[Music] Hello and welcome to Asking for a Trend. I'm Josh Lipton and for the next half hour, we are breaking down the trends of today, then our new stocks tomorrow. There's a lot to keep track of, so we're focusing on what you need to know to get the curve. Here's some of the trends we're going to be diving right into.Drama jumping from the screen to the boardroom. The future of Warner Brothers Discovery hangs in the balance as Paramount comes out swinging. in its effort to acquire the media giant.We're cal ...

Core Viewpoint - November was challenging for large- and megacap growth stocks, with the Nasdaq-100 and S&P 500 Growth indexes ending the month in negative territory, primarily due to an AI-related sell-off, which some are referring to as an "AI freak-out" or "shake-out" [1] Group 1: Market Performance - The Nasdaq-100 and S&P 500 Growth indexes finished in the red in November [1] - The recent pullback in AI-heavy stocks is viewed as a healthy correction rather than a long-term trend [1] Group 2: Investment Sentiment - Despite the recent downturn, the sentiment around AI investments remains positive, with expectations for growth in 2026 [1] - The AI investment thesis is still considered intact, with potential catalysts for ETFs like QQQ and QQQM [1] Group 3: Future Outlook - Federal Reserve rate cuts are anticipated to benefit growth stocks, which are expected to thrive in 2026 [1] - AI adoption is projected to be a significant theme in the upcoming year, supported by evidence from corporate activities [1] - Historical parallels are drawn to the 1990s internet boom, suggesting that current AI investments may lay the groundwork for substantial future businesses [1]

Market Overview - U.S. stock futures rose on Wednesday following modest advances on Tuesday, with major benchmark indices showing higher futures [1] - The 10-year Treasury bond yielded 4.08%, while the two-year bond was at 3.49%, with an 87% likelihood of the Federal Reserve cutting interest rates in December [2] - Key index performances included Dow Jones up 0.21%, S&P 500 up 0.16%, Nasdaq 100 up 0.10%, and Russell 2000 up 0.37% [2] Company Performance - **Marvell Technology Inc. (NASDAQ:MRVL)** saw a significant increase of 9.83% after reporting better-than-expected third-quarter results and announcing the acquisition of Celestial AI [6] - **CrowdStrike Holdings Inc. (NASDAQ:CRWD)** dropped 2.36% despite exceeding financial expectations for the third quarter and raising its full-year guidance [6] - **American Eagle Outfitters Inc. (NYSE:AEO)** climbed 12.71% after reporting third-quarter revenue of $1.36 billion, surpassing analyst estimates of $1.32 billion, and adjusted earnings of 53 cents per share, beating estimates of 44 cents [6] - **Salesforce Inc. (NYSE:CRM)** was up 0.55% as analysts expect quarterly earnings of $2.86 per share on revenue of $10.27 billion [5] Analyst Insights - BlackRock maintains a "pro-risk" investment stance, favoring U.S. equities due to a softening labor market that may allow for further Federal Reserve rate cuts [10] - The firm describes the current employment landscape as a "no hiring, no firing" stasis, which supports the Fed's ability to pursue "risk management" cuts without reigniting inflation [10] - BlackRock believes the Fed has room to ease policy without raising concerns about inflation and debt sustainability, supporting a positive outlook for risk assets heading into 2026 [12]

Market Overview - The cryptocurrency market has faced challenges in 2024, with the Federal Reserve's rate cuts attracting investors, but high U.S. Treasury yields and recession fears limiting gains [1][8] - Major cryptocurrencies like Bitcoin and Ethereum reached all-time highs earlier in the year, but have since declined, with Bitcoin down 10% and Ethereum down 18% year-to-date [2][3] Investment Trends - Investors have become more selective, favoring blue chip cryptocurrencies over smaller meme coins, which have seen significant declines, with Dogecoin and Shiba Inu down approximately 60% year-to-date [2][3] - The Fed's rate cuts have not yet led to a decrease in U.S. Treasury yields, which remain high due to inflation concerns and government debt issuance [6][8] Future Outlook - The crypto market is expected to improve with clearer regulations, more ETF approvals, and increased adoption among various investor types [5][6] - Despite current challenges, there is optimism that macroeconomic headwinds may ease next year, making blue chip tokens a more favorable investment choice [7]

