TikTok 2.0, JP Morgan Sued, Amazon to Can 14,000
Let's look at the new TikTok setup, Trump's suit against JPM, how Amazon plans to layoff another 14,000 workers, and chart the S&P 500.
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The Wall Street Journal among other news outlets reported on Thursday evening that controversial short-form social media platform TikTok had established a joint venture that would permit the service to continue operations within the U.S. The structure of this joint venture complies with both an executive order signed by Pres. Donald Trump this past September and a 2024 law passed during the Biden administration.
Under the terms of this deal, the exceedingly popular service will be operated by an entity seen as friendly to the US. Oracle (ORCL) will oversee all data management and algorithm training pertaining to American users. Oracle founder and CTO Larry Ellison is known to be a Trump ally. TikTok, which is owned and operated by Chinese parent ByteDance, had faced a ban inside the U.S. as early as this week without some kind of arrangement.
TikTok has announced that the joint venture will operate as an "independent entity." TikTok CEO Shou Chew is quoted in the Journal as saying, "The majority American owned joint venture will operate under defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for US users." Adam Presser, who is currently number two at TikTok under Chew will lead the joint venture after having gained approval form both the U.S. and Chinese governments.
Under this agreement, ByteDance will retain slightly less than a 20% interest in the U.S. operation, while Oracle, private equity firm Silver Lake and Abu Dhabi-based MGX will each own a 15% interest. Other notable investors include Revolution, which is JD Vance's old firm and the family office of Michael Dell, founder of Dell Technology (DELL) .
JP Morgan Sued
News broke on Thursday afternoon that Pres. Trump had sued JP Morgan Chase (JPM) and the bank's CEO, Jamie Dimon for at least $5 billion based on allegations that the bank had stopped offering the president and his businesses banking services for political reasons. The story is now everywhere. I read it first at the Financial Times.
The suit accuses JP Morgan Chase of libel and breach of implied covenant of good faith. The suit also claims that Dimon violated Florida's trade practices law. Pres. Trump has singled out JPM repeatedly in his attempt to put an end to what he sees as debanking or refusing to provide financial services for ideological reasons.
JP Morgan responded by stating that the firm does not close accounts for political or religious purposes. That said, JP Morgan Chase did close accounts for the then former president and his businesses roughly seven weeks after the riots outside and inside the U.S. Capitol by mostly Trump supporters on Jan. 6, 2021. At the time that the accounts were closed, Trump was no longer president, and his political standing was at its nadir.
In Other News...
- Amazon (AMZN) is reportedly set to announce another round of job cuts as soon as next week. According to MarketWatch, starting this coming Tuesday a rough 14,000 positions could be eliminated. This comes after 14,000 job cuts were already made by the company this past autumn
- Shares of Intel (INTC) are trading more than 13% lower overnight after earnings. Investors were warned in this column 24-hours ago that INTC had traded at our target price coming into the Thursday session and that reducing share count ahead of the release would be good discipline.
- Tesla's (TSLA) Elon Musk has reportedly lined up four investment banks for lead roles in what would be a "blockbuster" IPO for his space rocket and technology company SpaceX. Banks included are Bank of America (BAC) , JP Morgan Chase, Goldman Sachs (GS) and Morgan Stanley (MS) . The possible IPO could happen as soon as later this year after the still private company had been valued at $800 billion as recently as this past December.
Marketplace
Treasury debt securities more or less waffled as U.S. equities ran higher for a second consecutive session on Thursday, still basking in the glow of supposed "framework" for a Greenland deal that the U.S., Denmark and NATO had come to that allowed Pres. Trump to withdraw his proposed increased tariffs on many imports from the E.U. and the U.K.
Though still quite positive, the winning streak for small caps vs. the major equity indexes finally came to an end on Thursday. While the Russell 2000 did gain 0.76% for the session, the S&P 600 added just 0.26% and the S&P Mid-cap 400 added just 0.08%. By comparison, the Nasdaq Composite gained 0.91%, the Nasdaq 100 gained 0.76% and the S&P 500 tacked on 0.55% on Thursday.
Breadth
Growth returned to a leadership position across U.S. equity markets for the first time in a couple of weeks. Seven of the 11 S&P sector SPDR exchange-traded funds closed out the Thursday session in the green with Communication Services (XLC) , the Discretionaries (XLY) and Technology (XLK) at the top of the daily performance tables. Defensive-type sectors occupied the two bottom rungs and four of the bottom five on that ladder.
Winners beat losers by a rough five-to-three margin at the NYSE and by about nine to four at the Nasdaq. Advancing volume took a 68.1% share of composite NYSE-listed trade and a 65.8% share of Nasdaq-listed activity for the regular session. Party on? Not so fast. Aggregate trade tailed off a bit. On a day-over-day basis, trading volume contracted by 9.4% for NYSE-listed securities and by 1.4% for names domiciled at the Nasdaq. Activity faded across the membership of the S&P 500 as well.
Positivity?
While I would not be at all surprised to see some profit-taking this morning across our marketplace after the past two days, there was some technical improvement made to the condition of this chart.
Readers will see that the S&P 500 not only held the retaking of its 50-day simple moving average, but pierced the 21-day exponential moving average to the upside as well. This came very close to completely erasing Tuesday's selloff.
In addition, relative strength is back in neutral to slightly better than neutral territory and the daily moving average convergence divergence, while not bullish in posture, has experienced an upward curl for its 12-day exponential moving average. That would be the first step toward a bullish crossover and could, if consummated, drag the histogram of the 9-day exponential moving average back above the zero-bound.
Economics
(All Times Eastern)
09:45 - S&P Global Manufacturing PMI (Jan-Flash): Expecting 52.1, Last 51.8.
09:45 - S&P Global Services PMI (Jan-Flash): Expecting 52.8, Last 52.5.
10:00 - U of M Consumer Sentiment (Jan-F): Flashed 54.0.
10:00 - U of M One-Year Inflation Expectations (Jan-F): Flashed 4.2%.
10:00 - U of M Five-Year Inflation Expectations (Jan-F): Flashed 3.4%.
1:00 p.m. - Baker Hughes Total Rig Count (Weekly): Last 543.
1:00 - Baker Hughes Oil Rig Count (Weekly): Last 410.
The Fed
(All Times Eastern)
Fed Blackout Period.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: (BAH) (1.77), (CMA) (1.25), (ERIC) (1.63), (SLB) (.74)
At the time of publication, Guilfoyle is long JPM, AMZN, INTC equity.
