1. Micron is dead right about data center demand but very wrong about cellphone and PC demand, particularly weakness in NAND memory chips used in those markets. Micron reported solid earnings results Wednesday while lowering its outlook. Truly a mistake on CEO Sanjay Mehrotra’s part. Micron shares were down more than 11%. Bank of America downgraded the stock to neutral from buy.
2. The problem with the Federal Reserve in a nutshell: The homebuilders can’t build enough to satisfy demand without running into an interest rate buzzsaw. That’s the takeaway from Lennar. The company reported fourth-quarter EPS of $4.03 vs. consensus $4.12, noted that its results were hampered by “affordability limitations from higher interest rates.”
3. The S&P 500 Short Range Oscillator is at its most oversold level of the year. The Oscillator helps understand when the market has either become overbought and potentially due for a pullback, or too oversold and positioned for a bounce. We will review the prospects for all 34 companies in the portfolio at our December Monthly Meeting at noon ET.
4. The speculative stocks that the Fed would most like to see come down: commercial space, quantum computing, bitcoin derivatives, high-priced enterprise software companies, nuclear power. The air must come out of these balloons before the pain can recede. The Dow was headed for a higher open after Wednesday’s roughly 1,120-point drop on a path for fewer Fed interest rates cuts next year. The 30-stock average has dropped in 10 straight sessions, the worst losing streak since 1974.
5. Block upgraded to buy from hold at Oppenheimer, which cited recent investments in product and sales that could drive accelerated gross payment volume. This is the kind of fintech that you shouldn’t buy as it is richly valued. The analysts are betting Block will achieve the Rule of 40 — combined revenue growth rate and profit margin of at least 40% — earlier than its 2026 target. Meanwhile, Affirm, another very expensive stock, was upgraded to a buy from hold at Jefferies.
6. SoFi price target raised to $13 from $7.50 at Morgan Stanley. This isn’t the kind of stock you buy if we are having a hawkish cycle. You sell this kind of stock. Using the sell-off to raise PTs?
7. TD Cowen starts coverage of Nextracker with a hold. Best house in a bad neighborhood. We agree and will take a hard look at it during our monthly meeting today. The stock is cheap, but it’s solar with a President-elect that doesn’t like clean energy subsidies.
8. Stop panicking about the dollar, which advanced against its peers Wednesday after the Fed delivered its widely expected rate cut. It is a real inflation fighter.
9. A government closure will occur at 12:01 a.m. ET on Saturday without action from Congress. Does Donald Trump need stocks to go lower to get a good start on his reign? Seems a little cynical, but?
10. Danaher initiated with a buy at Guggenheim. Club name that is deeply oversold. Gradual return to high-single-digit bioprocessing revenue growth and it is best in class. Meanwhile, fellow Club name Bristol-Myers Squibb was added to focus list at JPMorgan, which said the drugmaker is gaining momentum in its new launch portfolio. That includes its major new launch of schizophrenia drug Cobenfy, a drug which has no peers.
