Market Update

DOW 48,748 (+259), S&P 500 6,822 (+25), Russell 2000 2,656 (+11), NYSE FANG+ 14,897 (-182), ICE Brent Crude $65.24/barrel (+$0.32), Gold $4,838/oz (+$73), Bitcoin ~87.9k (-1418)

• Hoosier crimson gives way to Hurricane green 
• Dovish comments from Trump- military, not monetary 
• Yields pulling back
• Smid caps, Energy leading
• Check out some of the recent ICE Data/Content:
• Inside The ICE House
  • Episode 509: Orla Mining CEO Jason Simpson on Mining Smarter, Scaling Faster, and the Future of Gold
  • ETF Central: Goldman Sachs Asset Management Chief Transformation Officer Bryon Lake
  • Market Story Lines
  • ICE First Look at Mortgage Performance: Seasonal and Calendar Factors Drive Rise in November Delinquencies

MAC Desk Commentary:
Yesterday markets paid homage to the Hoosier's college football championship with a sea of red after the revival of tariff and Greenland headlines over the weekend. A surge in global yields emanating from Japan added to the crimson palette. There was broad weakness across US equities but the S&P 500 was hit the hardest, dropping 2% and reversing all of the YTD gains while also breaking its 50d ma (~6,830). Mega-cap tech continued its underperformance trend with the NYSE FANG+ index falling nearly 3%, while the Russell 2k outperformed on a relative basis down only 1%. Markets closed pretty much at the lows with the VIX moving above 20.
 
A quieter overnight session allowed futures to bounce early, but it was a tepid move and futures turned negative ahead of President Trump’s Davos address. The speech was rather long and included something for everyone: victory laps, his big Golden Dome, Europe’s socioeconomic situation, Denmark’s short appearance in WWII, NATO and French President Macron’s sunglasses- we really could spend the whole note listing the topics covered. However the biggest soundbite for markets came when Trump ruled out taking over Greenland with excessive force (though he didn't say anything about not-excessive). Futures immediately jumped on that sort-of olive-branch, and the S&P opened modestly higher. It looks like we passed the first gut check of 2026, which we called yesterday's action. Speaking of green, with the more peaceful rhetoric, equities have gone from the Hoosier’s crimson red to the green of the vanquished Miami Hurricanes today, though the S&P 500 is off its highs. The equal-weight index, along with mid and small caps are continuing their outperformance today. The megacaps are mixed and the NYSE FANG+ is 1% lower. Weakness in Netflix post-earnings, along with Microsoft is more than offsetting modest gains from others.


 
If the MAC Desk were geopolitical strategic bankers, we’d be pushing Denmark to announce they’re exploring “strategic alternatives”, including a tax-free spinoff of Greenland or outright sale. That could lead to a bidding war that accrues significant value to stakeholders and unlocks value that is not being rewarded by the market currently. We think the US would be in a strong position to be a stalking horse bidder in such a process. If nothing else they should check in with the Dodgers before signing any deal. The only thing their roster is missing is an arctic territory. As legendary wrestling heel Ted “The Million Dollar Man” DiBiase said, “Everyone has a price.” Stress in the US-EU relationship remains, however. The European Parliament suspended work on implementing the trade agreement in response to the weekend tariff threats, and ECB President Christine Lagarde was reported to have walked out of a dinner on Tuesday during a contentious speech by U.S. Commerce Secretary Howard Lutnick. We remind readers that the administration has a track record of calling central bank leaders “knuckleheads”.  

Among the sectors, Energy is easily outperforming, with across-the-board strength and nat gas leveraged names seeing solid gains as the commodity rips higher. Healthcare is also mostly higher with some areas of services and providers slightly lower. Materials is a leader as well and broadly higher. On the other end are Consumer Staples and Utilities down modesty, though within Staples Kraft Heinz is down sharply on Berkshire Hathaway’s registering the shares it owns for potential future sale. Last night President Trump officially signed an executive order limiting institutional ownership of single-family homes which had been telegraphed over the last week. Major details remain to be worked out, however (like the definition of institutional owner). Single-family rental names like Invitation Homes are trading modestly higher while housing finance names are mixed-to-lower. Looking at some earnings reactions, Netflix is down ~5%, JNJ, kicking off healthcare earnings, is off slightly. Unlike the stock reactions from larger peers post-earnings, the regional and community banks that reported are generally trading well. 

