That’s it for me today folks. Thanks once again for letting me play in your sandbox, and hopefully we can do it again before too long.

Doug should be back on Tuesday, and that means you will be in his more than capable hands.

And let’s give a big hand to the editorial team that does far more than most people realize.

As you enjoy the long weekend, do me a favor and check out the Portfolio’s “ripped from the headlines” signals alert on Saturday.

Then swing by again on Sunday for a fresh collection of articles, streaming ideas, and things that caught our attention this week.

Outta here.

The pace of earnings season accelerates next week, with just under 300 reports coming during the compressed week. Among them will be 43 S&P 500 constituents and six Dow 30 components, which means we may see some movement in either S&P 500 EPS growth expectations or at least those for certain sectors.

The only Pro Portfolio holding scheduled to report next week is American Express AXP, but I will be working through the other reports coming at us. 

Here's a list of those earnings report that I’ll be digging into more closely next week:

Tuesday, January 21

• Open: 3M (MMM), Charles Schwab (SCHW), DR Horton (DHI), Logitech (LOGI),
• Close: Capital One (COF), Netflix (NFLX), United Airlines (UAL)

Wednesday, January 22

• Open: Abbott Labs (ABT), Johnson & Johnson (JNJ), Procter & Gamble (PG), Textron (TXT)
• Close: Alcoa (AA), Discover (DFS), Waste Connections (WCN),

Thursday, January 23

• Open: Alaska Air (ALK), American Airlines (AAL), GE Aerospace (GE), McCormick (MKC), Union Pacific (UNP),
• Close: CSX (CSX),

Friday, January 24

• Open: American Express (AXP), Ericsson (ERIC), HCA (HCA).

As we get ready to close the books on another week, and to enjoy another holiday weekend, here are the economic data I’ll be keeping an eye on next week:

U.S.

Monday, January 20

• US equity markets are closed for the Martin Luther King holiday
• Inauguration Day

Wednesday, January 22

• MBA Mortgage Applications Index – Weekly (7:00 AM ET)
• Leading Indicators – December (10:00 AM ET)
• EIA Crude Oil Inventories – Weekly (10:30 AM ET)

Thursday, January 23

• Initial & Continuing Jobless Claims – Weekly (8:30 AM ET)
• EIA Natural Gas Inventories – Weekly (10:30 AM ET)

Friday, January 24

• S&P Global Flash Manufacturing & Services PMI – January (9:45 AM ET)
• Existing Home Sales – December (10:00 AM ET)
• University of Michigan Consumer Sentiment Index (Final) – January (10:00 AM ET)

International

Monday, January 20

• Japan: Machinery Orders, Industrial Production – November
• Germany: Producer Price Index - December

Tuesday, January 21

• China: Foreign Direct Investment – December
• Eurozone: ZEW Economic Sentiment Index - January

Thursday, January 23

• Eurozone: Consumer Confidence (Flash) - January

Friday, January 24

• Japan: Inflation Rate – December
• Japan: Bank of Japan Interest Rate Decision
• Japan: Jibun Bank Flash Manufacturing & Services PMI – January
• Eurozone: HCOB Flash Manufacturing & Services PMI – January
• UK: S&P Global Flash Manufacturing & Services PMI – January

Notable insider buying and selling activity reported today:

Buyers:

Neogen Corp. NEOG Chief Executive Officer and Chief Financial Officer bought 37,835 shares combined worth approximately $419K.

PBF Energy PBF 10% owner bought 100,000 Class A Common Shares worth nearly $2.9 million.

STAAR Surgical STAA 10% owner Broadwood Partners bought 29,376 shares at $21.21 - $21.59 worth approximately $631K.

Sellers:

Caterpillar CAT Chief Financial Officer sold 10,000 shares at $380.00 to $380.22, worth more than $3.8 million.

Mark your calendar for January 22, at 12 PM ET!

TheStreet Pro’s next quarterly meeting will see James “Rev Shark” DePorre, Louis Llanes and Kate Stalter visit with Jason Meshnick and discuss their 2025 investment resolutions, where the bull market may be this year, and some of their best ideas for what’s ahead.

Be sure to bookmark this page so you can watch the event live or circle back for the eventual transcript.

