Today felt quiet. The equity market leaned into weakness one day after a very strong rally on Wednesday, partially driven by weakness in Apple AAPL. Fortunately, at least for this guy, SoFi Technologies SOFI and the defense contractors including Palantir Technologies PLTR were up enough to more than offset the negativity. For the session, the S&P 500 gave up 0.21%, led lower by UnitedHealth Group UNH, while the Nasdaq Composite was hit a bit harder, ending down 0.89%. The small- to mid-cap equity indices managed to close in the green. Treasuries rallied on the day with the U.S. 10-year note going out paying 4.61%.

Sector performance was led by the most interest rate sensitive groups. Among the sector SPDR ETFs, both the Utilities XLU and the REITs XLRE put together gains of more than 2.2%. Tech XLK was the laggard at -0.77%. The U.S. dollar index weakened moderately throughout the session, which put a bid under gold, silver and Bitcoin.

Tomorrow is a light day as far as earnings is concerned, but there will be some key macro released. Both December Housing Starts and December Industrial Production will be released in the morning and that will force the Atlanta Fed to revise their GDPNow model for the fourth quarter. That model was moved up to 3.0% from 2.7% earlier today after December Retail Sales, ex-autos, printed on the strong side.

Well, that's a wrap for today, gang. As always it is a pleasure to serve in Dougie's absence when called upon to do so. I hope you all have a happy and safe evening, and we'll catch you back here in the morning. Thank you for your time today. 

FTC refers AI complaint against Snap SNAP

The Federal Trade Commission has referred to the Department of Justice a complaint against Snap, Inc. The complaint pertains to the company's deployment of an artificial intelligence powered chatbot, My AI, in its Snapchat application and the allegedly resulting risks and harms to young users of the application. 

The FTC's investigation began in connection with our order compliance review of Snap following a 2014 settlement with the company for violations of Section 5(a) of the FTC Act, 15 U.S.C. Section 45(a). The Commission also investigated additional potential violations of the FTC Act. The investigation uncovered reason to believe Snap is violating or is about to violate the law and that a proceeding is in the public interest, so the Commission has voted to refer a complaint to the DOJ, according to the procedures outlined in the FTC Act. Although the Commission does not typically make public the fact that it has referred a complaint, we have determined that doing so here is in the public interest. We look forward to our continued partnership with the Department of Justice in this and other matters as we advance our shared interest in protecting the American people and in enforcing the law without fear or favor.

Read more.

It did not appear that the trivia question piqued much interest today, but a question asked must be answered.

Question:

The 2012 Cincinnati Reds were the last team to have four starting pitchers throw 200+ innings in the same season. The Reds were good that year, going 97-65, winning the NL Central Division, but losing to the San Francisco Giants in the Divisional Round of the playoffs.

All four of these pitchers won at least 12 games, all had winning records, and one finished in the voting for the CY Young and MVP Awards. How many of these four 2012 Reds can you name?

Answer:

Johnny Cueto went 19-9 with a 2.78 ERA, pitching 217 innings.

Mat Latos went 14-4 with a 3.48 ERA, pitching 209 innings.

Homer Bailey went 13-10 with a 3.68 ERA, pitching 208 innings.

Bronson Arroyo went 12-10 with a 3.74 ERA, pitching 202 innings.

Notes:

- Number 5 starter Mike Leake pitched 179 innings, which is ace material today.

- Cueto finished 4th in the NL Cy Young Voting and 30th in the NL MVP voting.

- Closer Aroldis Chapman finished 8th in the NL Cy Young voting and 12th in the NL MVP voting. 

Bank of America five-star rated (by TipRanks) analyst Ronald Epstein has reiterated his "buy" rating on Sarge and "Stocks Under $10" fave Rocket Lab USA RKLB on Thursday afternoon. 

Not just that, but Epstein named Northrop Grumman NOC, Booz Allen Hamilton BAH and Rocket Lab USA, RTX RTX and GE Aerospace GE as his top defense industry stock picks going into 2025

Readers will see in the chart below that Apple AAPL appears to have failed miserably today to take back its 50-day SMA after hitting resistance at that spot on Wednesday. You never say never, but the rally provoked by the ascending triangle has flickered out and the stock has come in quickly. 

AAPL may have a hot date with its 200-day SMA (currently $216.70) in its medium-term future. I am not long much at all, but I don't think I need to own this name here. 

The 2012 Cincinnati Reds were the last team to have four starting pitchers throw 200+ innings in the same season. The Reds were good that year, going 97-65, winning the NL Central Division, but losing to the San Francisco Giants in the Divisional Round of the playoffs.

All four of these pitchers won at least 12 games, all had winning records and one finished in the voting for the CY Young and MVP Awards. How many of these four 2012 Reds can you name? 

Latest estimate: 3.0 percent — January 16, 2025

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.0 percent on January 16, up from 2.7 percent on January 9. After recent releases from the Treasury's Bureau of the Fiscal Service, the US Census Bureau, and the US Bureau of Labor Statistics, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real government expenditures growth growth increased from 3.3 percent and 2.9 percent, respectively, to 3.7 percent and 3.0 percent, while the nowcast of fourth-quarter real gross private domestic growth decreased from -0.4 percent to -0.8 percent.

The next GDPNow update is Friday, January 17. Please see the "Release Dates" tab below for a list of upcoming releases.

Interesting...

