Morning Brew Daily
Big Banks Fuel Stock Market Rally & The FTC's Next Target... John Deere
16 Jan 2025
Chapter 1: Who is responsible for the stock market rally?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, stocks had their best day since right after the election. Who's responsible for Wall Street's surprise party?
Then John Deere is in trouble with the FTC for making its tractors too dang hard to repair. It's Thursday, January 16th. Let's ride.
Before we get into the business news, there were some major developments in global politics yesterday. After 15 months of devastating war in Gaza, Israel and Hamas agreed to a long-awaited ceasefire brokered by the U.S., Qatar, and Egypt.
It's a three-stage deal that will see a return of the hostages to Israel, a phased withdrawal of Israeli forces from areas in the enclave, and a surge in humanitarian aid to hundreds of thousands of displaced Palestinians. Both the Biden and and incoming Trump administration work together on the deal in a rare moment of cooperation, one official called almost unprecedented.
The first phase is set to go into effect on Sunday, but it needs to be approved by the Israeli cabinet first. And earlier this morning, that vote has been delayed as Israel accused Hamas of reneging on parts of the deal.
Biden followed up that ceasefire announcement with his farewell address to the nation last night. He used his platform to sound the alarm about the, quote, dangerous concentration of power in the hands of a few ultra wealthy people and the rise of the, quote, tech industrial complex that he says puts our basic rights and freedoms at risk.
Today, an oligarchy is taking shape in America, Biden explained, of extreme wealth, power, and influence that literally threatens our democracy. Biden's remarks come as Elon Musk, Jeff Bezos, and Mark Zuckerberg are set to have courtside seats to Trump's inauguration on Monday, with Zuckerberg topped to host a black tie reception for the incoming administration.
Now a word from our sponsor, Public.com. Neil, you know what's better than finding $20 in your old jeans? Finding $10,000? Well, those are some big jeans. But yes, when you transfer your investment portfolio to Public, you could earn up to $10,000. And they make it super simple.
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Chapter 2: What are the implications of the FTC's lawsuit against John Deere?
Head to public.com slash morningbrew and see why millions of investors trust Public with their portfolios.
And always remember to check your gene pockets. Paid for by Public Investing. Full disclosures in podcast description.
If you opened your brokerage account yesterday, you were finally greeted with some green numbers looking back at you. The Dow surged 700 points, the S&P 500 had its best day since November, and the Nasdaq snapped a five-day losing streak as the market digested a favorable inflation report and a solid start to fourth quarter earnings.
The CPI report, which measures the monthly and annual price changes for consumer goods, showed that the Fed's fight with inflation is far from over, but had some bright spots too. The index rose 0.4% from November to December and was up 2.9% from a year earlier in line with expectations.
However, core inflation, which strips out volatile food and energy prices, fell to 3.2% below expectations of 3.3%. That reading spurred a little optimism in traders and boosted hopes that Jerome Powell and the Fed will continue its rate-cutting campaign throughout this year. On top of the CPI report, fourth quarter earnings got off to a strong start, headlined by the largest banks. J.P.
Morgan, Wells Fargo, and Goldman Sachs all reported quarterly and annual financial results yesterday that beat analysts' expectations as a pickup in corporate dealmaking fattened profits. JP Morgan CFO Jeremy Barnum went so far as to say that there is, quote, no question that we are in an animal spirits moment right now.
Neil, judging from yesterday's market performance, I don't think John Maynard Keynes would disagree with him.
Let's go back to 2023. JP Morgan posted the biggest profit of any lender in the history of American banking. And then in 2024, it followed that up and crushed those numbers. It scored 58.5%. billion in profits, which was up 18% from 2023's 49.6 billion. It's the first time that any bank in American history has broached, breached that $50 billion profit mark.
Times are so good for American banks right now. They had been good last year. They'd been good since we've been coming out of the pandemic and now they're looking ahead to the incoming administration, deregulation, rolling back of some rules that had constrained them. They're seeing animal spirits. They're seeing just so much more money coming into their coffers. They're seeing more deal-making.
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