CLOSING BELL
Red Before The Cut
The market fell on Monday as investors returned from the weekend, waiting and watching for the Wednesday FOMC rate decision.
Last week’s outdated but flat inflation data, combined with fresh but bad labor data, created a perfect storm that reinforced expectations of a third and final 25 basis point cut coming soon.
Besides that, Netflix, Warner Bros, Paramount, and Skydance were facing off in a Phantom of the Opera-style love triangle of drama. PSKY recently upped the ante, professing its love for HBO streaming and IPs like Harry Potter with a $108B dowry offer.
In chips, Nvidia was climbing slightly when Trump posted he was letting the chip seller ship H200 level chips to China, for a 25% fee, of course.
I’m testing out new visuals for sector updates, let me know what you think!
STOCKS
Nvidia Finally Going High Tech Overseas
Trump Truthed out just before the close that he was telling President Xi that he was opening the chip floodgates by allowing Nvidia to start shopping its H200 chips around in China, after months of blockades.
The catch is that Nvidia will have to pay a 25% fee for the exports.
"I have informed President Xi, of China, that the United States will allow NVIDIA to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security. President Xi responded positively!" Trump said on Truth Social.
Nvidia posted a response in support of the move, but the Company has not made much headway selling H20, its mid-grade chips designed for foreign markets. Nvidia designed the H20 chip specifically to comply with the Biden White House export controls on high-powered advanced chips, but Trump still imposed a new 15% tax on its exports back in August.
Accordingly, Nvidia has not recorded ANYsales of these chips to China in the past two quarters of reports, meaning it didn’t want ot deal with either the taxes, the ever-changing nature of export demands, or a little bit of both.
The Chinese government has also strongly encouraged firms to use Chinese alternatives to U.S. chips.
Still, Nvidia Chief Jensen Huang has said exporting high end chips to Chinese companies could be a $50B revneue oppertunity, so if these chips find buyers in China, it could be a big winfall in the coming year (minus a quarter off the top).
DEAL NEWS
PSKY Tries To OutBid Netflix, With The Help Of Friends In High Places
$PSKY ( ▲ 9.02% ) was climbing, leading the S&P 6500 higher after news of the massive lump sum, and $WBD ( ▲ 4.41% ) climbed while $NFLX ( ▼ 3.44% ) fell.
Paramount offered up more than $30/share for WBD, and includes a purchase of WBD’s TV networks alongside its streaming and movie properties. WBD was planning to spin off CNN and other TV properties into a new stock called Discovery Global. Netflix last week won board approval for an offer of $27/share just for a streaming and movie package.
To finance the expensive deal, the Ellison family and RedBird Capital would backstop $40.7B in equity, and Saudi Arabia, Qatar, and Abu Dhabi wealth funds would help finance the rest.
If the board approves the Netflix deal, passes regulatory scrutiny, and shareholder votes make it a reality, it would mean 1/3 of all U.S. streaming activity would ultimately fall under one provider. That type of oligopic control could spark regulatory hurdles. Trump even said over the weekend it was a “big market share. It could be a problem.”
But in the same light, oil borons in the Middle East buying CNN could also turn some watchdog heads.
Paramount, under David Ellison’s leadership, had previously sent out a bunch of offers, totaling up to $58B for Warner Bros, without any bites. Today, they doubled that offer after other parties began bidding.
TRENDING STOCKS
Small Caps Hoping To Make It Big
Smaller cap stocks were trending on Stocktwits Monday, after $SMX ( ▼ 59.09% )flew last week following a reverse stock split. It seems like retail investors are now looking for other small-cap stocks with similar characteristics. Here are some top small caps trending today:
Cemtrex Inc. $CETX ( ▲ 129.64% ) : CETX is transitioning its business focus toward aerospace & defense and robotics through recent acquisition agreements, including a deal to acquire Invocon. Retail speculators are interested in the company's aggressive strategy to acquire proven engineering capabilities, a move that recently included acquiring $1 million in Solana to build a crypto treasury, linking it to broader hype sectors.
