Morning Reads





The federal government is not letting Big Tech out of its sights as the Biden administration hardens its playbook by taking a much tougher stance on antitrust. Last year, the DOJ filed a suit against Google (GOOGGOOGL) over digital advertising, which comes on top of a legacy trial that focused on internet search. The Federal Trade Commission has also sued Amazon (AMZN) for illegally maintaining a monopoly by stifling competition, while the agency is also going after Meta (META) in an attempt to unravel its acquisitions of WhatsApp and Instagram.

Next up: It was a matter of time, but Apple (AAPL) has finally made the hit list. "Apple has employed a strategy that relies on exclusionary, anticompetitive conduct that hurts both consumers and developers," U.S. Attorney General Merrick Garland declared, accusing the iPhone maker of violating federal antitrust law by monopolizing the smartphone market. "Consumers should not have to pay higher prices because companies break the law." Following the news on Thursday, Apple shares slid 4% into the close, erasing over $110B in market value and bringing the stock's year-to-date loss to 11%.

The DOJ's allegations range from Apple violating the Sherman Act by using its iPhone to prevent other companies from offering competitive services (like digital wallets) to limiting the functionality of hardware and making it difficult for users to switch to and communicate with competitive devices (such as Android phones). "If successful, it would hinder our ability to create the kind of technology people expect from Apple - where hardware, software, and services intersect," Apple responded in a statement. "It would also set a dangerous precedent, empowering government to take a heavy hand in designing people's technology."

SA commentary: The Quantamental Investor said the lawsuit is another "headwind" for Apple (AAPL), while the timing "couldn't have been worse" given the sentiment that the company has been "left behind in the AI gold rush." He adds that while the DOJ will likely fail to prove Apple a monopoly in court, the ordeal will "create further negative sentiment towards the stock." On the other hand, if the lawsuit does succeed in extracting a hefty fine or remedies, it "could force Apple to open up its ecosystem," according to SA Investing Group Leader Jonathan Weber. Apple would still be "highly profitable, of course, but it might see its margins decline to some degree." (261 comments)

Reddit recap

Shares of social media platform Reddit (RDDT) soared in their market debut, nearly 50% to over $50/share on Thursday, marking another success after semiconductor firm Astera Labs' (ALABrecent IPO. Reddit raised $748M in the offering, selling 22M shares amid strong investor appetite for all things AI-related. CEO Steve Huffman said there was a lot of momentum to keep the business success story on track, although some popular subreddits like r/WallStreetBets and r/stocks were bearish, calling it a "pump and dump scheme." SA analyst PropNotes also called Reddit the ultimate boom or bust stock. (109 comments)

Burger by drone?

DoorDash (DASH), Wendy's (WEN) and Alphabet’s (GOOG) (GOOGL) drone unit Wing are all making it happen. The service, which will start in Christiansburg, Virginia, will enable select local consumers to order eligible menu items from Wendy's through the DoorDash marketplace and have them delivered via a Wing drone, typically in 30 minutes or less. While analysts have noted the need for drones in disaster zones, or in areas like critical medicine and healthcare support, the concept and success of delivery for discretionary items have been debated. (22 comments)

Movers and shakers

A number of notable names just disclosed their quarterly numbers as the Q4 earnings season comes to a close. Micron (MU) surged to an all-time high after Wall Street called it the next AI beneficiary following a set of results and guidance that blew past expectations. FedEx (FDX) also soared 13% AH on Thursday after its Express unit delivered a strong quarter. Not all were so fortunate, especially in the apparel sector. Nike (NKEinitially rose, but fell 5.6% AH after the company's outlook disappointed investors, while Lululemon (LULU) tumbled 11% amid full-year guidance that landed short of expectations.

Today's Markets

In Asia, Japan +0.2%. Hong Kong -2.2%. China -1%. India +0.3%.
In Europe, at midday, London +0.8%. Paris -0.1%. Frankfurt +0.1%.
Futures at 7:00, Dow +0.1%. S&P +0.2%. Nasdaq +0.1%. Crude +0.2% to $81.23. Gold -0.7% to $2,169.20. Bitcoin -3.3% to $64,788.
Ten-year Treasury Yield -2 bps to 4.24%.

Today's Economic Calendar

Fed's Bowman Speech
9:00 Jerome Powell Speech
10:00 Fed’s Jefferson Speech
12:15 PM Fed’s Barr Speech
1:00 PM Baker Hughes Rig Count
4:00 PM Fed's Bostic Speech

Companies reporting earnings today »

What else is happening...

World’s first pig-to-human kidney transplant performed in U.S.

Medicare expands coverage for weight loss drugs.

Papa John's CEO takes Shake Shack (SHAKtop spot.

Non-binding: UN adopts first global resolution on AI.

Boeing’s (BA) airline customers seek meetings with board.

Disney (DIS) in focus as influential proxy firm backs Peltz.

Ex-Treasury Secretary Summers questions Fed's rush to cut.

Coming up: Xi Jinping plans to meet U.S. CEOs in China.

Darden (DRI) dims outlook after soft quarter for Olive Garden.

DWAC vote: Trump stands to gain $3B if SPAC merger cleared

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.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)