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Market Recap

Last Week’s Headlines

Economy & World News

• Supreme Court Upholds Law to Sell or Shut Down TikTok by January 19. In a unanimous decision, the Court sided with Congress on national-security concerns, potentially causing TikTok to go dark and impacting millions who use the platform for short-form video content.

• Biden Administration Announces Final Round of Student Loan Forgiveness. Over $600 million in debt will be cleared for nearly 8,650 borrowers, including those on the Income-Based Repayment plan and former DeVry University students.

• FTC May Sue Largest Apartment Landlord Over Hidden Fees. Greystar Real Estate Partners faces potential legal action for deceptive pricing and failing to disclose fees related to pest control, trash services, and tenant background checks, though a settlement remains possible.

• UK Regulator Probes Google for Dominant Market Status. The Competition and Markets Authority (CMA) is assessing if Google qualifies as having "strategic market status" under new legislation, which would enable it to enforce changes to curb anti-competitive behavior and ensure a level playing field in the search market.

• US Wholesale Inflation Cools, Easing Price Pressure Concerns. December saw an unexpected slowdown in wholesale inflation, with a modest 0.2% increase in the producer price index, aided by lower food costs and stable services prices, which could help temper concerns of persistent inflation.

• UK Economy Faces Sluggish Growth Amid External and Internal Challenges. Economists are concerned as the UK grapples with growth headwinds from potential trade tariffs anticipated under President-elect Donald Trump and various domestic fiscal and economic issues.

• US Fiscal Deficit Surges 39.4% to $710.9 Billion in Three Months. Rising financing costs, increased spending, and falling tax receipts have dramatically expanded the fiscal deficit, pushing the national debt beyond $36 trillion.

• German Economy Shrinks Again, Contracting 0.2% in 2024. Marking its second consecutive year of decline, Germany faces persistent economic challenges, including a housing crisis and pressures on its autos industry.

• US Inflation Hits 2.9%, Core CPI Slightly Better Than Expected. 

  The consumer price index rose by 0.4% last month, with annual inflation aligning with forecasts at 2.9%, while core CPI dropped to 3.2%. Shelter prices, a significant component, showed the smallest yearly gain in nearly two years, sparking a surge in stock market futures and a drop in Treasury yields.

• FDA Bans Red No. 3 Dye Linked to Cancer. The FDA is prohibiting the use of the artificial dye Red No. 3, found in various foods including Betty Crocker’s loaded mashed potatoes and MorningStar Farms plant-based bacon, after studies showed cancer links in animals. Manufacturers have until 2027 to eliminate the dye from their products.

• Canada Warns of "Trump Tariff Tax" on American Consumers. Canada's Foreign Minister Mélanie Joly cautioned that Americans could face a "Trump tariff tax" if President-elect Trump imposes a proposed 25% tariff on Canadian goods. Joly affirmed Canada's readiness to retaliate, emphasizing the potential economic impact on U.S. consumers amidst broader concerns about Trump's trade strategies.

• Blue Origin's New Glenn Rocket Successfully Reaches Orbit. Launching for the first time from Florida, the New Glenn rocket, comparable in height to a 30-story skyscraper and designed for partial reusability, achieved orbit after a 2 a.m. ET liftoff.

• Israel Cabinet Approves Gaza Cease-Fire to Free Hostages. After two days of intense debate highlighting its delicate nature, Israel's cabinet has ratified a cease-fire agreement in Gaza, which includes the release of Israeli hostages. This decision followed the security cabinet's approval and Prime Minister Benjamin Netanyahu's announcement of a resolved agreement, despite previous accusations against Hamas for violating earlier terms.

• Biden Administration Targets 15 Drugs for Medicare Price Negotiations. As part of the Inflation Reduction Act, the next phase to lower prescription costs involves negotiating prices for 15 drugs with manufacturers, including Novo Nordisk’s popular diabetes and weight loss treatments Ozempic, Wegovy, and Rybelsus, which all contain the active ingredient semaglutide.

Public Markets

• Apple Dethroned as Top Smartphone Seller in China

  Apple's smartphone sales in China plummeted by 17% in 2024, marking one of its worst annual performances, as local competitors Vivo and Huawei seized greater market share.

• Steve Cohen's Point72 Outperforms Rivals with 19% Return in 2024. Despite the New York Mets' season ending in a playoff loss, Steve Cohen's hedge fund Point72 Asset Management excelled, topping Citadel and Millennium Management, and plans to return $3 to $5 billion to investors due to excess cash.

