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Happy Sunday, everyone.
Welcome to your holiday break! Today we’ll be giving you a good breakdown of the crazy past week in the markets.
Tomorrow, you can expect a very brief Investing Week Ahead post — and then it’s time for you to put that laptop / phone away to spend time with your loved ones.
Let’s jump right in!
Portfolio Updates (YTD Performance):
Sometimes there’s nothing more thrilling than being on the wrong side of a trade — at least in the short-term.
As you all know, I put $75K into ETHA as shown below. The position is now down -$10K and unfortunately that’s just how the cookie crumbles sometimes. The good news is going into this trade I knew it wouldn’t be a smooth “up and to the right,” and that volatility would come and go over the coming months.
Unfortunately, that volatility came quicker than I expected. However, I’m not selling and I remain incredibly bullish on Ethereum, as well as Bitcoin. I believe we’ll experience new highs during Q1 in both ETH and BTC — and I’m enjoying the ride until then!
Here’s an awesome chart by @nsquaredvalue on X that shows the deep correlation between Bitcoin’s price and its ETF net flows.
The Ethereum ETF, ETHA, has now reached $1.1B in net inflows during the month of December — up +$500M week-over-week (as shared here). This happened despite the volatility the cryptocurrency experienced. I’m optimistic we’ll see $2B+ in net inflows during January — and if Bitcoin ETF flows taught us anything, the price of Ethereum will inevitably breach new all-time highs sooner than we think (+40% from current levels).
I’ll continue to patiently wait for this trade to transpire.
Beyond that quick check in, there are no new positions to share. I plan to publish a formal “2024 Portfolio Year in Review” later this week — so stay tuned for more thoughtful reflection on my current positions as we turn the calendar year.
Week in Review — Too Long, Didn’t Read:
Nike rips the Band-Aid off their multi-year turnaround, Micron’s consumer segment is struggling, FedEx is spinning off their Freight business to be a standalone publicly-traded company, Buffett made some purchases, Tesla tries to get the Robotaxis rolling, Google made major moves in the humanoid robotics space, The Fed caused market panic and the PCE Price Index gave a bit of relief at the end of the year.
Key Earnings Announcements:
Nike rips the Band-Aid off their multi-year turnaround, Micron’s consumer segment is struggling, and FedEx is spinning off their Freight business to be a standalone publicly-traded company.
Nike (NKE)
Key Metrics
Revenue: $12.4 billion, compared to $13.4 billion last year
Operating Income: $1.4 billion, compared to $1.9 billion last year
Profits: $1.2 billion, compared to $1.6 billion last year
Earnings Release Callout
After an energizing 60 days of being back with my NIKE teammates, our clear priority is to return sport to the center of everything we do. We're taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I'm confident you will see more moments of NIKE being NIKE again."
My Takeaway
Nike's earnings results beat Wall Street's expectations — but their operating margins still indicate significant pressure as the company aims to turn itself around. Their new CEO, Elliott Hill, highlighted their ongoing strategic initiatives (as shared above) — and Wall Street is comparing it to what Under Armour did to turn their company around a few years ago.
Unfortunately, next quarter's guidance was below Wall Street's expectations, and the guidance for the following quarter was even lower. This lower guidance reflects the company's efforts to clean up excess inventory to create a strong foundation for growth and brand elevation, as well as their ongoing efforts to balance Direct to Consumer and Wholesale.
Wall Street believes Nike's approach to "rip off the Band-Aid" is the right move to speed up their turnaround, but it remains unclear how much further their total revenue needs to decrease to reset. They're also keeping an eye on the trade-off between cutting operational expenses to increase marketing spend — as higher marketing spend will be needed if they plan to double down on sport and innovation.
Finally, their Chinese business remains under pressure. Chinese revenue was down 8% YoY as macro pressures continued, driving lower retail traffic and necessitating higher markdowns to sell inventory (negatively impacting their gross margins).
I don't think Nike has turned the ship around just yet. I believe they're truly in the trenches of a multi-year turnaround story. Now is the time where patient investors can make the most out of their investment — I just continue to believe there are better places to allocate capital at this time.
No shares.
