The Rundown - Nvidia Faces Monopoly Investigation in China, Reddit Gets a Bullish Call from Wall Street

Episode Date: December 9, 2024

Stock market update for December 9, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Monday, December 9th. In today's episode, we preview this upcoming week. We got earnings and inflation reports to look forward to. We also tell you why Nvidia is under investigation in China and why TikTok might actually get banned in the U.S. Then stick around to the end of the show to find out why Palantir, Reddit,

and Micro Strategy stocks are making moves today, and who just got the biggest sports contract in history. All right, let's go. Markets are coming off another record-breaking week. The S&P 500 was up 1% last week. The NASDAQ was up 3.3% both finishing the week at record highs. You know, one of the drivers of the market rally last week was the solid jobs report that came out on Friday. 227,000 jobs were added to the economy in November, according to that report, which was better than expect.

So it looks like the labor market is still holding up pretty strong. We actually talked more about that report on Friday's show, so go check that out if you missed it. But overall, this bull market doesn't seem to be slowing down. The S&P 500 is up 27% this year. The NASDAQ is up 32%. And we still got three more weeks left for a potential Santa Claus rally. Now, I don't know if this week is going to be as action packed as last week because there was a lot that went on last week. But we do have some major economic data coming out this week. The CPI inflation report drops. on Wednesday morning and the PPI inflation report, which measures wholesale price inflation, comes out on Thursday. So that'll give us a better idea of how inflation is doing and might

impact if the Fed decides to cut interest rates when they meet on December 18th. On top of that, we're also getting earnings report this week from Oracle, Adobe, Broadcom, and GameStop. So if you're a new listener to the show, make sure you guys are following the podcast because we'll probably have a lot to discuss this week. GameStop and a CPI report in the same week. I mean, this was two years ago. This would be like the Super Bowl. Let's run through some headlines. NVIDIA is under investigation by the Chinese government over possible violation of anti-monopoly laws. The Chinese government is looking into NVIDIA's $6.9 billion acquisition of Melanox back in 2020.

Now, if you had never heard of Melanox before, then, yeah, me neither. I mean, at least not until today. But it was a pretty strategic acquisition for NVIDIA. Melanox specializes in making high-performance networking products, like Switch. and Ethernet cables, things used to facilitate rapid data transmissions between servers. And that was big for Nvidia because they were building out AI data centers. So by integrating Melanox's networking expertise with Nvidia's AI chips, they're in the position they are today.

Now, Chinese regulators initially signed off on this acquisition when it happened back in 2020. They were cool with it. Now, back then, NVIDIA wasn't the household name they are today. And now the Chinese government is claiming that NVIDIA might have violated some restricted conditions around that acquisition. Now, this investigation could just be a coincidence, or the Chinese government could be retaliating against the U.S. for beefing up their export restrictions on AI chips to China. The U.S. is blocking 140 companies from shipping its products to China.

So it looks like the Chinese government might be pushing back a bit. We'll have to see how this all plays out, but shares of NVIDIA are down around 2% on this news. Sticking with the China theme, the TikTok ban might actually end up going through. On Friday afternoon, three judges in the U.S. Court of Appeals denied TikTok's position to overturn the law that would ban the social media app starting on January 19th. See, TikTok was making the case that banning it would be a violation of free speech, but the judges didn't see it that way. Now remember, back in April, a law was passed that required TikTok's parent company, Bight Dance, which is based in China, to sell TikTok to a non-Chinese company or be banned.

And this law received bipartisan support, which is pretty rare these days. But bite dance doesn't want to sell TikTok. And to make matters even more complicated, China's commerce ministry said it would not support the sale of TikTok. So TikTok has limited options now. They do plan to appeal this case to the Supreme Court, but the court doesn't have to hear the appeal. Now, there's also incoming President Donald Trump

who said he would save the app from being banned on the campaign trail, but we'll have to see what he can do because the ban is expected to go into place one day before Trump is inaugurated. But once Trump takes office, I guess he could ask the Department of Justice to hold off on enforcing the law. according to the financial times. So the story isn't over, and we've been hearing about a TikTok ban for years now,

but it might end up actually happening this time. We got like 40-something days to enjoy the app. Let's talk about some stocks making moves today. Pallantir shares continue to rip this morning after the company extended its contract with the U.S. Special Forces Operation Command. This is a one-year contract. It's valued at $37 million and assilatify's Palantir

as the provider of advanced AI and mission manager capabilities, according to the press release. Palantir has been one of the most talked about stocks on social media. It's the best performing stock in the S&P 500 this year, and it's showing no signs of slowing down. The stock is up around 3% this morning and up more than 350% year to date. Another stock that's been red hot this year is Reddit, and it continues to rally this morning.

Since pricing its IPO at $34 a share back in March, shares have been up around 400%. Shares continued to move higher this morning after Morgan Stanley admitted that it had been wrong about the stock and upgraded its rating to overweight. The analyst at Morgan Stanley nearly tripled their price target for Reddit to $200 a share. In fact, they went from having the lowest price target on Wall Street to now having the highest price target for Reddit. Shares of Reddit are up more than 8% this morning and trading around $176 a share. I got to take the L on this one too. I was pretty wrong about Reddit. I was making fun of them when they IPOed. This stock has been a monster. Now, another stock that's been red hot this year, but not having a great morning is micro strategy. Shares are down 2% in the pre-market after the company announced they're selling 5.1 million shares for $2.1 billion and using that money to buy Bitcoin. Micro Strategy announced they acquired 21,550 Bitcoin last week at an average price of nearly $98,800. So they're not slowing down and buying Bitcoin.

In fact, this is the fifth straight Monday the company announced they bought Bitcoin the previous week. but maybe the markets are kind of getting tired of that. Oh, I just looked at Micro Strategy stock again. The stock was down 2% now it's trading flat. So there you go. Shares are up more than 520% this year. So we mentioned Palantir, Reddit, and Micro Strategy in the same show. This might be our most popular show yet.

Let's wrap the show with a fun fact. The New York Mets just signed Juan Soto to the biggest sports contract of all time. $765 million over. 15 years. This contract is absolutely crazy. Bigger than any sports contract ever. I'm talking baseball, football, soccer. Nobody comes close. And look, I'm not a big baseball guy. In fact, I kind of joke all the time that baseball is a dying sport. But then you see contract numbers like this and I guess baseball is still thriving, you know? Because otherwise, how else can you justify paying a player three quarters of a billion dollars? From everything that I've read, Juan Soto seems to be a generational player. So maybe it's all

justified, but I don't know, man, $51 million every year for the next 15 years is just absolutely crazy. I guess it probably helps that the owner of the Mets is a hedge fund billionaire, Steve Cohen, who has a net worth of around $15 billion making him one of the richest owners in baseball. And I guess unlike other sports owners, he's not afraid to spend the cash to land one of the best baseball players in the game. On a side note, I need to start teaching my one-year-old son how to swing a baseball bat because baseball money is just different. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode.

We should have a lot to talk about this week, earnings, inflation, and who else knows what else might pop up. If you guys are looking for some bonus rundown content, remember, we put out a show on Saturday morning doing a deep dive on big tech's land grab into AI. We talked about all the money that big tech companies are investing in AI and some challenges they might face under a new Trump administration. It's a great episode. Go check that out if you missed it.

And we're going to be doing more deep dive episodes every Saturday moving forward. So if you guys have any topics that you think we should cover, let us know in the comments on Spotify. Thank you guys again for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own

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