Market Beats | JP Morgan to Remove Hybrid Work Model; US Credit Market Date Implies Stock Bubble; Nvidia Unveils 50-Series GPU; Deportation of Illegal Immigrants Could Cost $86bn; Apple Shares Suffer Longest Drop Since April; Anthropic Raises $2bn at $60bn Valuation; Point72 Hires Ex-Blackstone MD

—— US Credit Market Date Implies Stock Bubble; Nvidia Unveils 50-Series GPU; JP Morgan to Remove Hybrid Work Model; Deportation of Illegal Immigrants Could Cost $86bn; Apple Shares Suffer Longest Drop Since April; Anthropic Raises $2bn at $60bn Valuation; Point72 Hires Ex-Blackstone MD

1. US Credit Market Date Implies Stock Bubble

The U.S. bond market is hinting that investors in equities might be overly optimistic. Currently, stocks are nearing their highest overvaluation compared to corporate credit and Treasuries in nearly twenty years. The earnings yield of the S&P 500, which is the reciprocal of its price-to-earnings ratio, is at its lowest point relative to Treasury yields since 2002. This suggests that equities are the most expensive they’ve been in relation to fixed income in many years.

Regarding corporate debt, the earnings yield of the S&P 500, at 3.7%, is nearly at its lowest when compared to the 5.6% yield of BBB-rated dollar corporate bonds since 2008.

Typically, the profit yield of equities is higher than that of BBB bonds because stocks carry more risk. Since the beginning of the 21st century, whenever this gap has been negative—as it is currently—it usually indicates problems ahead for the stock market.

Historically, such negative readings have only occurred during economic bubbles or when credit risk was escalating, according to Bloomberg’s Ven Ram last month.

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2. Nvidia Unveils 50-Series GPU

Nvidia Corp.’s CEO, Jensen Huang, introduced a series of new chips, software, and services designed to maintain the company’s leadership in artificial intelligence computing. At the CES trade show in Las Vegas, Huang addressed a large audience, revealing Nvidia’s plans for integrating AI into various sectors of the economy. He envisions a future tech landscape populated by a billion humanoid robots, 10 million automated factories, and 1.5 billion autonomous vehicles.

The presentation, which lasted over 90 minutes, sparked significant interest as businesses are eager to implement the latest AI technologies. Huang’s discussion also covered partnerships with Toyota Motor Corp. and MediaTek Inc., which boosted their stock prices by more than 3%.

Nvidia’s shares saw an initial increase of up to 2.5% as trading opened in New York, although they stabilized shortly thereafter, showing little change by 9:38 a.m. local time. Over the past year, the stock has soared, achieving gains exceeding 200%.

This surge in Nvidia’s stock has also positively impacted its Asian suppliers, such as Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co., both of which experienced notable increases due to optimism about Nvidia’s future prospects.

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3. JP Morgan to Remove Hybrid Work Model

JPMorgan Chase & Co. is planning to mandate a return to the office five days a week for all its employees, effectively ending the hybrid work arrangement that allowed thousands of its staff to work partially from home. This policy shift, set to be announced soon, will replace the current requirement that many employees be in the office three days a week. The change aligns with policies introduced in April 2023 that already require managing directors to work in-office full-time. Approximately 60% of the bank’s workforce, including traders and retail branch employees, are already meeting this requirement.

The decision could still be subject to change but represents a significant shift back to pre-pandemic norms for one of the largest banks in the U.S., which employs over 300,000 people globally.

While some of JPMorgan’s competitors continue to offer more flexible working arrangements, this move underscores CEO Jamie Dimon’s belief in the benefits of in-person collaboration. A spokesperson from the bank, based in New York, has declined to comment on these plans.

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4. Deportation of Illegal Immigrants Could Cost $86bn

President-elect Donald Trump’s choice to lead the largest deportation initiative in U.S. history, Tom Homan, stated that executing this plan will require tens of billions of dollars but argued it would ultimately lessen the financial load on taxpayers.

Speaking at a Republican women’s club in central Texas, Homan, who has a long career in immigration enforcement, acknowledged the significant cost, estimated at $86 billion, although the details of what this figure includes were not specified. He compared this to the current expenses of housing, feeding, and transporting migrants within the U.S., suggesting that these costs are perpetually high.

Homan, who began his career as a Border Patrol agent during the Reagan administration, emphasized the potential savings for taxpayers by reducing the ongoing costs associated with illegal immigration. He highlighted the extent of current expenditures by claiming, “Every illegal alien gets a free hotel room, every illegal alien gets three squares a day.”

His remarks, made in Franklin, Texas, underscored his belief that despite the initial high costs, the deportation effort would ultimately be economically beneficial.

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5. Apple Shares Suffer Longest Drop Since April

Apple Inc. has experienced a difficult start to 2025, with its stock declining due to concerns about its performance in the crucial Chinese market. The company’s shares dropped for five consecutive sessions, marking the longest losing streak since April, before seeing a slight recovery on Monday. This downturn was influenced by data indicating weaker iPhone shipments in China and a report from Reuters about Apple offering discounts in the country.

The situation worsened on Tuesday when Apple’s stock fell further by up to 1% after an analyst downgrade to “sell” from MoffettNathanson. The downgrade was based on Apple’s declining influence in China among other factors. Analyst Craig Moffett highlighted the significance of the Chinese market, not only as a major consumer base but also as a central part of Apple’s supply chain. He noted the challenges Apple faces, including losing market share in China and the potential impacts of a looming trade war which could exhaust the company’s political goodwill without fully mitigating adverse effects.

The recent stock performance suggests that investors, who previously overlooked tepid responses to new AI-enhanced iPhone features and risks related to tariffs under the incoming Trump administration, might be losing confidence in Apple’s ability to navigate these challenges effectively.

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6. Anthropic Raises $2bn at $60bn Valuation

OpenAI competitor Anthropic is reportedly close to securing $2 billion in a funding round led by Lightspeed Venture Partners, potentially boosting its valuation to $60 billion. This information comes from sources who preferred to remain anonymous due to the private nature of the discussions.

This new valuation considers the capital Anthropic aims to gather in this round. The news of this significant funding effort was first reported by The Wall Street Journal. Anthropic has yet to comment on these developments.

This funding round places Anthropic among several tech startups that are drawing substantial investments fueled by the excitement surrounding generative AI technologies.

For context, just three months ago, OpenAI completed a $6.6 billion funding round, increasing its valuation to $157 billion. Additionally, last month, Elon Musk’s AI venture, xAI, secured $6 billion in a funding round that valued the company at over $40 billion.

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7. Point72 Hires Ex-Blackstone MD

Advanced Micro Devices Inc. (AMD), the world’s second-largest computer processor manufacturer, announced that its chips will be used for the first time in Dell Technologies Inc.’s PCs aimed at business clients.

The announcement was made as AMD introduced new processors at the CES show in Las Vegas, claiming these chips will position AMD-based personal computers as the leading choice for running artificial intelligence software. Dell has opted to incorporate these AMD chips into some of its business-oriented computer models, as stated by AMD executives during the event.

AMD, along with competitors Intel Corp. and Qualcomm Inc., unveiled new laptop and desktop components at CES, each claiming their technology offers superior performance for artificial intelligence workloads. The introduction of AI capabilities is seen as a potential revitalizer for the PC market, allowing machines to handle more complex tasks effectively.

Dell’s decision to use AMD chips in its corporate PCs—extending beyond their existing use in consumer devices—represents a significant shift and a challenge to Intel, which has been trying to maintain its leading position in a market where commercial and gaming PCs are especially lucrative due to their need for high-quality components.

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