Let’s check in on the divergence underway between the Russell 2000 and the 10-year Treasury yield courtesy of today’s birthday boy, Bob Lang:

As recently as December we experienced a dearth of underperformance by the small-cap stocks. Coming off a very strong November when the IWM (Russell 2K) rallied about 10% or so, we did not expect to give back nearly everything gained from that strong month. But it did happen, and we can point to higher rates as the culprit.

Higher interest rates are to small-cap stocks as Kryptonite is to Superman — deadly. During the month of December, we saw rates creeping higher and recently the 10-yr yield (TNX) rallied to nearly 4.8%. Not only did that rise in yield (over 100 basis points from when the Fed started cutting rates in September) affect small-caps, but stocks of all sizes were down sharply.

Notice in the chart the often-wide differential between small-caps and the 10-year yield (IWM versus the TNX). Small-caps do well when, you guessed it — the TNX is low as it was in late summer and early fall. When the yield (TNX) started to rise we saw how the small-caps were a cause for concern. Remember, small-caps tend to lead the market and when they are bearish, they will bring the rest of the market down with them.

As it stands now, we have a sideways movement with both the IWM and TNX. It is hard to say if they will diverge soon but suffice to say when they do a new trend will be established. If rates come down, it's time to start buying the small-caps!

The Congressional Budget Office projects $1.9 trillion deficit for fiscal 2025, growing to to $2.7 trillion by 2035.

You can read the full report here, just try to stay awake ;)

Trump on the Supreme Court TikTok ban:

“The Supreme Court decision was expected, and everyone must respect it. My decision on TikTok will be made in the not too distant future, but I must have time to review the situation. Stay tuned!"

Now to see what all those executive orders have to say….

Apologies folks, I had to pop off and record today’s Daily Rundown video. I’ll share the link here when it’s posted, in part because some may be interested in an acquisition announced by ServiceNow NOW.

As I grab some grub to recharge and get ready to continue with today’s Diary and also pen the Portfolio’s Weekly Roundup, here are some articles I’ll be perusing:

Brussels orders X to hand over documents on algorithm

First, the ceasefire. Next the Trump effect could upend the Middle East

National Debt Closes in on Post-World War II Mark, CBO Says

$10.1 Billion Pours Into Digital Health, but Late-Stage Ventures Feel the Pinch

Meta Platforms leaked emails reveal fierce AI rivalry

From Bloomberg:

The Supreme Court upheld a law that threatens to shut down the wildly popular TikTok social media platform in the US as soon as Sunday, ruling that free speech rights must yield to concerns that Chinese control of the app creates a national-security risk.

The high court said unanimously Friday Congress acted constitutionally when it required ByteDance Ltd. to sell the video-sharing app by Jan. 19 or face a ban.

President-elect Trump is expected to issue a tsunami of executive orders early next week, and we’ll want to see if one of them suspends enforcement of the above.

The unknown is the likely reason why Meta META shares are not up on word of the Supreme Court’s ruling.

The International Monetary Fund boosted its 2025 global growth outlook, largely on an upgraded outlook on the U.S. economy that offset generally disappointing growth around the rest of the world. No surprise to us given the rash of December data and the favorable new order data seen in the various December PMI reports.

The Fund now sees world growth at 3.3%, up from the 3.2% prior forecast, though it is still slightly below the 3.7% average (2000-2019).

The outlook on the U.S. was increased by 0.5 ppt from the October forecast to 2.7%.

In the Euro area, growth is expected to pick up at a more modest pace than expected previously, now seen at 1.0%, down -0.2 ppt thanks to geopolitical tensions as well as heightened political and policy uncertainty.

Growth in other advanced economies was seen relatively steady due to offsetting forces of recovering real incomes versus trade headwinds.

Turning to China, the IMF revised its forecast slightly higher to 4.6%, up 0.1 ppt amid “carryover from 2024 and the recently announced fiscal package offsetting the negative impacts of trade policy uncertainties and the property market drag.”