Micron (MU)
Key Metrics
Revenue: $8.7 billion, an increase of +84% YoY
Operating Income: $2.2 billion, compared to -$1.2 billion last year
Profits: $1.9 billion, compared to -$1.2 billion last year
Earnings Release Callout
“Micron delivered a record quarter, and our data center revenue surpassed 50% of our total revenue for the first time. While consumer-oriented markets are weaker in the near term, we anticipate a return to growth in the second half of our fiscal year.
We continue to gain share in the highest margin and strategically important parts of the market and are exceptionally well positioned to leverage AI-driven growth to create substantial value for all stakeholders.”
My Takeaway
The company is guiding to $36.5B in revenue next year, but implied a rapid acceleration across both their NAND and DRAM business segments — of which, DRAM-specific revenue experienced a decline quarter-over-quarter this earnings. HBM trends remain positive, with the company now pointing to a market that will be 4X larger by 2028 (when compared to 2024) and a $100B market by 2030.
The company has begun HBM shipments to its second largest customer and will begin shipments to its third largest customer next quarter. Wall Street continues to believe this deceleration is sort of a "mid-cycle correction" and will pick back up during the Summer of 2025.
Their Consumer business segment remains a drag on the business, as there have been clear signs that the demand for smartphones and PCs has underwhelmed. Micron's management team expects further delays in the "PC refresh cycle" and cited pockets of elevated customer inventory in smartphones.
Their datacenter business remains strong. With sales up >2X quarter-over-quarter, their HBM seems to be ramping up quickly. The company plans to spend $14B in capital expenditures in 2025 to ensure they can continue this ramp-up speed.
No shares.
FedEx (FDX)
Key Metrics
Revenue: $22.0 billion, flat YoY
Operating Income: $1.05 billion, compared to $1.28 billion last year
Profits: $740.0 million, compared to $900.0 million last year
Earnings Release Callout
“Our second quarter results demonstrate that our efforts to transform our operations are working. The Federal Express segment delivered operating profit growth despite several headwinds, including the continued weak U.S. domestic demand environment as well as the expiration of our U.S. Postal Service contract.
Consolidated operating results were negatively affected by lower-than-expected FedEx Freight revenue and profit, as sustained weakness in U.S. industrial production continued to pressure less-than-truckload industry demand.”
My Takeaway
Wow! FedEx just announced their plans to divest their FedEx Freight business as a standalone publicly-traded company. Really interesting stuff! Can't wait to share more as this event develops over the coming 18 months.
It makes sense! Their Express/Ground business segment posted a +1% revenue increase and a +13% increase in operating income, while their Freight business posted an -11% revenue decrease and -36% operating income decrease. Spinning off this business segment and separating it from the legacy business should deliver value to shareholders.
Their DRIVE strategy continues to deliver incremental cost savings, with another $2.2B expected in 2025. They're now expecting $400M in operating income growth because of their DRIVE strategy savings next year.
Despite these promising results thus far, I'm not going to jump into a stock whose management team is not only figuring out how to increase profits again but also divesting a major portion of their legacy business.
No shares.
Investor Events / Global Affairs:
Buffett made some purchases, Tesla tries to get the Robotaxis rolling, and Google made major moves in the humanoid robotics space.
Warren Buffett’s Berkshire Hathaway (BRK) Made Buys During Sell-Off
Source: Getty Images / MarketWatch
Warren Buffett's Berkshire Hathaway spent over $560 million on stocks during this late December sell-off, purchasing 8.9 million shares of Occidental Petroleum (OXY) for $405 million, pushing its stake to over 28%. The firm also bought 5 million shares of Sirius XM (SIRI) for $113 million and 234,000 shares of VeriSign for $45 million, likely handled by investing lieutenants Todd Combs and Ted Weschler.
Buffett capitalized on the market downturn, with Occidental’s stock down -24% in 2024. This move makes it Berkshire’s sixth-largest holding, and it’s worth noting that he ruled out a full takeover of the company.
Sirius XM’s value has plunged -62% this year, amid subscriber losses and demographic challenges — while Berkshire’s stake grew to 35%. VeriSign, down -6% this year, has been a Berkshire holding since 2013 with no recent adjustments. These purchases reflect Buffett’s opportunistic approach to discounted assets — even if he believes that the broader market may be due for a slowdown.
Below is an interesting letter that Warren Buffett wrote in 2008. I’m in no way comparing this week’s relatively small market correction to the Great Financial Crisis, but I wanted to share this regardless:
"The stock market is a device for transferring money from the impatient to the patient."
