MARKET WRAP

Another mixed market today with a rally attempt following a slightly cooler than expected PPI print. Tomorrow morning we get the second part of the story with the CPI (8:30am). For today, the SPX closed very slightly in the green, while small caps (RUT +1.1%) and the DJIA +0.5% had nice days. Once again, the Nasdaq lagged, -0.25%. Overall, very similar action to yesterday. Treasury yields were lower following the PPI but not large moves, the US10Y was lower by 0.02. Tomorrow morning not only brings the CPI, but also earnings from JPM, GS, WFC, BLK, C and more. Expect some volatility pre-market. SPX options are pricing about a 1.1% move for tomorrow, which is meaty (a typical day is usually closer to 0.5%).

More on banks earnings on today’s MRKT Call, as well as ways to trade at the bottom of this email.

MRKT MATRIX: January 14, 2025

Today’s Top Stories:

• Dow rises 100 points as traders await more inflation data (CNBC)

• Traders Brace for S&P 500’s Busiest CPI Day Since March 2023 (Bloomberg)

• BlackRock’s Rick Rieder would ‘100%’ buy the Nasdaq dip (CNBC)

• No One Is Talking About a Recession. 4 Red Flags for Markets to Watch. (Barron’s)

• Meta announces 5% cuts in preparation for ‘intense year’ — read the internal memo (CNBC)

• Microsoft pauses hiring in U.S. consulting unit as part of cost-cutting plan, memo says (CNBC)

• Oil Prices Are on a Tear. It’s a Short-Term Headache for Inflation. (Barron’s)

• China Officials Discuss Option of TikTok Sale to Elon Musk (WSJ)

• Nvidia CEO Tours China During Beijing Antitrust Probe, AI Curbs (Bloomberg)

• Trump Team Studies Gradual Tariff Hikes Under Emergency Powers (Bloomberg)

Today’s MRKT Call is Presented by Robinhood

How To Trade Big Banks Into Earnings

Today’s MRKT Call looks at the overall set-up into earnings, with a particular focus on the slew of bank earnings we’re about to see over the next two days. (Also, a look at NVDA in Chart of the Day). Below, the earnings calendar for banks, and ways to trade via XLF.

XLF (~$47.90) Buy Jan 24th Weekly 47.50/45.50 Put Spread for ~ $0.35

• Buy to open 1 Jan 24th 47.50 put for ~0.45 cents

• Sell to open 1 Jan 24th 45.50 put at ~0.10 cents

Break-even on Jan 24th weekly Expiration:

• Profits of up to 1.65 between 47.15 and 45.50, max gain below 45.50

• Losses of up to 35 cents between 47.15 and 47.50, max loss above 47.50

Trade Rationale & Risk Management:

• This trade idea risks less than 1% of the ETF price, has a break-even down of less than, 2% and has a max potential gain of nearly 5x the premium at risk if XLF is down % in a little less than 2 weeks.

• As with all long premium directional trades, I will cut my losses if the speed loses half of its value and take gains on half of the position if it doubles before expiration.

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s Okay, Computer. is Presented by RBC and Current

Meta Zucked It

Dan Nathan and Deirdre Bosa cover how macroeconomic factors like inflation and interest rates are influencing tech investments, the role of major tech companies in the AI race, and the evolving landscape of open-source AI models. They also delve into industry-specific developments, such as Apple's iPhone sales and AI integration, and NVIDIA's dominance in the AI chip market. The episode wraps up with thoughts on regulatory challenges and the future of AI technology in Silicon Valley.

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