ANALYSIS:

• Update ahead of PPI. Now markets are expecting a tick up MOM by 0.1%. And YOY expects PPI to 0.6%.
• I  suspect that PPI may come in hot. This is primarily due to the  relationship between ISM price paid and PPI. We saw in the last month  ISM prices paid tick up unexpectedly. I suspect that PPI will follow it  higher.
• We see that relationship in the chart below, which I have shown before.
• https://imgur.com/a/yewDekC
• Realistically,  the numbers are probably doctored anyway though, so who really knows.  Nonetheless, if we do see PPI come hot, let’s look at what we can  expect:
• If  we look at VIX, there is very little buying ahead of PPI. Traders  aren’t particularly worried. Even if we look at VIX Futures, we are  seeing a lack of hedging. Front end is lower than 1 months go on VIX  futures, If market is going to drop significantly, then this has to move  higher.
• We can see this here:
• https://imgur.com/a/RIoJzP7
• Realistically,  if PPI comes hot, volatility will spike, then traders will sell Vol and  the market will likely recover. Money flows are very strong into SPX  and QQQ so this would make sense.
• Today, we are seeing more massive options block trades in the S&P 500 futures today, lots of put selling.
• Despite  my suspicions with PPI, risk reversal for Euro ticks higher. Traders  still expect EURUSD to move higher from here, after finding support at  1.07
• A look at some individual stocks:
• LYFT: Been in the news after that big push post earnigns (even despite the typo on the earnings report):
• Skew points higher. Traders are selling Puts. Gamma wall at 20 is quite sticky and I suspect it hits in coming days.
• https://imgur.com/a/K4fAgoP
• Note on Bitcoin:
• Starting to see some hedging activity here as IV in OTM call options is lowering.
• MARA:
• Traders want to buy the dip.
• Volatility  skew didn’t come down, despite the pullback yesterday. IV in OTM Call  options up, despite pullback. I think MARA has some room to run still,  especially with Coin earnings.
• NVDA:
• Seeing  hedging activity now. IV in OTM put options increasing. This is bring  skew down. Still elevated in OTM call options. Still bullish, but  definitely seeing some hedging here.
• https://imgur.com/a/pMdgEOJ

LEVELS TO WATCH will be posted later in the day, just before market opens. Have some things to attend to before market.

DATA LEDE:

• UK Retail Sales (Jan)
• YOY came 0.7% vs expectations of -1.4%. Previous reading was -2.4%
• Ex fuel that was also strong numbers, up 0.7% vs forecast of -1.6%.
• MOM we can see how good these numbers were, coming in at 3.4% MOM vs expectation of 1.5%. Last month was -3.3% MOM.
• So all in all strong retail sales numbers.
• ONS said that the monthly increase in retail sales was the biggest since April 2021.
• Swiss  Industrial Production Numbers come weak, sending CHF slightly lower.  Turn negative YOY again for Q4, and slight downward revision to Q4 YOY  numbers.
• US Building Permits (Jan)
• US Housing Starts (Jan)
• US PPI (Jan) – this is one of the underrated key prints. After ISM prices paid ticked up, there is risk PPI can tick up again.
• UMCH  Consmr Sent. (Feb) – 1 year inflation expectation number will be key.  Came soft last couple of prints. Expected to be soft again.

FED SPEAKERS:

• Bostic
• Barr
• Daly

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MARKETS:

• SPX up, almost back All time high. Closed at 5032. Moving higher to 5042, before PPI.
• Nasdaq: Nearing 18k again. Closed 17,888.
• DJI: 38,770, up from 38,700.
• Ger40  (DAX) hits new high of the year. This comes as the market consolidated  above 17k which meant that traders were forced to sell their hedges and  this pushed the market higher.
• Hong Kong sharply higher by 2.33%. Had closed above 16k during US session, now up to 16,340.
• Chinese market up with Hong Kong Market, but is closed for New Year so movement was more suppressed than Hong Kong.
• VIX: sold off further yesterday. Traders crushing VIX. Peaked at 18 on CPI day, now trading at 14.
• Not much buying of VIX ahead of PPI.
• Bond yields up slightly.
• OIL: down 1% ahead of PPI.

