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Aurora soars after unveiling driverless truck partnership with Nvidia (0:20). November JOLTS shows interesting mixed picture (1:50). Meta ending 3rd-party fact-checking; Tesla downgraded (3:45). Getty Images and Shutterstock agree to merge (5:00).
This is an abridged transcript of the podcast:
Our top story so far. You heard about autonomous driving and AI in this morning’s Wall Street Breakfast as Nvidia (NASDAQ:NVDA) and Uber (UBER) teamed up. Now how about the big rigs?
Self-driving company Aurora (NASDAQ:AUR) is jumping after announcing a long-term strategic partnership with auto supplier Continental (OTCPK:CTTAF) and Nvidia to deploy driverless trucks at scale.
The collaboration will leverage Nvidia’s next-generation DRIVE Thor system-on-a-chip and DriveOS, which will be integrated into the Aurora Driver, a Society of Automotive Engineers Level 4 autonomous driving system.
The mass production of the driverless trucks is scheduled for 2027, with the initial service launch planned for April 2025 in Texas. The partnership was called the first in the industry aimed at scaling driverless trucks.
Aurora CEO Chris Urmson says: “Delivering one driverless truck will be monumental. Deploying thousands will change the way we live.”
Wedbush analyst Dan Ives says the overriding message from Nvidia CEO Jensen Huang at the Consumer Electronics Show was that “a slew of new AI technology is coming out of Nvidia around robotics, autonomous technology, PCs that will further stretch their enormous technology lead vs. the rest of the semi and Big Tech landscape.”
“This was a major ‘flex the muscles’ moment for Nvidia and Jensen in this AI arms race playing out across the tech ecosystem globally.”
On the economic front, ahead of Friday’s jobs report, the November Job Openings and Labor Turnover Survey, or JOLTS, showed an interesting mixed picture.
Job openings jumped to 8.096 million from 7.839 million in October. That was much higher than the 7.65 million expected, showing continued strength in the labor market. But the quits rate and hiring rate both fell.
Raymond James Chief Economist Eugenio Aleman says: “Although the total hires rate decreased in November compared to the previous month, the total separations rate also declined in November. This report supports our view that the labor market remained strong at the end of last year.”
December’s ISM Services index also showed economic strength, rising to 54.1 in December from 52.1 in November, topping the 53.5 consensus. That marks the sixth straight month of expansion.
Neither report was Fed-cut friendly, especially noting the prices paid component of the ISM, which rose to 64.4, well ahead of the 57.5 expected and raising further worries about sticky inflation.
Pantheon Macro economist Oliver Allen notes that prices paid are the highest since February 2023, and the “index has typically provided a reliable lead on underlying services inflation over the past decade or two.”
“At face value, the latest read points to services deflation essentially stalling from here. Note, however, that this index is far more volatile than services inflation, and big single-month moves often unwind without ever showing up in the inflation numbers,” Allen said.
Following the numbers, the odds of the Fed keeping rates on hold until after the July meeting rose above 30%, and the 10-year Treasury yield (US10Y) moved up near 4.7%.
In equities, growth stocks are reversing after gains in the previous session. The Nasdaq (COMP.IND) is the weakest among the major averages, down about -1.5%.
Among active stocks, Meta (META) is ending its third-party fact-checking program in the U.S. and will instead move to a Community Notes program. CEO Mark Zuckerberg said the move would avoid frequent and unnecessary censorship.
The new approach mimics policies implemented on Elon Musk’s X. Along with the appointment of UFC CEO Dana White to the company’s board, the move appears in line with Zuckerberg making his platforms more friendly to the incoming administration.
Bank of America downgraded Tesla (TSLA) to Neutral from Buy due to high valuation and near-term execution risk.
Analyst John Murphy said his price target of $490 still implies upside, but “execution risk is high, and TSLA is trading at a level that captures much of our base case (long-term) potential from core autos, robotaxi, Optimus, and energy generation & storage.”
And Ulta Beauty (ULTA) is among the top S&P gainers after CEO Dave Kimbell announced his retirement late Monday. He will be replaced by the company’s COO, Kecia Steelman.
After joining the company in 2014, Kimbell was promoted to CEO in 2021, guiding Ulta to $11 billion in annual revenue.
In other news of note, shares of Getty Images (GETY) and Shutterstock (SSTK) are off to the races after agreeing to merge.
The combined company will be called Getty Images Holdings and will have an enterprise value of about $3.7 billion. At close, Getty Images stockholders will own around 54.7%, and Shutterstock stockholders will own 45.3%.
Shutterstock stockholders at close can elect to receive one of the following: $28.8487 per share in cash for each share of common stock they own; 13.67237 shares of Getty Images common stock for each SSTK share; or a mixed consideration of 9.17 shares of Getty, plus $9.50 in cash.
The deal is expected to be accretive to earnings and cash flow beginning in year two. The stronger financial profile of the combined company is expected to create increased capacity for product investment and innovation for customers.
And in the Wall Street Research Corner, Wells Fargo’s Investment Institute is spotlighting 31 companies that it believes are in a position to “offer above-average growth potential.”
The list of stocks covers eight of the 11 S&P sectors, with the Consumer Discretionary (XLY) and Information Technology (XLK) seeing the most names.
Among the picks are Nike (NKE), Airbnb (ABNB), Salesforce (CRM), Electronic Arts (ERTS), CrowdStrike (CRWD), Visa (V), and Block (SQ).
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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