As we move past the market open and this morning’s economic data, I suspect folks will be contemplating the long weekend due to the Martin Luther King holiday that will have U.S. equity markets closed on Monday. Monday is also Inauguration Day and President Elect Trump is expected to give an Inauguration Address. That prompted us to ask this week’s Poll question, and I’d ask Diary readers to check it out and vote.

As it relates to Trump taking office next week, it may be a good thing the market is closed so we can digest what is being billed as a “shock and awe” campaign of executive orders per Barron’s:

Trump has said he is planning around 100 such orders beginning on his first day in office.

“The American people can bank on President Trump using his executive power on Day One to deliver on the promises he made to them on the campaign trail,” Trump transition spokeswoman Karoline Leavitt said in a statement.

Put another way, according to Beacon Policy Advisors, Americans can expect a “‘shock and awe’ campaign.”

Budget cuts, immigration, trade issues and tariffs, energy policy, Tik Tok ban, crypto?

We’ll see and adjust the Pro Portfolio accordingly.

We can add an upside surprise for the December Industrial Production print (see the table below) to the rash of stronger than expected economic data. Paired with what we saw in the December Housing Starts report this morning, we should expect to see the GPDNow model kept by the Atlanta Fed to move higher with its next update due later today.

Digging into the December Industrial Production data, we see gains across all three categories, with the biggest in Utilities (+2.1% MoM), reflecting the colder weather we’ve been having.

Despite the contraction readings in ISM’s Manufacturing PMI data for December, today’s data shows an another uptick for that part of the economy.

With less than 15 minutes to go before trading begins, here’s an updated look at equity futures compared to where they were about two hours ago:

About 8:45 a.m.:

Earlier:

Yesterday the Atlanta Fed updated its rolling GDP model, better known as GDPNow, to 3.0% for Q4 2024. That update was the first since just before the stronger than expected December employment report.

To that we can now add the upside surprise found in today’s December housing starts (see below), which saw single family housing starts coming in at 992,000, up 1.6% month over month and the highest level since February. That’s a nice data point for the Portfolio’s positions in United Rentals URI, Vulcan Materials VMC, and Waste Management WM.

This should nudge the GDPNow model a tad higher, but we’ll want to factor in the December Industrial Production report data out at 9:15 a.m. ET as we formulate thoughts for that revision. But as we think about it, barring a disastrous Industrial Production print, it’s going to be another in the longer wait for the next Fed rate cut column.

Israel's cabinet approves ceasefire deal; Hamas will release 33 hostages

Upgrades:

American Airlines (AAL) upgraded to Neutral from Underperform at BofA Securities; Price target raised to $20

Applied Materials (AMAT) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; Price target $225

AT&T (T) upgraded to Neutral from Sell at Arete

Axalta Coating Systems (AXTA) upgraded to Outperform from Peer Perform at Wolfe Research; Price target $41

Clearwater Analytics (CWAN) upgraded to Overweight from Equal-Weight at Morgan Stanley; Price target raised to $34

Cloudflare (NET) upgraded to Buy from Neutral at Citigroup; Price target raised to $145

DuPont (DD) upgraded to Outperform from Peer Perform at Wolfe Research; Price target $91

Enersys (ENS) upgraded to Outperform from Perform at Oppenheimer; Price target $115

Lam Research (LRCX) upgraded to Overweight from Sector Weight at KeyBanc Capital Markets; Price target $95

Life360 (LIF) upgraded to Buy from Neutral at UBS; Price target raised to $55

Lumentum (LITE) upgraded to Overweight from Underweight at Barclays; Price target raised to $125

MoonLake Immunotherapeutics (MLTX) upgraded to Buy from Neutral at Goldman; Price target raised to $82

Salesforce (CRM) upgraded to Buy from Hold at TD Cowen; Price target raised to $400

SAP SE (SAP) upgraded to Buy from Hold at TD Cowen; Price target raised to $305

Ultrapar Participacoes (UGP) upgraded to Buy from Hold at HSBC Securities

Ventas (VTR) upgraded to Outperform from Neutral at Robert W. Baird; Price target lowered to $65

Downgrades:

AmBev (ABEV) downgraded to Neutral from Buy at BofA Securities

Avantor (AVTR) downgraded to Neutral from Buy at UBS; Price target lowered to $25

