February 17th Market Overview

Happy Tuesday

Markets were flat on the surface but individual names got hit hard. Software stocks sold off again, a handful of companies moved double digits on M&A news, and three activist investors launched campaigns before lunch.

BofA's fund manager survey flashed a sell signal for the first time since mid-2021.

The survey is just noise imo but worth mentioning.

Let’s dig in...

Today's Big Picture

1. Software Stocks Are Getting Repriced And It's Not Over 
   Software names sold off again today with the IGV ETF losing ground for the year. ServiceNow $NOW is down roughly a third in 2026. Salesforce $CRM and Oracle $ORCL aren't far behind. The market is repricing any software business that AI agents can replace, and it's not slowing down.
   

2. BofA Survey Triggers A Contrarian Sell Signal 
   Bank of America's February fund manager survey hit levels not seen since mid-2021. The Bull & Bear Indicator printed 8.2, a sell signal. A record share of managers say companies are overinvesting in capex. Meanwhile, dollar positioning just went the most negative in over 14 years. When the crowd gets this one-sided, I pay attention.
   

3. Three Activist Investors Pounce On The Same Day 
   Elliott group built a stake above ten percent in Norwegian Cruise Line $NCLH. Jana Partners took a position in Fiserv $FISV. Starboard Value is going after Tripadvisor $TRIP's board. Three campaigns in one morning tells you where the value hunters are finding mispriced assets.

Market Overview

Index Performance

Stock Spotlight

Masimo $MASI ( ▲ 34.26% ) 
is nearing a deal to be acquired by Danaher $DHR for $180 per share in cash. That's roughly a $10 billion deal and a serious premium to Friday's close.

General Mills $GIS ( ▼ 7.19% ) 
cut its annual sales and profit outlook, blaming weak consumer sentiment and rising uncertainty. The company is rolling out smaller pack sizes and protein-packed products to court the GLP-1 crowd.

Genuine Parts $GPC ( ▼ 14.41% ) 
plans to split its auto-parts business from its industrial unit into two public companies. The market punished it after they also swung to a quarterly loss.

Big Name Updates

Amazon $AMZN ( ▲ 1.02% ) 
is on track for its longest losing streak since 1997. The stock has shed roughly $450 billion in value since announcing $200 billion in capex for AI data centers.

Micron $MU ( ▼ 2.91% ) 
committed $200 billion to expand U.S. manufacturing capacity for AI memory chips. The industry is facing its worst supply crunch in 40 years as data center demand outpaces production.

Warner Bros. Discovery $WBD ( ▲ 2.73% ) 
restarted deal talks with Paramount $PSKY after getting a seven-day waiver from Netflix $NFLX. A bidding war is officially on the table.

Nvidia $NVDA ( ▲ 1.01% ) 
got a buy reiteration from Citi ahead of expected second-half outperformance. Analyst forecasts January-quarter revenue of $67 billion versus $65.6 billion consensus. Mid-March GTC conference is the next catalyst.

Other Notable Company News

Hyatt Hotels $H ( ▲ 2.57% ) 
saw Executive Chairman Thomas Pritzker retire following the release of documents detailing his ties to Jeffrey Epstein.

AeroVironment $AVAV ( ▲ 7.13% ) 
got a new buy rating from JPMorgan with a $320 target on strong drone demand.

Coca-Cola $KO ( ▲ 0.97% ) 
Incoming CEO Henrique Braun says the company needs to "shop local." He pointed to Santa Clara, a Mexican dairy brand that just hit a billion in sales.

JFB Construction $JFB ( ▼ 42.75% ) 
is merging with Israeli drone maker Xtend in a $1.5 billion deal backed by Eric Trump. The stock fell hard.

Dollar Tree $DLTR ( ▲ 1.28% ) 
got an upgrade to buy from Rothschild with a $165 target. Analyst says post-Family Dollar divestiture, this is a better business than it's been in a decade.

Citigroup $C ( ▲ 3.08% ) 
led a rally in bank stocks as money rotated out of tech and into financials.

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Sector Watch

Bond Market

Treasury yields held steady coming out of the holiday. The 10-year sits at 4.057.

• The dollar strengthened, particularly against the pound after soft U.K. employment data

• Gold and silver both fell, with silver down hard

Policy Watch

Fed 
Governor Barr poured cold water on rate cut hopes today. He said holding steady is "likely appropriate for some time" and sees the labor market as "delicate" and "especially vulnerable to negative shocks." The Fed's preferred inflation gauge is still stuck around three percent and Barr sees real risk it stays there.

Chicago Fed's Goolsbee was more dovish on CNBC, saying several more cuts are possible in 2026 if inflation proves transitory. Citi's economists separately said the data points to "a clear path" for further cuts. I'm watching the gap between these two views closely.

Geopolitical 
U.S.-Iran talks in Geneva have concluded. Iran offered nuclear concessions but stopped short of an enrichment ban. Supreme Leader Khamenei said Iranian missile types and range "have nothing to do with the U.S." Iran also tested large missiles in the Persian Gulf during the talks. Oil settled lower on reports that progress was made.

International

• Goldman upgraded Japanese equities to overweight after PM Takaichi's election win

• India's Adani Group committed $100 billion to AI data centers

• India hosting a global tech summit Thursday with Sam Altman and Dario Amodei attending

What to Watch

Fed Meeting Minutes 
We get the details from the January meeting tomorrow afternoon. I want to see how divided the committee really is on holding rates, and whether tariff impacts came up.

PCE Inflation Data
The Fed's preferred gauge drops Friday. December 12-month PCE is expected unchanged from November. This is the number that actually matters for rate cut timing.

Q4 GDP Advance Estimate 
First look at October through December growth, also Friday. Sets the baseline for early 2026 expectations.

Walmart Earnings
The stock is at all-time highs and nearly three times as expensive as it was a decade ago on valuation. The consumer health read matters more than the numbers.

Nvidia GTC Conference 
Investors are already positioning ahead of the mid-March event. The inference roadmap and early 2027 AI guidance will move the entire trade.

Thanks for reading - you are now the more informed 🙂

- John

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