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Officials say the group is part of an effort to compromise Western infrastructure. (0:15) Elon Musk’s Neuralink implants brain chip in human. (1:10) Job openings unexpectedly surge. (2:19)
This is an abridged transcript of the podcast.
The U.S. government has introduced an operation to combat a Chinese hacking operation, which successfully compromised thousands of internet-connected devices. That’s according to a Reuters report citing security officials.
In recent months, the Justice Department and the FBI sought and received legal permission to remotely disable aspects of the Chinese hacking campaign.
The Biden administration has been focused on hacking, not only due to fears that countries could try to disrupt the U.S. election in November but also because of ransomware attacks on companies last year.
Volt Typhoon, the hacking outfit at the center of the recent activity, has alarmed intelligence officials, who say the group is part of a larger effort to compromise Western critical infrastructure, including naval ports, internet service providers, and utilities.
Volt Typhoon’s activities had surfaced in May 2023, but the group expanded the scope of their operations late last year and changed some of their techniques.
In other news of note
The first human to receive an implant from Neuralink is recovering well, according to Elon Musk, marking the latest milestone for the emerging brain-computer interface industry.
BCIs are aimed at helping people with traumatic injuries like paralysis, but if all goes well, Musk hopes to extend this to hearing and vision loss and eventually merge humans with artificial intelligence. The implants use “ultra-fine” threadlike electrodes to detect and help transmit “neuron spikes,” or the electrical and chemical signals in participants’ brains.
The FDA gave Neuralink approval for clinical trials on humans in May 2023, prompting the company to start recruiting candidates in September. Some of Neuralink’s activities have been criticized for their surgical work, but the in-human clinical trial marks one step closer toward commercialization, especially for a startup that’s reportedly valued at around $5 billion.
In today’s trading
Stocks are moving slightly to the downside following the rally on Monday sparked by lower-than-expected Treasury borrowing estimates.
Treasury yields erased losses following a jump in job openings from the Job Openings and Labor Turnover Survey, or JOLTS, and a solid rise in consumer sentiment.
The number of job openings climbed to 9.026 million in December, the highest level since September and well ahead of the 8.7 million consensus.
The quits rate stayed steady at 2.2%. Those voluntarily leaving their jobs are around pre-pandemic levels.
“The operative term in today’s JOLTS report is ‘little changed.’ The labor market was steady in December,” Julia Pollak, chief economist at ZipRecruiter, said.
Meanwhile, the Conference Board’s measure of consumer confidence rose to a two-year high.
The index rose to 114.8 in January from a revised 108 in December, about in line with forecasts for 115. It was the highest reading since December 2021 and marked the third consecutive monthly increase. The main driver was the present situation component, although the expectations component did tick up.
Macro adviser Craig Shapiro notes a “nice pickup in (THE) differential of jobs plentiful vs. jobs hard to get in the Conf Board survey (that) meshes well with the stronger JOLTS data.”
That “could add potential for upside surprise to Friday’s payroll print and signals continued strength in the labor market, which makes it more difficult for the Fed to justify an imminent rate-cutting regime that is still being priced in by market.”
Among active stocks, earnings dominate.
United Parcel Service (UPS) stock fell sharply after the company posted a mixed Q4 earnings report and set full-year guidance below expectations. UPS also plans to cut 12,000 jobs as demand remains soft and will explore strategic options for its Coyote truckload brokerage business.
CEO Carol Tomé said: “2023 was a unique and difficult year, and through it all, we remained focused on controlling what we could control, stayed on strategy, and strengthened our foundation for future growth.”
Pfizer (PFE) beat Wall Street forecasts for its COVID-19 franchise, while its revenue for the period fell short of expectations as its non-COVID products underdelivered. Pfizer reported $14.2 billion in revenue for the quarter, down 41% YoY.
General Motors (GM) rallied after the Detroit automaker set a stronger profit outlook for 2024 than anticipated.
GM expects 2024 adjusted operating earnings of $12 billion to $14 billion vs. $11 billion consensus and adjusted EPS of $8.50 to $9.50 vs. $7.70 consensus. It expects to cut costs by $1 billion and slow down the cash burn with the Cruise business. Tailwinds seen by GM include the non-recurrence of the UAW strike, LG agreements, and substantially lower EV inventory allowance adjustments.
And in the Wall Street Research Corner
UBS is bullish on quality stocks performance, even though those companies are “slightly expensive” currently. Quality stocks are companies with above-average growth and strong balance sheets.
Analysts screened for Buy-rated stocks are in the top 30% for quality, have positive earnings momentum, are not crowded, and have reasonable value without overly high beta.
Picks include Target (TGT), Domino’s (DPZ), Amazon (AMZN), Colgate-Palmolive (CL), and P&G (PG).
