STOCK MARKET TALK

The Spaces covered a wide-ranging market discussion anchored on the surprisingly bullish reaction to the latest political-legal headlines around Jerome Powell, despite many expecting risk-off. Speakers emphasized that catalysts are unpredictable and markets increasingly trade on liquidity rather than data, reinforcing the value of technical analysis and risk management. Breadth remains healthy (RSP/IWM) with mega-cap tech mixed, while metals (gold/silver) rallied on both industrial-use narratives and speculation. Logical outlined a reflationary policy backdrop, strong AI capex, and a supportive fiscal stance, staying aggressively long and highlighting notable China options flow (FXI, KWEB, BABA). Options Mike focused on intraday structure, upcoming CPI/PPI and bank/airline earnings, and tactical trades (Tesla, Oracle), noting the market’s indifference to the Powell drama. Hamid presented a fundamental case for Micron (sold-out capacity, multi-year fab investments) and Meta (fastest growth among the “Magnificent 7,” founder-led, undervalued with underpriced AI optionality), and previewed new Earnings Hub features. Montev provided deep defense sector insights (budget realism, shutdown impacts, guidance cadence) and flagged European/Japanese/Korean defense leaders and ETF approaches. The session closed with caution on chasing high-beta names after sharp two-week runs and a watchlist for near-term earnings and macro catalysts.

Stocks on Spaces: Market, Fed headlines, Metals, Earnings, Defense, and Trades

Participants and roles

• Evan (host; "Stocks on Spaces")
• Brian Lund (market technician; referred to variously as Brian Lunt/Lund)
• Logical (active trader focused on small/mid caps and options flow)
• Options Mike (discretionary trader, technical focus)
• Hamid (fundamental, long-term investor; Earnings Hub creator)
• Montev (“Monitor”; macro, semis/data center/defense analyst)
• StockSniper (defense-focused contributor; Wolf Defense/Wolf Trading collaborator)
• Wolf Trading (Black Wolf; intraday technical market commentary)

Market snapshot and tone

• Equities: SPY up ~0.3%, S&P 500 at an all-time high by close; IWM near/at highest close; breadth strong. Equal-weight S&P (RSP) nearly flat (-0.04%). Host’s single-stock portfolio +0.8%.
• Metals: Gold and silver “ripping” and holding gains.
• Crypto: Weak relative to metals and equities.
• Rates: 10Y yield (TNX) up into the close; bond market more sensitive to the headline risk.
• Indices technicals: Resilient, buy-the-dip behavior. NASDAQ held above fast daily moving averages; multi-index ascending structures with higher lows; breadth outside the Mag 7 improving.

Headline risk: DOJ/Powell, Fed independence, and market reaction

• Context: A DOJ step (subpoena; threat of potential lawsuit) targeting Fed Chair Jerome Powell triggered Sunday-night hedging and lower futures, prompting many bears to expect a sharp selloff.
• Outcome: Equities rallied shortly after the open and ground higher all day. Metals surged; bonds under relative pressure.
• Read-through:
  • Brian Lund: This reiterates that markets are in a “post-catalyst” and even “post-data” regime where the reaction to headlines is unpredictable. Attempting to guess catalysts—or the market’s reaction to them—is largely futile. Technical analysis (price/volume) is essential in a liquidity-driven market where PE and classic value signal less.
  • Logical: Equities don’t care; bonds may. The action felt political; Powell’s tenure is nearly over, and further cuts are not expected in the next three meetings. Markets look forward and had already priced much of the regime change.
  • Options Mike: First 5-minute read mattered; strength confirmed. The administration has a weak track record getting grand-jury actions to stick; the market shrugged the headline and reclaimed momentum.
  • Wolf Trading: Overnight hedges were unwound; shorts covered all day; grind-up to ATH reflects resilience.

Liquidity, breadth, and technical regimes

• Brian Lund: Liquidity flows dominate; tune out narratives and focus on technicals for risk management.
• Logical: Weekly charts show ascending triangles and higher lows across SPY, RSP, IWM; QQQ lagged modestly. XBI has been consolidating after a strong prior year, which is healthy.
• Options Mike: Despite ATHs, many names remain range-bound; looking for sustained momentum. Index is strong but not “exploding,” awaiting more catalysts (earnings, CPI/PPI, court decisions).

