Cover:
-The 2025 Barron's Roundtable includes a divided group of bearish and optimistic panelists. The bears expect 2025 to be more challenging for markets than 2024, due to levitating bond yields, inflation fears, and levitated equity valuations. The pessimists worry about the growth of government debt and policy uncertainty in Washington DC, especially with the incoming President Trump's sea change. On the other hand, optimists expect stocks to continue rising due to a strong economy, double-digit earnings growth, government deregulation, mergers and acquisitions, and the widespread adoption of artificial intelligence. Despite the negativity, most investment pros offered up more stock picks than usual, suggesting that the market may be overpriced but many stocks are cheap.
Interview:
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Tech Trader:
-Nvidia's shares fell 6% on Tuesday (Dec. 7) after no new details about its next-generation AI data center processors were revealed at CES. The rumors were silly, as Nvidia traditionally reveals information on its data center products during its annual GTC developer conference. Huang announced Nvidia's new line of RTX 50 Series gaming graphics cards, which include the latest version of Deep Learning Super Sampling. He also announced Project Digits, a desktop computer with a new GB10 Grace Blackwell Superchip and a Nvidia-designed Arm-based processor capable of delivering up to one petaflop of AI performance. Digits will be available in May, starting at $3,000. The computer uses a scaled-down version of Nvidia's Grace AI server CPU and is packaged in a Mac Mini-sized form factor with Taiwan-based MediaTek.
The Trader:
-The bond market is currently in control, leading to a sharp drop in major stock indexes on Friday. The monthly jobs report, which came in hotter than expected, sent bond yields soaring, causing investors to fear that the Federal Reserve will keep interest rates high or raise them to prevent inflation. The 30-year Treasury note yield briefly rose above 5%, its highest level since November 2023. The Dow Jones Industrial Average fell by 1.6%, the S&P 500 index closed down by 1.9%, and the NASDAQ Composite fell by 2.3%. This move erased all of the market's 2025 gains. However, good economic news is still good news, as more Americans with jobs will be able to spend more money, as 70% of the US economy relies on consumer spending. Although inflation remains above the Fed's long-term goals, there are few signs that it will start raging again.
-Jefferies Financial Group reported its earnings, indicating a strong earnings season for US financial institutions. Profits rose by 212% to $205.7M, missing analysts' forecasts for $245M and 97 cents, respectively. Revenue jumped 63% to $1.96B, surpassing analyst estimates for $1.8B. Jefferies' investment banking business saw a record quarterly revenue of $596.7M from advisory work for clients. Overall investment banking revenue reached $3.4B in 2024, its second-highest annual figure. Jefferies' CEO Richard Handler and President Brian Friedman expressed satisfaction with the firm's position in 2025. However, the stock dropped 11% on Friday, its largest drop in five years, likely due to a stronger-than-expected payrolls report suggesting the Fed may be done cutting interest rates. Despite this, shares have nearly doubled over the past year, surpassing the S&P 500's 24% rise.
Features:
-Investors are betting that the Supreme Court will uphold a law that would ban TikTok by late next week. The video-sharing social-media app delivered oral arguments in its defense before the Supreme Court on Friday. Shares of Meta and Snap jumped as the Supreme Court began to hear arguments from TikTok lawyers and the US government. Lawmakers on both sides of the political spectrum have criticized TikTok, citing national security concerns and worries about its Chinese parent company, ByteDance. The consensus after the arguments ended seems to be that the Court won't. TikTok attorney Noel Francisco argued that the Supreme Court needed to convince the Supreme Court that the company doesn't pose a risk to national security and banning it would be a violation of users' free-speech. TikTok wouldn't be banned in the US if it divested from Chinese parent company ByteDance.
-The incoming Trump administration has been warned that the economy is healthy, despite some inflation. The biggest concerns are not from the economy itself but from concerns about government policy. The employment report showed 256,000 jobs created in December, above expectations, which sent the S&P 500 and other major stock indexes down and the 10-year Treasury yield up. This good-news-is-bad-news reaction came as investors and traders were reconsidering the possibility of the Federal Reserve lowering its main policy rate this year. The economy looks set for 3% growth and 3% inflation. Trump has assailed Fed Chair Jerome Powell over current rate levels, stating that interest rates are far too high. The high interest rates on consumer debt are more due to bond traders' assessments of future growth and inflation than the Fed.
Europe:
-HSBC analyst Erwan Rambourg believes that LVMH Moët Hennessy Louis Vuitton could not see a real rebound in its sales figures, as the luxury sector has been struggling for so long. The company's share prices have sagged even as the broader market reaches new highs. However, Rambourg argues that 2025 may mark a turning point for luxury, and the market will react swiftly to any sign that sales have bottomed. If that's the case, it makes sense to buy the stock ahead of the results, leading him to reiterate a Buy rating and raise his price target by €20 to €747 (about $765). Rambourg is also not concerned about recent management changes at the firm, as CEO and controlling shareholder Bernard Arnault has a mandate to remain at the helm until he's 80, making succession a less urgent question. Meanwhile, Barron's has argued that LVMH finally looks like a buy, as Chinese sales could start to rebound, Arnault scooped up more than $100M in stock, and the shares look inexpensive following their 2024 slump. Analysts have gotten less pessimistic, with 71% rating it at Buy or the equivalent, up from 64% this summer.
Emerging Markets:
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Commodities:
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Streetwise:
-The US stock market is largely dependent on chip designer Nvidia, Taiwan Semiconductor Manufacturing, and Dutch company ASML Holding, which is the leader in lithography. All three companies have made significant contributions to investors over the past decade, with Nvidia shares returning 29,000%, Taiwan Semi's American depositary receipts 1,100%, and ASML's ADRs 800%. However, Nvidia and Taiwan Semi are trading close to their highs, while ASML is down by nearly a third from its peak last summer. This could be an early warning for chips and the US stock market, or ASML losing its monopoly on high-end lithography. ASML's machines can print 13-nm resolutions, which chip makers can turn into even smaller features to achieve their current 7-nm, 5-nm, and 3-nm "nodes." A nanometer is roughly how long a fingernail grows in a second, while a human hair is 80,000 to 100,000 nanometers wide.