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Tuesday, February 18

Noteworthy macro moves today: USD/CNH +0.3%. Gold +0.7%. Noteworthy US mega-cap moves today: UnitedHealth Group Inc (UNH) -0.9%. 

Recent developments in the financial markets are heavily influenced by ongoing geopolitical tensions and central bank policies. Notably, U.S. officials have engaged in high-level talks with Russian counterparts regarding a resolution to the Ukraine conflict; however, initial reports suggest limited progress was made during these discussions. This uncertainty has contributed to fluctuations in market sentiment as investors remain cautious about potential outcomes.

In addition to geopolitical factors, economic indicators from major economies continue to shape investor expectations. The Empire State Manufacturing Index is set for release today; analysts anticipate it will show a slower contraction compared to January's figures but still reflect challenges within the manufacturing sector amid broader inflation concerns that persist despite recent Federal Reserve commentary suggesting stability may be on hold until further data emerges.

Central banks' actions also play a critical role at this juncture—Australia’s Reserve Bank recently cut interest rates for the first time since 2020 while signaling caution over future cuts due to moderating inflation pressures. Meanwhile, comments from European Central Bank officials highlight growing concerns around core inflation dynamics which could influence monetary policy decisions moving forward across various regions including Europe and North America.

SPDR Gold Shares (GLD) [+1.1%]
SPDR Gold Shares (GLD) has experienced a price increase of 1.1% since Friday. April gold prices rose by 0.9%, reaching approximately 2,927 an ounce, although they remain below recent intraday highs. Social media discussions have highlighted a notable price spike in gold, with mentions of inflation and potential Federal Reserve rate hikes. Additionally, there is growing public interest in the verification of gold holdings at Fort Knox, following comments from Senator Rand Paul and a viral suggestion from Elon Musk. Demand for gold jewelry in China surged significantly leading up to Valentine's Day, potentially exerting upward pressure on gold prices. Furthermore, geopolitical tensions related to U.S.-Russia discussions about Ukraine have increased safe-haven demand for gold. The Reserve Bank of Australia's recent cash rate cut may also support gold as a preferred investment during uncertain economic conditions.

USD/CNH (USD/CNH) [+0.3%]
The People's Bank of China (PBOC) set the USD/CNY central rate for today at 7.1697, slightly lower than yesterday's fix and below market expectations. Concurrently, social media discussions have highlighted that the PBOC raised the Central Parity Rate of the CNY by 5 pips, indicating a firmer stance than anticipated. Geopolitical tensions are also in focus as U.S. and Russian officials engage in high-level talks in Riyadh regarding Ukraine, which could impact market sentiment towards the yuan and dollar. Additionally, South Korea announced a $249 billion trade financing plan aimed at supporting exporters against U.S. tariffs, further contributing to the backdrop of international economic interactions affecting USD valuation.

STZ | +6.6% | +2.1B
Constellation Brands Inc | Distillers & Vintners
Warren Buffett's Berkshire Hathaway has established a new stake in Constellation Brands Inc, acquiring 5.62 million shares, valued at over $1 billion as of December 31, 2024. This investment follows significant reductions in Berkshire's holdings in Bank of America and Citigroup. Following this announcement, Constellation Brands' shares increased notably in after-hours trading. Social media discussions highlight concerns regarding tariffs as overstated, with the stock considered undervalued relative to its historical performance and peers. Despite a substantial decline over the past year, the company's alcoholic beverage portfolio has shown consistent revenue growth. The recent acquisition by Berkshire Hathaway underscores positive sentiment regarding Constellation Brands' long-term prospects.

MDT | -4.5% | -5.3B
Medtronic PLC | Health Care Equipment
Medtronic PLC reported its third-quarter fiscal 2025 results, with adjusted earnings per share of $1.39, surpassing the consensus estimate of $1.36. Revenue for the quarter was $8.29 billion, slightly below the expected $8.33 billion, marking a year-over-year increase of 2.5% and a 4.1% rise on an organic basis. The Cardiovascular segment achieved organic growth of 5%, while the Diabetes segment grew by 10.4%. Medtronic reaffirmed its fiscal 2025 guidance, projecting organic revenue growth between 4.75% and 5% and adjusted EPS in the range of $5.44 to $5.50, aligning with analyst expectations. Following the earnings announcement, the stock experienced a decline of approximately 4%. The company also adjusted its revenue guidance for fiscal 2025 to a range of $33.5 billion to $33.6 billion.

MU | +2.5% | +2.8B
Micron Technology Inc | Semiconductors
Micron Technology, Inc. has announced plans to significantly increase production of its 12-stack HBM3E memory, targeting supply for Nvidia, thereby reinforcing its position in the high-bandwidth memory market. Concurrently, social media discussions highlight a surge in memory chip sales, with a notable year-over-year increase driven by demand for high bandwidth memory chips used in AI GPUs. Despite ongoing concerns regarding AI compute developments and market cyclicality, there is a strong defense of the $85 price level among buyers, suggesting potential opportunities in Micron shares. In related news, Intel Corp has experienced a rise following reports of interest from Broadcom and TSMC in parts of its operations, reflecting broader interest in the semiconductor sector that may also influence Micron.

BIDU | -3.1% | -8.1B
Baidu Inc | Interactive Media & Services
Baidu Inc. reported fourth-quarter earnings with an EPS of RMB19.18, surpassing the analyst estimate of RMB16.42. Revenue reached RMB34.12 billion, exceeding expectations but reflecting a 2% year-over-year decline. The core business generated RMB27.7 billion, while iQIYI's revenue fell short at RMB6.6 billion against an estimate of RMB6.84 billion. Adjusted operating profit was RMB5.05 billion, above forecast; however, adjusted EBITDA of RMB6.95 billion missed the anticipated RMB7.47 billion. Monthly active users totaled 679 million, below the estimate of 690.82 million. Concerns arose as the company's market value declined by $2.4 billion following its CEO's absence from a significant meeting with President Xi Jinping. Additionally, Baidu's ad revenue decreased by 7% to RMB17.9 billion, although AI Cloud services grew by 26%.

HSBC | +3.1% | +33.1B
HSBC Holdings PLC | Diversified Banks
HSBC Holdings is projected to report a fourth-quarter net profit of $27.9 million for the three months ended December 31, recovering from a net loss of $153.0 million in the same period last year. This follows a write-down related to its stake in the Bank of Communications. The stock has increased by 13% year-to-date through Monday, building on a 23% rise in 2024, as restructuring efforts under new Chief Executive Georges Elhedery gain traction. Additionally, HSBC has terminated 40 investment banking positions in Hong Kong as part of a global restructuring initiative. The company's Q4 FY2024 earnings announcement is expected before market open on February 19, 2025, with a conference call scheduled for 3:45 AM. Meanwhile, Barclays PLC has experienced a price increase of 3.57%, suggesting a correlation that may also influence HSBC's recent performance.

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