Core Viewpoint - Growing expectations for Federal Reserve rate cuts are increasing investor interest in real estate investment trusts (REITs), particularly Realty Income Corporation (O) [1][2] Interest Rate Sentiment - Shifts in interest-rate sentiment are crucial for Realty Income, as lower rates enhance the attractiveness of yield-oriented stocks compared to bonds and improve the REIT's cost of capital [2][4] Performance Metrics - Realty Income currently offers a yield of 5.72%, outperforming peers like Agree Realty Corporation (ADC) at 4.23% and Essential Properties Realty Trust, Inc. (EPRT) at 3.80% [3] - Year-to-date, Realty Income stock has increased by over 6%, although it lags behind Agree Realty's rise of 6.6% [3] Operational Stability - The REIT reported a 98.7% occupancy rate and a consistent same-store rent growth of 1.3%, indicating strong operational performance [5][8] - A rent recapture rate of 103.5% on re-leased units further underscores the strength of its real estate portfolio [6] Investment Strategy - Realty Income invested $1.4 billion in the quarter, with nearly $1 billion allocated to Europe, raising its full-year investment guidance to $5.5 billion [8][10] - The focus on European investments is strategic, as it offers higher spreads and less competition compared to the U.S. market [10][11] Financial Health - The REIT maintains a solid balance sheet, with a net debt to annualized pro forma EBITDAre ratio of 5.4X and $3.5 billion in liquidity [12] - Recent issuance of $800 million in unsecured notes at a 4.4% yield has helped manage its cost of debt [12] Efficiency and Risk Management - Realty Income employs data analytics and AI tools to enhance lease decisions and manage risks, having sold 140 properties for $215 million in the quarter [13] - Management anticipates about 75 basis points of potential credit loss for 2025, primarily from tenants inherited from past mergers [14] Valuation Insights - Realty Income is trading at a forward 12-month price-to-FFO of 12.88X, below the retail REIT industry average of 14.52X [15] - Despite a Value Score of D indicating it may not be a bargain, the company's consistent dividend growth remains attractive for long-term income-focused investors [17] Investment Outlook - Realty Income is viewed as a sensible hold for income seekers, blending consistency, dependable income, and measured expansion [18][21] - The REIT's focus on essential-service retailers supports steady cash flows, while its investment-grade profile adds resilience [19][21]

Geopolitical Dialogue and Global Stability - US President Trump and Chinese President Xi Jinping engaged in a significant phone call, discussing the stability of China-US ties and the importance of safeguarding World War II outcomes [2] - The leaders addressed the Ukraine crisis, with Xi urging for reduced differences and expanded cooperation, while reiterating China's stance on Taiwan as a crucial part of the post-war international order [2][9] Economic Policy, Outlook, and Trade Relations - The Bank of England conducted an Asset Purchase Facility gilt sale, offloading £750 million with a cover-ratio of 2.75 [4][9] - Goldman Sachs economists foresee downside risks for the economy next year, predicting Federal Reserve rate cuts in December and further cuts in 2025, bringing rates just above 3% [5][9] - US officials met with EU counterparts to discuss trade issues, including steel and aluminum tariffs, with a focus on establishing a balanced digital framework and addressing overcapacity in steel [6][9] Market Performance and Corporate Developments - US stock markets showed positive momentum, with the S&P 500 advancing 1.00%, the Nasdaq gaining 0.95%, and the Dow Jones up 0.14% after market open [7][9] - Tesla's regulator in the Netherlands denied commitment to approving Full Self-Driving, contradicting earlier reports as Tesla aims for FSD approval in Europe [8][9]

