Trade Deficit Widens, Oil Climbs, Earnings Deliver Mixed Signals

12/28/2025 5:38:11 PM	short term down	7 days later	+0.41%	-0.41%
12/14/2025 5:00:00 PM	short term cautious down	7 days later	+2.09%	-1.05%

December trade deficit came in much higher than expected, surprising economists and forcing cuts to fourth quarter GDP estimates.

Host

Louie Navellier

Imports surged 3.6% in December while exports declined 1.7%, causing a deficit over $70B vs. expectations of ~$55B. This is causing economists to cut Q4 GDP estimates (e.g., Atlanta Fed lowered from 3.6% to 3%).

The trade deficit is a huge component of GDP. The only ways to boost GDP are productivity enhancements, shrinking the trade deficit (which had been happening but backed up in Nov/Dec), and consumer spending.

Louie Navellier

Most economic growth will come from productivity gains thanks to AI, evidenced by earnings up 12.1% and sales up ~9% this quarter - the 10th straight quarter earnings have outpaced sales.

New Fed Chair Kevin Walsh (to be confirmed) expects huge AI productivity gains and may use that as a reason to cut rates, as such gains aren't normally inflationary.

Brent crude jumped about $70/barrel on fears the US could strike Iran. How serious is this risk and what happens if tensions escalate?

Host

Louie Navellier

It is a real risk. The US has assembled significant military firepower and is demanding Iran stop all nuclear enrichment. Iran partially closed the Strait of Hormuz and may launch missiles.

Whatever action President Trump takes must be fast, furious, and decisive. We don't want American hostages. This will definitely keep crude oil prices artificially high.

Louie Navellier

Normally this kind of military action does not hurt the stock market, as long as it's decisive, short-lived, and not a surprise.

Why did Carvana fall after reporting huge revenue and earnings beats?

Host

Louie Navellier

Carvana's revenue surged 58% and operating earnings rose 653% YoY, with a 7.3% revenue surprise and 274% earnings surprise. The sell-off was a gross overreaction; it's a great near-term buy.

Some analysts expected slightly higher operating earnings, but the market just read headlines and not details.

Why did Quantum Services soar after a more modest beat?

Host

Louie Navellier

Quantum Services (PWR) sales rose 19.7%, earnings rose 7.5%, beating sales estimates by 7.8% and earnings by 5.4%. Order backlog rose and guidance was positive.

The company is in the sexy area of building out data centers, showing data center demand remains strong. We own it and are happy with the rally.

Why is the Bank of England preparing a study on the economic impact of aliens?

Host

Louie Navellier

This is bizarre old news that resurfaced due to comments from Presidents Obama and Trump about aliens and classified disclosures.

President Trump is a master at dominating news media and will disclose if he thinks it benefits him. The Bank of England was apparently told by someone in the US about an announcement. I don't think we should worry; if aliens have been here, life goes on.

Are consumers still spending? What about Domino's Pizza?

Host

Louie Navellier

Domino's sales expected up 5.2%, earnings up 10% (excellent margin expansion). They surprised last quarter (3.2%). Consumers will get more money from tax cuts.

If they spent in Q4, they'll spend more in Q1.

How did Home Depot perform with housing under pressure?

Host

Louie Navellier

Home Depot sales expected down 4.2%, earnings down 16.4%, showing weakness in construction/housing. They've missed four straight quarters.

Home Depot is more sensitive to contractor volume than Lowe's. It's a great company but out of sync; I have extremely low expectations.

Louie Navellier

Lowe's sales expected up 9.7%, earnings up only 0.7%. They have surprised last four quarters. Neither stock is strong enough for my portfolio.

Lowe's has a direct-to-consumer model and does better. They hire for spring garden sales.

What does TJX say about bargain hunting?

Host

Louie Navellier

TJX sales expected up 6.3%, earnings up 12.5% (excellent margin expansion). No analyst cuts, steady estimates, and surprise history.

I'd expect a nice surprise but not strong enough to buy.

Louie Navellier

Keurig Dr Pepper sales expected up 6.9%, earnings up only 0.5% (margin compression). Surprises have been minuscule; guidance on consumer spending will be important.

Coffee prices are high, consumers looking for caffeinated alternatives.

Is Nvidia still the AI gold standard?

Host

Louie Navellier

Nvidia sales expected up 67%, earnings up 71.5% (margin expansion). It's our largest holding. Expecting a blowout.

Nvidia has ~70% operating margins. Super Micro sales up 123%, Vertiv had credible results, and WON Semi (makes Nvidia chips) reported strong January sales growth (36.8%). If all customers report stunning sales, Nvidia will be even stronger.

Louie Navellier

Nvidia is a $5T company, bigger than the entire British stock market and the French, German, and Italian markets combined. Estimated to account for up to 14% of US GDP growth.

The bigger you get, the harder it is to go up. There's a lot of covered call writing on the stock.

What are you watching in Salesforce? Growth or margin story?

Host

Louie Navellier

I want both growth and expanding margins. Salesforce had a huge Q3 beat. Sales expected up 11.9%, earnings up 9.7% (slight margin contraction).

Analysts revised estimates slightly higher. Expecting great results.

Where does Dell fit into AI hardware buildout?

Host

Louie Navellier

Dell builds rack systems for data centers. Sales expected up 32.3%, earnings up 31.6%. Analysts revised estimates significantly higher.

Everybody involved in data centers is beating expectations. Expecting Dell to beat and provide positive guidance.

Louie Navellier

Snowflake sales expected up 27.2%, earnings expected to decline 9.4% (margin compression). Analysts cut estimates. It's off my radar.

I want absolute earnings growth, forecast is negative, but they have a good surprise history.

Is Stellantis telling us about global auto demand?

Host

Louie Navellier

Stellantis is a mess. They didn't build enough EVs, can't compete with Chinese EVs in Europe, and face EU fines. Sales expected up 10.7%, earnings unclear.

The EU is systematically destroying brands like Alfa Romeo and Fiat. If I ran it, I'd move all production to America to escape EU demands.

How is Warner Bros. doing before deciding who to merge with?

Host

Louie Navellier

Warner Bros. doesn't look good. Sales expected down 7%, earnings down 92%. They've missed three of last four quarters. They need to merge with Netflix or Paramount to improve streaming.

What do you expect for J.M. Smucker?

Host

Louie Navellier

Smucker sales expected up 6.3%, earnings expected to decline 13.4%. Analysts trimmed estimates; they've missed last two quarters.

Stock is dead until they post a surprise and positive guidance.

What do you expect for Berkshire Hathaway?

Host

Louie Navellier

Berkshire is now predominantly a reinsurance company. They will profit as interest rates decline. There was a significant decline in bond yields this month after the positive CPI report.

They had a mild hurricane season last year, helping the bottom line. They've had nice surprises past two quarters, but Warren Buffett is retiring and not as chipper.

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