Sam Badawi
Pullback, Thats All You Got? | HE 25
1/23/2025, 3:08:28 PM
Economic Summary
- December headline CPI printed +0.4% month-over-month with motor vehicle insurance a large contributor, while used and new car prices declined; falling car and rental indicators (Redfin rents, owner’s equivalent rent) suggest core inflation may moderate over time.
- US 10-year yields pulled back from recent highs (discussion around ~4.63%), and historically when the 10-year retreats from the upper end of its recent range equities have resumed stronger rallies; a further decline in yields would likely boost equity multiples.
- The US dollar’s decline signals increased liquidity conditions; a weaker dollar reduces pressure on foreign central banks and can support risk assets if it persists.
- Political/fiscal uncertainty from new administration actions (trade deals, proposed AI spending, tariffs) injects fiscal ambiguity — reported Saudi investment talk (~$600B) and proposed domestic AI spending (~$500B) could materially affect economic expectations depending on public vs private funding.
Bullish
- AI narrative and cloud re-acceleration could drive mega-cap earnings beat and multiple expansion.
- Google/Alphabet has unmatched data assets, positioning it well for the AI race.
- Falling yields and a weaker dollar would support higher equity valuations and drive further market rallies.
- Strong earnings from platform leaders (Netflix, Amazon, Microsoft) may fuel broader market momentum.
Bearish
- Rising motor vehicle insurance and sticky components of CPI could keep inflation elevated and pressure rates.
- Higher 10-year yields historically slow the S&P 500’s rally when they sit at the upper end of their range.
- Speculative small-cap AI names (e.g., Tempest AI / TN) lack profitability and can crash after hype-driven pumps.
- Regulatory/antitrust risk and DOJ scrutiny could weigh on Alphabet/Google sentiment despite fundamentals.
Bullish tickers
GOOGLNVDASNOWAMZNMSFTNFLX
Bearish tickers
TNPANWAAPLGOOGL
GOOGL
Bullish
Dominant data footprint and multiple AI-adjacent businesses (Waymo, cloud) position it to benefit from the AI shift.
Bearish
Facing DOJ/antitrust scrutiny and political noise that could weigh on sentiment despite strong data assets.
NVDA
Bullish
Leader in accelerated computing and primary beneficiary of the AI hardware demand surge.
Bearish
High valuation and concentration of AI expectations could lead to volatility if AI demand softens.
SNOW
2 price targets
175110
Bullish
Recovered strongly from the lows and stands to benefit from renewed enterprise cloud/AI spending.
Bearish
Large prior drawdown and reliance on continued AI/cloud sentiment could make it vulnerable in a market pullback.
TN
Bullish
Short-term upside from momentum and headlines (Pelosi 13F) but remains a moonshot trade.
Bearish
Speculative AI healthcare name with recent poor fundamentals and inorganic growth from acquisitions.
AAPL
Bullish
Large mega-cap with strong ecosystem; historically able to rally sharply after periods of weakness.
Bearish
Can be vulnerable to cyclicality and may disappoint if consumer hardware slows despite past strong rallies.
PANW
Bullish
Cybersecurity demand and enterprise positioning support long-term secular growth.
Bearish
Can suffer steep drawdowns after earnings-related selloffs and sentiment shifts.
AMZN
Bullish
AWS re-acceleration would be a major positive for broader software and cloud sentiment.
Bearish
Cloud growth/margin pressure could disappoint if AWS slows.
MSFT
Bullish
Key cloud/AI player; strong earnings would reinforce the AI investment narrative.
Bearish
Highly priced on cloud/AI expectations; misses would disappoint markets.
NFLX
Bullish
Recent strong earnings show resilience and can drive near-term market outperformance.
Bearish
Advertising and subscriber growth risks could cap upside if trends reverse.
META
Bullish
Large consumer data assets and ad business can rebound strongly with improved ad demand.
Bearish
Ad market cyclicality and regulatory scrutiny remain risks.
WAYMO
Bullish
If autonomous taxi expansions scale, it could add sizeable upside to Alphabet’s value.
Bearish
Not publicly traded and long path to profitability; valuations could be speculative.
People mentioned
Donald TrumpScott DescentLizanne SaundersWarren PiesEdward YardiniTom LeeSundarSergey BrinElon MuskNancy PelosiHarryPeter WigleySaddamMr. V