🔬Microsoft vs. Apple for World's Biggest, Bitcoin ETFs Are Here, and Much More

"Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years"
- Warren Buffett

"Monopoly is the condition of every successful business"
- Peter Thiel

• The big US markets had another strong up-day, with the S&P 500 +0.57% and Nasdaq +0.75%.

• 7 of 11 sectors closed in the green with techy Communication Services (+1.2%) and proper Tech (+1.0%) pulling the index higher.

• Energy (-1.0%) was the worst performing sector again, following continued weakness in crude oil prices. The big story today was a surprise increase in oil inventories (more below).

• The SEC announced their approval for Bitcoin ETFs which should start trading today.

• HP confirmed its plans to buy Juniper in $14 billion deal.

Street Stories

Battle for Biggest: Apple vs. Microsoft

After a weak start to the year for Apple, Microsoft is in striking distance of being the largest company in the world. Trading +1.9% on Wednesday compared to Apple’s measy +0.5%, Microsoft is now less than 2% away from taking Apple’s crown. The two companies - with market caps of $2.90 and $2.84 trillion respectively - are more than a trillion dollars larger than their next closest US peer, Alphabet; and along with Saudi oil giant, Aramco, the trio are the only three companies in the +$2 trillion club.

Amazon’s Bloodbath

Amazon is laying off hundreds of employees in its Prime Video and studios division, including the recently acquired MGM unit, as part of a broader cost-cutting initiative. The layoffs are a part of Amazon's larger strategy to focus on content and product initiatives with the highest impact. The move follows the culling at their Twitch gaming division that was announced on Tuesday that amounted to 35% of staff, as well as recent cuts at Alexa. The move builds on the deep 2022/2023 cuts that totalled more than 27,000 people.

This trend of reducing workforce in the streaming sector is not unique to Amazon, with other major players like Walt Disney Co., Paramount Global, and Warner Bros. Discovery Inc. also scaling back amid a predicted decline in the number of scripted shows. (Bloomberg has more on this)

Wall Street Meets the Wild West: Bitcoin ETFs Get the Green Light

The much speculated Bitcoin ETF approval is finally here, as the U.S. Securities and Exchange Commission (SEC) has approved the public sale of the first U.S. exchange-traded funds (ETFs) holding bitcoin, enabling mainstream investors to lose money trade bitcoin as easily as stocks and mutual funds.

And for those of you suspicious, this is the real deal. In case you didn’t hear about it, the SEC account on X got hacked on Tuesday and a fake Tweet purported to announce the Bitcoin approval, which led to some wonkiness in cryoptoland.

This decision, which marks a significant shift in the availability of digital assets to everyday investors, has led to an increase in Bitcoin's price and mixed reactions in other crypto assets. SEC Chair Gary Gensler cited a recent court ruling in favor of crypto asset manager Grayscale as a key factor in this landmark decision, despite past concerns about market manipulation. The new ETFs are expected to start trading as early as today. Yee-haw!

For non-crypto folk: Brrr is the meme sound a money printer makes and HODL stands for ‘hold on for dear life’ (ie: not sell) but probably just started as a typo.

Crude Comedy: Stockpile Surprise Sends Prices Sliding

Oil prices declined sharply following an unexpected increase in U.S. crude stockpiles, signaling concerns about demand in the world's largest oil market. Crude inventories rose by 1.3 million barrels in the week ended January 5th compared to analyst expectations for a decline of around 700k barrels. The rise in U.S. crude inventories, alongside significant increases in gasoline and distillate stocks, defied analysts' expectations for a decline, reflecting investor worries about slowing demand growth.

‘Peak Fed’ Narrative Gets More Support

New York Fed President Williams, a voting member*, believes that current interest rates are sufficiently restrictive to reduce inflation to the 2% target, but emphasizes the need to maintain this stance until the Fed is confident that inflation is consistently moving towards this goal.

* The Federal Open Markets Committee (FOMC) is the group within the Federal Reserve that does the voting on monetary policy. Not all eleven of the regional Feds are voting members; only four at a time, which alternate for one year terms. The rest of the FOMC consist of the seven Board of Governors plus the head of the NY Fed who always gets a spot.

Joke Of The Day

It was so cold today I saw a stockbroker with his hands in his own pockets.

Hot Headlines

Yahoo Finance | Wells Fargo Investment Institute bets on rate cuts and increases 2024 S&P 500 target. Target S&P range of 4,800 to 5,000 (+0.3% to +4.5%), against the 4,600 to 4,800 range forecast earlier.

The Messenger | Starbucks accused of buying coffee beans from farms that use child labor. Which, I might add, is bad.

Barron’s | Short primer on everything you need to know about the new Bitcoin ETFs. Price ⬆️ = 🙏💵. Got it.

Bloomberg | Obesity drugs driving M&A optimism at JPMorgan healthcare conference. Industry players see deal flow potentially return to pre-Pandemic boom.

NPR | Walmart announces expansion of drone delivery pilot project to 1.8 million homes. Launch to take place in the Dallas-Fort Worth metropolitan area. Walmart currently has completed 20k drone deliveries in pilot project. Haven’t heard of anyone getting cluster bombed with eggs so I assume it’s been going ok.

Trivia

This week’s trivia is on famous financial dynasties. Today’s is on the Agnelli family - the founders of automaker Fiat and "the Kennedys of Italy".

1. In what year was Fiat founded?
   A) 1899
   B) 1905
   C) 1910
   D) 1922

2. Which car model is often associated with the rise of Fiat under the Agnelli family?
   A) Fiat 500
   B) Fiat Panda
   C) Fiat Punto
   D) Fiat Uno

3. Approximately how much is the Agnelli family's net worth as of 2023?
   A) $5 billion
   B) $10 billion
   C) $13 billion
   D) $15 billion

4. The Agnelli family has a significant stake in which famous Italian football club?
   A) AC Milan
   B) Inter Milan
   C) AS Roma
   D) Juventus

(answers at bottom)

Market Movers

Winners!

• EchoStar (SATS) [+31.5%] Announced completion of strategic transactions post-merger with DISH Network for increased flexibility, including transferring wireless spectrum licenses to a subsidiary.

• GoodRx Holdings (GDRX) [+13.3%] Updated Q4 revenue guidance to $195-197m, up from $188-$194m, expressing confidence in Q1 and full year 2024 mid-single digit percentage revenue growth.

• Intuitive Surgical (ISRG) [+10.3%] Preliminary Q4 revenue above consensus, driven by robust da Vinci (its surgery robot) procedure volumes and higher pricing, with analysts suggesting conservative FY24 growth guidance and management hints at a new multi-port robot.

Losers!

• IRobot (IRBT) [-19.8%] was impacted by a Politico report suggesting Amazon didn't offer concessions to the European Commission for its merger, with today being the deadline for proposing remedies (ie: deal probably not going through).

• Aehr Test Systems (AEHR) [-16.8%] reported better Fiscal Q2 revenue and EPS but lowered FY revenue guidance by 20% at midpoint, citing a slowdown in the EV market and delayed customer orders for silicon carbide devices.

• Chewy, Inc. (CHWY) [-5.7%] is conducting a sale of approximately 12.3M shares through Morgan Stanley, with the shares re-offered in the range of $20.45-$20.85.

Market Update

Trivia Answers

1. A) Fiat was founded in 1899 - four years before Ford.

2. A) Fiat 500 is most associated with Fiat under the Agnelli.

3. D) The family is reportedly worth $15 billion.

4. D) The football team they have a controlling stake is is Turin’s Juventus.

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