• Robinhood Pays $45 Million to Settle SEC Charges. Robinhood broker-dealers have agreed to a $45 million settlement for violating multiple securities law provisions, according to the Securities and Exchange Commission.

• Moderna Reduces 2025 Sales Forecast by $1 Billion Amid Cost Cutting. As demand for its Covid vaccine wanes, Moderna has adjusted its 2025 revenue expectations to between $1.5 billion and $2.5 billion, with the majority anticipated in the latter half of the year.

• Honeywell's Breakup Could Yield Up to 25% Return for Shareholders. After years of deliberation influenced by activists, Honeywell International is set to split into two companies focused on aerospace and automation, potentially boosting share value by 20% to 25%.

• SEC Sues Elon Musk for Undisclosed Twitter Stake Purchase. The SEC alleges that Elon Musk violated securities law by not disclosing his acquisition of a significant Twitter stake, enabling him to purchase shares at artificially low prices before his $44 billion takeover and subsequent rebranding to X.

• US Tightens AI Chip Export Controls, Exempts Key Allies. In a move to maintain AI leadership, the US sets export quotas for AI chips to about 120 countries, exempting 18 allies like Japan and Britain, and reinforces blocks against China, Russia, Iran, and North Korea.

• Southwest Airlines Sued by US Transportation Department Over Flight Delays. The lawsuit, filed in Oakland, accuses Southwest of violating regulations by failing to maintain realistic schedules, leading to "unlawful chronic flight delays." Southwest, expressing disappointment, noted that this action pertains to only two flights from over two years ago, amidst an otherwise compliant record since 2009.

• Nate Anderson to Close Hindenburg Research, Citing Personal Reasons. Notorious short seller Nate Anderson announced he will dissolve his influential firm, Hindenburg Research, to focus more on personal life and less on the intense demands of his high-profile financial campaigns.

• Block Inc Fined $80 Million Over Anti-Money Laundering Lapses. Block Inc has settled with 48 state regulators, agreeing to pay $80 million for inadequate money laundering controls in its Cash App service. The settlement includes hiring an independent consultant to review and report on its compliance programs.

• American Express Settles for $230 Million Over Deceptive Sales Practices. American Express has agreed to pay around $230 million in penalties due to misleading sales tactics to small-business customers, including a $108.7 million civil penalty and a non prosecution agreement related to a criminal investigation.

• Vanguard Settles for $106.41 Million Over SEC Violations. Following a 2020 policy change that lowered the minimum investment for its institutional target date funds, Vanguard has agreed to pay $106.41 million to compensate investors, settling without admitting to the SEC's allegations. Vanguard, a global asset management giant, manages over $10 trillion in assets.

M&A, IPO’s, Bankruptcies

• Johnson & Johnson to Acquire Intra-Cellular Therapies for $14.6 Billion. Johnson & Johnson will purchase Intra-Cellular Therapies, specializing in central nervous system disorder treatments, at $132 per share, marking a 39% premium over the recent closing price.

• Bill Ackman's Pershing Square to Merge with Howard Hughes Holdings. 

  Bill Ackman has proposed forming a new subsidiary to merge with Howard Hughes Holdings, offering $85 a share to current holders, after expressing dissatisfaction with the company's stock performance.

• JCPenney and Sparc Group Merge to Create Catalyst Brands. JCPenney has joined forces with Sparc Group, forming Catalyst Brands which combines over 1,800 store locations and aims to reshape retail with a diverse portfolio including Aéropostale and Brooks Brothers, and $1 billion in liquidity.

• Cleveland-Cliffs Eyes All-Cash Acquisition of U.S. Steel, Plans to Divest Big River Steel. Cleveland-Cliffs proposes to buy U.S. Steel entirely in cash, intending to sell the Big River Steel subsidiary to Nucor, while U.S. Steel’s headquarters would continue to operate from Pittsburgh.

• Pfizer to Sell $3.05 Billion in Haleon Shares, Cutting Stake to 7.3%. Pfizer is reducing its stake in Haleon by selling 700 million shares at a 2.8% discount, as Haleon's stock continues to perform strongly in the market, aligning with broader FTSE 100 trends.

• Perplexity AI Proposes Merger with TikTok U.S. Perplexity AI has submitted a merger proposal to TikTok's parent company, ByteDance, aiming to maintain current investor equity stakes while enhancing Perplexity's video content. Although the deal might take months to finalize, President-elect Donald Trump indicated a potential extension of 90 days for TikTok to secure an agreement.

Earnings this week

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