Finding the next rally

• The Feds dovish message

• Merck rallies on rare approval

• Trump Media rallies on open

• TSMC and Broadcom are overlooked chip winners

Was this email forwarded to you? Sign up here.

Our Sponsor
Public

New: Options trading on Public

Public.com has just launched options trading, and if you activate your account by March 31, you can earn an $0.18 rebate on every single options trade. That means instead of paying to place trades, you get something back.

There are also no commissions or no per-contract fees, making Public the cheapest way to trade options.

It’s easy to transfer your portfolio to Public, and for a limited time, you may earn up to $10,000* when you make the switch. Plus, Public will cover any fees from your old brokerage.

Activate options trading at Public.com by March 31 to lock in your lifetime options rebate.

Interested? Earn $0.18 per options contract traded at Public here.

_{*Transfer offer Terms and Conditions apply. Paid for by Public Investing. Options are not suitable for all investors and carry significant risk.  Option investors can rapidly lose the value of their investment in a short period of time and incur permanent loss by expiration date.  See the Characteristics and Risks of Standardized Options to learn more. Must activate Options Account by March 31 for revenue share. To learn more, see our Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions.  US members only.}

Economics
Jerome delivers dovish message

Last week, the Federal Reserve held its March FOMC meeting and press conference and also released an updated set of economic projections. The Fed left the fed funds rate on hold at 5.25% - 5.5%, but its updated "dot plot" still pointed to three rate cuts in 2024.

The FOMC also sees the fed funds rate gradually heading to around 3.1% by 2026, indicating that this year is likely the start of a multiyear rate-cutting cycle.

More meaningdfully, the central bank now expects higher GDP growth of 2.1% in 2024 rather than the 1.4% they anticipated back in December and higher inflation, 2.6% instead of 2.4%, as measured by PCE .

Pharmaceuticals
Merck gains landmark approval for Winrevair

Merck & Co. won US approval for a new treatment for a rare, dangerous form of high blood pressure that’s expected to be among the company’s hits as sales from successful older drugs begin fading later this decade.

The drug, known as sotatercept, will be sold as Winrevair in the US, according to information posted on the Food and Drug Administration website. It will cost $14,000 per vial and will be taken every three weeks, according to Merck. At that rate, the drug would cost about $242,000 a year, although some patients will require more.

“This is not incremental,” Carlos Santos-Gallego, a cardiologist at the Icahn School of Medicine at Mount Sinai, said in an interview. “This is potentially a groundbreaking therapy for PAH.”

IPO
Trump Media to the moon

Former president Donald Trump’s social media startup gained 16% in its first trading day as a public company, after the most high-profile blank-check deal in years.

The completion of the reverse-merger with DWAC overcame hurdles including an investigation and settlement with the US Securities and Exchange Commission and last-minute lawsuits from executives and investors.

DWAC shares closed at $49.95 Monday, up about 185% since the start of the year. That valued Trump’s 58% stake in the company at $3.9 billion.

It has become the most expensive US stock to sell short, with short sellers paying over 200 times the average cost to borrow the shares, according to financial analytics firm S3 Partners.

“We have a great company and are incredibly honored,” Eric Trump, executive vice president of the Trump Organization, said in a statement.

Semiconductors
TSMC, Broadcom are overlooked chip winners

They may lack the pure-play allure of Nvidia, but hardware firms that provide the infrastructure for artificial intelligence computing are becoming the next hot trade.

TSMC is up 33% thanks to increasing orders from its three major clients – Apple, Intel, and AMD – for its 3nm chips, according to Taiwanese media outlet Economic Daily News.

TSMC launched its 3nm process in late 2022, but up until the fourth quarter of 2023, Apple was its only customer for the technology, as the foundry slowly ramped up its production. As that situation changes, TSMC’s revenue share from 3nm chips is expected to surpass 20% of its total this year, positioning them as the company’s second-largest revenue contributor after its 5nm chips.

Broadcom reported robust revenue of $11.96 billion, marking a remarkable 34% YoY increase and a substantial 29% QoQ growth. This revenue figure beat the consensus estimate of $11.72 billion (i.e. by about 2%), as did non-GAAP earnings per share of $10.99, up 6% year over year. Broadcom was up 110% in 2023 and is up another 20% YTD.

That increase has TD Cowen analysts increasing their price target for AVGO stock from $1,400 per share to $1,500.

TD Cowen analysts also upgraded AVGO stock from a “market perform” rating to an “outperform” rating. To put that in perspective, the analyst consensus rating for AVGO is a moderate buy based on 21 opinions.