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🚀 Drones Are Soaring on Wall Street

+ Bitcoin Hits $107K

December 16, 2024

Good afternoon! McKinsey & Co. just shelled out $650 million to settle investigations into its not-so-secret role in the opioid epidemic. The consulting powerhouse admitted to advising Purdue Pharma on how to crank up OxyContin sales—even while knowing the risks. From 2004 to 2019, McKinsey raked in $93 million across 75 projects, with tips like “turbocharging” sales. Now, it’s banned from working on controlled substances for the next five years.

This isn’t McKinsey’s first mea culpa. Back in 2021, it cut a $573 million check to settle with states over similar allegations. In its latest statement, McKinsey expressed “profound regret” over its involvement, but critics are unlikely to let this one slide as the fallout from the opioid crisis continues.

MARKETS

*Stock data as of market close*

  • The Nasdaq kicked off the final stretch of 2024 with a bang, climbing 1.2% to a fresh record close as Big Tech rallied hard. Alphabet, Tesla, Amazon, and Apple all hit new highs, while the S&P 500 edged up 0.4%. Meanwhile, the Dow? It dipped 0.3%, marking its eighth straight loss—the longest losing streak since 2018.

  • Investors are laser-focused on the Fed’s last meeting of the year, starting Tuesday. Hopes are high for one more rate cut to cap off 2024. While tech stocks keep stealing the spotlight, more traditional sectors are struggling to keep pace, leaving the Dow looking tired as the year winds down.

STOCKS
Winners & Losers

What’s up 📈

  • Broadcom surged 11.21% after beating fiscal Q4 earnings expectations and announcing AI revenue that tripled for the year. Broadcom is also working on custom AI chips with three large cloud customers. ($AVGO)

  • Tesla climbed 6.14% to an all-time high after Wedbush raised its price target to $515, citing expected benefits from a second Trump administration. ($TSLA)

  • Honeywell rose 3.68% amid reports of a potential aerospace spinoff, supported by activist investor Elliott Management. ($HON)

  • Crypto stocks rallied, with Mara Holdings soaring 8.05%, Robinhood rising 7.46%, and Coinbase gaining 1.52%, following a statement by Michael Saylor suggesting Mara could join the Nasdaq 100. ($MARA, $HOOD, $COIN)

  • Micron Technology advanced 5.62% ahead of its quarterly earnings, with analysts forecasting strong results. ($MU)

  • Capri Holdings climbed 3.70% after reports that the company is exploring potential buyers for Versace and Jimmy Choo. ($CPRI)

  • Alphabet added 3.60% to reach a 52-week high, buoyed by Jefferies naming it a top tech stock for 2025. ($GOOGL)

What’s down 📉

  • Super Micro Computer fell 8.26% after news that the company hired Evercore ISI to help raise equity and debt capital, raising delisting concerns despite reassurances from the CEO. ($SMCI)

  • Ford Motor declined 3.85% after Jefferies downgraded the automaker to "underperform," citing inventory overhang and struggles in Europe. ($F)

  • Healthcare stocks took a hit following Trump’s comments about eliminating middlemen in the industry, with CVS Health dropping 5.61%, UnitedHealth down 4.22%, and Cigna losing 3.05%. ($CVS, $UNH, $CI)

  • Nvidia slipped 1.68%, marking a 10% decline since its record close in early November and officially entering correction territory. ($NVDA)

AEROSPACE
Drones Are Soaring on Wall Street

Move over crypto and EVs, drones are the new darlings of both Wall Street and Reddit’s r/WallStreetBets. Shares of Red Cat Holdings (RCAT) skyrocketed 27% Monday after announcing a partnership with Palantir Technologies to integrate advanced visual navigation software into their drones.

This AI-driven upgrade promises drones that don’t need GPS or radio control signals—a big win for military and government applications.

Retail Traders Take Flight: Red Cat isn’t just a hit with investors; it’s dominating Reddit’s meme-stock hub. The stock surged to the sixth-most popular ticker on r/WallStreetBets, gaining over 1,625% in mentions over the past 24 hours, according to Quiver Quantitative. With retail traders piling in, Red Cat’s 2024 performance is up a jaw-dropping 1,129%.

Other drone stocks also caught some tailwinds:

  • Unusual Machines (+17.93%) got a lift from its Trump Jr. advisory board buzz. ($UMAC)

  • Kratos Defense and Security Solutions (+5.40%) and Aerovironment (+7.86%) joined the rally.

Drones Are Having a Moment: It’s not just hype fueling the drone frenzy. Rising geopolitical tensions and an incoming Trump administration suggest increased spending on U.S.-made drones. Analysts are also bullish on federal and local governments ramping up counter-drone tech investments for public spaces like stadiums and airports.

Meanwhile, those mysterious drone sightings in New Jersey and across the Northeast have kept drones in the public eye—adding an element of intrigue (and meme potential).

Reality Check: While Red Cat’s stock soared during the day, after-hours trading brought turbulence. The company reported a revenue drop from $3.9 million to $1.5 million in the second quarter and widened its losses to 18 cents per share. CEO Jeff Thompson said the company paused production of its Teal 2 drones to focus on its next-gen Black Widow, prioritizing long-term growth.

The takeaway? Investors are betting big on drones, but as Red Cat’s mixed results show, not all growth stories take a straight path to the sky.

NEWS
Market Movements

CRYPTO
Bitcoin Hits $107K: Bulls Keep the Party Going

The crypto king just smashed through $107,000, its latest all-time high after seven straight weeks of gains—the longest streak since 2021. Bitcoin is now up a casual 149% this year and 52% since the U.S. election. Not bad for a digital asset once pronounced dead roughly 426 times.

