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🏦 Big US Banks Profit Surge

+ CPI Inflation Surprise

January 15, 2025

Good afternoon! Spain’s Prime Minister Pedro SĂĄnchez is pushing for a bold 100% tax on home purchases by non-EU buyers to tackle the country’s housing crisis. In 2023, non-residents bought 27,000 properties—mostly for investment, not living—fueling concerns about affordability for locals. SĂĄnchez says it’s time to prioritize residents over speculators, though details on how the tax will be implemented remain unclear.

The proposal has some UK buyers already looking elsewhere, with concerns about resale limitations and future taxes. Critics argue that non-EU buyers typically target luxury homes, which doesn’t address the shortage of affordable housing. Meanwhile, the government is also cracking down on Airbnb-style rentals and transferring thousands of homes to public housing in an effort to cool the market.

MARKETS

*Stock data as of market close*

  • Wall Street kicked off earnings season with a bang as inflation cooled just enough to give investors a reason to rally. The Dow soared over 700 points, the S&P 500 climbed 1.8%, and the Nasdaq surged 2.5%, snapping its five-day losing streak. December’s core inflation reading came in at 3.2%, slightly below the 3.3% forecast—a win for anyone hoping the Fed stays friendly in 2025.

  • The lighter inflation report sent bond yields sliding, with the 10-year Treasury yield dropping 0.13 percentage points—the steepest dip in weeks. Big banks also set the tone with earnings beats, giving stocks another boost. It was the best trading day for all three major indexes since early November, shaking off early-year jitters and putting rate-cut optimism back on the table.

STOCKS
Winners & Losers

What’s up 📈

  • IonQ soared 33.48%, D-Wave Quantum surged 22.41%, and Rigetti Computing jumped 22.23% after Microsoft's Quantum-Ready program announcement bolstered sentiment for quantum computing stocks. ($IONQ, $QBTS, $RGTI)

  • Robinhood Markets popped 9.10% after Bernstein and Morgan Stanley named it a top stock pick for 2025. ($HOOD)

  • BNY Mellon increased 8.03% after reporting Q4 EPS of $1.72, beating the $1.56 estimate. ($BK)

  • Citigroup climbed 6.49% after beating Q4 expectations with $1.34 EPS on $19.58 billion in revenue. ($C)

  • Goldman Sachs rose 6.02% following strong Q4 results, with $11.95 EPS on $13.87 billion in revenue, topping forecasts. ($GS)

  • Wells Fargo added 6.69% after issuing strong net interest income guidance and reporting $1.42 adjusted EPS. ($WFC)

  • BlackRock gained 5.19% after posting adjusted Q4 earnings of $11.93 per share, above the $11.19 estimate. ($BLK)

What’s down 📉

  • Calavo Growers dropped 6.79% despite strong quarterly sales growth, with concerns over profit margins weighing on shares. ($CVGW)

  • Applied Digital fell 1.99% after reporting larger-than-expected losses last quarter. ($APLD)

BANKS
Big US Bank Profits Surge as Biden Era Comes to a Close

The Biden era is wrapping up, but big banks are still cashing in. JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo closed 2024 with their second-best year ever, raking in over $100 billion in combined profits—thanks to wild market swings, dealmaking back from the dead, and Trump’s election rallying corporate optimism.

JPMorgan made history as the first U.S. bank to hit $58 billion in annual profit, with Q4 earnings up 50%. Goldman Sachs doubled its quarterly profits, while Wells Fargo saw investment banking fees surge 62%. Citigroup wasn’t left behind—it posted a 40% bump in annual net income, setting records in services, wealth management, and U.S. personal banking.

Powered by Volatility

The wild card? Market turbulence. Strong job numbers and Trump’s policy teasers fueled Q4 volatility that handed banks a trading jackpot. JPMorgan’s trading revenue spiked 21%, while Citigroup’s market units posted a 36% annual gain. Goldman’s investment banking fees jumped 24% in Q4 alone as companies rushed to close deals before any policy surprises hit.

Higher interest rates also gave lending revenues a boost. JPMorgan raised its 2025 guidance to $90 billion in net interest income, up from its December estimate. But not everything was smooth sailing—JPMorgan’s consumer unit profits fell 6% as borrowers felt the heat from rising rates.

What’s on the Horizon

With Trump back in the driver’s seat, Wall Street is eyeing looser regulations and a green light for bigger corporate deals. Citigroup wasted no time, unveiling a $20 billion stock buyback plan. Goldman’s CEO David Solomon hinted at a “more constructive” regulatory environment ahead, while Jamie Dimon emphasized the need for transparency and fairness—not weaker oversight.

But it’s not all roses. Inflation, geopolitical tensions, and an unpredictable Fed could shake things up. For now, though, Wall Street’s titans are feeling good—shares of major banks surged 5% to 7% after their earnings reports.

Dimon summed it up best: “It’s about setting clear, fair rules—not weakening regulation.” Clear or not, the banks seem poised for another big year.

