Stocks ripped higher yesterday, powered by a semiconductor surge and a small-cap flex that left major indexes comfortably in the green. Tech and real estate led the charge, basking in the glow of investor optimism, while Tesla and Amazon did their best impressions of dead weight, dragging consumer discretionary down with them.

⚡ Closing Bell:

• Dow Jones: ⬆️ +0.7% › 44,873.3 › Lifted by Amgen’s strong gains.
• S&P 500: ⬆️ +0.4% › 6,061.5 › Real estate, tech, and financials out front.
• Nasdaq 100: ⬆️ +0.2% › 19,692.3 › Chip stocks kept momentum alive.
• Russell 2000: ⬆️ +1.8% › Small-caps stole the show, leading the pack.

Sector Moves:
✅ Real Estate, Tech, Financials: All posted gains over 1%, with semiconductors fueling tech.
❌ Consumer Discretionary: Dragged down by Tesla (-3.58%) and Amazon (-2.45%).

Economic Snapshot:

• Private Sector Jobs: Topped expectations, signaling solid employment growth.
• US Services Sector: Growth slowed, but Jefferies says the trend remains strong.
• Trade Deficit: Up 25% in December, capping 2024 with a $918.42B shortfall.

Macro Moves:
➝ 10-Year Yield: ⬇️ 4.42% › Fell 8.9 bps as bond demand surged.
➝ 2-Year Yield: ⬇️ 4.19% › Dipped 2.7 bps on softer data.

❗ What’s Next?
Earnings season rolls on with more big names reporting, while traders keep an eye on US-China trade developments. The momentum is far from cooling off….

#TRUTH:
❗❗❗ “Smooth seas do not make skillful sailors.” ~ African Proverb

Amazon Spends $75 Billion on AI So You Can Ask Alexa the Same Question Twice:

Amazon’s up next in the Big Tech earnings lineup, and traders are locked in. After Microsoft and Google stumbled on cloud revenue, the question is—can AWS keep its edge, or is the AI arms race taking a toll?

What’s in Play?

➝ AWS Revenue: Expected at $28.8B, up from $24.2B last year. But after Microsoft’s and Google’s cloud misses, no one’s feeling too confident.

➝ AI Spending Spree: Amazon’s $75B CapEx for 2024 is a big bet on AI infrastructure, with even more spending planned for 2025.

➝ Ad Revenue Growth: Expected to jump nearly 20% to $17.3B, with Prime Video ads starting to pay off.

The DeepSeek Factor

Just as Big Tech thought it had AI locked down, China’s DeepSeek R1 model shook things up. A startup with a fraction of the budget is competing with Silicon Valley’s best—and investors want answers. Amazon, like Microsoft, has already onboarded DeepSeek’s model to AWS, but how it plays the AI game from here is the real question.

What’s Next?

Amazon’s cloud, AI, and ad dominance keep it in the driver’s seat, but the pressure’s on. After tech stocks took a hit last week, traders are watching for any cracks—or a breakout moment.

EV Woes:

Ford’s EV business is still running on fumes. The automaker’s latest earnings report confirmed another massive loss in its electric division, with 2024 EV losses totaling $5.1 billion—roughly the value of 100,000 new F-150s down the drain.

➝ Stock Reaction: Ford (F) fell 4.5% after hours as investors balked at weak guidance.

The EV Scoreboard:

• 2024 EV Loss: $5.1B (up from $4.7B in 2023 and $2.1B in 2022).
• EVs Sold: 98,000 (+35% YoY), but still outpaced by Ford’s 187,000 hybrid sales and 1.8 million gas-powered vehicle sales.
• F-150 Lightning vs. Cybertruck: Tesla’s Cybertruck outsold Ford’s Lightning in Q4—despite its own supply struggles.

Ford is banking on lower-cost and extended-range EVs, but those aren’t rolling out for at least two more years. Until then, it’s a waiting game.

Tariff Troubles on the Horizon?

• 82% of Ford’s North American vehicles are made in the U.S., reducing its exposure to Trump’s delayed 25% tariffs on Mexico and Canada—but key components still cross borders.
• The Lincoln Nautilus is built in China, meaning Trump’s 10% tariff on Chinese imports could hit Ford’s bottom line.
• Some analysts estimate auto prices could jump $3,000 if the full tariff plan kicks in, adding to Ford’s already higher-than-average $57,000 transaction price.

Big Picture:

Ford did set a revenue record in 2024, pulling in $48.2 billion in Q4 with a $1.8 billion profit, but its EV division remains a money pit. Until Ford’s next-gen EVs hit the market, the road ahead looks bumpy.

