🕵🏻‍♂️ China Investigates Nvidia

Good afternoon! TikTok’s future in the U.S. just took a hit, with a federal court upholding a law that could kick the app out of the country by January 2025 unless ByteDance sells it. TikTok, unsurprisingly, isn’t going down quietly—it’s taking the fight to the Supreme Court, calling the ban a violation of free speech. With 170 million users in the U.S., this isn’t just a platform issue, it’s a cultural one.

Critics were quick to pounce. The ACLU slammed the decision as a “blow to free expression,” while civil liberties groups warned of government overreach. As TikTok’s millions of fans wonder if their scroll sessions are numbered, the political and legal drama is just getting started.

MARKETS

• Stocks slid Monday, with the S&P 500 and Nasdaq dropping 0.6% and the Dow falling 0.5%. Nvidia led tech lower after news of a Chinese antitrust probe, pulling markets back from Friday’s record highs.

• Nine of the 11 S&P sectors ended in the red as traders braced for this week’s inflation report. With markets already eyeing their best year since 2019, all eyes are on what the data means for Fed rate decisions.

STOCKS
Winners & Losers

What’s up 📈

• SolarEdge Technologies soared 11.74% after announcing the launch of its US-made home battery, qualifying for significant tax credits under the Inflation Reduction Act. ($SEDG)

• Workday climbed 5.06% following its upcoming inclusion in the S&P 500, boosting investor confidence. ($WDAY)

• Rivian Automotive jumped 11.15% after Benchmark analysts initiated coverage with a "buy" rating. ($RIVN)

• Hershey gained 10.85% on reports that Mondelez is again considering acquiring the company. ($HSY)

• China-based stocks rallied after China’s Politburo pledged to ease monetary policy:

  • PDD Holdings surged 10.45%. ($PDD)

  • JD. com gained 11%. ($JD)

  • Alibaba added 7.44%. ($BABA)

  • Tencent rose 4.99%. ($TCEHY)

  • Nio climbed 12.36%. ($NIO)

  • Trip. com advanced 8.67%. ($TCOM)

What’s down 📉

• AppLovin tumbled 14.68% after being excluded from the S&P 500, disappointing investors who had speculated on its addition. ($APP)

• Rent the Runway plunged 21.84% despite beating revenue estimates, as management issued a downbeat fiscal outlook. ($RENT)

• Comcast dropped 9.50% after projecting the loss of another 100,000 subscribers in Q4. ($CMCSA)

• AMD slid 5.57% after Bank of America downgraded the stock, citing competitive risks from Nvidia. ($AMD)

• SoFi Technologies fell 2.80% after a Bank of America downgrade to "underperform," arguing the stock is overvalued following a recent rally. ($SOFI)

REGULATORY
China Opens Probe Into Nvidia, Adding Heat to Global Tech War

Nvidia just found itself in Beijing’s crosshairs.

Chinese regulators launched an antitrust probe into the U.S. chip giant over its $7 billion Mellanox acquisition from 2020. The investigation centers on whether Nvidia violated conditions set at the time of the deal, like ensuring fair treatment of Chinese firms. Shares of the chipmaker dipped 2.55% on the news, a minor dent considering the company’s meteoric 188% rise this year.

Escalation in a Global AI Arms Race

This isn’t just about chips; it’s the latest salvo in the U.S.-China tech cold war. The Biden administration’s export bans on advanced AI chips, including those from Nvidia, aim to curb China’s military and tech ambitions.

Meanwhile, China’s response includes restricting exports of key raw materials and now flexing its regulatory muscle on Nvidia. Adding to the tension, President-elect Trump has promised steep tariffs on Chinese goods, potentially deepening the rift.

Nvidia’s Global Scrutiny

China isn’t the only one with questions about Nvidia’s dominance. U.S. and European regulators have also probed the chipmaker for antitrust violations in the past year, focusing on whether it’s leveraging its market power to unfairly edge out competition.

While these cases often take years to resolve, they underline the risks of being the top player in the AI chip market—a sector critical for everything from large language models to military tech.