Top Wealth Group Holding Ltd. $TWG ( ▲ 266.22% ) : TWG is a micro-cap stock with a very small market capitalization and limited shares outstanding, making it highly susceptible to extreme volatility from low trading volume. The recent catalyst saw the stock experiencing massive percentage swings following an announcement that it projects strong profit growth for 2025, which would reverse prior losses.
Altimmune Inc $ALT ( ▲ 7.06% ) : ALT is a clinical-stage biopharma company primarily focused on its obesity and liver disease drug candidate, Pemvidutide. The stock is moving on speculation ahead of and following key clinical data releases, specifically the 48-week MASH data for Pemvidutide, which is seen as a "make-or-break" moment for the company's valuation.
Wave Life Sciences Ltd $WVE ( ▲ 147.26% ): The stock is experiencing extremely high volatility after reporting positive interim data from its Phase 1 INLIGHT trial for WVE-007 (an obesity treatment), which showed significant reductions in body fat. The promising data immediately led the company to announce a $250 million public offering of shares to raise capital.
COMMENTARY
Yardeni Ends 15-Year Bullish Tech Call
Wall Street veteran Ed Yardeni of Yardeni Research has officially ended his fifteen-year recommendation to overweight mega-cap technology, advising investors to scale back exposure to the Magnificent Sevenstocks. The firm now recommends going Underweight the group relative to the rest of the S&P 500, a massive strategic shift based on the belief that future earnings growth will broaden across the index.
Yardeni's core argument is that the Magnificent Seven's exceptional profit margins are now attracting substantial new competition from both rival tech giants and non-traditional sectors; he asserts that "every company is evolving into a technology company." He argues that the broader S&P 500 will benefit from rising productivity and margin expansion, driven by the diffusion of AI and technology throughout the entire economy.
To execute this rotation, Yardeni Research recommends moving the Information Technology and Communication Services sectors from 'Overweight' to 'Market Weight,' while simultaneously increasing exposure to Financials, Industrials, and Health Care sectors.
It wasn’t all bad news, just bad news for the Mag 7. Yardeni also wrote a note to clients Monday that the “Raoring 2020s” will continue, and posted a S&P 500 target of 7,700 by the end of next year.
"The Roaring 2020s remains our base-case scenario. We are less concerned about a meltup [or] meltdown scenario now, so we are lowering the odds of that from 30% to 20%. We are keeping our bearish scenario at 20%," Yardeni wrote.
Yardeni expects accelerated economic growth in 2026, citing the affordability crisis, tax benefits, baby boomers reaching retirement age, the Fed's rate cuts, and the AI-driven tech boom and its billions in capital expenditures.
POPS & DROPS
Top Stocks News Stories
OpenAI Survey found heavy users gained 10 hours of productivity/ week
Netflix stock was downgraded from Warner Bros acquisition caution.
Carvana stock surged after inclusion in the S&P 500.
PepsiCo overhauled supply chain to settle with activist investor Elliott.
CFTC launched program allowing crypto as derivatives collateral.
CoreWeave stock declined 6% after $2 billion offering.
WHAT’S ON DECK
Tomorrow’s Top Things
Economic data: ADP Employment Change Weekly (8:15 AM), Nonfarm Productivity QoQ Q3 (8:30 AM), JOLTS Job Openings (10:00 AM), WASDE Report (12:00 PM), 10-Year Note Auction (1:00 PM).
Pre-Market Earnings: Autozone Inc ($AZO).
After-Market Earnings: Gamestop Corporation ($GME), Dave & Buster`s Entertainment Inc ($PLAY), and AeroVironment Inc ($AVAV).
$GME ( ▲ 1.52% ) : The video game retailer, old meme stock is set to report its Q3 fiscal 2026 results. The focus is on achieving positive adjusted earnings per share and generating revenue above $987 million.