Policy noise: Credit card cap, defense budget, tariffs

• Credit card APR cap at 10% (proposed):
  • Evan: Mixed effects—could cut rewards and tighten access to credit; implementation would be complex and require Congress; unlikely near-term.
  • Options Mike: Congressional approval required; posturing to pressure lawmakers.
• Defense budget to $1.5T (proposed):
  • Evan: Triggered a rally in defense on Friday.
  • Montev: 1.5T unrealistic; ~1.1T more plausible. Dividend/buyback bans for defense likely illegal or blocked on appeal.
• Tariffs:
  • Evan/Wolf Trading: Post surfaced about a 25% tariff on any country doing business with Iran; verification challenges noted. A separate report suggested lowering a Taiwan tariff to 15%, supportive for TSMC and Arizona fabs.

Metals: Why are gold and silver ripping?

• Silver fundamentals:
  • Brian Lund asked for the underlying case.
  • Evan: Silver’s highest electrical conductivity supports data centers (efficiency, signal integrity, heat management); cited mentions of solid-state battery use and heavy copper use in Nvidia’s systems.
  • Conclusion: Industrial demand tied to AI/data center buildouts plausibly fueled the first leg; speculation adds momentum thereafter. If silver holds, it implies AI infrastructure spend may persist for years.

Flow-driven trades and China exposure (Logical)

• China: Followed large unusual options flow (threshold >$10M) in FXI (large-cap China ETF) and KWEB (China internet). FXI May 40 calls ($41M notional) quickly up 65%; KWEB up ~5% on 2x volume; Alibaba March 170 calls ($8M) saw sharp gains.
• Discipline: Taking quick profits on explosive option moves can cap upside; “you don’t go broke taking a profit,” but reviewing trade management is key.
• Small-cap semis/tech: SYNA (IoT; Google partnership; ~15x PE; IoT growth ~70% YoY per commentary), ACMR (China exposure), SCHM? Sizable rallies across niche semi names.
• Netflix: Noted a large Aug 110–130 call spread ($19M); tends to follow high-notional flow.

Trades and setups (Options Mike)

• Intraday approach: Wait for first candle; reaction was straight up.
• Focus names:
  • Tesla: Break over opening candle yielded a clean long.
  • Oracle: Calls into the earnings gap fill; improved look.
  • Google: New ATHs.
  • Nvidia: Testing/holding above key levels (185 noted by host; Mike: over 20-day, under 50-day).
  • Apple: Attempting to wake up; consolidating near prior ATH.
• Catalysts: JPM and DAL (Tuesday pre-market), CPI (Tue), PPI (Wed), potential Supreme Court tariff decision (Wed). Seeking momentum post-data/earnings to break ranges.

Earnings season preview and tooling

• Near-term schedule (host):
  • Banks and airlines kick off (JPM, BAC, C, GS, BLK; DAL), then Netflix next week, followed by Tesla, Microsoft, and other Mag 7 into late January; Powell/Fed speaking late January.
• Earnings Hub (Hamid):
  • New SEC Filings tab: one-line and detailed AI summaries; notifications for new filings; pre-generated for top 500, on-demand for others.

Deep dive: Micron (Hamid)

• Thesis: Buy great companies at good prices, ignore macro noise (Buffett approach).
• Micron specifics:
  • Management indicates 2026 capacity already contractually sold out.
  • Next quarter revenue guide ~$18B (vs. ~$13.6B prior ATH), with EPS ~$8/qtr implied by commentary; annualized ~$32 EPS.
  • At a hypothetical 30x PE, price implication near ~$960/share within a year (directional math; Hamid acknowledges conservatism and uncertainties).
  • Massive capex to expand capacity for 2027–2028 reflects visibility; doubts about “memory is cyclical” given contracted demand.
  • Position sizing: Initially ~6% of portfolio, adding on strength despite psychology of “buying higher” because upside potential dwarfs recent gains.

Deep dive: Meta (Hamid)

• Core business:
  • Facebook, Instagram, WhatsApp at record usage and ad revenue.
  • Fastest revenue growth among mega caps (>20%, accelerating), yet trades at low-20s PE (vs. peers often >30).
  • Founder-led; aggressive AI investment; current AI revenue near zero, implying optionality not priced in.
• New developments:
  • “Meta Compute” headline suggests large compute build; details pending. Cuts of ~10% in Reality Labs staff point to capex discipline.
• Valuation stance: Undervalued vs. growth peers; potential to eclipse Google over a 7–8 year horizon if growth rates persist.
• Technicals (host inquiry to Brian): Meta lagging indices; traders watching for key levels (50D/200D references in commentary).

