Daily Market Brief - Jan 01, 2026
Editor's Notes:
- Macro theme remains the same as the past few days. Expect more AI debate / US overvaluation to dominate the markets in 2026.
- Insider buying may signal some bullish view on Nike for 2026, given CEO, Tim Cook and another director's recent insider buying. Only recently, Nike CEO described the turnaround as "just starting" and will have an "non-linear path" - I would track Nike sales in channels / search and monitor downstream Dick's and upstream Shenzhou.
- Happy New Year! Some readers already told us that reading our newsletter every day has become a routine that sped up their ideation and theme tracking. We also heard that the number of emails (10+ a week) may be too much for some. We will continue fine-tuning our AI-enabled noise-to-signal engine to deliver better insights in 2026. Thank you!
The year concluded with divergent narratives across global markets, reflecting both persistent themes and emerging debates. Japan's "golden era" continues to captivate, fueled by corporate governance reforms and activist interest, while Hong Kong displayed selective strength amidst broader caution. In the US, the AI market remains the dominant discourse, oscillating between hyper-growth optimism and bubble concerns, shadowed by macro indicators and valuation debates.
(a) Overall Themes, Market Sentiment & Debates
Japan's "Golden Era" & Corporate Governance
The Nikkei 225 ended 2025 above 50,000, driven by AI enthusiasm and policy optimism. Beyond the headline index, a significant theme is the ongoing "golden era" for investing in cheap, asset-rich Japanese firms. Increasing interest from private equity and activists, spurred by governance reforms, is creating M&A and delisting opportunities. However, caution exists regarding potential market overextension and long-term demographic risks. The growth investing narrative in Japan appears to be softening, shifting focus to value and special situations.
Hong Kong Market: Selective Resilience Amidst Caution
While the Hang Seng Tech Index saw a slight dip, selective buying in specific sectors indicates underlying resilience. Notable gains were seen in consumer goods (Grace Wine, Pacific Legend), AI innovation (Wealthink AI), and medtech (Microport Cardioflow Medtech), suggesting opportunistic trades. Meituan acted as a defensive play within consumer tech. Conversely, financials (Merchants Bank), energy (PetroChina), and consumer staples (Nongfu Spring) showed weakness, highlighting broader economic concerns and valuation pressures. Trade tensions continue to pressure the semiconductor sector, exemplified by SMIC's decline amidst China's domestic equipment mandate.
US Markets: AI Dominance & Valuation Debates
The AI boom remains the central theme, sparking a heated debate: Is it sustainable growth or a speculative bubble? Bearish arguments cite record insider selling, SoftBank's strategy, and OpenAI's IPO perception as an exit. Bullish camps emphasize AI's nascent stage, its role in driving tech infrastructure, and emerging "bottleneck industries" like Energy & Power, and Defense, which are crucial for supporting AI's demands. Concurrently, broader market overvaluation concerns are amplified by the Warren Buffett Indicator hitting a record 221%. High-growth valuations in space tech (ASTS, RKLB, SpaceX) also fuel "FOMO and hype" discussions versus fundamental analysis.
US Labor Market: Mixed Signals
Recent data presents a nuanced picture of the US labor market, with weekly jobless claims falling to a one-month low, hinting at resilience. However, this is juxtaposed against a rise in the unemployment rate to a four-year high of 4.6% in November, suggesting potential underlying weakness or shifts in labor force participation dynamics.
China's Economic Influence & Trade Policy
New tariffs (55% on beef imports) and restrictions on silver exports mirror China's strategic approach to critical resources. Crucially, the mandate for chipmakers to use at least 50% domestically made equipment for new capacity will significantly reshape global supply chains, creating competitive advantages for domestic players and impacting international semiconductor firms.
(b) Notable Big Stock Moves, Earnings and Development
| Symbol | Company Short Name | Price Move | Explanation (very concise summary) | Related to earnings |
|---|---|---|---|---|
| AXSM | Axsome Therapeutics, Inc. | +22.75% | Revenue beat expectations, but CEO sold shares and future earnings estimates cut. | Yes |
| NKE | NIKE, Inc. | +4.12% | Apple CEO Tim Cook bought shares; positive analyst rating and retail acquisition. | No |
| CYTK | Cytokinetics, Incorporated | +3.54% | Lawsuit investigations, FDA issues & insider selling mixed with analyst upgrade and Q3 earnings. | Yes |
| 0670.HK | China Eastern Airlines | +4.92% | Launched cross-carrier transfer service with partner airlines to boost satisfaction. | No |
| 1055.HK | China Southern Airlines | +4.68% | Gained market share via aggressive Korean expansion, low prices, and shorter routes. | No |
| 2333.HK | Great Wall Motor Co., Ltd. | +3.31% | China's EV subsidies and broader auto sector strength, plus Brazil expansion plans. | No |
| 0753.HK | Air China Limited | +3.21% | Holiday travel, Airbus order, "Buy" rating, and aggressive Korean market strategy. | No |
| AAON | AAON, Inc. | -3.01% | Declined despite Oppenheimer "Outperform" rating and Q2 earnings. | Yes |
| MRNA | Moderna, Inc. | -3.03% | Analyst downgrades, insider selling, institutional stake reduction, and poor earnings outlook. | Yes |
| LCID | Lucid Group, Inc. | -3.03% | EV policy changes, analyst downgrades, earnings/production miss, supply chain, high short interest. | Yes |
| UHS | Universal Health Services | -3.13% | Declined despite positive analyst ratings, new partnerships, and growth plans; undisclosed factors. | No |
| FICO | Fair Isaac Corporation | -3.16% | Analyst downgrade, price target cut, and CEO insider selling contributed to decline. | No |
| GFS | GlobalFoundries Inc. | -3.31% | Analyst downgrade; Q4 EPS guidance may be below expectations. | Yes |
| 1801.HK | Innovent Biologics, Inc. | -3.60% | New obesity drug approval intensifies competition, potentially impacting profitability. | No |
| QXO | QXO, Inc. | -8.32% | Analyst lowered EBITDA estimates due to weak roofing demand; Q3 revenue miss. | Yes |
| CORT | Corcept Therapeutics Inc. | -50.42% | FDA issued Complete Response Letter for key drug relacorilant NDA, citing insufficient effectiveness. | No |
(c) Interesting Comments, Facts and Ideas
Japan's Activist & PE Landscape
The ongoing value unlocking trend in Japan is exemplified by Yutaka Giten Co., Ltd. receiving an activist letter from GAM funds, pushing for corporate reform. This highlights the increasing pressure on Japanese management to address undervaluation. Yomeishu Seizo further underscores this with a 24%+ surge on news of KKR's first negotiation rights for a buyout, drawing attention to companies with attractive underlying assets, like real estate, that could be seen as potential REIT-like investments post-acquisition. Investors should scrutinize balance sheets for hidden value.
