DHUnplugged #687: No Stopping Now

Those margins – not a pretty look.

Trouble in Airlines Space while the love for Apple remains.

More Stimulus but hidden in the details.

Announcing a new Closest to The Pin.

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Warm Up
-  Trouble in Airlines
- Apple Love Remains
- More Stimulus - Hidden in the Details
- BULL TAKE OFF - No Stopping Us Now - Right? (Overconfidence?)

Market Update
- Bitcoin - Sub $40k on Monday - Why?
- Chatter IPO on the  way (again)
- New Highs for markets - Pulled by a few stocks
- And on The Margin - A Margin Crunch
- Rates moving up - VIX moving down

DONATIONS - HEY it is 2024!

NEW HIGHS - A New Bull Market has just been declared. Out of the  BEAR as we eclipse the previous high set in 2022.

- JetBlue Airways and Spirit Airlines on Friday said they are appealing a federal judge's ruling issued earlier this week that blocks the two carriers' planned merger on antitrust grounds.
- JetBlue had planned to buy Spirit for $3.8 billion in a deal struck in the summer of 2022. A federal judge on Tuesday, however, barred that combination, saying it would eliminate the budget carrier and mean higher prices for cost-conscious consumers.
- Spirit  drop 62% last week - trying to recover a bit
- BUT, if Sprint fails - doesn't that mean that the elimination of a budget carrier could mean higher prices for cost conscious consumers?
---- They will appeal, give concessions and win.
---- Spirit up 90% since low last week

Bitcoin Sinking
- Bitcoin sub $40,000 on Monday as the sell-off continues
- Blaming it on selling of the GrayScale and beig bought in NEW Sppot ETFs
- Thought question: If Selling Apple in Fidelity and Buying in Schwab - does that impact share price?

Banks Suing The Fed?
- Big banks have hired one of the country’s top trial lawyers and are preparing to sue the Federal Reserve — a nearly unthinkable challenge — if sweeping new industry regulations aren’t watered down.
- Eugene Scalia, the son of the former Supreme Court justice and a well-known conservative litigator, is quietly drawing up a lawsuit seeking to block the proposed rules on behalf of the Bank Policy Institute, a trade group that represents JPMorgan, Citibank, Goldman Sachs, and others, people familiar with the matter said.
- It would be the first time in recent memory that the industry has sued the Fed, and a departure from standard halls-of-power persuasion efforts that try to avoid antagonizing its chief regulator.

More Airlines
- The U.S. Federal Aviation Administration (FAA) has recommended that airlines operating Boeing 737-900ER jets inspect door plugs to ensure that they are properly secured after some operators reported unspecified issues with bolts upon inspections.
- Regulators have stepped up scrutiny on Boeing after a Jan. 5 mid-air panel blowout on an eight-week-old Alaska Airlines MAX 9 jet that left a gaping hole in the aircraft. Boeing has sought to contain the damage, appointing an independent advisor to examine quality control in its manufacturing processes while numerous planes remain grounded.
- In its new "Safety Alert for Operators," the FAA said that some airlines had conducted additional inspections on the 737-900ER mid-exit door plugs and had noted "findings with bolts during the maintenance inspections."

Apple -
- Apple (AAPL.O), opens new tab ended Samsung Electronics' 12-year run as the largest seller of smartphones in the world, after commanding a 20% market share in 2023, according to a report from International Data Corp.
- Samsung ended the year with a 19.4% share, followed by China's Xiaomi, Oppo and Transsion, preliminary data from IDC's Worldwide Quarterly Mobile Phone Tracker showed.
- The change in ranking comes after a tough year that saw consumers going slow on smartphone upgrades and choosing cheaper handsets due to high inflation and economic uncertainties.
- Some of the overtake is also probably due to some softeness in China for lower cost phones with lower income earners that are struggling.

More Apple
- Apple received 3 recent downgrades by reputable brokerage houses - stock was down $2
- Apple receives ONE upgrade and stock flies by $6 on Friday
- AND - U.S. Customs and Border Protection determined on Friday that Apple can use a redesign to bypass an import ban on newer Apple Watch models stemming from its patent infringement dispute with medical-monitoring technology company Masimo, according to a Monday court filing.
- The import ban, issued by the U.S. International Trade Commission, applies to Apple's current Series 9 and Ultra 2 watches and initially went into effect on Dec. 26. Apple convinced a U.S. appeals court to pause the ban the next day, and has since resumed selling the watches as it contests the import ruling.

Tesla - So Much Tesla
- Tesla owners are lining up at Chicago-area charging stations as subzero temperatures cause electric vehicle batteries to die quickly -  But, their cars aren’t always making it to the charging port.
- Fox32 called the charging lots “car graveyards,” describing the abandoned cars left in the lot after cars wouldn’t charge.
- Several motorists told local news outlets that they had been stranded at charging stations in the cold with cars with dead batteries, while successful charging was taking far longer than usual. They also claimed that many of the charging stations were not functioning.

