TMTB EOD Wrap

Good afternoon. QQQs +1.45% in a nice green day helped by MU print and a cooler CPI number. Odds of a 25bp Fed cut is ~30% on 1/28 and ~70% on 3/18. Yields fell 3-4bps across the cure while BTC fell 1.5% and now hovers around $85k.

Tech had a strong risk-on session, led by AI infrastructure and memory as MU blew out results yesterday and reports that OAI was raising near $750B (WSJ out after the close saying new raise could target $830B). Whatever the number ends up being able to raise $100M at $500B+ valuation is a good thing.

Semis (+2.5%), semi equipment (+2.9%), and network equipment (+3.0%) all outperforming. Memory-exposed and optical names were the clear standout (MU +10%, SNDK/WDC/STX +5–6%, LITE +5%), reinforcing where investor preference/sentiment currently sits in AI land: DRAM > Optical > HDDs > NAND > Power > ASICs > GPUs > Networking. Basically, the sectors with tight supply/demand dynamics and increasing prices where investors continue to want to be exposed. On the factor side, momentum, non-profitable tech, and AI worked, while defensiveness lagged. The main pockets of weakness were legacy hardware and PCs as MU results renewed margin pressure fears.

We mentioned in our EOD wrap yesterday that we thought the combo of washed out sentiment + stellar MU results + better seasonality merited getting tactically long. That turned out well and now one can just set a closing stop below yesterday’s low near entry and relax into the holidays with a risk free trade. Personally, we took all short/medium term exposure off today (BOJ overnight/Quadwich is tomorrow) as a clean book makes for a cleaner psyche and deeper relaxation/enjoyment over the holidays, but to each their own. On that note - tomorrow will be our last day of posts for the year.

Let’s get to the recap:

INTERNET

• DASH +4% as they announced their teaming up with OpenAI to offer Grocery shopping in ChatGPT. Under the partnership, users can ask ChatGPT for meal or recipe suggestions, then ask the chatbot to shop for it using the DoorDash app. Users would be able to build their carts and place orders through DoorDash’s app within the chat.