Good Morning! The stock market had its best rally (+1.8%) since the election, thanks to record bank profits and cooling inflation. Goldman, for example, hit a 3-year profit high, and JPMorgan had its most profitable year ever (raking in $58B).

TikTok is planning on going dark this Sunday and could fetch as much as $50B in a sale. Walgreens CEO admitted that locking up products is not working as people don’t buy them anymore. Blue Origin and SpaceX race is heating up, and ChatGPT can now handle reminders and to-dos.

Plus, Southwest Airlines sued for being chronically late, and 7 weekend habits of highly successful people.

With a strong jobs report, markets now expect just 2 rate cuts in 2025, while Apollo even predicts a potential hike. What’s your take? Make your prediction on Kalshi.

_{SQUEEZ OF THE DAY}

Adios to Wall Street's Short King

Nate Anderson, the founder of Hindenburg Research, has officially called it quits. Anderson took on Gautam Adani, Jack Dorsey, and Carl Icahn with short-selling reports, but last night he announced the dissolution of his firm.

In a heartfelt letter, Anderson reflected on the impact of Hindenburg’s work, stating, “We shook some empires that needed shaking,” but said he needs to reconnect with life beyond short-selling.

Anderson started out in a bunch of low-profile Wall Street jobs, trying to scrape by on tips to the SEC’s whistleblower program. In 2017, he founded Hindenburg and focused on investigative reports. His breakthrough was exposing Nikola as an overhyped fraud. 

And in 2023 alone, Anderson took $99 billion off the collective wealth of Adani, Dorsey, and Icahn, accusing them of pulling some of the largest corporate cons in history.

Hindenburg’s investigative reports rattled markets and led to criminal or civil charges against almost 100 individuals, including oligarchs and billionaires.

But for every grand slam like Nikola or Adani, there were misses. Take Carvana. This month, Anderson called the company’s accounting practices “a grift for the ages.” But auto retailer shot back, calling his claims “intentionally misleading,” and their stock bounced back, up 5% since.

The relentless pressure of the job took its toll on Anderson, who described waking up in the middle of the night to think about investigative threads or edit reports.

Looking ahead, he plans to “open-source every aspect of our model and how we conduct our investigations” through a series of videos and materials over the next six months. His aim? To inspire the next generation of short sellers to shine a light on corporate misconduct.

Takeaway: Anderson’s retirement and heartfelt letter highlight the toll that relentless work in high finance can take on both the body and the soul. While he could have easily continued cashing in on his reputation and making millions, he chose to step away to focus on what truly matters in life. Maybe it’s a reminder for all of us who take work a little too seriously. One thing’s certain: Wall Street just got a little less exciting without Hindenburg and Nate Anderson.

_{PRESENTED BY KALSHI}

Number of Rate Cuts in 2025?

With the economy performing better than expected, highlighted by a record recent employment report, expectations for many rate cuts in 2025 have dropped significantly. In fact, Apollo is now calling for a 40% chance that the Fed hikes rates this year, citing strong retail sales and a 2.7% GDP forecast from the Atlanta Fed.

So, how many rate cuts will the Fed make in 2025? Here are the odds on Kalshi:

• 22% chance of 0 rate cuts

• 24% chance of 1 rate cut

• 25% chance of 2 rate cuts

• 29% chance of 3 or more rate cuts

What’s your take? Will the Fed cut, hold, or hike? Make your predictions on Kalshi.

_HEADLINES

Top Reads

• Wall Street soars on record bank profits and cooling inflation (CNN)

• Big US bank profits surge as Biden era comes to close (YF)

• Goldman Sachs profit hits over 3-year high as investment banking (YF)

• Citi soars as Fraser plans to buy back $20B of stock (YF)

• JPMorgan notches another record year of profits (YF)

• Goldman Sachs CEO says Apple card partnership may end before 2030 (YF)

• TikTok’s U.S. operations could be worth as much as $50B (CNBC)

• ChatGPT can now handle reminders and to-dos (Verge)

• DOT sues Southwest, fines Frontier for ‘chronically delayed flights’ (CNBC)

• There’s been a shift in CEO confidence since Trump’s election (CNBC)

• Inflation mixed but with encouraging signs in December, CPI shows (Axios)

• Walgreens CEO reveals anti-theft measures are not working (Fox)

• TikTok is running out of time and options (CNN)

• Blue Origin, SpaceX race heating up (LinkedIn)

• Company behind Trump’s favorite drink goes above and beyond for the inauguration (Fox)

_{CAPITAL PULSE}

Markets Rundown

Stocks Surge Following Key Inflation Data

U.S. equity markets closed sharply higher after consumer price index (CPI) data showed continued moderation in core inflation.

