Macrosynthesis
TLDR
- PPI Slows: Inflation moderates, but prices remain 26% above 2020.
- CPI Eases: Core inflation dips, encouraging Fed outlook.
- Trump Inauguration: Crypto, immigration policies take center stage.
- Trump Coin: Launch surges 300%, signaling blockchain economic focus.
- TikTok Drama: ByteDance merger talks; Kevin O’Leary offers $20B bid.
- Little Red Book Rises: U.S. bans TikTok, but Chinese app dominates downloads
- Credit card charge-offs hit 10YR high
Markets Rally, Breaking Weekly Losing Streak
U.S. markets rebounded sharply this week, ending a prolonged losing streak. The S&P 500 rose 2.9%, while the Nasdaq 100 surged 2.5%, and the Dow Jones gained 3.9% (334 points). Tech stocks, led by Tesla (+11%), Nvidia (+6%), and Microsoft (+3.4%), fueled the rally alongside strong performances in consumer discretionary stocks like Amazon. Optimism was driven by easing inflationary pressures from December’s PPI and CPI reports, coupled with robust earnings in the banking sector from Citi, Morgan Stanley, and Wells Fargo.
Signs of Slowing Inflation Amid Long-Term Price Increases
The December Producer Price Index (PPI) revealed a 2.9% year-over-year increase, below economists’ expectations of 3.5%, and a monthly rise of 0.2%, well under the anticipated 0.4%. Core CPI, which excludes food and energy, increased 3.2% annually and decreased from .3% in November to .2% in December, defying projections of a 0.3% gain. Energy fuel costs rose 4.4% and was by far the largest contributor to inflation for December due to rising oil and gas prices.
Producer prices have surged 26% since 2020—three times faster than the 8% increase seen in the five years preceding the pandemic. Certain components of the PPI have climbed even more dramatically. Prices in trade services and total manufacturing industries have jumped 32% over the past five years, while transportation and warehousing prices have risen 29% over the same period. But, things are beginning to calm down and the market celebrated in response.
Fed Outlook: Cautious Optimism
Despite the encouraging data, inflation remains above the Federal Reserve's 2% target. Analysts now expect the Fed to maintain rates at its upcoming meeting, with markets pricing in only a 3% chance of a rate cut in January. Longer-term projections show a higher likelihood of cuts starting mid-year. While the labor market’s strength and persistent inflationary pressures in certain sectors complicate the outlook, the moderation in PPI and CPI data supports a “wait-and-see” approach, giving policymakers more time to assess the broader economic trajectory.
Credit Card Charge-off Rate Hits 10-Year High
The charge-off rate on credit cards is the percentage of credit card debt that lenders deem uncollectible and write off from their books after borrowers fail to make payments for an extended period, typically 180 days (or six months). Once a debt is charged off, it doesn’t mean the borrower is no longer responsible for the debt; it may be sold to collections agencies or pursued through other recovery efforts.
This rate just reached 4.7 percent. Rates above 4.5% preceded recessions in 3 of the last 4 times since tracking began in the 1980s.
A rising charge-off rate suggests that more consumers are struggling to repay their debts, signaling potential economic stress or financial difficulties for households. High charge-off rates reduce lenders’ profitability as they directly represent losses. High charge-off rates can lead to stricter credit approval criteria, higher interest rates, or reduced credit limits, impacting consumers’ ability to access credit.
Inauguration Eve: Trump Prepares for Leadership Transition
With less than 24 hours before Donald Trump’s second inauguration, excitement and uncertainty loom over Washington. The high-profile event, drawing industry leaders such as Mark Zuckerberg, signals a pivotal moment for the U.S. economy and global markets. As Trump takes office, his administration’s immediate plans include sweeping changes to immigration policy and an unprecedented embrace of cryptocurrency initiatives.
