Morning Reads

Morning Reads

Open Interest Changes



Funding for foreign policy priorities remains stuck on Capitol Hill as dire warnings abound over what it might mean for national security. Back in October, President Biden had requested $106B in supplemental funding, including $61.4B for Ukraine, $14.3B for Israel, $7.4B for Taiwan and the Indo-Pacific, and $13.6B for the U.S.-Mexico border, urging Congress to pass the measure as a comprehensive, bipartisan agreement. However, tensions continue to brew over aid for Kyiv, and immigration and asylum procedures, as well as what priorities should be tied to what bills to get things over the finish line.

Quote: "I want to be clear: without congressional action, by the end of the year we will run out of resources to procure more weapons and equipment for Ukraine and to provide equipment from U.S. military stocks," White House Budget Director Shalanda Young wrote in a letter to Congressional leaders. "There is no magical pot of funding available to meet this moment. We are out of money and nearly out of time. If Ukraine's economy collapses, they will not be able to keep fighting, full stop. Putin understands this well, which is why Russia has made destroying Ukraine's economy central to its strategy - which you can see in its attacks against Ukraine's grain exports and energy infrastructure."

The U.S. came close to a government shutdown at the end of September, with some last-minute dealmaking that kicked the fight into the new year and left out key foreign aid initiatives. Young further said the new round of national security funding and contracts would bring benefits to the U.S. economy, "for example, air defense systems built in Alabama, Texas and Georgia and vital subcomponents sourced from nearly all 50 states." On the other hand, a failure to pass the measure would "kneecap Ukraine on the battlefield, not only putting at risk the gains Ukraine has made, but increasing the likelihood of Russian military victories."

Market movement: While Lockheed Martin (LMT), Raytheon (RTX) and Northrop Grumman (NOC) all saw outsized gains in 2022 following Russia's invasion of Ukraine, the three biggest defense giants deflated this year, recording share losses ranging from 6% to 18% - despite an influx of new orders. Existing backlogs and difficulties in ramping up production capacity will likely result in new order revenue only being reflected in company accounts in two to three years time, while overall U.S. arms sales even saw a decline last year. "Despite the global surge in military conflicts, [Lockheed Martin] hasn't quite expanded its top and bottom lines as much as I would have anticipated," added SA analyst Millennial Dividends in Not Worth Your Money At Today's Price. (21 comments)

Future network

Dealing a blow to Nokia (NOK), AT&T (T) is buying up to $14B of cell tower equipment in a five-year deal with Swedish supplier Ericsson (ERIC) to deploy its commercial-scale open radio access network. Open RAN would allow interoperation between telecom network gear from different vendors, thereby cutting costs drastically. AT&T is aiming for 70% of its wireless traffic to flow through open cloud-based platforms by late 2026. Nokia dropped 11% aftermarket on Monday, adding to intraday losses amid speculation that it may no longer be a 5G gear vendor for AT&T. Meanwhile, Ericsson jumped 8% AH, building upon the gains seen during the regular session. (4 comments)

Export controls

The U.S. may soon add more curbs on tech exports to China. "Technology changes, China changes and we have to keep up with it," Commerce Secretary Gina Raimondo declared, calling the restrictions on the sale of advanced semiconductors and related gear a "bold move" and "necessary" because these "semiconductors are unbelievably powerful." Nvidia (NVDA) had even previously delayed the launch of a new AI chip it designed to comply with U.S. export curbs, in a heavily discussed development in the sector. Meanwhile, SA analyst Bluesea Research sees lower chip demand in 2024, saying Chinese tech firms already hoarded them prior to the restrictions. (4 comments)

AI Alliance

As the debate over open vs. closed artificial intelligence development rages, Meta Platforms (META) and IBM (IBM) have launched a coalition of over 50 AI firms and research institutes, advocating for an open-source model. The group's stance differs from the closed approach of rivals Google (GOOGGOOGL) and ChatGPT-maker OpenAI, backed by Microsoft (MSFT), amid growing safety concerns over AI's power. Members of the new alliance include AMD (AMD), Intel (INTC),, CERN, and more. "We believe it's better when AI is developed openly - more people can access the benefits and work on safety," said Nick Clegg, president of global affairs at Meta. Last month, over 15 countries inked the first detailed pact on AI safety. (3 comments)

Today's Markets

In Asia, Japan -1.4%. Hong Kong -1.9%. China -1.7%. India +0.6%.
In Europe, at midday, London -0.6%. Paris +0.2%. Frankfurt +0.2%.
Futures at 7:00, Dow -0.3%. S&P -0.4%. Nasdaq -0.7%. Crude -0.1% to $72.95. Gold flat at $2,041.90. Bitcoin +0.4% to $41,724.
Ten-year Treasury Yield -5 bps to 4.23%.

Today's Economic Calendar

9:45 PMI Composite Final
10:00 ISM Service Index
10:00 Job Openings and Labor Turnover Survey
10:00 Fed's Gibson: "Fostering Financial Innovation"

Companies reporting earnings today »

What else is happening...

WSB survey results: College not a given, depends on the degree.

Twenty-two nations commit to triple nuclear power capacity.

Intel (INTC) wins appeal of $2.2B patent infringement ruling.

Apple (AAPL) iPhone production halted in India amid heavy rains.

CME Group (CME) reports highest November ADV on record.

Saudi oil production cuts could 'absolutely' continue past March.

23andMe (ME) data breach: Only 0.1% of user accounts affected.

TASE exec slams claims Hamas used short selling ahead of Oct. 7.

Supreme Court wrestles with Purdue Pharma's bankruptcy deal.

Bears Refuse To Acknowledge New All-Time Highs In 2024.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

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