SOTS 2nd Hour: Big Tech Gets Wrecked, A Quantum Slump, the State of Commercial Real Estate 1/8/2025

The hosts opened the episode discussing the softening major indices, particularly with the Russell 2000 down by 1.5%. They highlighted key upcoming events, including a 30-year note auction and the release of Fed minutes. The analysis by Rick Santelli focused on the implications of lower inventories on GDP and the contrasting strong trade sales figures. Jobless claims showed a decrease, indicating a robust labor market despite weaker ADP results, hinting at the Fed’s battle with inflation and employment metrics.

Discussion moved to the performance of the 10 and 30-year Treasury yields, which are near 5% and 4.73% respectively. The analysts explained that these rates reflect longer-term budgetary concerns and increased government borrowing inseminated by current administration policies. Key charts demonstrated the GDP growth surprising on the upside versus inflation pressures still felt by Americans, with conversations pivoting towards how these economic indicators affect market investing strategies.

A noteworthy segment addressed the downturn in quantum computing stocks attributed to pessimistic comments from NVIDIA CEO Jensen Huang. Stocks like Brigetti and IonQ faced declines, indicative of skepticism toward the near-term utility of quantum computing. Despite falling valuations in tech, strong demand remains for AI-related stocks that have generated considerable investor interest due to their perceived growth potential.

The commercial real estate market took center stage with Scott Reckler's insights on current trends. He highlighted a growing demand for high-quality spaces in New York City, supported by big banks urging employees back to the office. The opportunity for conversions of older office buildings and the strategic investment landscape were discussed. Reckler also identified potential challenges ahead due to the refinancing of billions in loans maturing over the next few years, placing an optimistic yet cautious tone on the market’s future.

Sarah Eisen, David Faber, and Carl Quintanilla wrapped up the episode by reflecting on upcoming fiscal policies and the impact on market conditions. Discussion about hitting the reset button in investor sentiment surfaced, alongside thoughts that a solid tech sector performance could still prevail despite uncertainties. Market participants are advised to monitor the evolving economic environment as new government policies further shape market dynamics.