The Power of "Physical AI"
Sony ($SONY) is positioned as an "irreplaceable" player in "physical AI" due to its dominant 53% market share in image sensors. Its three-level moat (chip design, manufacturing, software) and ability to aggressively invest, unburdened by its financial segment, make it a compelling AI infrastructure play beyond just compute. High growth in automotive solutions and Crunchyroll are strong tailwinds.
China's EV & Tech Ecosystem Evolution
Great Wall Motor (2333.HK) benefits significantly from China's NEV subsidies and strategic expansion into Brazil, showcasing government support and global ambitions. Meanwhile, JD.com is a key enabler of national subsidy programs through its extensive logistics network and digitalized distribution, hinting at its integral role in China's domestic consumption policies. Xiaomi Corp. is strategically diversifying, as evidenced by Samsung Chairman Jay Y. Lee's visit (signaling automotive interest) and its entry into AI smart glasses.
Lenovo: Underpriced AI Infrastructure
With a P/E of ~10x, Lenovo (992.HK / LNVGY) is pitched as the "cheapest AI infrastructure play." The market appears to be underpricing its growing Infrastructure Solutions Group (20%+ YoY growth) and high-margin Solutions & Services Group. Catalysts include the emerging "AI PC" cycle and Google's rumored "Project Aluminium" OS refresh.
Tesla's Valuation Conundrum
The debate around Tesla ($TSLA) intensified, with Michael Burry reiterating his "ridiculously overvalued" stance, citing an "Elon Cult." Reddit echoes concerns over its 200+ P/E. Analysts project a 15% YoY drop in Q4 deliveries and 30% downside potential, attributing this to phasing out tax credits, intensifying competition, and diminishing demand pull-forward. Only 13% of revenue from its profitable energy segment adds to the skepticism.
Meta's Strategic AI & "Loneliness Economy"
Meta Platforms ($META) is highlighted for Instagram's crucial role in customer acquisition via short-form video. More profoundly, its focus on advanced AI avatars (Codec Avatars, GPiCA) and integrated hardware (Quest) positions it to capitalize on the "loneliness economy," offering unique social connectivity solutions.
Edge AI & Semiconductor Bottlenecks
The potential for "Edge AI" (on-device, energy-efficient inference) is significant. Companies like ARM and Qualcomm ($QCOM) are well-positioned, given their low-power AI architectures and Qualcomm's 12.3% share in neuromorphic computing. On the supply chain side, Entegris, Inc. is a key supplier of specialized materials for EUV masks, underscoring critical component dependencies in advanced semiconductor manufacturing.
AI Infrastructure Beyond Compute
Beyond the direct AI companies, Nvidia is reportedly in advanced talks to acquire Israel's AI21 Labs for its AI expertise, signaling continued consolidation. Brookfield plans to launch a cloud business to reduce AI costs, indicating a focus on practical implementation and efficiency for the demanding AI infrastructure. The emergence of Energy & Power and Defense as "bottleneck industries" for 2026 suggests strategic investment opportunities as AI demands expand beyond data centers.
Specific Stock Insights from Price Moves
- Axsome Therapeutics (AXSM): A notable Q3 revenue beat was overshadowed by significant CEO share sales and a cut in future earnings estimates, presenting a cautionary tale of mixed signals for investors.
- Nike (NKE): The unexpected personal investment by Apple CEO Tim Cook serves as a strong, credible vote of confidence that transcended immediate company news.
- Universal Health Services (UHS): Its decline despite positive analyst ratings and growth plans underscores the presence of broader market factors or unstated concerns influencing stock performance, warranting deeper due diligence.
- Innovent Biologics (1801.HK): The approval of a new obesity drug, paradoxically, created market concerns about intensifying competition and potential profitability erosion, demonstrating that 'good news' can sometimes have nuanced market reactions.
- Corcept Therapeutics (CORT): A massive 50% drop due to an FDA Complete Response Letter for a key drug (relacorilant) vividly illustrates the critical regulatory risks inherent in the pharmaceutical sector.
Duke Energy's Nuclear Ambitions
The early site permit application for new nuclear development, including Small Modular Reactors (SMRs), by Duke Energy signals a forward-looking strategy for decarbonization and long-term energy supply in the US, with potential for up to 600 MW of advanced nuclear capacity by 2037.
Happy Alpha Hunt!
- Distilla
Disclaimer: This content is generated using AI, synthesizing public data (filings, reports, news) and social media (Reddit, X). It may contain errors, inaccuracies, or hallucinations. Nothing herein constitutes financial advice. This newsletter is for informational purposes only; please consult a qualified professional and conduct your own due diligence before making any investment decisions.