📈 TikTok's Potential $50B Fire Sale

Good morning.

⚡ The Fast Five → Big bank profits soar, Beacon Roofing rejects $11B acquisition, Goldman eyes early Apple Card exit, Biogen offer for Sage gets mixed reactions, U.S. TikTok potential sale could unlock tremendous value

🔎 Market Trends → Wall St surges as inflation data, bank earnings fuel rally; US Futures Hold Steady After Strong Market Rally

And now…

⏱️ Your 5-minute briefing for Thursday, January 15, 2025:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Markets Soar as Inflation Cools and Banks Deliver

The Nasdaq surged 2.5% to 19,511.2, the S&P 500 climbed 1.8% to 5,949.9, and the Dow rose 1.7% to 43,221.6. Consumer discretionary led all sectors, while consumer staples lagged.

The Big Picture:

Markets rallied Wednesday after core inflation data came in below expectations, signaling progress in the fight against rising prices. This, combined with strong bank earnings, lifted investor sentiment. Treasury yields tumbled, with the 10-year yield dropping to 4.66%, as traders recalibrated expectations for a cautious Federal Reserve.

While inflation remains above target, the deceleration offers the Fed room to maintain its current policy stance without tightening prematurely. Meanwhile, robust financial sector earnings underscore the resilience of the banking industry, bolstering optimism for the broader economy.

Oil soared 3.7% to $80.39/barrel on a larger-than-expected crude stock draw, signaling robust demand. Gold rose 1.4% to $2,719.50/oz, while silver jumped 4%, reflecting increased investor demand for safe-haven assets.

Market Movers:

• Goldman Sachs (GS): Jumped +6%, leading the Dow, after delivering better-than-expected Q4 earnings, supported by strength in investment banking.

• Citigroup (C): Rose +6.5%, one of the S&P 500's top performers, on strong trading revenue and improved credit metrics.

• Wells Fargo (WFC): Gained +6.7% despite a decline in net interest income, as EPS topped estimates, signaling operational resilience.

• Lululemon (LULU): Fell -3.1%, the Nasdaq's biggest laggard, amid concerns over inventory buildup and margin pressures.

What They’re Saying:

"Cooling core inflation offers a glimmer of hope for investors, but the Fed is unlikely to rush into further easing until it has greater clarity on the broader economic impact of tariffs and wage pressures," BMO Capital Markets noted.

WHAT WE’RE WATCHING
Events

• Today: Census Bureau - Retail Sales Ex Autos - 8:30am

• Why You Should Care: It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

• Today: Census Bureau - Advance Retail Sales - 8:30am

• Why You Should Care: It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

• Today: Department of Labor - Jobless Claims - 8:30am

• Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

• Today: UnitedHealth Group, Bank of America, Morgan Stanley, PNC Bank, U.S. Bancorp, J.B. Hunt

• Tomorrow: Truist Bank, Huntington Bank, Regions Bank, Citizens Bank, SLB, Fastenal, State Street

MARKET BRIEF
Leading News

TikTok's Potential $50B Fire Sale: The Ultimate Gen Z Value Play?

Why it matters:

As regulatory pressure mounts, ByteDance might be forced to divest TikTok's U.S. operations – creating what could be the most intriguing social media arbitrage opportunity since Meta's 2018 privacy crisis.

Zoom Out:

The digital attention economy is facing a watershed moment. TikTok's 115M U.S. monthly users represent a goldmine of Gen Z engagement that rivals Instagram's reach (META) and dwarfs traditional social platforms like Pinterest (PINS) and Reddit.

The current valuation estimates of $40B-$50B – down from $60B in March – reflect both geopolitical headwinds and a broader reset in tech multiples. But here's the fascinating part: these numbers don't include TikTok's secret sauce – its recommendation algorithm.

Key Insights:

• The engagement paradox: TikTok's user metrics are actually strengthening amid the regulatory drama, with higher retention than Snapchat (SNAP) and Pinterest. This suggests remarkable platform stickiness despite uncertainty.

• The Musk factor: While Elon's potential involvement has grabbed headlines, veteran tech investors might recall similar regulatory concerns didn't prevent Microsoft's strategic LinkedIn acquisition. The key difference? Data sovereignty.

• Hidden value catalyst: A forced sale could unlock shareholder value for eventual acquirers by forcing a clean split from Chinese ownership – potentially opening doors for deeper U.S. monetization.

Market Pulse:

"The idea that we're seeing a $20B-$30B discount due to regulatory pressure suggests a classic market overreaction" - Angelo Zino, CFRA Research

Bull’s Take:

For long-term investors, the potential TikTok spinoff represents a rare opportunity to gain exposure to Generation Z's preferred media platform at a significant regulatory discount. While short-term volatility is inevitable, the platform's growing advertiser appeal and engagement metrics suggest the core business value remains fundamentally sound.

Headlines

• Biogen’s ‘cold and calculated’ offer to buy Sage receives a mixed reaction on Wall Street (link)

• Warner Bros Discovery adds SoFi CEO, outgoing IAC chief executive to board (link)

• Big bank profits soar on wave of surging corporate optimism (link)

• Activist short-seller behind Hindenburg Research will disband firm (link)

• Beacon Roofing Supply Rejects QXO's $11B Acquisition Offer (link)

• Goldman Sachs Eyes Early Apple Card Exit -- What It Means for Investors and Apple's Ecosystem (link)

CRYPTO
Fear & Greed

Headlines

• Bitcoin briefly touches the $100,000 mark, as cooling US inflation stokes wider market exuberance (link)

• XRP Hits 7-Year High Above $3 as Large Holders Accumulate $3.8B of Tokens (link)

• Eight U.S. Blockchain Lobby Groups Unite Ahead of Trump's Crypto Friendly Regime (link)

DAILY SHARE
On the Socials