Rate Cuts, Reserves, and Trump’s Crypto Cheerleading: Today’s rally comes with a double-shot of market optimism. First, investors are nearly certain the Federal Reserve will cut interest rates this week (96% chance, according to CME’s FedWatch Tool), which is music to Bitcoin’s ears. Lower rates = weaker dollar = Bitcoin-friendly environment.

Second, the crypto crowd is buzzing after Donald Trump reiterated his plan to establish a national bitcoin strategic reserve in a CNBC interview. It’s a move that feels ripped from the playbook of oil reserves but could cement Bitcoin as part of the financial infrastructure. Trump summed it up with, “We’re going to do something great with crypto.”

MicroStrategy: All-In on Bitcoin: If you’re looking for a Bitcoin proxy without forking over six figures for a whole coin, there’s MicroStrategy —the unofficial Bitcoin stock. Founder Michael Saylor, never one to undersell his bets, compared investing in Bitcoin today to “buying Manhattan 300 years ago.” The company doubled down on its BTC obsession, purchasing another 15,350 BTC last week, bringing its total haul to a staggering 439,000 coins worth $46 billion.

Oh, and starting Monday, MicroStrategy joins the Nasdaq-100 index, meaning funds tracking the index will need to load up on its shares.

The Takeaway: Hot Streak, Cautious Feet: While the crypto market feels like a money printer right now, the pros still recommend treading carefully. Bitcoin’s price may be sky-high, but wild swings come with the territory. Whether you're HODLing or watching from the sidelines, one thing’s for sure: it’s never boring in Bitcoin-land.

Calendar
On The Horizon

Tomorrow

With the year winding down, analysts are shifting their attention from spreadsheets to holiday festivities, leaving tomorrow's earnings calendar looking pretty bare.

Still, a couple of key economic reports are on tap. US retail sales data will offer clues about the strength of holiday shopping, while the homebuilder confidence index will hint at what 2025 might hold for the housing market. The real spotlight, though, is on the Federal Reserve. The central bank kicks off its last meeting of the year tomorrow, with markets anxiously awaiting Wednesday’s decision on interest rates and any signals about what’s ahead.

NEWS
The Daily Rundown

  • 💼 Tech CEOs Rally at Mar-a-Lago Amid Political Power Shift: America’s top tech executives, including Google’s Sundar Pichai, Apple’s Tim Cook, and Meta’s Mark Zuckerberg, are meeting President-elect Trump to rebuild ties. Amazon’s Jeff Bezos is next in line as tech leaders pledge $1 million each to Trump’s inaugural fund, hoping to influence policies that could shape their businesses. Once critics of Trump, they now aim to repair relationships amid concerns about Elon Musk’s growing political clout.

  • ✈️ New Jersey Drone Panic Deemed a False Alarm: New Jersey Senator Andy Kim concluded many reported drone sightings were likely planes after a night of investigation. Despite no evidence of illegal activity, the Department of Homeland Security faces pressure to address public concerns as investigations continue.

  • 💰 ABC News Settles Trump Defamation Case for $15 Million: To resolve a defamation lawsuit involving anchor George Stephanopoulos, ABC agreed to fund Trump’s presidential library. The lawsuit stemmed from false on-air claims, marking a rare concession by the network amidst Trump’s frequent legal battles with media outlets.

  • ⚖️ High-Profile Lawyer Joins UnitedHealthcare Shooting Case: Luigi Mangione, the suspected shooter in the UnitedHealthcare CEO case, retained prominent NYC attorney Karen Friedman Agnifilo. Legal experts suggest Mangione may pursue an “extreme emotional disturbance” defense as evidence mounts against him.

  • 🕰️ Trump Pushes for Permanent Standard Time: President-elect Trump reignited the daylight saving debate, proposing permanent standard time to cut costs and align with circadian rhythms. While Americans largely support ending clock changes, past legislative efforts have stalled, leaving the proposal’s fate uncertain.

  • 🚗 Hot Wheels Zooms Ahead as Bestselling Toy: Mattel’s Hot Wheels continues to dominate the toy market, selling 709 million units annually—22.5 cars per second. With over $1.43 billion in sales last year, the 56-year-old brand remains a favorite across generations, from kids to collectors.

  • 🌊 Russian Oil Tankers Spill in Black Sea: Two Russian oil tankers were severely damaged during a storm in the Black Sea, leading to a significant oil spill. One tanker, the Volgoneft-212, split in half, spilling thousands of barrels of heavy fuel oil into the Kerch Strait. One crew member is presumed dead, and rescue operations are ongoing.

  • 🔍 OpenAI Whistleblower Found Dead: Former OpenAI researcher and whistleblower Suchir Balaji, who had publicly accused the company of violating U.S. copyright laws, was found dead in his San Francisco apartment on November 26. Authorities have ruled his death a suicide. Balaji had expressed concerns over the ethical implications of AI technologies and their potential infringement on copyright laws.

  • 🌩 San Francisco's First Tornado Warning: San Francisco residents were awakened on Saturday to the city's first-ever tornado warning, issued by the National Weather Service. While no tornado touched down in the city, a rare EF1 tornado with winds up to 90 mph struck Scotts Valley in Northern California, causing injuries and significant damage.

  • 📚 James Patterson's Holiday Generosity: Author James Patterson continued his tradition of supporting independent bookstores by awarding $500 holiday bonuses to 600 bookstore employees across the United States. This initiative, which Patterson began in 2015, aims to recognize the vital role of booksellers in promoting literacy and supporting communities.

RESOURCES
The Federal Reserve Resource

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