Charles River (CRL) downgraded to Neutral from Buy at UBS; Price target lowered to $185

H&E Equipment (HEES) downgraded to Neutral from Buy at UBS; Price target raised to $92

HubSpot (HUBS) downgraded to Hold from Buy at TD Cowen; Price target raised to $725

Lucky Strike Entertainment (LUCK) downgraded to Neutral from Overweight at JP Morgan; Price target lowered to $12

Rapid7 (RPD) downgraded to Hold from Buy at Stifel; Price target lowered to $42

Southwest Air (LUV) downgraded to Underperform from Neutral at BofA Securities; Price target $31

Spotify (SPOT) downgraded to Peer Perform from Outperform at Wolfe Research

Tenable (TENB) downgraded to Hold from Buy at Stifel; Price target lowered to $45

Tenaris (TS) downgraded to Hold from Buy at Kepler

Warby Parker (WRBY) downgraded to In-line from Outperform at Evercore ISI; Price target $23

The WSJ reports activist investor Starboard Value has built a 7.7% stake in the RF chip company Qorvo QRVO, which is also a known supplier to Apple AAPL. The RF chip space is subject to program wins and over the years we’ve seen OEMs switch back and forth between key vendors.

Despite the positive outlook for smartphone growth in 2025 offered by Taiwan Semi TSM this week, Qorvo and Skyworks Solutions SWKS are staring down Apple developing its own RF chips as part of its Apple Silicon strategy. That means at least 23% of its smartphone business (based on Apple’s iPhone market share) is vulnerable, and to that we can add RF chips in Apple’s other devices.

While Qualcomm QCOM, Broadcom AVGO and others are also facing similar developments, Qualcomm's diversification efforts into AI PCs with its Microsoft MSFT relationship and other IoT efforts as well as its program wins in the auto market put it on a different flight path than QRVO. TSM’s outlook for AI PCs and other connected devices supports out longer-term view on QCOM shares.

It will be interesting to see what Starboard’s plans are, if any, for Qorvo.

We’re getting some Wall Street analyst follow-through from yesterday’s installment of big bank earnings.

Piper Sandler inched its Bank of America BAC price target to $49 from $50, while Morgan Stanley boosted its to $56 from $54.

Keefe Bruyette lifted its Morgan Stanley MS target to $145 from $138, and Barclays boosted its to $156 from $155 .

Odds are we’ll see other target adjustments later this morning from other firms.

Over at the Pro Portfolio we kept our BAC price target at $53 but upped our MS target to $145 from $140. Based on investment banking deal pipeline morphing into priced deals, we’ll revisit those targets as needed.

Southwest Airlines LUV and JetBlue JBLU are catching a few downgrades, with Bank of America slapping an Underperform rating on LUV with a $31 price target and a fresh Underperform rating on JBLU.

BofA’s argument for the move? Both airlines trade at the high end of historical valuation ranges despite less exposure to "the strongest industry trends." Both are also exposed to execution risk as Southwest expands its product offering and JetBlue continues to “fine tune its network.”

At the same time BofA upped its price target on Alaska Air ALK to $80 from $70, even though it see risk to Q1 consensus EPS.

Earnings next week from United Airlines UAL, American Airlines AAL, and Alaska Air should provide some nice context for air travel demand starting 2025 as well as fuel costs.

Over at the TheStreet Pro Portfolio, we’ll be interested in those comments given our exposure to American Express AXP and Mastercard MA.

Let’s get ready for the final day of the first full week of trading in 2025. After a rocky start, month to date the S&P 500 is up 0.9%, the Nasdaq just over 0.1%, and the Dow is leading the way with its 1.4% gain.

With a few hours to go until stocks start trading, equity futures point to a positive start to the day, but as you can see below we have some earnings reports and economic data that could kick those futures around some.

On the earnings docket today:

Citizens Financial CFG

Fastenal FAST

SLB SLB

State Street STT

Truist TFC

Webster Financial WBS

Economic data coming:

December Housing Starts & Building Permits (8:30 AM ET)

December Industrial Production & Capacity Utilization (9:15 AM ET)

So get that next cup of coffee, tea or your preferred morning go juice, and I’ll see you back here shortly.