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Market Headlines 👀 

• Bitcoin (BTC) rises back over the $100k mark, closing over $102k.

• Nvidia (NVDA) stock climbed above the $150 level as CEO Jensen Huang was speaking at the annual CES tech event in Vegas today.

• Tesla (TSLA) sales in China rose 8.8% YoY and hit 657k vehicles for 2024.

• Fubo (FUBO) stock surged after the company announces deal to combine with Disney’s Hulu+ live tv.

• Microsoft (MSFT) expects to spend $80b in AI related data centers for 2025.

• Meta Platforms (META) announces UFC CEO Dana White will be joining its board.

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S&P 500 Heatmap 🔥 

Recap Around the Street 🧠

2018: “You’re almost there with much at stake; now the ground begins to shake.”

A return to the volatile and uncertain conditions that prevailed in 2018 might, of the four, mostly closely resemble what we get in 2025. Trade-related uncertainty, in particular, could lead to volatility across markets if and when new policies are announced.

There are key differences, of course. While 2018 came on the heels of a major fiscal expansion and during a period of monetary tightening, this year arrives as short-term interest rates have begun to fall, and Congress and the new administration must pass a bill to avoid massive fiscal tightening by the end of the year. The narrow Republican majority in the House may be a source of periodic policy uncertainty.

Valuations are also higher today than they were heading into 2018 (12-month forward price-to-earnings ratio of 21.8 vs. 18.3), but interest rates are, as well. The “almost” bear market (a 19.8% S&P 500 correction) that eventually arrived in Q4 came with a swoon in interest rates that helped diversified portfolios amid policy and economic uncertainty. When policy uncertainty is high and growth is under threat, the correlation between stocks and bonds tends to move strongly negative. (Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Can valuations reach a “new paradigm” or are they going to hit a ceiling in 2025? “New paradigms” in valuations are usually dangerous narratives, as they emerge at times of valuation excess to justify the irrational pricing of the moment. Though there are arguments as to why valuations of today’s stocks should average higher versus prior periods, including higher cash generation, higher return on invested capital, and a larger weighting to quality, stable businesses. The path of this chart in 2025 (do we break above the 2020 highs or do we revert lower from this peak?) will be critical for the path of returns this year and the sustainability of the rally. (Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Market Preview 🎞️ 

• Tuesday, January 7th: Trade balance; JOLTS job openings

• Wednesday, January 8th: MBA mortgage applications; ADP employment change; Consumer credit

• Thursday, January 9th: Weekly jobless claims; Wholesale inventories

• Friday, January 10th: Non-farm payrolls and unemployment change; University of Michigan consumer sentiment

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That’s all for today, folks! We’ll be back around the same time Thursday with a curated list of important news, economic data and market highlights. 

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