Very Hot:

Central banks are hoarding gold at record levels, but in a twist —gold sitting in the Bank of England’s vaults is actually trading at a discount. Normally, BOE gold moves in lockstep with London’s spot prices, but lately, it’s been $5 cheaper per ounce. Why? Traders are racing to move bullion into the U.S. ahead of potential Trump tariffs, and BOE storage is proving to be more of a hassle than a help.

After a record-breaking 2024, where central banks snapped up 1,045 metric tons of gold (worth $96 billion), demand is still running hot. But while global buyers remain steady, supply bottlenecks are messing with the usual pricing dynamics.

So What’s the Issue?

Gold at the BOE isn’t moving fast enough. With long withdrawal queues slowing access, traders would rather store their bullion in commercial vaults—even if it costs more. And since the BOE is a major supplier of liquidity during tight markets, this bottleneck is making things even more complicated.

Meanwhile, gold lease rates have jumped to 4.7%, a sign that supply is tightening up fast. Normally, these rates are close to zero, but when gold is hard to get your hands on, those rates spike.

What’s Next?

If central banks keep stacking gold at the same pace and tariff fears keep traders on edge, this pricing gap might not be a short-term fluke. With access to bullion becoming just as important as price, gold’s next move might be driven just as much by logistics as by demand.

Snooze Button:

Crude prices barely budged on Thursday, struggling to shake off a 10% slide from January highs as markets wrestled with stockpile builds, trade tensions, and shifting policy moves.

➝ Brent crude: ⬆️ 8 cents to $74.69
➝ WTI crude: ⬆️ 15 cents to $71.18

What’s Keeping Oil in Check?

• Stockpile Surge: U.S. crude and gasoline inventories swelled, signaling softer demand.
• Tariffs: The latest U.S.-China trade spat includes new tariffs on energy products, adding uncertainty to global flows.
• Saudi’s Move: Saudi Aramco hiked oil prices for Asian buyers, providing a brief floor after Wednesday’s sell-off.

Supply Risks on the Radar

• Russia Sanctions: The U.S. is cracking down on “shadow vessels” used to bypass trade restrictions, adding another layer of volatility.
• China’s Response: Beijing retaliated with tariffs on U.S. oil, LNG, and coal, but its direct imports from the U.S. are modest, limiting the immediate impact.

What’s Next?

Analysts expect more volatility ahead as traders weigh Trump’s evolving policy landscape, potential carve-outs for energy, and global demand trends. The $70-$68 range could be the next key battleground for oil prices.

Highlights of the Day:

① AI & Chips Keep Winning ✅
➝ Super Micro (SMCI) +8.06% › Extended its rally after ramping up full production of servers powered by Nvidia’s Blackwell GPUs.
➝ Nvidia (NVDA) +5.31% › Rode the AI wave as demand for Blackwell chips stayed red hot.
➝ Broadcom (AVGO) +4.38% › Scored a win thanks to Alphabet’s massive $75B capex plan.

② Earnings Winners ✅
➝ Mattel (MAT) +15.33% › Skyrocketed after strong earnings and bullish guidance.
➝ Novo Nordisk (NVO) +3.76% › Jumped as weight-loss drug sales kept surging.
➝ Workday (WDAY) +6.33% › Popped after announcing job cuts and an AI pivot.

③ Cannabis Stocks Light Up ✅
➝ Canopy (CGC) +22.46% & Tilray (TLRY) +6% › Rallied on positive industry news.

④ Big Tech Stumbles ❌
➝ Alphabet (GOOGL) -7.29% & GOOG -6.94% › Cloud revenue growth missed the mark, sending shares lower.
➝ AMD (AMD) -6.27% › Weak data center sales led to multiple price target cuts.
➝ Uber (UBER) -7.56% › Posted record profits but fell on operational concerns.
➝ Match Group (MTCH) -7.87% › Dropped after underwhelming revenue guidance.

⑤ Consumer Discretionary Drag ❌
➝ Tesla (TSLA) -3.58% & Amazon (AMZN) -2.45% › Pulled the sector lower.

⑥ Standout Moves ✅
➝ Johnson Controls (JCI) +11.28% › Jumped after raising its 2025 outlook and naming a new CEO.
➝ Amgen (AMGN) +6.5% › Led the Dow after a strong Q4 earnings beat.

Commodities Check : ✔️

• Crude Oil: ⬇️ 2.1% › $71.17/bbl as US inventories surged.
• Gold: ⬆️ 0.2% › $2,882/oz, holding steady amid mixed economic signals.
• Silver: ⬇️ 0.8% › $32.74/oz, slipping on weaker demand outlook.

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Disclaimer

This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.