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Good morning investors! The long weekend is over; not much happening in the crypto world and prices are stagnant but the political situation appears to be worsening.

Today we cover:

• AI to take half the jobs? 😳 

• Earnings are pouring in. 💴 

• What are hedge funds? 🏡 

Follow us on Twitter for more.

📊 Economy and News 

About 40-60% of jobs will disappear, warns IMF

Jobs around the world could be affected by the rise of artificial intelligence, warned the International Monetary Fund.

IMF chief Kristalina Georgieva requested governments to create social safety nets and come up with retraining programs to dilute the impact.

Georgieva expects the situation to worsen in more advanced economies such as the US as the UK since “white-collar workers are seen to be more at risk than manual laborers.”

About 60% of workers might lose jobs in these countries due to the rise of AI.

On the other hand, the impact could be much in emerging markets such as India and Brazil where about 40% of jobs “are expected to be affected by AI.”

Low income countries have to worry as well since AI could take about 25% of jobs in these countries.

It could worsen: She expects the situation to result in social unrest and income inequality. Moreover, she warned that senior workers may go out of work

We’re already seeing it: Companies have already started to fire workers due to AI. Duolingo recently was in the news for this reason and many small startups are doing the same.

Not all is lost: AI poses challenges but it is also expected to help countries grow more. It could “increase labor productivity and boost global GDP by 7% annually over a 10-year period,” according to Goldman Sachs.

Global hits:

• Microsoft tops Apple as the world’s most valuable public company. Moreover, the iPhone maker is offering unique discounts in China.

• What’s at stake for the global economy as Taiwan goes to the polls.

• Possible there will be no rate cuts this year, European Central Bank member says.

📈 Stocks

S&P 500 4,783.83 (+0.075%)
DJIA 37,592.98 (-0.31%)
NASDAQ 16,832.92 (+0.071%)
BRENT CRUDE 78.15 (-0.18%)
* Prices as of Jan 16th, 12:20 AM UTC

Earnings are in 💰

Big names have finally started to announce earnings:

• Delta capped a year of strong travel demand with impressive numbers. Fourth-quarter profit doubled, and the demand is expected to rise but the airline and other carriers faced higher costs throughout 2023. Moreover, shares fell 9.8% after the company trimmed its 2024 earnings forecast.

• Bank of America shares fell Friday due to declining fourth-quarter earnings amid hefty one-time charges. The bank faced a large pretax charge of $1.6 billion related to the transition away from the London Interbank Offered Rate. The stock hasn’t been doing well and is down 2.6% this year after a mere 1.7% gain in 2023.

• Citigroup surprised with a $1.8 billion fourth-quarter loss mainly due to charges linked to last year’s regional banking crisis, CEO Jane Fraser’s corporate overhaul, and overseas risks. The charges impacted quarterly earnings by $4.66 billion, or $2 per share. Moreover, it expects to cut 10% of its workforce and incur up to $1 billion more in severance costs over the medium term.

• JPMorgan Chase’s profit fell after a $2.9 billion fee from regional bank rescues. Quarterly earnings fell 15% to $9.31 billion, or $3.04 per share, from a year earlier. Without these charges and $743 million in investment losses, the company would have recorded earnings of $3.97 per share.

We don't have big names lined up for this week but things will get exciting next week when companies like Tesla, Netflix, and Microsoft report.

Last Week’s Winners and Losers by The Yellowbrick Road

Reminder: Biotech and pharma companies are betting on a promising class of cancer drugs to drive growth.

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💵 Personal Finance

A look at hedge funds

Said to be worth around USD 4.53 trillion, the hedge fund industry is massive and very profitable with the average equity hedge fund yielding 3% YTD, but up to 14%. That’s considered a down year.

Popular among investors, hedge funds involve using pooled money and a variety of tactics to earn returns for their investors. Money is invested directly in companies, by either purchasing private firms or buying a controlling interest in publicly traded companies.

Some of the top hedge funds include Citadel, Bridgewater Associates, and AQR Capital Management.

This investment option is said to be suitable for investors with a high net worth.

This method is known for being quick but there are risks involved. As a result, investments are primarily in highly liquid assets, enabling the fund to take profits quickly on one investment and then shift funds into another investment that is more immediately promising.

In addition, hedge fund managers typically use leverage to get more profit but this also increases the risk factor.

Most hedge funds invest in a variety of things, including individual stocks (including short selling and options), currencies, bonds, commodities, arbitrage, and derivatives.

Interested in more? Check this video:

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