Graham: Both GDP & PCE "Rear View Mirror" Prints

Economic Indicators - The Q4 GDP report is low, and revisions are expected, potentially drifting higher due to the impact of the government shutdown [2][6] - Core PCE inflation for December was slightly above expectations at 2.9%, indicating a potential cooling of inflation [3][4] - Higher frequency data, such as the Philadelphia Fed prices, suggest inflation is cooling, with a year-over-year inflation rate of 0.7% [5][6] Market Reactions - The market is showing a mixed reaction, with equities feeling jittery while precious metals are rising [8][9] - There is a notable market cap mismatch as money moves out of larger tech companies into smaller markets, leading to outsized moves in precious metals and industrials [10][11] Sector Performance - Sectors like materials, energy, staples, and industrials are outperforming, indicative of a late bull cycle rotation that may continue [12][13] - Earnings growth across sectors is exceptional at 14%, with a cyclical acceleration expected [13][22] Company Insights - Eli Lilly is highlighted for its obesity treatment pipeline, particularly the upcoming release of Orphogon, which is expected to be well-received [15][16] - Coherent is well-positioned to benefit from increased demand in networking equipment, with a 25% premium over pre-AI multiples [17][19] - Arista Networks is expected to continue outperforming, with recent earnings guidance above market expectations and new customer acquisitions [19][21]