February 18th Market Overview

Happy Wednesday

Fed confirmed no cuts are coming and stocks rallied anyway, led by a massive Meta-Nvidia chip deal. Oil climbed on Iran tensions and gold is sitting on $5,000. There is a vibe in the air, nobody is as confident as the price action suggests.

Let’s dig in...

Today's Big Picture

1. Fed Members Want Rate Cuts Off the Table 
The minutes showed a clear push to remove any hint of future cuts from Fed language. Staff forecasts flagged persistent above-target inflation as "a salient risk." The labor market worry that dominated last year has faded. Inflation hasn't.

2. Meta Doubles Down on Nvidia 
Meta signed a multiyear deal worth tens of billions for Nvidia chips across its data centers. Zuckerberg framed it as the path to "personal superintelligence for everyone." Morgan Stanley called Nvidia the most under-owned megacap, with a negative gap between its S&P 500 weight and active institutional ownership. That matters more than the deal itself.

3. Oil Catches a Bid as Iran Talks Stall 
VP Vance said Iran failed to address U.S. red lines in Geneva this week and military action is still on the table. Iran's foreign minister called the talks "constructive" but crude moved sharply higher anyway. I'm watching Brent near $70, that's where the White House gets uncomfortable given their cheap-energy messaging.

Market Overview

Index Performance

Stock Spotlight

Caesars Entertainment $CZR ( ▲ 13.03% ) 
posted a quarterly loss but revenue beat. CEO Tom Reeg guided for a stable year. One of the best performers on the session.

Madison Square Garden Sports $MSGS ( ▲ 15.77% ) 
board approved exploring a spinoff of the Knicks and Rangers into two separate public companies. Structured as a tax-free distribution. No timeline, still needs league approval. Stock hit an all-time high.

Moderna $MRNA ( ▲ 6.1% ) 
got a lifeline. The FDA reversed course and agreed to review its mRNA flu shot with an August 5 decision date. This was dead in the water weeks ago. Changes everything for their combo Covid-flu play and 2028 breakeven target.

Wingstop $WING ( ▲ 10.84% ) 
same-store sales declined but beat the Street's low bar. Guided for flat to low-single-digit growth this year.

Big Name Updates

Amazon $AMZN ( ▲ 1.64% ) 
snapped its nine-day losing streak yesterday and kept climbing today. Bill Ackman's Pershing Square grew its stake by nearly two-thirds last quarter, making it the fund's third-largest holding.

Nvidia $NVDA ( ▲ 1.64% ) 
traded higher on the Meta deal. A 13F filing also showed Nvidia sold its Arm position along with stakes in Applied Digital, Recursion, and WeRide.

Berkshire Hathaway $BRK.B ( ▼ 0.79% ) 
filed its first portfolio update since Buffett retired. New $351M stake in the New York Times. Continued selling Apple for the third straight quarter. Slashed its Amazon position by more than three-quarters.

Palo Alto Networks $PANW ( ▼ 6.88% ) 
fell hard after guiding 78-80 cents adjusted EPS next quarter versus 92-cent consensus. CEO Arora said he's "confused" why the market treats AI as a threat to cybersecurity. I think he has a point, but the guide speaks for itself.

Other Notable Company News

Analog Devices $ADI ( ▲ 2.34% ) 
beat on revenue and EPS with revenue up 30 points year over year. Q2 guide well above consensus.

Moody's $MCO ( ▲ 6.51% ) 
beat on both lines. CEO Fauber pushed back on AI disruption fears, saying their data "can't be synthesized from public sources."

La-Z-Boy $LZB ( ▼ 6.33% ) 
beat on earnings but weak guidance dragged the stock. CEO cited consumers pulling back on big-ticket purchases.

Palantir $PLTR ( ▲ 1.94% ) 
upgraded to Outperform at Mizuho with a $195 target. Analyst called the YTD pullback overdone.

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Sector Watch

Bond Market

The 10-year crept up to 4.09 after the minutes. No surprise there.

The bigger story is the borrowing. UBS expects U.S. tech companies to issue $360 billion in new debt this year, up from a $300 billion forecast, almost all of it funding AI data centers.

Policy Watch

Tariffs 
White House adviser Kevin Hassett called a New York Fed study "the worst paper I've ever seen" and said the researchers should be "disciplined." The study found U.S. importers bore most of tariff costs through the first eight months of 2025. A German think tank reached similar results. Hassett argued the researchers ignored "how quantities moved" and reshoring benefits.

The White House publicly threatening Fed researchers is worth paying attention to regardless of where you stand on the underlying policy.

Trade and Diplomacy

• U.S. arms sale to Taiwan in limbo ahead of Trump's April trip to Beijing. Xi called Trump on Feb. 4 and the $11.1 billion package stalled. Congress expected Patriot interceptors but the notification hasn't come
  

• Trump praised Japan's $36 billion first investment tranche tied to last year's trade deal, headlined by a $33B natural gas power site in Ohio
  

• The U.S. is pitching a "price floor" system for critical minerals to allies, trying to cut reliance on Chinese supply chains by guaranteeing minimum prices for Western producers

What to Watch

Walmart Earnings Thursday 
The consumer health check. First trillion-dollar traditional retailer reports. Commentary on tariff front-loading and buy-now-pay-later usage will tell you more about the real economy than any government data release this week.

PCE Inflation Data Friday 
The Fed's preferred inflation gauge for December drops alongside an advance Q4 GDP estimate. A hot print here ends the rate cut conversation for 2026.

Supreme Court Opinions Friday
Three opinion days start Friday after winter recess. A tariff-related decision could be among them.

GTC Next Month
Jensen Huang teased "a chip that will surprise the world." Between the Meta deal and Morgan Stanley's under-owned call, this conference matters for anyone with Nvidia exposure.

Iran 
Vance's military action language shifted the tone from Monday's optimism. Watch crude and defense names.

Thanks for reading - you are now the more informed 🙂

- John

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