Breakfast News: Red, White, And Blue Chips
January 15, 2025
| S&P 500 5,843 (+0.11%) |
|
| Nasdaq 19,044 (-0.23%) |
|
| Dow 42,518 (+0.52%) |
|
| Bitcoin $96,336 (+2.23%) |
|
Source: Image created by JesterAI.
1. Increased Scrutiny on Chip Customers
Further regulations are planned to restrict chip supplies to Chinese customers from Taiwan Semiconductor (TSM 2.13%), Intel (INTC 1.17%), and other producers, reports Bloomberg. It comes after some of TSMC’s chips were secretly diverted to Huawei, currently on the U.S. government blacklist.
- The smaller the nanometer count, the more sophisticated the chip is: All semiconductor chips with a threshold of 14 or 16 nanometers and below would require a government license to sell in China.
- “We continue to observe extremely robust AI-related demand”: Taiwan Semi management reported a strong third quarter in October, with a Q4 update due Thursday. Earnings have beaten expectations for the past four quarters.
2. Core CPI in the Spotlight
The December Consumer Price Index (CPI) print takes center stage Wednesday, as analysts expect it to hit 2.9% year over year. The core CPI figure, which excludes more volatile costs like food and fuel, is expected to remain stubbornly higher at 3.3% year over year, lifted by higher housing, medical care, and other service costs.
- "These categories should moderate in December": Bank of America (BAC 3.09%) economists are cautiously optimistic, after Tuesday’s Producer Price Index (PPI) update showed a slower-than-expected monthly rise of just 0.2% compared to a forecast 0.4%.
- “While we continue to advocate for long-term equity investing…”: “...There is a case to be made that bonds are actually fairly attractive relative to stocks at this point in the market cycle,” says TMF’s Financial Planning team lead Amanda Kish, CFA.
3. Quantum Stocks Push Back
Quantum computing stocks rebounded yesterday, as B. Riley Securities raised its price targets on Rigetti Computing (RGTI 17.24%) and D-Wave Quantum (QBTS 20.12%). Analyst Craig Ellis believes “materially underappreciated” quantum advances boost confidence in the scalable technology’s ability to outstrip current processors.
- Doubling price targets: The broker raised its price target on Rigetti from $4 to $8.50, and on D-Wave from $4.50 to $9. Rigetti jumped 48% in response on Tuesday, with D-Wave up 23%. Both are still well down from before Nvidia (NVDA 2.57%) CEO Jensen Huang’s claims that useful quantum computing is still decades away.
- “Still quite a ways off from being a very useful paradigm”: Meta (META 3.55%) CEO Mark Zuckerberg added his bearish thoughts this week, though he did admit he’s “not really an expert on quantum computing.”
4. Next Up: Leading out the Banks
JPMorgan (JPM 1.38%) kicks off the bank reporting season before the market bell, as the stock has climbed 47% in the past 12 months on the back of four quarters of earnings beats. Analysts expect fourth quarter earnings to dip a little from Q3.
- What to expect: Net interest income remains a key measure, and the bank is expecting about $91.5 billion for the full year. Though Q3 debit and credit card sales rose 6% year over year, there could be some credit write-offs on the cards.
- "The interest rate environment is going to prove to be the biggest wild card": Scott Siefers at Piper Sandler sees the outlook for banks as “pretty good,” with analysts generally bullish as the incoming administration is expected to relax banking regulations.
5. Foolish Fun
If you were JPMorgan CEO Jamie Dimon and you could eliminate one competitor, who do you pick and why? Become a member to hear what your fellow Fools are saying.
