Bitget US Stock Morning Brief | Fed Internal Divisions Widen; Trump Accelerates Space Militarization; Pharma Giants Accept Price Cuts for Tariff Relief (December 20, 2025)

I. Market Highlights

Federal Reserve Dynamics

1. Internal Rifts Widen; Cleveland Fed President Hammack Advocates Holding Rates

• Cleveland Federal Reserve President Hammack emphasized monetary policy should remain on pause while assessing prior rate-cut effects, until inflation trajectory becomes clearer
• Key Points: December meeting set 2019-era high for dissenting votes; officials diverge on employment vs. inflation prioritization; dot plot shows six officials favoring unchanged rates in 2026
• Market Impact Analysis: Statement reinforces Fed's cautious posture, potentially easing market concerns over premature tightening, though inflation rebound could trigger short-term rate expectation volatility

2. Fed Chair Selection Stakes Rise; Trump Interviews Multiple Candidates

• Federal Reserve chairmanship competition enters critical phase with Hassett, Walsh, and Waller independence under intense scrutiny; Wall Street heavyweights actively engaged
• Key Points: BlackRock executive expected to meet Trump year-end; JPMorgan CEO and others in frequent government dialogue; aggressive lobbying competition among candidates
• Market Impact Analysis: Selection uncertainty could undermine policy continuity, with investors warranted to monitor potential debt and equity market repercussions

International Commodities

1. Indonesia Plans Sharp Nickel Production Cut; Global Supply Tightens

• As world's largest nickel producer, Indonesia plans reducing 2026 ore output to 250 million tons—roughly one-third below 2025 target—driving nickel futures recovery from lows
• Key Points: Nickel futures rally third consecutive day, escaping eight-month lows; production cuts stem from government budget planning; current prices already rebounded meaningfully
• Market Impact Analysis: Supply contraction should support medium-to-long-term nickel appreciation, benefiting EV battery supply chain, though near-term swings depend on demand recovery vigor

Macroeconomic Policy

1. Trump Accelerates Space Militarization; Defense Orders Reach Record Scale

• US government prioritizes space dominance as strategic objective; following Trump's executive order, Pentagon rapidly awards $3.5 billion satellite procurement contract
• Key Points: Involves Lockheed Martin, L3Harris, Northrop Grumman, and Rocket Lab; 72 infrared satellites scheduled 2029 deployment enabling global missile warning coverage
• Market Impact Analysis: Initiative combines civilian exploration with military capability, potentially triggering defense tech valuation uplift while catalyzing broader space industry investment surge

2. Major Pharma Giants Agree to Price Cuts for Tariff Exemptions

• Nine pharmaceutical giants reach government agreements reducing select drug prices in exchange for three-year tariff relief, now covering 14 of 17 target enterprises
• Key Points: Benefits low-income and disability insurance beneficiaries; new drug pricing synchronized with overseas; remaining three expected post-holiday follow-up with "TrumpRx" discount platform launch
• Market Impact Analysis: Supports healthcare cost control but compresses pharma profit margins, potentially accelerating industry M&A consolidation

3. BofA Warns Market Sentiment Overheated; Record-High Capital Inflows

• Investors pre-positioning for 2026 policy easing tailwinds; US equity single-week inflows reached near-record levels, though bull-bear indicators hit sell thresholds
• Key Points: Betting on rate cuts, tax cuts, and tariff adjustments driving growth; sentiment gauge hit 8.5, signaling structural risk; dual fiscal-monetary stimulus favorable
• Market Impact Analysis: Optimistic tone supports rebounds, but overheating signals may trigger near-term pullback; recommend monitoring elevated valuation sectors

II. US Stock Market Review

Index Performance

• Dow Jones: +0.38%, extending prior session's moderate advance
• S&P 500: +0.88%, tech-weighted stocks furnish primary momentum
• Nasdaq 100: +1.31%, AI-related sector strong rebound proves key driver

Tech Giants Update

• Nvidia: +3.93%
• Apple: +0.54%
• Google: +1.55%
• Microsoft: +0.40%
• Amazon: +0.26%
• Meta: -0.85%
• Tesla: -0.45%

Overall Assessment: Most tech giants benefit from AI concept warmth strengthening. Core drivers include robust Oracle and Nvidia performance offsetting valuation pressure adjustments.