The Bigger Picture

Despite the regulatory clouds, Nvidia remains an investor favorite, riding high on AI’s explosive growth. But the ongoing scrutiny shows how geopolitical tensions and regulatory backlash can weigh even on the most successful players. For Nvidia, this could be a long game of managing compliance while staying ahead of rivals in the AI arms race.

The takeaway? Nvidia’s dominance might still be intact, but the scrutiny underscores how its position at the heart of the U.S.-China tech battle is both an asset and a liability.

NEWS
Market Movements

• 🚗 Volkswagen Strike Intensifies: Workers at nine German Volkswagen plants escalated strikes. Union leaders warned of unprecedented industrial action next year unless management offers better terms. ($VWAGY)

• 🔍 Google Overhauls Search: Google CEO Sundar Pichai unveiled AI-driven upgrades to Google Search set for 2025, promising improved capabilities through updates like Gemini to address complex user queries. ($GOOGL)

• 🏆 Apple Tops Management Rankings: Apple secured the top spot on the Management Top 250 list for 2024, lauded for financial strength and innovation. Mastercard surged to fifth place, with Nvidia and Microsoft also ranking in the top four. ($AAPL) ($MA) ($NVDA) ($MSFT)

• ⚖️ Google Challenges CFPB Oversight: Google filed a lawsuit against the CFPB, arguing that placing Google Payments under federal supervision is unjustified. The case could set a precedent for Big Tech regulation. ($GOOGL)

• 🛍️ Macy’s Faces Activist Pressure: Barington Capital is urging Macy’s to establish a $5–$9 billion real estate subsidiary, spin off Bloomingdale’s and Bluemercury, cut costs, and authorize $2–$3 billion in stock buybacks. ($M)

• 🏗️ Dow Sells Stake in U.S. Assets: Dow Inc. announced the sale of a 40% stake in its Gulf Coast infrastructure assets to Macquarie for $2.4 billion, with additional upside possible if Macquarie increases its stake. ($DOW)

• ⚖️ CFPB Sues Comerica Bank: The CFPB has filed a lawsuit against Comerica Bank, alleging mishandling of the Direct Express federal benefits program, including call disconnections and improper ATM fees. ($CMA)

• 📊 Omnicom-Interpublic Merger in the Works: Omnicom is nearing a $13–$14 billion all-stock acquisition of Interpublic Group, aiming to create the world’s largest advertising firm with over $20 billion in annual revenue. ($OMC) ($IPG)

FOOD
Mondelez Takes Another Bite at Hershey

Oreo and Ritz powerhouse Mondelez International has rekindled its interest in acquiring Hershey, the maker of Reese’s and Kisses, in a deal that could create a global snacks behemoth with $50 billion in combined sales.

Hershey shares surged over 10% following the news, marking their best day since Mondelez’s first takeover attempt in 2016. Back then, Hershey rejected a $23 billion bid, and Mondelez walked away.

Sweet Opportunity or Sticky Situation?

Mondelez’s approach comes amid challenges for Hershey, including record-high cocoa prices and competition from health-conscious trends like GLP-1 weight-loss drugs. While Hershey’s iconic chocolate brands remain household names, the company recently lowered its sales outlook, citing inflation-weary consumers.

The Hershey Trust, which holds 80% of the company’s voting stock, remains a key player in any potential deal. Its approval is essential, and history suggests they’re not easily swayed.

The Stakes Are High

This deal wouldn’t just be about chocolate. It’s a response to broader pressures in the packaged food sector, where companies are seeking mergers to combat slowing growth and rising costs. Mondelez, whose portfolio includes Toblerone and Cadbury, is no stranger to M&A and sees Hershey as a gateway to bolstering its North American dominance while expanding into new global markets.

But there’s a bitter side. Pennsylvania law could allow the state attorney general to step in if the Hershey Trust loses significant power, a hurdle that has derailed past attempts to acquire the chocolate maker. And let’s not forget the Federal Trade Commission, which might scrutinize such a large deal in today’s antitrust-focused climate.

