🪔 What to expect this week

and some big earnings are coming

Good morning investors! In today’s issue, we’ll talk about upcoming earning reports and other economic data. Also, the stock market is expected to be red today with ETH already down above -15% on Sunday and BTC also going below $97,000.

Today we cover:

  • What to expect this week

  • The inflation view

  • Earnings this week

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📊 Economy and News 

What to look forward to this week

Global markets are on edge as President Trump imposes new tariffs while investors brace for key jobs data and corporate earnings reports.

Trump’s Tariffs Hit Canada, Mexico, and China

President Trump has signed an executive order imposing 25% tariffs on imports from Canada and Mexico, and 10% on Chinese goods, set to take effect Tuesday. The move aims to curb illegal immigration and opioid trafficking but could disrupt trillions in trade. Economists warn it may drive up U.S. inflation, complicating Federal Reserve rate decisions. Stocks ended lower Friday, with analysts anticipating further sell-offs. We may see stocks react to tariff-related decisions this week too.

Jobs Report in Focus

This week, investors will scrutinize fresh labor data, including Friday’s January jobs report. Forecasts suggest the U.S. added 154,000 jobs in January, down from 256,000 in December, while unemployment is expected to hold at 4.1%. Wage growth remains steady at 0.3%. These figures could influence the Fed’s next steps after multiple rate cuts in 2024.

Oil Prices React to Energy Tariffs

Trump’s tariffs include a 10% levy on Canadian energy products, which account for $100 billion in annual U.S. imports. He also hinted at broader oil and gas tariffs by mid-February, causing a spike in oil prices. Last week, crude benchmarks fell on fears of higher fuel costs dampening global demand.

Bank of England Set to Cut Rates

The Bank of England is expected to cut interest rates to 4.5% on Thursday as the UK economy stagnates. Falling inflation and weak growth support a rate reduction, with analysts predicting an 8-1 vote in favor. The BoE will also update economic forecasts, offering insight into future policy moves.

Global hits:

Inflation reminder: The Federal Reserve’s preferred inflation gauge rose to 2.6% in December, up from 2.4% in November, driven by higher energy and food costs.

Monthly prices increased 0.3%, matching expectations. Core inflation, which excludes food and gas, remained steady at 2.8% for the third straight month. While inflation has cooled significantly since its 2022 peak, the U.S. remains on track for a “soft landing” as Biden’s presidency nears its end.

Tariffs changing things: On Saturday, U.S. President Donald Trump signed an order imposing 25% tariffs on imports from Mexico and Canada, along with a 10% duty on Chinese goods. In response, Canadian Prime Minister Justin Trudeau announced retaliatory 25% tariffs on $155 billion worth of U.S. products. Mexico also pledged countermeasures, though President Claudia Sheinbaum did not provide details. China, meanwhile, refrained from immediate retaliation; however, it may go ahead with a WTO complaint.

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📈 Stocks

S&P 500 6,040.53 (-0.50%)
DJIA 44,544.66 (-0.75%)
NASDAQ 19,627.44 (-0.28%)
BRENT CRUDE 75.55 (-0.29%)
* Prices as of Feb 2nd, 12:20 AM UTC

Alphabet and Amazon Lead Earnings Reports

Big Tech earnings take center stage, with Alphabet and Amazon reporting this week. Here’s all you need to know about the earnings week:

Eli Lilly
Earnings: Before Thursday’s open.
Stock price: $811.08, -1.5% Friday, +5% in January.
Earnings estimate: $5.16/share (+114% YoY). Revenue estimate: $13.5B (+43.5% YoY).
Eli Lilly has had success with drugs like Mounjaro and Zepbound but is facing slowing revenue projections for GLP-1 treatments. The stock has dropped 16.6% from its 52-week high.

Amazon
Earnings: After Thursday’s close.
Stock price: $237.68, +1.3% Friday, +8.3% in January, +19% since Nov. 5 election.
Earnings estimate: $1.46/share (+46% YoY). Revenue estimate: $187.2B (+10.2% YoY).
Amazon continues to be a top buy due to its strong logistics, cloud computing dominance with AWS, and its development of AI chips to reduce dependence on Nvidia.

Alphabet
Earnings: After Tuesday’s close.
Stock price: $204.02, +1.6% Friday, +7.8% in January, +20% since Nov. 5 election.
Earnings estimate: $2.12/share (+29% YoY). Revenue estimate: $96.7B (+12% YoY).
Alphabet invests heavily in AI and faces breakup pressures, but its advertising business remains strong. Lower AI expenses could boost the company if DeepSeek proves competitive

Palantir Technologies
Earnings: After Monday’s close.
Stock price: $82.49, up 1.2% on Friday, +9.1% in January.
Earnings estimate: $0.11/share (+37.5% YoY). Revenue estimate: $776.8M (+28% YoY).
Palantir gained 340% in 2024, but its January performance was muted. The company specializes in big data and machine learning, with strong ties to government and Silicon Valley.

Qualcomm, Arm Holdings, and Uber will also release results, alongside drugmaker Novo Nordisk, which is leading the weight-loss treatment boom.

Good to know: Costco and Teamsters reach a tentative deal to avert a strike.

Warning: About 35% of teens reported being deceived by fake content online.

💵 Personal Finance

Real estate for retirement 🏠

I have a neighbor who bought 2 four-plexes as part of his retirement plan. In fact, that is his retirement plan. It’s going well for him, but he spends every Saturday taking care of the properties.

Could it be right for you?
Investing in multi-family real estate can be a great way to build wealth over time. Here are some of the benefits of investing in multi-family real estate:

  • Passive income: Multi-family properties can generate a steady stream of income from rent payments. This can be a great way to generate passive income, which means you don't have to actively work to earn it. The average rent for an apartment in the U.S. is $1,748. The cost of rent varies depending on several factors, including location, size, and quality. If you play it right, you can easily make a decent amount of money if you have a few solid properties. This rule applies to other countries as well. In most cases, expect to make about 1% of the property’s value no matter where you are. It can go up in some countries but is rarely below the 1% threshold. Knowing how to determine the rental value of your property can be a great way to know how much you'd make if you invest in a property.

  • Capital appreciation: The value of multi-family properties can appreciate over time, which can provide you with additional profits when you sell the property. According to this CaseLogic report, the annual appreciation of detached properties (6%) was 1.1 percentage points higher than that of attached properties (4.9%). This is a very good number but it greatly varies. Some states reported as low as 4% and some as high as 25%.

  • Tax benefits: There are a number of tax benefits available to real estate investors, including depreciation deductions and tax breaks for energy-efficient upgrades. Explore these to enjoy all the perks of being a real estate investor.

  • Diversification: Investing in real estate can help to diversify your investment portfolio, which can reduce your overall risk.

  • Economies of scale: When you own multiple units, you can benefit from economies of scale. This means that you can spread out the costs of things like property management, maintenance, and repairs over a larger number of units, which can save you money.

Of course, there are also some risks associated with investing in multi-family real estate, besides spending a lot of time and expenses on upkeep. These include:

  • Tenant risk: If your tenants don't pay their rent, you may have difficulty collecting it. This can put a strain on your cash flow and make it difficult to make your mortgage payments. Also, remember that the US Rental Vacancy Rate is at 6.30%, which means that it can often be hard to find a tenant.

  • Property damage: Tenants may damage your property, which can be costly to repair. Insurance can help cover this to an extent.

💰 Be a Better Investor

"Tesla is not just a car company. It is a technology company that is revolutionizing the transportation industry."

Jim Chanos, Kynikos Associates

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.