 20 to 25 ships total when complete

• Fifteen submarines under construction or ready to start

International

US deployed troops and special operations aircraft to the Caribbean to pressure Venezuela's Maduro regime. Separately chased another tanker hauling Venezuelan crude. Brent crude rose on the supply threat.

Today’s Sponsor

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What to Watch

Christmas Week Trading 
Markets close at 1pm tomorrow, closed Thursday for Christmas, regular hours Friday. Light volume and skeleton crews mean moves can be exaggerated in either direction.

Fed Chair Decision 
Trump names his pick by early next year. After today's post demanding rate cuts "when the economy is doing well," whoever he picks will determine the entire 2026 rate path. Hassett or Warsh are still the front runners.

Warner Bros Discovery Takeover
Paramount sweetened their offer with Larry Ellison personally guaranteeing $40.4 billion in equity financing. Warner rejected it last week. Battle heats up into year end.

Thanks for reading 🙂

- John

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