FOREX:

• Dollar slightly higher ahead of PPI. DXY trading at the 104.3 support.
• GBPUSD slightly higher, moved higher initially after storng retail sales.
• EURUSD higher again, moved slightly lwoer to 1.076 support, then pushed higher.
• AUDUSD flat ahead of PPI

INSTITUTIONAL:

• UBS  likens the put selling option blocks as alike to “picking up pennies in  front of a steamroller”. Says the trading activity may end badly.
• Bernstein  say to prepare for a FOMO rally in Bitcoin back to record highs.  Bernstein’s initial forecast anticipated a rally in Bitcoin’s value  after its halving event. Yet, considering the extraordinary success of  the ETF launch the best in 30 years and the continuous inflow into ETFs,  they now expect a significant Bitcoin rally to occur before the  halving.

EARNIGNS:

• DASH:
  CURRENT QUARTER:
• Rev $2.3B vs $2.2B est (beat by 4.5%)
• EBITDA $363M vs $357M est (beat by 1.6%)
• Revenue growth was up 27% YOY, driven by strong order growth and marketplace expansion.
• Marketplace GOV, surged 22% from previous year, showcasing platform’s growing scale.
• Improved unit economics and operational efficiencies, increase profitability improvement.
• Total orders: up 23% YOY, due to robust customer engagement, and platform growth.
• Sees 1Q:
• Order Value $18.5-18.9B vs $18.6B est (beat by 0.5%)
• EBITDA $320-380M vs $361M est (miss by 3%)
• Sees FY:
• Order Value $74-78B vs. $76.5B est (miss by 0.6%)
• EBITDA $1.5-1.9B vs. $1.6B est (beat by 6%)

COIN: – I was suspecting a strong return on Coin. This is because it’s  profitability is directly linked to activity and transaction volume for  Crypto What with the ETF approval and the build up to that, it was  fairly inevitable that they would see strong transaction volumes into  the print.

• Nonetheless, it is Surging after first quarterly profit in 2 years.
• Net income was 273M in Q4, first positive net income since Q4 of 2021.
• Net revenue up 50% YOU
• As expected, transaction revenue was the primary reason for revenues higher.

TTD:

• EPS of 0.41 missed expectations by 4.6%
• Revenue of 606M, was up 23% YOY and beat expectations by 4.2%
• EBITDA of 284m beat by 3.7%
• Saw strong growth in digital advertising sector
• Record 9.6B$ platform spend, 23% YOY growth.
• Net income grew to $97m, sign of good profitability and cost management.
• Innovating with Kokai, an advanced media buying platform.
• 95% customer retention
• GUIDANCE: Next Quarter:
• Revenue of at least $478m, beat expectations by 6%.
• EBITDA of 130m, beat by 14%
• Revenue change next quarter expected to be 25% YOY, better than the 18% expected.

YELP:

• EPS of 0.37 missed by 2.7%
• Revenue of 342.38 beat by 0.15%
• EBITDA for 2023 grew 23% to a record 330m.
• Net income grew to 99m, which represents a 7% net income margin.
• Advertising revenue – achieved 13% YOY growth, driven by strong demand in high intent ad clicks.
• Returned $200m to shareholders during 2023.
• Services sector grew 14%, home services excellent growth at 20%.
• OUTLOOK:
• Net revenue for 2024 at 1.43B, missed consensus by 2.1%
• Expected EBITDA to be from 315-335m.
• Said  they are planning to focus on service categories in 2024. New tools to  connect consumers with businesses, driving more leads for advertisers.

