Happy Tuesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟥 | US stocks tumbled Tuesday as hotter-than-expected January inflation data dampened hopes for multiple Fed rate cuts.

• 📈 | One Notable Gainer: ZoomInfo Technologies stock popped around 14% after announcing a slightly better-than-expected first-quarter earnings per share outlook.

• 📉 | One Notable Decliner: Moody’s Corp shares sank 8% after underwhelming Q4 earnings.

• 🤕 | Tomorrow's Trade: NYCB's Next Headache. Scroll down for more.

Plus, today’s partner, Bullseye Trades, delivers fresh trade ideas directly to your inbox. Click here to subscribe.

YESTERDAY’S POLL RESULTS

Do you think the Fed will announce rate cuts at its March meeting?

🟨🟨🟨⬜️⬜️⬜️ 👍Yes

🟩🟩🟩🟩🟩🟩 👎No

MARKET MOVERS

WK Kellogg’s, Shopify, & JetBlue

KLG: WK Kellogg's stock soared by 8% following a strong performance in the fourth quarter, surpassing expectations on revenue and profit. Additionally, the recently spun-off company revised its 2024 forecast upwards.

SHOP: Shopify shares fell over 13% due to a mixed forecast for the current quarter. While the company exceeded fourth-quarter earnings and revenue estimates, its projected free cash flow margin in the high single digits was below Wall Street's expectations of 13.6%.

MAR: Marriott International's stock dropped by 5.6% after failing to meet fourth-quarter revenue estimates. Additionally, the company's first-quarter and full-year earnings guidance fell below analyst expectations.

JBLU: Jetblue's stock surged over 21% following activist investor Carl Icahn's announcement of acquiring approximately a 10% stake in the company, asserting that the shares were undervalued.

TRIP: Tripadvisor shares surged by nearly 14% after the company established a special committee to evaluate proposals for a "potential transaction."

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OVERHEARD ON THE STREET

CNBC: A hotter-than-expected inflation print for January is the “final nail in the coffin” for a March rate cut, according to Sonu Varghese, global macro strategist at Carson Group. The 10-year Treasury yield spiked 10 basis points to 4.27%, hitting a new high for 2024.

BBG: Photovoltaic installations increased 30% on farms in the latest US Census of Agriculture released Tuesday. Some 116,758 farms had solar panels in 2022, compared with 90,142 in 2017. Wind turbine installation, meanwhile, grew by only 2.7% during the same period, to 14,511 farms.

Reuters: Global investors are at their most bullish in two years this month and no longer expect a recession, as confidence grows in the resilience of the underlying economy, a Bank of America survey showed on Tuesday.

Axios: Super Bowl LVIII became the most-watched American telecast in history, attracting 123.4 million viewers across CBS, Univision, and streaming platforms.

Euronews: LinkedIn's 2023 report indicates a substantial gap between demand and supply for remote work, with 50% of workers preferring remote or hybrid roles.

TOMORROW’S TRADE IDEA, TODAY

NYCB's Next Headache

Overexposed

The New York City apartment scene is changing, particularly in the rent-stabilized sector. New York Community Bancorp (NYCB) is feeling the brunt of it and, as a result, the stock is down over 55% year-to-date. 

The regional bank is heavily exposed to apartments, with almost half of its portfolio consisting of multifamily complexes in NYC. Moody’s, the ratings agency, doesn’t like this so it cut NYCB’s rating all the way down to “junk.”

Elevated interest rates aren’t helping anyone in the real estate space (except for maybe debt funds). But rent stabilization exacerbates the issue. If you can’t increase rents, then property values are likely to stagnate, and potentially even fall. This, in turn, weighs on lenders with exposure to these types of buildings. Ipso facto, NYCB.

Damage Control Time

The city's regulation of rent increases has made it harder for building owners to turn a profit and disincentivized keeping the buildings well-run and maintained. High-interest rates and price increases for building materials didn’t help.

As a result, NYCB’s new executive chairman Alessandro DiNello announced plans to reduce the regional bank’s exposure to commercial real estate. The bank has also reserved $552 million in anticipation of future loan losses in an attempt to assure investors that it is prepared for what’s to come. 

In another move to shore up investor confidence, Dinello along with other board members purchased $873 thousand of the company’s stock. That move resulted in a 17% increase in share price. But this was temporary.

Is This Systemic?

The question bugging analysts is whether this issue is unique to NYCB, or if it is indicative of a more systematic risk among regional banks. 

Banks, predominately smaller banks, own half of all outstanding commercial real estate loans according to the Mortgage Bankers Association. 

Nonetheless, Treasury Secretary Janet Yellen has taken notice, saying that she hopes and believes the commercial real estate issues are not systemic, but admitted that smaller banks may be stressed by it. 

There is no doubt NYCB is not in a good spot right now, but experts remain hopeful that this will not be a system-wide problem.

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If you're looking for free daily trading ideas, options trading strategies, and real-time alerts, then consider subscribing to Bullseye Trades. The e-letter is captained by world-famous 20-year trading veteran Jeff Bishop and is packed full of information.

Subscribe here to have it delivered directly to your inbox.

ON OUR RADAR

Nikkei Asia: China is learning from Russia's invasion of Ukraine and starting to prepare for a "protracted" war in the Indo-Pacific region by making legal changes that will help integrate military and civilian mobilization, an analyst at the International Institute for Strategic Studies said on Tuesday.

Reuters: Russian President Vladimir Putin's suggestion of a ceasefire in Ukraine to freeze the war was rejected by the United States after contacts between intermediaries, three Russian sources with knowledge of the discussions told Reuters.

CBS: A recent analysis found that raising a child from birth to age 18 now costs an average of $237,482.

CNN: Some younger Americans are giving up on ever owning a home, according to CNN.

Redfin: Roughly one-third (32%) of real estate agents have at least one client who moved primarily because of local laws or politics in the last year.