- The billionaire posted on X on Monday that he is “uncomfortable” developing Tesla into a leader in artificial intelligence unless he has more control.
- Since Tesla does not have super-voting shares, the simplest way to do that is to issue common stock to Musk.
- Taking dilution into account, that would mean about $100 billion worth of shares.
- Estimates that this will take down value per shares by $14 - which is probably why shares have been so weak lately.
- - If history is any guide - there could be a bounce near the $200 level

China Stocks
- The value of China’s stock market has never been this far behind that of the US, as the losses continue to pile up in a seemingly relentless equity rout.
The market capitalization of the US stock market is now $38 trillion greater than that of Hong Kong and China put together, a fresh record, according to data compiled by Bloomberg.
- “China offers value, but catalysts are just not there,” said Michael Liang, chief investment officer at Foundation Asset Management HK Ltd. “Meanwhile, the US market has momentum and economy on its side.”
- The growing divergence comes as steep losses paint a troubling picture of global investor sentiment toward the world’s No. 2 economy. At the same time, US stocks have hit record highs, powered by a megacap technology rally amid optimism that the Federal Reserve will cut interest rates this year and navigate a soft economic landing.
- Chinese stocks have lost more than $6.3 trillion in market value from a peak in February 2021. Over the same period, US equities have gained some $5.3 trillion.

More Stimulus
- U.S. lawmakers on Friday advanced a bill to enhance tax breaks for businesses and low-income families in a strong show of bipartisan support for the largely revenue-neutral measure, despite their deep divisions over federal spending levels.
- The "Tax Relief for American Families and Workers Act of 2024" would increase the child tax credit and restore the full value of declining business tax deductions for investments in research and development and plant and equipment.
- While the business tax breaks were restored in the deal, the child tax credit expansions fell short, reaching only $2,000 per child in 2025. The measure also includes tax breaks for affordable housing and people hit by disasters, including wildfires and a train derailment in Ohio last year.

More Money! Show Me The Money!
- U.S. President Joe Biden on Friday announced student debt cancellation of nearly $5 billion for an additional 74,000 borrowers, including more than half who earned forgiveness after 10 years of public service as teachers, nurses and firefighters.
- The White House announcement brings the total loan forgiveness approved by the Biden-Harris administration to $136.6 billion for more than 3.7 million Americans.
- Nearly 44,000 of the borrowers approved for relief are those with a decade of public service, with close to 30,000 are people who have been repaying their loans for at least 20 years but never got the relief through income-driven repayment plans.

- Going Private rumor again
- Macy’s board of directors on Sunday rejected a $5.8 billion bid to take the company private because the proposal "lacks compelling value."
- Arkhouse Management Co. LP and partner Brigade Capital Management LP, which already has a significant stake in Macy's through Arkhouse-managed funds, issued an unsolicited proposal in December to acquire all the outstanding shares of the 165-year-old department store chain for $21 per share in cash.

Reddit IPO
- Social media platform Reddit has drawn up detailed plans to launch its initial public offering (IPO) in March, moving forward with a listing it has been eyeing for more than three years, according to people familiar with the matter.
- It would be the first IPO of a major social media company since Pinterest's debut in 2019, and would come as Reddit and its peers face stiff competition for advertising dollars from the likes of TikTok and Facebook
- Recall - moderators locked down the site and  the previous IPO was pulled. Also, this is all user based - so adverts and valuation very dependent on a community that are mini activists.

2024 Davos
- CNBC is unwatchable - aside from simple news, the anchors (in the morning) all think they aer intellects and talk like academics -
--- Jamie Dimon
--- Bitcoin is a Pet Rock
---- Warned on a few things over the next couple of years (all the headwinds we already know about)

-  Microsoft said consumers and small businesses can buy subscriptions to access more capabilities in its artificial intelligence "Copilot," as it moves to grow sales beyond large enterprises.
- After introducing a free AI Copilot for its Bing search engine last year, Microsoft will offer what it calls Copilot Pro to individuals for $20 a month.
- The subscription will add a text-drafting, number-crunching AI assistant to Microsoft's widely used applications including Word and Excel, and it will give purchasers access to new tools and AI models such as GPT-4 Turbo.

Margins and Earnings
- S&P 500 Reporting Lowest Net Profit Margin in More Than 3 Years for Q4
- According to FactSet -The (blended) net profit margin for the S&P 500 for Q4 2023 is 10.7%, which is below the previous quarter’s net profit margin (12.2%), below the year-ago net profit margin (11.2%), and below the 5-year average (11.5%).

SP500 Profit Margin Trend


- Traders who put on a massive bearish options bet earlier this month on crop trading giant Archer-Daniels-Midland Co. are sitting on more than $17 million in profits.
- Two weeks before ADM’s shares plunged the most ever following Sunday’s announcement that it placed chief financial officer Vikram Luthar on leave and cut its earnings outlook pending an accounting probe, a trader or traders bought put options expiring in February and March.
- The owners of the options — which allow them to sell more than 1.6 million ADM shares at $65 apiece — are up as much as $17.7 million, based on average trading prices from Jan. 5 and Monday’s intraday prices.


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