Takeaway: A Mondelez-Hershey merger could redefine the global snack landscape, but it’s far from a done deal. With regulatory hurdles and Hershey’s storied independence at play, the outcome might hinge on whether Mondelez can sweeten its offer enough to satisfy both the Hershey Trust and cautious regulators.

Calendar
On The Horizon

Tomorrow

The NFIB Optimism Index offers a snapshot of how small businesses are feeling across the U.S., measuring trends in hiring, inventory levels, and overall confidence. These businesses, often the backbone of the economy, provide key insights into broader economic health.

Last month, optimism ticked up but stayed below the index's 50-year average, while uncertainty reached record highs. With the election now in the rearview mirror, economists are watching closely to see if small business owners feel more secure about what’s ahead.

Before Market Open:

• AutoZone missed estimates last quarter despite posting growth on both revenue and earnings. Shareholders are hoping for a stronger showing this time, and long-term trends are working in AutoZone’s favor. As cars last longer, they require more upkeep, making AutoZone a go-to for repairs and gear. Even if this quarter falls short, Wall Street remains bullish, with 16 of 20 analysts rating the stock a “buy.” Consensus: $33.69 EPS, $4.31 billion in revenue. ($AZO)

After Market Close:

• GameStop is still clinging to its meme stock glory days, as evidenced by its latest surge following a Roaring Kitty post on X. While the videogame retailer has yet to outline how it plans to use the cash pile it amassed during its meme-fueled peak, investors continue to enjoy the ride. Consensus: -$0.03 EPS, $887.7 million in revenue. ($GME)

NEWS
The Daily Rundown

• 🔫 UnitedHealthcare CEO Shooting: Person of Interest Apprehended: Luigi Mangione, a 26-year-old Towson, Maryland native, has been identified as a person of interest in the fatal shooting of UnitedHealthcare CEO Brian Thompson. Arrested in Altoona, Pennsylvania, Mangione was found with a silencer-equipped "ghost gun" similar to the weapon used in the killing, as well as a fake New Jersey ID. Police credit his arrest to surveillance footage and a tip from a McDonald’s employee. The investigation is ongoing as authorities work to confirm connections to the targeted attack.

• 🪙 Trump Retains Powell, Avoids Inflation Promises: President-elect Trump confirmed he will not remove Jerome Powell as Fed chair, easing concerns about Fed independence. However, Trump declined to promise his proposed tariffs won’t spike prices, and reiterated plans for mass deportations and ending birthright citizenship—policies likely to face legal challenges.

• 🌍 Syrian Rebels Oust Assad, Geopolitical Shift Ensues: Syrian rebels toppled President Bashar al-Assad’s regime, taking Damascus and ending a 50-year authoritarian dynasty. Assad fled to Moscow, marking a significant setback for Russia and Iran, which had supported his government.

• 🏈 College Football Unveils 12-Team Playoff Field: The first-ever 12-team college football playoff bracket was announced, with SMU taking the final spot over Alabama. Top seeds include Oregon, Georgia, Boise State, and Arizona State, vying for a $115 million prize pool.

• 📊 Juan Soto Becomes Baseball’s $765 Million Man: MLB superstar Juan Soto signed a 15-year, $765 million deal with the New York Mets, surpassing Shohei Ohtani's record contract. The historic deal solidifies the Mets’ dominance in New York baseball under owner Steve Cohen.

• 🇰🇷 South Korean President Faces Growing Turmoil: South Korea’s President Yoon Suk Yeol narrowly avoided impeachment by eight votes on Saturday after briefly declaring martial law last week. However, the drama intensifies as prosecutors launch investigations into Yoon for treason and abuse of power.

• 🎥 Moana 2 Smashes Global Box Office: Disney’s Moana 2 continued its box office dominance, crossing the $600 million mark globally after another blockbuster weekend. The film is on pace to become one of the year’s highest-grossing releases.

• 💎 Ruby Slippers Fetch Record $28 Million: Judy Garland’s iconic ruby slippers from The Wizard of Oz, stolen in 2005, were sold at auction for a jaw-dropping $28 million. The sale shattered expectations, which had placed their value at $3 million.

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