NEWS
Market Movements

  • 🚜 Deere Sued by FTC: The FTC filed a lawsuit against Deere & Co., alleging a monopoly on repair services that raises costs for farmers. The suit claims Deere’s exclusive repair software forces customers to use authorized dealers, limiting access to affordable fixes. Deere’s stock fell slightly following the news. ($DE)

  • ✈️ Boeing’s Delivery Woes: Boeing delivered just 348 aircraft in 2024, its lowest since the pandemic, due to supply chain issues and regulatory scrutiny. Meanwhile, Airbus delivered 766 planes, further widening the gap. Boeing’s order backlog remains strong at 5,595 planes. ($BA)

  • 💰 Robinhood Fined: The SEC fined Robinhood $45 million for violations related to data security and accounting errors between 2019 and 2023. The company stated the issues have been resolved. This fine adds to regulatory scrutiny following Robinhood’s rise during the meme-stock era. ($HOOD)

  • 🏈 DirecTV Launches Sports Streaming Service: DirecTV has introduced "MySports," a $70/month streaming service featuring live NFL, NBA, and MLB games. The service aims to attract cord-cutters seeking live sports without cable subscriptions. ($T)

  • ⚖️ Mastercard Settles Discrimination Suit: Mastercard agreed to pay $26 million to settle a pay discrimination lawsuit involving 7,500 employees. The settlement includes pay audits and bias reviews, though the company denied wrongdoing. ($MA)

  • ☕ Starbucks Ends Open-Door Policy: Starbucks is limiting restrooms to paying customers as part of a new strategy to improve store safety and customer experience. The policy shift has sparked mixed reactions from customers. ($SBUX)

  • 📈 JPMorgan's Record Profit: JPMorgan Chase reported a 50% increase in Q4 profit, reaching $14 billion, driven by net interest income and strong fixed-income trading results. Revenue grew 10% to $43.74 billion, exceeding expectations, as noninterest expenses dropped 7%. CEO Jamie Dimon attributed the gains to economic resilience and reiterated concerns over inflation and geopolitical risks. ($JPM)

  • 📈 Wells Fargo Earnings Beat: Wells Fargo posted Q4 net income of $5.1 billion, up 47% from the previous year, with earnings per share hitting $1.58, surpassing estimates. Investment banking fees rose 59%, and the bank returned $25 billion to shareholders through buybacks. Shares jumped 5% following strong 2025 guidance. ($WFC)

  • 💼 Citigroup's Turnaround: Citigroup swung to a $2.86 billion Q4 profit, compared to a $1.84 billion loss a year earlier. Revenue grew 12%, with investment banking revenue up 35% amid strong debt issuance. CEO Jane Fraser highlighted cost reductions and a $20 billion stock buyback plan to enhance shareholder returns. ($C)

INFLATION
CPI Surprise — Inflation Cools, Markets Heat Up

December’s CPI report delivered a rare win for inflation-watchers. Headline CPI rose 0.4%—no surprises there—but core CPI, which cuts out volatile food and energy prices, increased just 0.2%, coming in cooler than the 0.3% Wall Street expected. The annual core rate ticked down to 3.2%. Translation: inflation isn’t disappearing, but it’s learning to chill.

What’s Driving It:

  • Energy spike: Gasoline surged 4.4%, responsible for nearly half the monthly inflation jump.

  • Housing gains: Rent and homeowners’ equivalent rent rose 0.3%—slower, but still sticky.

  • Eggs? Really? Egg prices cracked another 3.2%, thanks to avian flu disruptions.

Despite lingering pressure from housing and fuel, tame rent increases and cheaper hotel stays helped keep core inflation in check.

The Fed’s Dilemma

While the CPI report is good news, the Fed won’t celebrate just yet. Policymakers are cautious after last week’s strong jobs report, which keeps rate cuts out of reach for January. But March? That’s suddenly in play if the inflation cooldown continues.

Wall Street pros are now pricing in at least one rate cut in 2025—and they’re leaning toward two. Investors sent stocks soaring while Treasury yields nosedived, signaling renewed optimism.

Looking Ahead

Biden’s last CPI report closes the books on an era of post-pandemic price surges. Trump’s return to the White House brings tariff chatter and potential policy shifts that could stir inflation all over again. For now, though, markets are happy to bask in the glow of a tamer inflation reading—and they’re hoping this isn’t just a one-hit wonder.

Calendar
On The Horizon

Tomorrow

With the CPI report out of the way, the rest of this week’s economic updates feel more like side dishes than the main course. December retail sales will show whether shoppers went big or kept it chill during the holidays, while import and export prices will give a peek into the US trade picture. Plus, the NAHB housing market index will clue us in on where homebuilder sentiment stands.

On the earnings front, the banks are still stealing the spotlight—Bank of America, Morgan Stanley, and PNC Financial are all set to report. But it’s not just finance on deck—some non-financial heavyweights are also stepping up to the mic tomorrow.

