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- 📈 Meta's Performance Purge
📈 Meta's Performance Purge
Quantum computing stocks soar, SEC sues Elon Musk, Macquarie to invest $5B in AI data center business, United Rentals makes $4.8B deal for H&E, Meta announces 5% cuts
Evelio Silvera
January 15, 2025
Today’s Bull Street Market Briefing is Sponsored by:
Good morning.
⚡ The Fast Five → Quantum computing stocks soar, SEC sues Elon Musk, Macquarie to invest $5B in AI data center business, United Rentals makes $4.8B deal for H&E, Meta announces 5% cuts
🔎 Market Trends → S&P 500 edges higher, Nasdaq dips in choppy session as inflation data eyed; US Futures Edge Higher Ahead of CPI Report
And now…
⏱️ Your 5-minute briefing for Wednesday, January 15, 2025:
MARKET BRIEF
Before the Open
As of market close 01/14/2025.
Pre-Market
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Fear & Greed
Markets in Review
Markets Edge Higher on Producer Price Relief and Deal-Making
The Dow climbed 0.5% to 42,518.3, the S&P 500 added 0.1% to 5,842.9, while the Nasdaq slipped 0.2% to 19,044.4. Utilities and financials led sector gains, while health care and communication services lagged.
The Big Picture:
Stocks ended mostly higher as producer prices offered a glimmer of relief, decelerating more than expected in December. Lower wholesale costs give the Fed breathing room to navigate its policy decisions, even as inflation remains a focal point ahead of Wednesday’s consumer price report.
Meanwhile, small business confidence soared to its highest since 2018, signaling optimism around pro-business policies anticipated under the new administration. The bond market reflected easing pressures, with the two-year yield slipping to 4.37% and the 10-year yield at 4.79%.
Oil dropped 1.3% to $77.80/barrel, while gold and silver rose 0.5% and 0.8%, respectively, benefiting from steady demand for inflation hedges.
Market Movers:
United Rentals (URI): Jumped +5.9%, leading the S&P 500, after announcing a $4.8 billion acquisition of H&E Equipment Services (HEES), which surged +106%, expanding its US capacity.
Celanese (CE): Rose +5.4%, the second-best S&P 500 performer, boosted by a BofA Securities upgrade to buy, citing favorable valuation and growth potential.
Eli Lilly (LLY): Dropped -6.6%, the worst on the S&P 500, after trimming revenue guidance due to slower-than-expected growth in its US incretin division.
What They’re Saying:
"A more benign producer price report provides welcome flexibility for the Fed, allowing policymakers to remain data-dependent as inflation risks evolve," Stifel noted in a client report.
WHAT WE’RE WATCHING
Events
Today: Bureau of Labor Statistics - CPI (Consumer Price Index) Ex Food and Energy m/m - 8:30am
Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Today: Bureau of Labor Statistics - Consumer Price Index (CPI) m/m - 8:30am
Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Today: Bureau of Labor Statistics - Consumer Price Index (CPI) y/y - 8:30am
Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Earnings Reports
Today: J.P. Morgan Chase, Wells Fargo, Citigroup, BlackRock, Schwab, Rio Tinto, Bank of New York Mellon
Tomorrow: UnitedHealth Group, Bank of America, Morgan Stanley, PNC Bank, U.S. Bancorp, J.B. Hunt
MARKET BRIEF
Leading News
Meta's "Performance Purge": Why Smart Money Is Actually Bullish on Zuck's Latest Move
Why it matters:
Meta's 5% workforce reduction signals not just cost discipline, but a cultural shift toward startup-style intensity at the $1T tech giant — exactly what value investors have been quietly hoping for.
Zoom Out:
While headlines might scream "layoffs," seasoned market watchers see something more intriguing: Meta is essentially running a corporate Darwinism experiment. By pruning its lowest-performing 5% (roughly 3,600 employees), Zuckerberg is taking a page from Jack Welch's legendary GE playbook — but with an AI-era twist.
The timing is particularly noteworthy. With Meta's stock up nearly 200% in 2023, this move suggests Zuckerberg isn't resting on his laurels. Instead, he's positioning for what he calls an "intense year" in 2025, likely centered around AI development and AR/VR moonshots.
Key Insights:
Margin magic: Previous layoffs in 2022-23 helped boost Meta's operating margins from 25% to 40%. This round could push profitability even higher, delighting value investors who've long griped about Big Tech's bloat.
AI acceleration: By trimming underperformers, Meta's freeing up capital for AI talent — much like how NVIDIA (NVDA) maintained its edge through strategic pruning during the chip wars.
Culture reset: The Feb 10 deadline creates urgency, suggesting Meta's embracing the "move fast" ethos that younger fintech upstarts have used to challenge incumbents.
Market Pulse:
"Meta's becoming what value investors always wanted: a tech company with old-school discipline," notes veteran tech analyst Dan Ives.
Bull’s Take:
Meta's strategic pruning, combined with its AI initiatives and dominant social media moat, suggests this isn't just another tech layoff — it's a transformation play. For long-term investors, that's typically when the real money is made. Remember: The best companies often make their boldest moves when things are going well, not when they're forced to.
Headlines
Quantum computing stocks soar after Nvidia and Meta CEOs tanked them (link)
SEC sues Elon Musk, saying he didn’t disclose Twitter ownership on time before buying it (link)
Macquarie invests up to $5 billion in Applied Digital's AI data center business (link)
United Rentals boosts equipment capacity with $4.8 billion H&E deal (link)
Intel to turn venture arm into separate firm with new name (link)
Pfizer to cut stake in Sensodyne-maker Haleon to 7.3%, says bookrunner (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to dougboneparth
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