Good morning investors,
Bitcoin bounced 6% yesterday and was above $94,000 in the overnight session as President Trump all but confirmed Kevin Hassett as next Fed Chair, saying "I guess a potential Fed Chair is here too" while Hassett stood nearby. Marvell surged 13% acquiring Celestial AI for up to $5.5 billion, joining the optical interconnect revolution that could make copper obsolete. Meanwhile, OpenAI declared "code red" as Google's Gemini 3 erases ChatGPT's lead, forcing Sam Altman to rally troops while Salesforce pivots from ChatGPT to Google. The AI race just entered a new phase.
Opening Bell: Risk-On Returns
Dow ($DIA ( ▲ 1.36% )) futures rise 61 points with S&P ($SPY ( ▲ 0.23% )) futures up 0.1% and Nasdaq ($QQQ ( ▼ 0.32% )) futures flat. Marvell rockets 10% premarket on its Celestial acquisition and 25% data center growth projection. American Eagle soars 12% after lifting guidance on strong holiday shopping. Bitcoin continues recovering, trading above $92,000 after Tuesday's 6% surge.
Macy's delivered surprise Q3 profit with 3.2% comparable sales growth, its strongest in three years, validating Tony Spring's turnaround strategy. Yet shares fell 2% as even raised guidance remains below last year's sales. The consumer story remains complicated even when execution improves.
Hassett's Fed Confirmation Nears
Trump's Oval Office comment about "a potential Fed Chair" while gesturing at Kevin Hassett essentially confirms what prediction markets positioned for months. Hassett leads Bessent's shortlist that includes Fed Governors Chris Waller and Michelle Bowman, former Governor Kevin Warsh, and BlackRock's Rick Rieder.
Hassett's dovish stance aligns with Trump's rate-cutting philosophy. Markets price 89% odds of December cuts, up from 50% mid-November. A Hassett Fed would maintain accommodative policy supporting risk assets, particularly benefiting small caps and rate-sensitive sectors I've been highlighting.
OpenAI's Existential Crisis
Sam Altman's "code red" memo urging employees to accelerate development reveals genuine panic. Google's Gemini 3 beating ChatGPT in performance tests while Anthropic advances rapidly leaves OpenAI squeezed between better-funded competitors. Salesforce CEO Marc Benioff's pivot from ChatGPT to Google validates the shift.
OpenAI lacks the retail, cloud, software, and advertising businesses its competitors leverage for AI funding. With mounting debt and limited monetization paths, the company that started everything risks becoming a footnote. First-mover advantage means nothing without sustainable competitive moats.
Marvell's Optical Revolution
Marvell ($MRVL ( ▼ 3.29% )) acquiring Celestial AI positions them perfectly for AI's next infrastructure phase. Optical interconnects transfer data faster, enable longer cables, and handle higher bandwidth than copper. As AI systems scale to thousands of chips, copper physically cannot handle requirements.
The $5.5 billion maximum payout triggers if Celestial hits $2 billion cumulative revenue by 2029. AWS VP Dave Brown's public endorsement saying this will "accelerate optical scale-up innovation" validates the technology. When hyperscalers endorse your acquisition publicly, you've won.
AWS-Nvidia: Frenemies Forever
AWS ($AMZN ( ▼ 0.65% )) adopting Nvidia's ($NVDA ( ▼ 1.55% )) NVLink Fusion for its Trainium4 chips reveals the complex hyperscaler dynamic. Even while developing competitive chips, AWS needs Nvidia's interconnect fabric for true scale. NVLink Fusion becomes the plumbing binding AI infrastructure together.
This pragmatic partnership shows hyperscalers can design chips and compete on price but still need Nvidia for networking and ecosystem compatibility. Nvidia embeds itself deeper into competitors' roadmaps rather than battling head-on. Brilliant strategy execution.
Apple's AI Reset
Apple ($AAPL ( ▼ 0.27% )) replacing AI chief John Giannandrea with Google/Microsoft veteran Amar Subramanya signals major strategic shift. The company finalizing a Google Gemini partnership to power Siri acknowledges internal development limitations while leveraging proven technology.
I called Apple a buy around $200 as a catch-up play. Now at $286 hitting records without meaningful AI implementation, the stock perfectly positioned for next catalyst. Apple excels at design and marketing, not foundational technology. Partnering with winners while controlling user experience plays to core strengths. If they improve their internal AI, there could be further strength from Apple.
Today's Data Deluge
ADP employment expects 20,000 November jobs versus 42,000 October, providing crucial Fed context. ISM Services at 52 expected would confirm modest expansion. Import/export prices and industrial production complete the pre-Fed data picture.
Salesforce earnings after close become pivotal given Benioff's OpenAI-to-Google switch. The stock down 29% year-to-date needs to demonstrate AI monetization beyond promises. Dollar Tree and Five Below provide consumer health checks from value retailers benefiting from trade-down dynamics.
Final Thought
Tuesday's reversal confirms Monday's weakness was noise, not signal. Bitcoin bouncing 6%, Marvell surging on strategic acquisition, and Hassett's Fed confirmation approaching all validate year-end rally thesis. The pieces continue aligning for December strength.
The market currently sits just above 6,800 level and I think the markets will test 7,000 into year end. Seasonal December strength, coupled with the expected rate cut, and a more dovish fed moving forward being baked into markets .
Breadth continues to improve, and this could be the key to the bull market accelerating.
My four bold calls remain firmly on track as December's first week unfolds exactly as predicted.
As always, feel free to reach out with questions about positioning for year-end opportunities.
Best regards,
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.