Tesla (TSLA) Moves Ball Forward for Cybercab Launch
Source: Tesla
Tesla is in early discussions with Austin officials about deploying its autonomous vehicle technology, possibly starting in Texas next year. Emails reveal the company has been engaging with Austin's autonomous vehicle task force since May to meet safety guidelines, though the city has not been confirmed as the launch site.
Tesla’s rollout of driverless fleets, including its Cybercab robotaxi prototype, is critical to Elon Musk’s vision — but regulatory approvals and technical hurdles could delay progress. Competitors like Waymo and GM's Cruise have already faced challenges in deploying autonomous vehicles, including accidents and public pushback. Tesla’s strategy contrasts with rivals by aiming for a general solution rather than localized mapping, but questions remain about timelines and feasibility.
Meanwhile, Texas’s relatively relaxed regulatory environment could favor Tesla’s plans, with efforts underway to train first responders and gain community support.
Tesla (TSLA) Stock Performance, 5-Year Chart, Seeking Alpha
“Texas is going to be a much easier market for Tesla’s self-driving effort. The state hasn’t regulated self-driving vehicles.
It basically regulates them like regular vehicles. They need to be able to respect traffic law, have video recording, insurance, and a license from the Texas Department of Licensing.
There’s no need to submit data proving it is safer than a human driver.”
Google (GOOG) Partners with Apptronik
Apptronik has partnered with Google DeepMind to enhance its Apollo humanoid robot by combining advanced robotics hardware with cutting-edge AI. The collaboration aims to create intelligent robots that are capable of addressing global challenges and performing tasks in dynamic environments — such as manufacturing and logistics.
Apollo, a 5'8", 160-pound humanoid, is designed for safe operation alongside humans and has already been tested in automotive manufacturing by Mercedes-Benz and warehouse applications by GXO Logistics.
With nearly a decade of experience, Apptronik has developed Apollo to balance complexity and functionality, earning a 2024 RBR50 Robotics Innovation Award. Google DeepMind brings expertise in machine learning and robotics, contributing AI models like Gemini and platforms like ALOHA for complex manipulations. This partnership marks a significant step forward in developing humanoid robots for industrial use, healthcare, and eventually home applications.
Alphabet Inc. (GOOG) Stock Performance, 5-Year Chart, Seeking Alpha
"The next wave of AI is physical AI. AI that understands the laws of physics. AI that can work among us.”
Major Economic Events:
The Fed caused market panic and the PCE Price Index gave a bit of relief at the end of the year.
Fed Projects Less Rate Cuts in 2025 and 2026, Investors Hated It
The Federal Reserve reduced its key interest rate by 25 basis points to a target range of 4.25%-4.5%, marking the third consecutive cut and signaling a cautious approach to further reductions. Fed Chair Jerome Powell emphasized the need for a measured pace of policy changes given solid economic growth and inflation above target. The Fed's dot plot projects only two additional rate cuts in 2025, significantly fewer than anticipated in September, with long-term neutral rates now estimated at 3%.
Despite lowering rates, Treasury yields and mortgage rates have risen — reflecting market skepticism about further easing. The Fed also revised its 2024 GDP growth projection upward to 2.5%, while slightly raising inflation estimates above its 2% goal.
Powell highlighted the importance of maintaining a balanced labor market and acknowledged potential fiscal policy challenges under President-elect Trump.
“Today was a closer call but we decided it was the right call”
PCE Price Index
The Fed's preferred inflation measure, the PCE price index, rose just +0.1% in November, with an annual rate of +2.4% — both below expectations.
Core PCE, excluding food and energy, also increased +0.1% monthly and +2.8% annually — signaling persistent, though easing, inflation pressures.
Personal income and expenditures grew at +0.3% and +0.4%, respectively — both slightly below forecasts. The personal savings rate dipped to 4.4%.
These figures suggest inflation is softening, aligning with the Fed's recent cautious approach to rate cuts and signaling progress toward economic stabilization. While these were narrow “beats” in economic data, they were a welcome sigh of relief on the Friday before Christmas.
“Sticky inflation appeared to be a little less stuck this morning… The Fed’s preferred inflation gauge came in lower than expected, which may take some of the sting out of the market’s disappointment with the Fed’s interest rate announcement on Wednesday.”
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You can click here to watch the trailer on YouTube.
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Don't wait — reply now and claim your free tickets! 🍿✨
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