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😎 Market Vibes

📈 Futures Inch Higher as Wall Street Braces for CPI Showdown

US stock futures are creeping upward this Thursday morning, trying to shake off the post-earnings blues as traders steel themselves for tomorrow's inflation data.

After-hours trading brought more drama as Cisco and AppLovin reported earnings. Cisco beat expectations but got punished anyway (down 7% in extended trading) because its gross margins came in weaker than Wall Street wanted - thanks to soaring memory prices eating into profitability. AppLovin also beat estimates but slid 6% as the market continued its brutal punishment of anything remotely connected to software or advertising.

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🏆 Bitcoin Bounces Back (Sort Of) While Gold Holds Above $5,000

Bitcoin is trading around $68,000 as of this morning, up about 1.6% as dip-buyers tentatively step back into the pool after last week's bloodbath.

The volatility has been absolutely wild, with analysts debating whether Bitcoin's traditional four-year cycle is dead or just taking a dramatic intermission. Steven McClurg, CEO of Canary Capital, told CNBC he expects Bitcoin to fall as low as $50,000 this summer. Meanwhile, JPMorgan analysts are playing the long game, suggesting Bitcoin could eventually hit $266,000 "over the long term" as it becomes more attractive relative to gold.

Gold, on the other hand, is living its best life at $5,075 per ounce, hovering near two-week highs as expectations of Federal Reserve rate cuts gain momentum. The yellow metal is benefiting from soft US economic data - December retail sales flopped, job openings hit their lowest since 2020, and the market is now pricing in three rate cuts this year instead of two.

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⏳ The CPI Countdown Begins: Inflation Data Drops Tomorrow

All eyes are on tomorrow at 8:30 AM EST when the Bureau of Labor Statistics releases January's Consumer Price Index - the data that could make or break the Federal Reserve's rate-cutting plans for 2026. Economists expect headline CPI to rise 0.3% month-over-month (matching December's increase) while core CPI is also forecast to tick up 0.3%, slightly hotter than December's 0.2%. Year-over-year, inflation is expected to cool to 2.5% from December's 2.7%.

The report was delayed two days due to the partial government shutdown, adding extra drama to what's already a high-stakes release. Here's the thing - while December showed moderating goods prices, economists expect that number to jump back up as companies use the calendar flip to reset prices higher.

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🫨 Tech's Rough Patch Continues: AI Fears Meet Valuation Reality

The tech sector is having an identity crisis, and it's not pretty. Yesterday's market action showed the sector splitting faster than a celebrity marriage - AI infrastructure stocks extended their rally while software-as-a-service companies got absolutely demolished on fears that AI automation tools will displace their business models.

Micron jumped 4% in pre-market trading after its CFO expressed optimism about producing HBM4 memory products (the super-fancy chips that AI needs to function). Meanwhile, anything remotely connected to traditional software is getting torched like it's 2001 all over again.

The bigger question this earnings season is whether Big Tech can sustain its AI-driven rally that has seen both spending and valuations soar to eye-watering heights. Wall Street strategists remain almost unanimously bullish, but those calls for growth now come with nervous footnotes about sustainability.

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💪 Market Breadth Stays Strong Despite the Chaos

Here's something that should make you feel slightly less panicky: market breadth remains surprisingly solid despite all the recent volatility and sector rotation. As of Tuesday, 69% of S&P 500 stocks were trading above their 50-day moving average, and that percentage hasn't fallen below 50% since December 10th.

That's actually impressive when you consider everything the market has thrown at investors lately - including yesterday's jobs surprise that sent Treasury yields bouncing from one-month lows. The 10-year Treasury yield is currently trading around 4.17%, up from recent lows as the market reprices its rate-cut expectations downward.

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💭 Jobs Report Aftermath: What 130,000 Really Means

Let's dig into Wednesday's jobs bombshell that caught everyone off guard. The economy added 130,000 jobs in January - almost double the 70,000 economists expected - and unemployment dipped to 4.3% from 4.4%. Hourly earnings also came in solid, up 0.4% month-over-month. At first glance, that looks fantastic. But peel back the onion and it gets complicated fast.

First, the benchmark revisions were brutal. The government revised down jobs data for the year ending last March by a whopping 862,000 on a non-seasonally adjusted basis - the biggest downward revision since 2009.

Second, the sectoral breakdown reveals the economy is increasingly bifurcated. The biggest gains came from health care and social assistance, continuing a trend where services sector jobs growth outpaces goods-producing jobs.

Third - and this is the part bond traders care about - the solid jobs number combined with still-elevated inflation gives the Fed plenty of cover to keep rates higher for longer.

📌 Bottom Line

Thursday's looking like a classic pre-CPI drift session - futures are modestly higher as traders position for tomorrow's inflation data, but nobody wants to make any big bets until we see those numbers. Bitcoin is bouncing around in its new $66K-$72K range while gold is partying above $5,000, earnings are providing plenty of drama (Cisco beat but got punished anyway), and the Fed is firmly in wait-and-see mode.

🔥 What’s Heating Up This Week

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✌️ Thanks for vibing with us.

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