From TheFly

Embraer (ERJ) delivers 75 aircraft in Q412:21 Read Less ERJ Embraer delivered 75 aircraft in 4Q24, or 27% higher than in the previous quarter, when 59 aircraft were delivered, and equal to the volume of the same period of 2023. For the full year, 206 aircraft were delivered in 2024, a number 14% higher than the 181 recorded in 2023. With 31 deliveries in the last three months of the year, Commercial Aviation reached 73 new aircraft in 2024. Meanwhile, Executive Aviation was responsible for another 44 jets in the quarter, and for the total of 130 deliveries in the year. In comparison with 2023, growth in these business units was +14% and +13%, respectively. Last, but not least, Defense & Security also surpassed the previous year's result with the delivery of 3 new C-390 Millennium in 2024 versus 2 in 2023.

By comparison... 

To some degree, Boeing BA customers are finding aircraft elsewhere. Airbus EADSY continues to recover from the pandemic, and Embraer ERJ has come almost out of nowhere to become a potential third player. Now, to make some larger aircraft. 

... a bearish head & shoulders pattern morph instantly into a bullish double bottom reversal? 

Well now you have...

Still long SoFi Technologies SOFI. 

Added last week. 

Pivot of $15.60. 

Current price target: $20.

Palantir Technologies PLTR is down 16.6% since Christmas Eve, up 11.5% since Monday's low. Earnings due on February 3rd... Cleanest balance sheet I know of. 

PLTR lost the lower trendline line of the regression model, then lost the 50-day SMA. Now, that 50-day line has been regained. 

I added to this long position last week. Keep the 50-day? Keep the funds on board. 

Recapture the 21-day EMA? Get the swing crowd back. My price target remains $90.

... For January, the Empire State (NY) Manufacturing Index showed a flip from positive growth in New Orders in December to negative growth (contraction).

But the Philly Fed Manufacturing Index showed a flip from contracting New Orders in December to extreme growth in New Orders in January. Hmmm...

Headline retail sales printed at 0.4% month-over-month, decelerating from +0.7% for November and below the growth of 0.6% that Wall Street was looking for. 

Ex-autos and parts, December still printed at 0.4%, which was in line with expectations and an acceleration from November's growth of 0.2%.

Extreme strength of +2.6% m/m was seen in the fun index (sporting goods, hobbies, music and books), which is a real positive, because this category is strictly made up of discretionary spending. Furniture sales were also very strong at +2.0%. Above trend strength was also seen in motor vehicles, gasoline, clothing, groceries and e-commerce. There was an extreme drop-off in the purchase of building supplies at -2.0% m/m. Sales of health and personal care products and at food and drink places also contracted. Department stores saw below trend growth.

This report really did not move Fed Funds futures markets trading in Chicago. There is still a 97% likelihood for no rate change this month, and the first rate cut is still priced in for June (69% probability). The change that I see is that there is now a majority probability (52%) for a secind rate cut of a quarter percentage points being priced for the full year (in December).

Retail sales: +0.4% m/m versus expectations for +0.6%, down from +0.7%

Core retail sales: +0.4% versus expectations for +0.4%, up from +0.2%.

First-time jobless claims: 217K, up from 201K.

Continuing jobless claims: 1.859M, down from 1.867M.

Philly Fed Manufacturing Index: 44.3, up huge from -16.4, well above expectations for -10. (employment up huge, but so are prices)

Target TGT is trading slightly lower after the company raised its fourth-quarter sales guidance. Target expects comp store sales to increase by 1.5% in the fourth quarter, up from previous guidance for the figure to remain roughly flat.

TGT appears to be breaking down from a Rising Wedge pattern stretching back to November. For those unaware, the Rising Wedge is a pattern of bearish reversal.

S&P Futures: +6 vs FV.

Nasdaq Futures: +60 vs FV.

Russell 2000 Futures: -5 vs FV.

US Dollar Index: +0.24%

US Ten Year Note: 4.67%

US Two Year Note: 4.29%

US Three-Month T-Bill: 4.31%

WTI Crude: -0.55%

Gold: +0.75%

Silver: +0.77%

Bitcoin: -0.44%

Wells Fargo WFC price target raised to $80 from $72 at RBC Capital

Wells Fargo price target raised to $86 from $81 at Keefe Bruyette

Wells Fargo price target raised to $86 from $84 at BofA

JPMorgan JPM price target raised to $273 from $265 at Morgan Stanley

Citi C price target raised to $79 from $69 at Evercore ISI

Rivian Automotive RIVN price target raised to $14 from $11 at UBS

Tractor Supply price target raised to $53 from $44 at BofA

AT&T T upgraded to Buy from Hold at Argus

J.B. Hunt JBHT price target raised to $206 from $195 at BofA

CrowdStrike CRWD price target raised to $410 from $370 at Cantor Fitzgerald

UPS UPS upgraded to Buy from Neutral at BofA

Now, that was a day. Sure, the S&P 500 is now up three days in a row, but the Nasdaq Composite posted its first up day on Wednesday (January 15) since January 6. The rally was strong, and quite broad in nature supported by a consumer inflation report for December that showed core inflation growing a little more slowly than projected.

Mind you headline inflation is still raging, but slowing core inflation coupled with strong earnings from the financials was enough to cause a surge in buying that forced a "relief" rally across equities and debt securities. Treasuries rallied sharply across the entirety of the slope of the yield curve. The flow of capital into the commodity complex was just as evident, as crude, natural gas, copper, corn, wheat, gold and silver all surged in U.S. dollar terms.

More fun today? We'll soon find out. Fed Funds futures moved the pricing of the first and potentially only rate cut for 2025 from September up to June on Wednesday. This morning, there's more key macro on the way in the form of December Retail Sales, as well as November Business Inventories and the January edition of the Philly Fed Manufacturing Survey.

That said, let's get to work. Push-ups, sit-ups, whatever you're capable of. Let's get the blood moving and begin our day with a guttural roar. Get that cup of Joe and I'll meet you back here in just a little while. With that, let us rock.