Sector Rotation

1. Artificial Intelligence Sector Up ~4% (Representative Stock Average)

• Key Names: Oracle +6.63%, Micron +6.99%, AMD +6.15%
• Drivers: Market reignites AI application enthusiasm coupled with year-end capital reflows, collectively driving chip and software equities higher

2. Defense & Aerospace Sector Up ~2% (Inferred from Order News)

• Key Names: Lockheed Martin (order beneficiary), Northrop Grumman (order beneficiary)
• Drivers: Government space military contract releases reinforce industry growth expectations, attracting long-term thematic positioning

III. Deep Dive: Key Stock Insights

1. Tesla — Ackman Proposes SpaceX IPO Innovation Path

Event Overview: Hedge fund titan Ackman suggests leveraging special purpose acquisition rights (SPARC) vehicle to launch SpaceX IPO, bypassing traditional IPO while eliminating underwriting fees and granting Tesla shareholders preferential subscription rights. Specifically, each Tesla share corresponds to 0.5 SPARs convertible into two SpaceX shares, totaling 3.446 billion shares while maintaining pure common stock structure. Proposal aims streamlining process, reducing costs, while integrating Musk ecosystem resources.

Market Interpretation: Multiple institutions find structure innovative, able to attract retail participation while strengthening Tesla-SpaceX synergies, though regulatory scrutiny warrants attention.

Investment Insight: If implemented, structure delivers added shareholder value; recommend medium-to-long-term holdings capturing cross-ecosystem opportunities.

2. Google — Market Valuation Crown Odds Rise; Major AI Security Contract Lands

Event Overview: Prediction platform Polymarket shows Alphabet's 33% probability of topping global market capitalization by end-2026, trailing only Nvidia. Simultaneously, Google Cloud and Palo Alto Networks sign ~$100 billion multi-year agreement focusing on AI-driven security service development addressing generative AI emerging threats. Collaboration marks Google's largest cloud security order, strengthening competitive advantage versus Amazon and Microsoft.

Market Interpretation: Analysts broadly bullish on Gemini model and TPU chip potential, believing Google positioned to challenge Nvidia's AI hardware dominance while expanding enterprise market share through security partnerships.

Investment Insight: AI positioning continuously deepens; investors may track Google as diversified tech leader's long-term growth potential.

3. Palo Alto Networks — Deepens Google Cloud AI Security Partnership

Event Overview: Cybersecurity leader Palo Alto and Google Cloud reach ~$100 billion agreement co-developing AI-enhanced security solutions targeting generative AI network risks. Order sets Google Cloud security services record, positioning Palo Alto at forefront of rapidly expanding AI security sector while elevating product ecosystem compatibility.

Market Interpretation: Institutional analysis highlights not only locked-in substantial revenue but underscores Palo Alto's zero-trust architecture leadership, expected to drive further market capitalization expansion.

Investment Insight: Robust order supports earnings certainty; suitable defensive tech equity allocation.

4. Nvidia — AI Rebound Drives Stock to New Highs

Event Overview: Amid market AI enthusiasm resurgence, Nvidia Friday stock surged nearly 4%, benefiting from broad tech sector warmth and optimistic data center demand expectations. Recent chip supply stability combined with global AI investment momentum maintains elevated valuation.

Market Interpretation: Multiple investment banks reaffirm buy ratings, believing Nvidia's GPU market monopoly advantages resist near-term challenges; robust demand sustains profit growth despite competition.

Investment Insight: As core AI beneficiary, recommend tactical positioning to circumvent valuation bubble risk.

IV. Today's Market Calendar

Data Release Timeline

V. Key Takeaways

Near-Term Catalysts:

• Tech sector rally momentum sustained by AI enthusiasm
• Treasury auction market reception signals rate expectations
• Defense contracting announcements support aerospace/defense thesis
• Pharma pricing agreements impact earnings expectations

Medium-Term Themes:

• Fed policy uncertainty creates tactical opportunities
• AI infrastructure deployment accelerates through public-private partnerships
• Space sector militarization creates multi-year growth runway
• Healthcare cost containment vs. pharma profitability tradeoff emerging

Risk Factors:

• Market sentiment overheating per BofA warnings
• Fed policy pivot timing uncertainty
• Valuation compression risks in elevated sectors
• Geopolitical escalation (space, trade tensions)

Bitget Research Institute Perspective: Tech sector rebound ends recent choppy trading, supported by moderate inflation data and inventory reflow expectations. Though Fed hawkish positioning creates uncertainty, December year-end rally remains potential despite rough start. Monitor year-end liquidity dynamics and 2026 policy catalysts closely.

Disclaimer: Content compiled via AI research and verified by human review for publication only. Not intended as investment advice.