 


It’s a relatively light day for economic data. US mortgage purchase and refinance applications were up again, following last week’s very strong gains, with refinancing again seeing the highest growth. A counter balance to that data was the December Pending Home Sales, which fell 9.3% m.m and 3.0% y.y. October Construction spending grew versus September’s decline and beat estimates. The long end of the treasury curve is pulling back slightly after yesterday's rate jump. The USD index is slightly higher after it's drop yesterday. The oral arguments in the Lisa Cook Supreme Court case were earlier today. Legal analysts commented that the judges showed significant concern with the administration's case, likely allowing Cook to keep her position, but how they actually resolve the case is still debated. 

• US 2yr -1bps to 3.60%, 5yr -2bps to 3.84%, 10yr -3bps to 4.27%, 30yr -2bps to 4.89%
• USD index: +$0.07 to $98.51

Overnight markets in Asia were relatively calm with South Korea, China and Hong Kong all closing modestly higher. Japan continued to be under some pressure but JGB yields pulled back amidst some jawboning by politicians and rumors of potential intervention. The Bank of Japan policy meeting is on Friday. Major European markets moved off session lows after Trump’s Greenland comments and closed slightly positive with the exception of the DAX. Headline UK inflation data was a touch hot, but core was in line. Emerging markets are trading well in a more risk-on and muted Dollar day 
 
Commodities are mixed. Oil prices reversed overnight losses beginning around 4:00am when the IEA released its Monthly Oil Market Report. Global demand was increased by 70k bpd to 930k from last month while supply was also increased by 100k to 108.7ml. The API inventory data will be released tonight and the DOE data tomorrow. US Special Envoy Steve Witkoff is scheduled to meet with Russian President Putin on Thursday. If you’ve been outside, you know it’s frickin cold (that’s a technical term), which is causing natural gas prices to surge, up >20% for the second consecutive day. Dutch gas, which was seeing less pronounced moves, is seeing up 10% today. Metals are mixed with gold higher but off its best level of ~$4900 and silver is lower. Ag was modestly higher earlier but is now mostly lower. Crypto continues to be under some pressure since the legislative issues last week. Bitcoin has fallen below its 50d ma and is back below $90k.


 
Earnings:
Pre-Market: ALLY, BKU, CFG, DCOM, HAL, JNJ, PLD, SCHW, TDY, TEL, TFC, TRV
After-Market: BANC, CACI, EQBK, FBK, KMI, KNX, LOB, PNFP, RLI, TCBX, TRST
Pre-Market (Thrs): ABT, AUB, CADE. FCX, GE, HBAN, MKC, MBLY, NTRS, OFG, ORI, PG, STBA, TCBI
After-Market (Thrs): AA, ALK, AMTB, ASB, BY, COF, CNS, CSX, CUBI, GBCI, INTC, ISRG, SLM
 
Economic Data:
US:

• Mortgage purchase apps: 5.1% w/w vs prior 15.9%
  • Refis: 20.4% vs prior 40.1%
  • 30yr Rate: 6.16% prior 6.18%
• Pending Home Sales Dec m.m: -9.3% vs -0.3% cons., prior 3.3%
• Construction Spending m.m Oct: 0.5% vs 0.1% cons., prior -0.6%  
• 4:30pm API crude inventories

Global:

• UK CPI: 0.4% / 3.4% m.m / y.y  vs. 0.4% / 3.3% cons, prior -0.2% / 3.2%
• UK Core-CPI: 0.3% / 3.2% m.m / y.y vs. 0.3% / 3.2% cons,. prior -0.2% / 3.2%
• Indonesia Rates Decision: 4.75% unchanged as expected