Headline CPI rose 2.9% year-over-year in December, slightly above expectations due to higher energy prices, while core CPI increased 3.2%, below forecasts of 3.3%. Bond yields fell, with the 10-year Treasury yield dropping to 4.65%.

Positive bank earnings from JPMorgan Chase, Wells Fargo, Citigroup, and Goldman Sachs further boosted risk-on sentiment, driving the S&P 500 up 1.8% and the Nasdaq up 2.5%.

Core Inflation Moderates

Shelter inflation rose 0.3% in December, its lowest annual change (4.6%) since January 2022. Together with the recent soft producer price inflation, this data underscores an ongoing disinflationary trend.

Moderating shelter inflation, productivity gains, and normalizing labor markets should continue driving disinflation through 2025, though the process may face occasional setbacks.

Corporate Earnings in Focus

Fourth-quarter earnings season started on a positive note, with JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup all exceeding earnings expectations. JPMorgan CEO Jamie Dimon attributed strong results to a resilient U.S. economy, healthy labor markets, and robust holiday spending.

Across the S&P 500, fourth-quarter earnings are expected to grow 11%, resulting in 2024 earnings growth of approximately 8.6%. For 2025, earnings are projected to increase by 14%, with all 11 sectors of the S&P 500 expected to post gains, led by technology, health care, and industrials.

Broad-based earnings growth across growth and value sectors is likely to support diverse market leadership, reinforcing the importance of well-balanced portfolios.

Movers & Shakers

• (+) IONQ Inc ($IONQ) +33% after Microsoft unveiled its quantum-ready plan.

• (+) Goldman Sachs ($GS) +6% because the bank’s profit hit a 3-year high.

• (–) Calavo Growers ($CVGW) -7% after the avocado distributor missed earnings.

Private Dealmaking

• CBRE acquired Industrious, a coworking space, raised $800 million

• Bain Capital bought Jamco, an aircraft interior maker, for $634 million

• Colossal Biosciences, the "de-extinction" company, raised $200 million

• Synthesia, a B2B AI video generation platform, raised $180 million

• Loft Orbital, a space infrastructure startup, raised $170 million 

• Harbinger, an electric commercial trucks maker, raised $100 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

The Hour Between Dog and Wolf

What happens to your body when you take risks? What happens to it when you make or lose a lot of money?

In this startling book, physiologist and former Wall Street trader John Coates vividly illustrates what happens to your body when you engage in risk taking. You transform into a different person, a change Coates refers to as "the hour between dog and wolf."

He tells a gripping story of a group of traders caught in a bull market and then a crash. As the excitement builds he takes us inside the traders' bodies to see the biology of risk taking at work, a biology shared by athletes, politicians, soldiers - anyone who ventures beyond their safety zone.

Coates also discusses how men and women excel at different types of risk; how the stress of failure damages our health; and how we can train our bodies so that they help rather than hinder our risk taking. Revealing the biology behind bubbles and crashes, The Hour Between Dog and Wolf sheds new and surprising light on issues that affect us all.

“It makes intuitive sense that biological responses inform the mood of the markets. This book puts flesh on that idea.”

_{DAILY VISUAL}

Strong Foreign Demand for US Treasuries

_{PRESENTED BY MACABACUS}

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_{DAILY ACUMEN}

Meditation

Meditation is a practice with unpredictable outcomes, often requiring the right approach rather than just time.

While short sessions of 5–10 minutes can provide glimpses of mindfulness, deeper benefits typically require 20–45 minutes of daily practice.

Early on, significant benefits are often seen within the first 200–500 hours of practice, such as stress relief and improved focus.

As practice deepens, the focus may shift from managing daily stress to more profound psychological or spiritual growth.

Advanced meditation involves integrating awareness into everyday activities, blending stillness with movement and daily routines.

Consistency and regularity are essential for building a sustainable and transformative meditation practice.

_{ENLIGHTENMENT}

Short Squeez Picks

• 5 signs to spot someone with bad leadership

• The Harvard Business Review’s favorite management top

• A self-made millionaire’s top investing priority

• Habits of highly successful people on weekends

• Sleep hygiene tips to rest like a pro

_{MEME-A-PALOOZA}

Memes of the Day