DKNG Summary:

• Current Quarter
• Rev $1.2B vs $1.2B est – in line
• EPS $0.29 vs $0.08 est – big beat
• Guidance: – mostly short of expectations
• 1Q EBITDA ~breakeven vs -$45M est
• 2Q EBITDA “nearly” $150M vs $165M est
• 4Q EBITDA “above” $300M vs $365M est
• FY EBITDA $410-510M vs $422M est
• FY FCF $310-410M vs. $370M est

————

MAG 7 NEws:

• APPLE  – Readying Ai tool to rival Microsoft’s Github Copilot. It’ll add more  AI capabilities, critical new software tool for app developers.
• NVDA – loop capital initiates coverage on NVDA at buy with price target of 1,200.
• AMZN – Bezos sells another $2b in shares. Bezos has now sold $6b worth over last week.
• MSFT – Xbox game pass service now has 34m subscribers, up 36% from the 25m previously reported 2 years ago.
• MSFT -0 OPenAI just dropped Sora, which generates AI video just from text. The video examples look pretty amazing.
• META  – implements 30% fee for boosted posts on iOS to offset Apple tax. Will  charge 30% fee for boosted posts on FB and instagram iOS apps. New way  for small advertisers to avoid apple fees.
• GOOGL  – unveils Geimini 1.5 Pro yesterday. Enhancing text and video handling  capabilities. A ialable to cloud customers and developers for testing  and application development.
• TSLA – Musk Tesla ownership has soared to 20.5%

———

OTHER COMPANIES:

• COIN – up on earnings, JMP raises price target to 220 from 200.
• NKE – will cut 2% of workforce, which amounts to 1,600 jobs in a bid to cut costs.
• LUCID  – has just approved a new multi million dollar bonus for its CEO Peter  RAwlinsonf or his performance. Shares are down 70% YOY
• LCID – cut prices by up to 8k or 9.5%. Quite big price cuts.
• DHI  – yesterday, Warren Buffet, who was previously a top 10 holder of DHI  (nations biggest homebuilder), exited his entire position after only  opening it in Q2 2023.
• AMAT – gains on Applied Materials outlook boost.
• F  – CEO says it will rethink where it builds vehicles after last years  UAW strikes. Said stop looking at Tesla’s FSD and look at Ford’s Pro  instead.
• LLY – MS say Eli Lily has upside and may reach $1T
• TOST – moving on earnigns. Also announced they will cut 550 workers.
• AMAT – up on strong earnings and outlook.
• ROKU – down 14%, wider Q4 loss than expected. Revenue beat estimates but EPS missed.

———

OTHER NEWS:

• ECB  governing council tally shows that the number of ECB members who see  cuts as premature is still the majority, but not overwhelmingly so.
• Ironically,  ECB’s Schnable was talking today saying that need to be careful not to  prematurely cut rates. Said monetary policy must remain restrictive  until can be confident that inflation will return to medium term target.
• Sam Altman is apparently not seeking to raise $7T for AI server Chips.
• BOJ  governor Ueda gave mixed, but mostly dovish commentary. Said that he  thinks accommodative monetary conditions will continue despite ending  negative rates (dovish)
• Will reassess easing measures only when price target in sight (dovish)
• Expects wages to increase slightly above 1.8% inflation forecast for Fiscal 2025. (Slight Hawkish)
• Japan  Finance minister Suzuki says its hard to identify the cause of a weak  yen. Said they are watching FX movements with urgency.
• Said when BOJ raises rates, it won’t mean their fight against deflation is over.
• Said its up to BOJ when to raise rates.
• German banks are apparently preparing for huge loan defaults in “greatest real estate crisis since Financial crisis” as per CNN
• Bostic  emphasises no rush to cut interest rates due to strong US economy.  Inflation not yet moving reliably towards 2%. Jan CPI probably an  outlier but inflation fight isn’t over. Hints at possible rate cut for  H2.
• Japan is considering an extension of gasoline subsidy beyond April, gradually phasing out by Summer.
• BoA EPFR data, investor flows to stocks, and away from Gold.
• 16th straight week of inflows to investment grade bonds.
• Outflow from cash was the largest this week in the last 8 weeks.
• UK Labour Party wins Kingswood by election in SW England, as they defeat conservative rival.
• White  House confirms that Russia is developing an anti-satellite weapon.  Represents as serious concern but no active threat to American safety.
• Whitehouse says that Ukrainian frontline town is at risk of falling to Russia now.