Intel Runs Hot, Invasion Talk Chills, Cook Looks Safe
Let's chart INTC's wild move before earnings, see how the Greenland hype is coming back down to earth, and see why Cook might keep her job.
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It was the news that we could see coming from a hundred miles away. It was classic Donald Trump. Who wrote "Don't Believe the Invasion Hype" ahead of the news? That's right. Your buddy, Uncle Sargie. Who wrote to be at the ready, to identify avenues of attack, areas of weakness and targets of opportunity? That's right. Your pal. Do we know all things? Of course not. Do we make mistakes? Often. That said, I think it was quite obvious that the U.S. was not about to drop the 82nd Airborne on Greenland while the 2nd Marine Division attempted an amphibious assault in the Arctic in winter. We knew the game. Thankfully, Europe panicked and the game played out quickly.
On Wednesday, Pres. Trump dropped his threat to place new tariffs on several NATO allies over Greenland after striking a "framework of a future deal" with the alliance's secretary general, Mark Rutte. The president posted to his Truth Social account, "based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st. Additional discussions are being held concerning The Golden Dome as it pertains to Greenland."
A NATO statement was quoted as responding. "Discussions among NATO allies on the framework the president referenced will focus on ensuring Arctic security through the collective efforts of allies, especially the seven Arctic allies."
Pres. Trump allowed that mineral rights to rare earth elements will be part of any final agreement. Vice Pres. JD Vance, Sec. of State Marco Rubio and special envoy Steve Witkoff will take over the negotiations from here and report to the president. Greenland's sovereignty or lack thereof, was not discussed on Wednesday.
Marketplace
U.S. Treasury debt securities rallied slightly on Wednesday as the market for Japanese government bonds calmed down a bit. The yield paid by the U.S. Ten-Year Note dropped four basis points for the session to 4.25% and has held that level overnight. U.S. equity markets roared back on Wednesday after Tuesday's meltdown. U.S. equity index futures have carried that rally forward overnight.
The S&P 500 gained 1.16% on Wednesday as the Nasdaq Composite tacked 1.18% back on. Small caps outperformed the broader marketplace yet again as the Russell 2000 gained an even 2% and the S&P 600 added a beefy 2.64%. It gets better. The Philadelphia Semiconductor Index ran 3.18% as Intel (INTC) and SanDisk (SNDK) popped for 11.7% and 10.6% respectively. The Dow Transports gained 3.1% on Wednesday aided by a 7.7% run by Matson (MATX) , which is an ocean transport provider for those who didn't know but were afraid to ask.
Breadth
All 11 S&P sector SPDR ETFs ended the day's regular session in the green, led by Energy (XLE) and the Materials (XLB) as the cyclicals clearly won the day. Though the more defensive sectors dropped to the bottom of the daily performance tables on Wednesday bit still managed to close on the plus side.
Winners beat losers at the NYSE by a 15-to-four margin and at the Nasdaq by a rough nine to four. Advancing volume took a near-commanding 69.6% share of composite NYSE-listed trade and a 68.5% share of composite Nasdaq-listed activity. Aggregate trade did manage to increase by 1.1% across NYSE-listings and did manage to grow slightly across the membership of the S&P 500.
But trade contracted by 3.2% on a day-over-day basis across Nasdaq-listings. Therefore, we do not have a bullish "Day One" to admire on the charts. That said, there was some positive or "bullish" development. Take a look:
Readers may recall that 24 hours ago, I wrote: "A level, such as the 50-day simple moving average, is not lost with just a piercing. Contact must be lost. That said, U.S. equity markets will need a semi-significant rally on Wednesday just to maintain contact." Well, the S&P 500 got that semi-significant rally and did more than maintain contact, the index actually retook that important blue line as professionals added risk. The S&P 500 only hit resistance as the 21-day exponential moving average (green line) was approached.
Cook: Probably Not Fired
In a Supreme Court hearing on Wednesday, the justices appeared to show some skepticism in regard to Pres. Trump's authority to remove Fed Gov. Lisa Cook for alleged mortgage filing issues. The more liberal justices showed doubt, which was widely expected, but so did the more conservative justices.
Several justices expressed doubt over whether the consideration of the president's case after Cook's firing had been blocked by a lower court, actually warranted emergency treatment. Cook's term runs into the year 2038, so any final determination here does really matter. Current Fed Chair Jerome Powell and former Fed Chair Ben Bernanke were in attendance.
Fed Choice Coming Soon
In a televised interview from Davos, Switzerland, Pres. Trump told CNBC's Joe Kernan that he more or less has narrowed his decision down to a final candidate on who will replace Jerome Powell as Fed Chair in May. The president said, "I'd say we're down to three, but we're down to two. And I probably can tell you, we're down to maybe one, in my mind."
Yowza!
Anyone else notice that the share price of Intel (INTC) ran 11.7% on Wednesday, one day ahead of earnings. The company is set to release its fourth-quarter financial results this evening. INTC closed at $54.25 on Wednesday afternoon and has ticked at $55 overnight.
Readers may recall that on Jan. 8, with Intel trading at $41.60, I placed a $55 target price on the shares using a $44 pivot created by an Ascending Triangle pattern of bullish continuance.
I do not yet have a new target price. The point of this segment is to let readers know that I do not like when my stocks run into earnings this hot and I always take off at least a token portion of my long positions when one of my targets is breached. I will be selling something ahead of the numbers. I do expect to hear later that Intel has issued upside guidance for the current quarter.
Economics
(All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 212K, Last 198K.
08:30 - Continuing Claims (Weekly): Last 1.884M.
08:30 - GDP Growth Rate (Q3-F): Flashed 4.3% q/q, SAAR.
10:00 - Personal Income (Oct): Expecting 0.3% m/m, Last 0.4% m/m.
10:00 - Personal Income (Nov): Last?
10:00 - Consumer Spending (Oct): Expecting 0.1% m/m, Last 0.3% m/m.
10:00 - Consumer Spending (Nov): Last?
10:00 - PCE Price Index (Oct): Expecting 2.7% y/y, Last 2.8% y/y.
10:00 - PCE Price Index (Nov): Last?
10:00 - Core PCE Price Index (Oct): Expecting 2.8% y/y, Last 2.8% y/y.
10:00 - Core PCE Price Index (Nov): Last?
10:30 - Natural Gas Inventories (Weekly): Last -71B cf.
11:00 - Kansas City Fed Manufacturing Index (Jan): Expecting 5, Last -3.
12:00 p.m. - Oil Inventories (Weekly): Last +3.391M.
12:00 - Gasoline Stocks (Weekly): Last +8.977M.
The Fed
(All Times Eastern)
Fed Blackout Period.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: (ABT) (1.50), (FCX) (.32), (GE) (1.43), (MKC) (.88), (PG) (1.86)
After the Close: (COF) (4.13), (CSX) (.41), (INTC) (.08)
At the time of publication, Guilfoyle was long INTC equity.
