Good morning! Today we’re covering the S&P 500’s post-election rise and fall, Trump Media stock, and China mulling a TikTok sale to Elon Musk. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

Trump trading lower

The stock market’s Trump-fueled honeymoon has fallen short of inauguration day. 

While the S&P 500 eked out a gain to start the week, the index remains effectively unchanged from the day before the election. Stocks on Monday briefly fell below their November 5 closing price thanks to a mix of hesitations around inflation and Fed policy. 

“The animal spirits unleashed when President Donald Trump won a second term in office on November 5 have been subdued by more realistic outlooks for both Fed policy and the policy stew cooked up by Trump 2.0,” strategists at Yardeni Research wrote in a note.

Remember, the S&P 500 — as well as other benchmarks and cryptocurrencies — skyrocketed through much of November and December on account of expectations for a new pro-business, market-friendly administration.

The rally has since cooled, leaving the index barely above pre-election levels. 

“This earnings season will be crucial, testing the post-election optimism,” added Bank of America strategist Gonzalo Asis, who noted that volatility is expected to remain elevated as companies report quarterly results this week.

The bond market, meanwhile, has reacted in kind with a big enough sell-off to draw attention from investors who typically ignore fixed income.

Traders’ perception of a slower pace of rate cuts, concerns on tariffs, changes to US debt issuance, and deflation in China are among the drivers here, according to Steve Sosnick, chief strategist for Interactive Brokers. 

Notably, the one stock that hasn’t dropped its Trump-fueled fervor is the one that has the president-elect’s name in it.

Counter to the rest of the market, Trump Media, the parent company to Truth Social, skyrocketed more than 21% Monday for no apparent reason. 

Sticking to its trend of the last several months, the stock moved not on corporate news but political: Trump’s inauguration is one week away — and traders seem to be betting on more upside ahead. 

In sum, since November 4 Trump Media has returned nearly 25% while the S&P 500 has seen just over a 2% gain.

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Elsewhere:

📱 China could sell TikTok US to Elon Musk. ByteDance, the app’s parent company, prefers to fight the potential US ban, but Chinese officials are reportedly evaluating an option that involves Musk’s acquisition. The world’s richest man already owns X, Tesla, SpaceX, and other companies. (Bloomberg)

📊 Earnings are set to move stocks dramatically. Options traders are bracing for individual equities to move 4.7% on average in either direction after reporting earnings this week, according to strategists at Bank of America. Given inflation, interest rates, and political tensions, uncertainty is high across markets. (Bloomberg)

📉 Joe Biden is curbing the US chip industry as he exits the White House. Nvidia and other chip stocks tumbled Monday after the White House released an updated export rule aimed at controlling the flow of AI technology to rival nations, like China. In Nvidia’s view, the move harms the US economy, sets America back, and plays into the hands of adversaries. (Nvidia’s official statement)

❌ JPMorgan’s Jamie Dimon still doesn’t like bitcoin. He’s previously said the cryptocurrency is as useful as a pet rock, and he’s compared it to a Ponzi scheme: “Bitcoin itself has no intrinsic value, it’s used heavily by sex traffickers, money launderers, ransomware.” (Business Insider)

Rapid-fire:

• A strong US dollar could negatively impact companies that do most of their business overseas (Yahoo Finance)

• The SEC has charged Robinhood with securities violations and the brokerage will pay a $45 million penalty (CNBC)

• Trump could sign crypto-related executive orders on his first day in office (Benzinga)

• Goldman Sachs announced a restructuring to create a new group that can capitalize on the anticipated boom of private-equity deals (WSJ)

• California fires have killed at least 24 people and strong winds are expected to continue at least until Wednesday (NBC)

• The US TikTok ban has pushed many users to RedNote, a Chinese social app that’s suddenly at the top of Apple’s app store (CNBC)

• Stablecoin issuer Tether has relocated to El Salvador (Decrypt)

• Bitcoin has been outperforming gold and the S&P 500 for years (Pomp Letter)

Last thing:

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