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- 📈 Nissan & Honda Rev Up Merger Talk
📈 Nissan & Honda Rev Up Merger Talk
Nvidia stock slides, Retail sales rise, Salesforce to hire 2,000 for AI sales, Mastercard buying back $12B shares, Nissan surges 22% on merger hype
Evelio Silvera
December 18, 2024
Good morning.
⚡ The Fast Five → Nvidia stock slides, Retail sales rise, Salesforce to hire 2,000 for AI sales, Mastercard buying back $12B shares, Nissan surges 22% on merger hype
🔎 Market Trends → Stocks fall, Dow drops for 9th straight session with Fed decision due; US Futures Wobble Ahead of Fed Decision
And now…
⏱️ Your 5-minute briefing for Wednesday, December 18, 2024:
MARKET BRIEF
Before the Open
As of market close 12/17/2024.
Pre-Market
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Fear & Greed
Markets in Review
Dow Slips for 9th Day as Markets Brace for Fed Guidance
The Dow dropped 0.6% to 43,449.9, marking its ninth straight loss, while the S&P 500 declined 0.4% to 6,050.6. The Nasdaq slipped 0.3% to 20,109.1, retreating slightly from Monday’s record close.
The Big Picture:
Markets wavered Tuesday as the Federal Reserve kicked off its two-day meeting, with investors anticipating a 25-basis-point rate cut. Traders are looking to Fed Chair Jerome Powell for guidance on the pace of easing in 2025, as inflation pressures linger and economic data offers mixed signals.
On the economic front, US retail sales came in stronger than expected, driven by automotive spending, a bright spot amid weaker industrial production data. Homebuilder confidence held steady but remains constrained by elevated prices and mortgage rates.
Oil slipped 0.8% to $70.16/barrel as China’s demand outlook cast a shadow. Gold fell 0.3% to $2,661.30/oz, while silver dipped 0.2% to $31/oz, reflecting a cautious risk-off sentiment.
Market Movers:
Amentum (AMTM): Dropped -9.6%, among the S&P 500’s worst performers, after reporting a decline in Q4 revenue and non-GAAP earnings, fueling concerns about its growth trajectory.
Pfizer (PFE): Rose +4.7%, leading the S&P 500, after projecting higher 2025 earnings alongside disciplined cost-cutting initiatives, signaling a turnaround for the pharma giant.
Teva (TEVA): Surged +27%, as its ulcerative colitis drug met key study endpoints, boosting investor confidence. Partner Sanofi (SAN) climbed +6.7% on the news.
What They’re Saying:
"The Fed remains caught between cooling inflation and resilient spending. Powell’s tone will determine how far markets lean into their bullish outlook for 2025," said Macquarie in a note to clients.
WHAT WE’RE WATCHING
Events
Today: Federal Reserve - Fed Funds Rate - 2:00pm
Why You Should Care: Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.
Today: Federal Reserve - Summary of Economic Projections (SEP) - 2:00pm
Why You Should Care: It's the primary tool the Fed uses to communicate their economic and monetary projections to investors.
Today: Federal Reserve - Monetary Policy Statement - 2:00pm
Why You Should Care: It's the primary tool the FOMC uses to communicate with investors about monetary policy. It contains the outcome of their vote on interest rates and other policy measures, along with commentary about the economic conditions that influenced their votes. Most importantly, it discusses the economic outlook and offers clues on the outcome of future votes.
Today: Federal Reserve - Chair's Press Briefing - 2:00pm
Why You Should Care: It's among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, along with commentary about economic conditions such as the future growth outlook and inflation. Most importantly, it provides clues regarding future monetary policy.
Earnings Reports
Today: Birkenstock, General Mills, Micron Technology
Tomorrow: Accenture, Nike, FedEx, BlackBerry, Cintas, Scholastic
MARKET BRIEF
Leading News
Nissan-Honda Merger Rumors Fuel Market Surge
Why it matters:
A Nissan-Honda tie-up could create an automotive powerhouse, reshaping the electric vehicle (EV) landscape and reviving Nissan’s fortunes. The potential merger aligns with growing industry consolidation as companies race to dominate the EV market.
Zoom Out:
Nissan shares skyrocketed 22% on reports that the automaker is in talks to merge with Honda (HMC). The deal could position the combined entity as a serious rival to industry leaders like Toyota (TM) and Volkswagen.
The Nikkei reported that Nissan and Honda are considering forming a holding company, potentially bringing Mitsubishi Motors (MSBHY), in which Nissan owns a 24% stake, under the same umbrella. The merger would create a combined entity selling over 8 million vehicles annually, trailing only Toyota’s 11.2 million in 2023.
Nissan’s struggles with declining market share and a fractured partnership with Renault have fueled the urgency for this deal. Meanwhile, Honda gains access to Nissan’s global manufacturing footprint and EV expertise, addressing mounting competition in the sector.
Key Insights:
Strategic Evolution: Nissan and Honda’s earlier partnership on EV components laid the groundwork for this potential merger, highlighting the growing importance of shared R&D to stay competitive.
Industry Context: The proposed deal would be the largest since Fiat Chrysler’s merger with PSA Groupe to form Stellantis (STLA) in 2021, underscoring the consolidation trend in automotive.
Mitsubishi’s Role: Incorporating Mitsubishi could bring synergies in Asia-Pacific markets, where it has a strong foothold, amplifying the new entity’s global reach.
Market Pulse:
Nissan needs a revitalization after losing its leadership position in key segments, says Joe McCabe, CEO of AutoForecast Solutions.
Bull’s Take:
If the merger materializes, expect a leaner, meaner competitor capable of challenging Toyota and Volkswagen in EVs and autonomous driving. Investors should watch for announcements confirming the deal—it could turbocharge growth in an increasingly tech-driven auto market.
Keep an eye on Nissan (NSANY) and Honda (HMC) for further developments. A confirmed merger could unlock value for both stocks as they combine forces to electrify the future.
Headlines
Tesla’s stock surge means even the biggest bulls are showing some restraint (link)
Nvidia stock slides amid AI spending slowdown fears, increased competition (link)
Retail sales rose at healthy pace last month in latest sign of US economy’s health (link)
Salesforce will hire 2,000 people to sell AI products, CEO Marc Benioff says (link)
Mastercard to buy back up to $12 billion shares (link)
Pfizer Stock Jumps On Mixed, But 'Marginally Encouraging,' 2025 Outlook (link)
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*Hat-tip to Wall Street Memes