Semis, data center, and “show me” quarter (Montev)

• Nvidia: Large position managed via hedges; cautious about exuberant claims; wants hard data this quarter.
• Google memory management rumor: If mismanagement limits GPUs/memory, cloud growth and vendor deliveries (e.g., Broadcom) could disappoint.
• Sector aggregates (consensus):
  • Tech: ~26.5% EPS growth, ~18% revenue growth; margin expansion likely.
  • Comm Services: ~7.3% EPS vs. ~8.6% revenue—possible margin pressure.
  • Healthcare: Revenue-led growth.
• Defense:
  • Government shutdown (roughly half the quarter) likely caused revenue recognition delays and cautious H1 guides, with bullish H2 guides; full-year numbers intact.
  • Preference: Northrop Grumman and Boeing on US side; cautious on Raytheon. European defense: Rheinmetall up massively; shifting to NATO/EU defense ETFs for diversification; core holdings include Safran (engines, CFM JV), Rolls-Royce (widebody engines, defense, nuclear/energy), Leonardo (electronics), BAE (US programs), Airbus (deliveries constrained by engine supply; upside if resolved).
  • Asia: Japanese/Korean conglomerates (Mitsubishi Heavy, Sumitomo Heavy) benefit across defense, energy, nuclear, and data-center infrastructure; increasing allocation. Indian defense exposure rising.

Oracle, AMD, and balance-sheet risk (Montev)

• Oracle: Skeptical of large AI capex funded by high-margin legacy cashflows transitioning to lower-margin compute rental. Would reconsider shorts above ~$250; neutral at current levels.
• AMD: Customer concentration risk and balance sheet considerations; was a strong short above ~$250, neutral below $200, would reassess on strength.

Defense momentum names (StockSniper)

• Kratos (KTOS): Up ~58% in a month; heavy hypersonic testing/exhaust technology involvement; potential benefit from any US defense budget growth.
• Rocket Lab: Monitor alongside hypersonics/space ambitions.

Small-cap/growth momentum caution (Logical)

• Observation: Many 2025 growth leaders are leading early 2026; moves in names like Kratos and Bloom Energy (up ~39% YTD) are “too far, too fast.”
• Approach: Avoid chasing; risk/reward worsens each day of parabolic advance. Acknowledge prior years’ January–February ramps but remain disciplined.

Key upcoming dates and catalysts

• Tuesday: JPM, DAL earnings; CPI.
• Wednesday: PPI; potential Supreme Court decision related to tariffs.
• Next week: Netflix.
• Late January: Multiple Mag 7 earnings; Powell/Fed comments.
• Early February: More tech majors; Roblox Feb 5; Palantir Feb 2 (after close).

Risks and opposing views

• Headline/political risk: DOJ/White House vs. Fed; markets currently dismissive for equities, less so for bonds.
• Tariffs/geopolitics: Iran-related tariff rhetoric; Taiwan tariff adjustments; oil flows; verification issues.
• Supply constraints: Memory/optical/copper/fiber transitions could bottleneck AI builds; silver demand surge suggests sustained infra needs.
• Defense policy/legal risk: Dividend/buyback bans likely to be appealed; budget growth less dramatic than rumors.

Highlights and takeaways

• Markets continue to prioritize liquidity, breadth, and technical structure over headline noise; technical analysis increasingly vital for risk management.
• Bonds more sensitive to political/legal uncertainty; equities favor forward-looking regimes.
• Metals strength (gold/silver) aligns with both risk hedging and industrial AI/data center demand (especially silver).
• Earnings season should validate or challenge high expectations in semis, cloud, and defense; Tech set up for margin expansion, Comm Services for pressure.
• Flow-based trades in China (FXI/KWEB/BABA) and selective small-cap semis are working; risk management and trims after rapid gains remain prudent.
• Long-term theses (Micron, Meta) highlight valuation asymmetry and future AI optionality; near-term technical lag (Meta) needs confirmation.
• Defense diversified exposure (US majors, EU primes, JP/KR conglomerates) offers multi-sector leverage to energy, nuclear, and data-center infrastructure cycles.

Actionable orientation

• Trading: Respect the tape; buy strength with risk controls; fade headline panic only after price confirms.
• Investing: Focus on businesses with contracted demand, visible capacity plans, and founder-led execution; value the optionality of AI investments not yet monetized.
• Monitoring:
  • Earnings: Banks/airlines immediate; Netflix, then semis/cloud in late Jan.
  • Data: CPI/PPI for near-term direction; watch 10Y yield.
  • Defense: Guidance cadence (H1 cautious/H2 bullish); watch legal outcomes on dividends/buybacks.
  • Semis/data center: Supply chain updates (memory/optical/copper) and vendor delivery guidance.