Mass Deportations Set to Begin in Chicago
Trump has announced large-scale deportations beginning in Chicago on Tuesday, one day after his inauguration. The operation will deploy 100–200 ICE officers to target undocumented individuals in the city. This move aligns with Trump’s campaign promise to implement aggressive immigration policies, but it has sparked criticism and protests from advocacy groups, warning of economic and social disruptions.
Crypto Focus: Plans for a National Reserve
Trump unveiled a plan to create a national cryptocurrency reserve, positioning the U.S. as a global leader in digital assets. He also pledged to overhaul crypto regulations, replacing the contentious policies of outgoing SEC Chair Gary Gensler. This shift is expected to usher in a more crypto-friendly regulatory landscape, celebrated by industry leaders as a chance to spur innovation and market growth.
Recent meetings with Ripple CEO Brad Garlinghouse and Solana executives have amplified market optimism, with XRP soaring 500% and Solana rising 45% in a week. Trump emphasized the strategic importance of U.S.-based cryptocurrencies, suggesting they will play a central role in the reserve, akin to historical gold stockpiles. Analysts highlight the potential for this initiative to reshape the digital economy, cementing U.S. dominance in blockchain technology. Expectations of a Solana ETF are heavy.
Experts believe the revised regulatory approach will accelerate industry growth, reducing risks while fostering innovation. Trump’s hands-on engagement and focus on strengthening economic resilience mark a significant shift in financial policy, driving bullish market sentiment and sparking widespread investor interest.
Trump’s Crypto Coin Soars Over 300%
Adding to the crypto frenzy, Trump launched his own digital asset, dubbed "Trump Coin," which soared over 300% within its first trading day and is now the third largest meme coin by market cap behind Doge coin. Enthusiasts say this initiative aligns with his focus on leveraging blockchain technology to reduce national debt and strengthen U.S. economic dominance.
Coinbase stock rallied nearly 20% last week on the crypto-hype and in response to Bitcoin's 9% surge to $105,000 per coin. Robinhood stock (HOOD) which now trades in line with Bitcoin's price movements, also rose 23% last week.
Real Estate Stocks Plummet, Healthcare Shows Promise
Last week, the S&P 500 sectors showed strong gains across the board, with Financials (+6.1%), Energy (+6.1%), and Materials (+6.0%) leading the charge. Industrials (+4.8%) and Real Estate (+4.8%) also posted significant increases, while Utilities (+4.3%) and Consumer Discretionary (+4.0%) performed well. Modest gains were seen in Information Technology (+1.6%), Consumer Staples (+1.3%), Telecom (+1.3%), and Healthcare (+0.3%), reflecting broad sector-wide strength.
Homebuilder and regional bank stocks rallied over 8% last week on rate cut hopes, while retail, airline, and clean energy industries fell. Oil drillers and insurance stocks also rallied 5 percent.
Among commodities, oil prices pulled back a bit Friday after rising 11% over the past month. Natural gas followed suit, falling 7% after a 17% monthly run driven by colder weather. Gas flows to US LNG export facilities have hit a record daily high, further boosting demand.
Upcoming Stock Market Catalysts Next Week: A Wave of Policy Shifts About to Hit
Next week in the U.S., focus shifts to Trump’s inauguration and a packed earnings season, featuring Netflix, Charles Schwab, P&G, J&J, Abbott, and others. Key data includes S&P Global PMIs and existing home sales.
Trump is expected to sign dozens of executive orders in the first few days of his presidency to curb immigration, continue border fence construction, eliminate regulations on mining, crypto, and oil drilling, open up offshore drilling, strip protections from federal workers so they can be more easily fired, eliminate DEI initiatives in the federal government, increase tariffs on foreign goods from China, Mexico, Canada, and Europe through a new external revenues service, lift bans on the creation of new LNG terminals and nuclear plants, withdraw from climate change agreements, lower federal spending, place sanctions on Iran and its oil, restrict entry to the U.S. from muslim countries, force federal workers back to the officer, and begin mass deportations of millions of illegal immigrants.