Before Market Open:

  • Taiwan Semiconductor Manufacturing Company isn’t just another chipmaker—it’s the semiconductor sector’s earnings-season curtain-raiser. Investors are bracing for clues on whether the AI boom is cooling or still packing heat. Despite concerns, TSMC already pre-announced a stellar 57.8% year-over-year sales jump for December, solidifying its status as a dominant player in the game. Expectations are set at $2.16 EPS and $26.38 billion in revenue. ($TSM)

  • UnitedHealth Group’s earnings call is shaping up to be anything but routine. Alongside the usual financials, management will likely face tough questions about the recent tragedy involving an executive and ongoing scrutiny over the company’s influence on healthcare policy. But with all 19 analysts giving it a “buy” rating, Wall Street’s faith remains strong. Consensus calls for $6.92 EPS and $101.09 billion in revenue. ($UNH)

NEWS
The Daily Rundown

  • 🤝 Israel and Hamas agree to ceasefire and hostage deal: Reports indicate that Israel and Hamas have reached a draft agreement that could result in a 42-day ceasefire and the release of hostages by Hamas in exchange for Palestinian prisoners. The deal, which still requires approval from the Israeli government, was brokered with the support of U.S. officials. If finalized, the Biden administration’s efforts to mediate the conflict will be handed over to the incoming Trump administration for implementation.

  • 🛍️ Walmart debuts a bold new logo: Walmart revealed its first logo redesign since 2008, opting for a bolder font and a brighter hue called "True Blue." The updated branding pays homage to the company’s founder, Sam Walton, and reflects Walmart's evolution as a retail powerhouse. The company has already rolled out the new design at its flagship store in Arkansas, signaling an effort to modernize its look while maintaining strong brand recognition.

  • 📲 TikTok “refugees” flock to another Chinese app: Amid concerns of a looming TikTok ban in the U.S., Americans are flocking to RedNote, a Chinese video-sharing app that recently became the most downloaded app in the Apple App Store. Known as Xiaohongshu in China, the platform caters primarily to lifestyle content, with users posting everything from fashion tips to travel recommendations. However, the app's strict censorship on politically sensitive topics, such as LGBTQ+ issues and drug-related content, sets it apart from TikTok and may limit its long-term appeal among Western audiences.

  • 🛡️ Hegseth grilled over excessive drinking, sexual assault allegations: Pete Hegseth, Trump's controversial pick for defense secretary, faced intense questioning at a Senate confirmation hearing over accusations of workplace misconduct, including excessive drinking and inappropriate behavior. The former Fox News host and Army veteran denied all allegations but deflected inquiries about past comments opposing women in combat roles. To secure his appointment, Hegseth must gain support from at least 50 Republican senators amid concerns about his suitability for the role.

  • 💼 JPMorgan leadership shake-up: Daniel Pinto, COO and president of JPMorgan Chase, has announced plans to retire by 2026 after more than three decades at the bank. His departure opens the door for Jennifer Piepszak, co-CEO of the corporate and investment banking division, to step into the COO role. Despite being considered a potential successor to CEO Jamie Dimon, Piepszak has expressed no interest in the top position, adding uncertainty to the bank's leadership succession plans. ($JPM)

  • 🏈 DirecTV launches sports streaming service: DirecTV has unveiled a new sports streaming service priced at $70 per month, offering live games and exclusive content from major leagues, including the NFL. The service is designed to attract cord-cutters seeking flexible viewing options outside traditional cable bundles. By launching this platform, DirecTV aims to position itself as a competitive player in the expanding sports streaming market, which has seen increasing demand for on-demand access to live sports events.

  • ⚖️ Special Counsel Jack Smith’s final report: Special Counsel Jack Smith released a final report asserting that Donald Trump would likely have been convicted of election interference had the case gone to trial. The report details Trump’s alleged attempts to overturn the 2020 election, including pressuring state officials and inciting the January 6 Capitol riot. However, the Department of Justice dropped the case after Trump’s 2024 presidential victory, citing its policy against prosecuting sitting presidents.

  • 👑 Kate Middleton’s remission announcement: The Princess of Wales, Kate Middleton, revealed that she is in remission after privately battling cancer for the past year. She first disclosed her diagnosis in March 2024 and completed chemotherapy by September. Middleton expressed her gratitude for the support she received and plans to resume her public duties in 2025, with a focus on raising awareness for cancer research and patient care.

  • ⚖️ CFPB sues Capital One over $2B in lost interest: The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Capital One, accusing the bank of misleading customers by promoting low-yield 360 Savings accounts instead of its higher-interest 360 Performance Savings accounts. The lawsuit claims that bank employees were discouraged from informing existing customers about the higher-yield option, resulting in $2 billion in lost interest for consumers. Capital One denied the allegations, asserting that its marketing practices have always been transparent and consumer-friendly.

RESOURCES
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