Core Viewpoint - Oil prices are experiencing a decline due to geopolitical developments, particularly Ukraine's President Zelenskyy's agreement to collaborate with Washington on a peace plan, which may increase oil supply in a fragile market [1][3]. Oil Price Movements - West Texas Intermediate (WTI) for December delivery decreased by 2.51% to $57.52 per barrel, while Brent crude fell by 2.19% to $61.99 [1][2]. - This decline marks the third consecutive daily drop for WTI, leading to a projected weekly loss of over 4%, reflecting concerns over global supply growth and weakening demand [3]. Geopolitical and Economic Factors - The announcement of new U.S. sanctions on Rosneft and Lukoil, targeting key subsidiaries to limit Kremlin revenue from fossil fuels, coincides with the peace proposal news [3]. - Despite the sanctions expected to tighten supply, their impact has largely been factored into the market already [3]. - Russian Urals crude is trading at a discount of up to $23 per barrel compared to other global grades, indicating the effect of sanctions [4]. Inventory and Market Sentiment - U.S. crude stockpiles unexpectedly fell by 3.4 million barrels last week due to strong refinery activity, but this bullish inventory surprise did not lift prices as traders focused on geopolitical issues [5]. - A stronger U.S. dollar has negatively impacted dollar-priced crude, contributing to the bearish sentiment in energy markets [6]. OPEC+ Influence - OPEC+ is committed to increasing production in December, with plans to halt output increases in early 2026, which could influence market dynamics if oil prices continue to decline [6]. Future Outlook - The market is expected to remain focused on developments in Kyiv and Washington, which could significantly impact crude oil prices heading into December [7].

Federal Reserve rate cuts are overwhelming deficit fears, boosting Treasurys and corporate debt. https://t.co/eubPQODiuS ...

Core Viewpoint - The Federal Reserve's rate cuts are alleviating concerns over budget deficits, leading to increased demand for Treasurys and corporate debt [1] Group 1: Federal Reserve Actions - The Federal Reserve has implemented rate cuts which are positively impacting the bond market [1] - These cuts are seen as a response to economic conditions, aiming to stimulate growth [1] Group 2: Market Reactions - The demand for Treasurys has surged as investors seek safer assets amid economic uncertainty [1] - Corporate debt is also benefiting from the favorable interest rate environment, making it more attractive for issuers [1]

Market Overview - The Nasdaq experienced its heaviest selloff in a month, down approximately 4% from its peak in October, driven by unease in the market [1] - Early trading on Friday saw blue-chip indices from Tokyo to Paris and London in the red, but the S&P 500 ended slightly lower while the Nasdaq Composite rose by 0.13% [1] - Gold and bitcoin also faced declines, with bitcoin dropping below $96,000, a level not seen since May [1] Economic Data and Federal Reserve - The recent U.S. government shutdown has created an information vacuum, leading to uncertainty regarding upcoming economic data releases, including October's inflation and employment reports [1][11] - The Federal Reserve's confidence in making rate cuts may be affected by the lack of data points, with expectations for a 25-basis point cut in December dropping to about 46% [4][11] - Analysts suggest that the Fed may hold off on further rate cuts due to the current economic uncertainty, with some policymakers expressing reluctance [10][11] Valuation Concerns - The forward price-to-earnings ratio for the S&P 500 is currently at 22.8 times, significantly above its 10-year average of 18.8, raising concerns about extreme valuations [5][11] - Major tech stocks, including Palantir and Oracle, have seen losses of approximately 12% and 14% respectively this month, while Nvidia is down 6% [6][11] - Michael Burry's closure of his hedge fund has heightened concerns over inflated AI valuations, particularly regarding tech companies' financial practices [7][11] Hedge Fund Positioning - Hedge funds have shown signs of bearishness towards tech stocks, with Tiger Global Management reducing its stake in Meta Platforms [8][11] - The mixed economic signals during the shutdown have led to increased scrutiny of corporate debt markets, particularly for companies like Oracle that are heavily investing in AI infrastructure [7][11] Investor Sentiment - Investors are increasingly looking to lock in gains after significant market rallies, leading to a more cautious mood [6][11] - The current market environment is characterized by skepticism regarding valuations and expectations, as noted by investment strategists [1][11]