Trump has also given reference to the need to force China to purchase $100B in agricultural goods from the U.S. as part of trade agreements made during his previous term which went unenforced by the Biden administration. Similarly, Trump has suggested mandating increased purchases of U.S. oil and gas by Europe in exchange for favored trading status.
The actions will have profound impacts on a barrage of industries, as we've been detailing in our Level 2 trades weekly.
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Natural Gas
-7% (1D Chg)
+17% (1M Chg)
Steel
+6.15% (1W Chg)
+2.56% (1M Chg)
Oat
+3.08% (1D Chg)
+9.7% (1W Chg)
Salmon
+7.22% (1D Chg)
+22.6% (1M Chg)
Company News
LevelFields AI Stock Alerts Last Week
DOYU shares soared 27.66% in a single day following the announcement of a special dividend of $9.94, signaling strong financial confidence. Similarly, MKTW surged 25.6% after declaring a special dividend of $0.03, further boosting investor sentiment. AKA climbed 16.84% on news of its new CEO appointment, a move expected to drive strategic growth and innovation. Meanwhile, OPCH gained 15.55% after unveiling a $500 million stock buyback plan, signaling a commitment to returning value to shareholders and strengthening market confidence.
Bank Earnings: Strong Results Across the Board
Major U.S. banks reported upbeat December-quarter earnings, kicking off the season with solid performances. JPMorgan Chase posted a strong quarter, with profits exceeding expectations and a 20.6% return on tangible equity—well above its medium-term target. CEO Jamie Dimon reiterated his plans to remain at the helm, adding confidence to the bank’s future.
Goldman Sachs also beat earnings forecasts, attributing gains to a boost in corporate confidence following the U.S. election. CEO David Solomon noted a “meaningful shift” in optimism among corporate leaders, driving increased deal activity. The bank’s shares rose over 2% on the news.
Citigroup swung to a profit, forecasting full-year 2025 revenue of $83.5–$84.5 billion, surpassing analyst estimates. The bank also announced an uptick in share buybacks, further energizing investors.
Capital inflows into bank bonds surged, reflecting market optimism. As earnings season progresses, investors are watching for further signs of economic momentum.
TikTok's Future Hangs in the Balance Amid Merger Proposal and Offers
Perplexity AI has submitted a merger proposal to ByteDance, aiming to combine its AI-driven capabilities with TikTok U.S. to create a new entity. The proposal would allow ByteDance investors to retain equity stakes while addressing national security concerns surrounding TikTok’s Chinese ownership. This follows the Supreme Court’s decision to uphold a law requiring ByteDance to divest from TikTok or face a U.S. ban.
Adding to the drama, investor Kevin O’Leary announced a $20 billion cash offer to acquire TikTok U.S. during a media appearance. O’Leary emphasized the urgency of resolving the situation before the incoming Trump administration enforces the law. The combined pressure of legal deadlines and high-stakes proposals underscores the complexity of TikTok’s position.
President-elect Donald Trump has signaled he will “most likely” grant a 90-day extension to ByteDance to negotiate a resolution, potentially averting a ban that could disrupt access for over 170 million U.S. users. TikTok CEO Shou Zi Chew expressed gratitude for Trump’s willingness to explore solutions, while ByteDance has yet to confirm plans for a sale or merger.
The Irony of Little Red Book’s Rise Amid TikTok’s U.S. Ban
As the U.S. moves to ban TikTok over concerns about Chinese influence, the irony is striking: the app surging in its place is Little Red Book, or Xiaohongshu—a Chinese platform referencing Mao Zedong's iconic text. With its name steeped in Chinese history, this TikTok alternative has quickly become the top download in the U.S., highlighting the paradox of banning one Chinese app only for another to rise in its place. Little Red Book’s meteoric rise underscores the complexity of regulating global tech while user behavior often defies policy intentions.
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