🔪 Tariffs leave investors confused

and construction spending jumps

Good morning investors! The market yesterday was full of surprises and today we’ll be waiting for big earnings.

Today we cover:

  • Construction spending jumps

  • Tariffs leave investors confused

  • Real estate investing

📊 Economy and News 

Construction spending jumps

U.S. construction spending rose 0.5% in December—well above the expected 0.2%—thanks to gains in single-family homebuilding.

Year-on-year, spending was up 4.3%, with a 6.5% increase in 2024.

Private construction jumped 0.9%, while residential projects increased 1.5%, including a 1.0% rise in new single-family construction. However, high mortgage rates may limit future residential growth despite builder hopes for looser Trump-era regulations.

Global hits:

Good to know: Vanguard announces fee cuts for nearly 100 funds, including ETFs with billions of dollars in assets.

Also check: Tesla's California car registrations down 12% in 2024.

Sponsored by Mode Mobile

As Elon Musk puts it, “Apple used to really bring out products that would blow people’s minds.” Those days, however, seem to be behind us. Meanwhile, a new smartphone company, boasting an astonishing 32,481% revenue growth rate over three years, is stepping up to deliver the kind of groundbreaking moments we've been missing in the industry... They’ve just secured their Nasdaq ticker $MODE, and you can still make an investment in their pre-IPO offering. 

Turning smartphones from an expense into an income stream, Mode has already helped users earn and save an eye-popping $325M+, driving $60M+ in revenue and a massive 45M+ consumer base. This ranked them the #1 fastest-growing North American software company in 2023, according to Deloitte. 

Uber did it to taxis, Airbnb did it to hotels...And now, Mode Mobile is doing it to the $1 trillion smartphone industry.

📈 Stocks

S&P 500 5,994.57 (+%) (-0.76%)
DJIA 44,421.91 (+%) (-0.28%)
NASDAQ 19,391.96 (+%) (-1.20%)
BRENT CRUDE 75.44 (-0.93%)
* Prices as of Feb 4th, 12:20 AM UTC

Tariff uncertainty sends stocks bouncing

The dollar surged yesterday, pushing its Canadian counterpart and the Mexican peso to multi-year lows, while China's yuan slumped to a record trough in offshore trade. The dollar has since slid but is still doing well.

The peso, however, rallied after US President Donald Trump and Mexico President Claudia Sheinbaum announced a deal to delay tariffs by a month after Mexico agreed to place 10,000 soldiers at the border.

BofA thinks that tariffs on Canada and Mexico may be short-lived, but China likely permanent as Trump speaks with Trudeau, plans another call amid trade tensions. The President has decided to pause tariffs on Canada for 30 days. However, things are worsening as China just announced additional tariffs of up to 15% on select U.S. imports starting Feb. 10.

Auto stocks, which took a major hit due to supply chain ties with Mexico, pared losses. GM, Stellantis, and Ford recovered from steeper declines. Globally, markets struggled, with European and Asian stocks falling. Energy prices surged due to upcoming Canadian tariffs, though losses eased by the day’s end. Industry experts warned of rising costs for diesel and jet fuel.

Despite the temporary reprieve, more tariffs loom. Trump downplayed the need for foreign trade, but US supply chains remain deeply intertwined with global markets. Tariffs will likely increase costs for importers, retailers, and ultimately, consumers.

Trump’s new tariffs cover $1.4 trillion in imports—far surpassing the $380 billion taxed in his first term.

Businesses reacted swiftly. The Chamber of Commerce and manufacturing groups condemned the tariffs, while agricultural organizations sought subsidies to offset expected losses.

For now, consumers may see little immediate impact as businesses work through existing inventory. But supply chain disruptions could soon drive prices higher. Still, supporters argue tariffs will strengthen US manufacturing in the long run.

See this: China to launch probe into Google over alleged antitrust violations. Also, Swiss giant UBS posts fourth-quarter profit beat, reveals up to $3 billion buyback. Lastly, Palantir jumped 23% after earnings report and several price hikes.

Must check: Goldman Sachs flags up to 3% hit to its S&P 500 earnings forecasts from Trump's tariffs. Elsewhere, Samsung chief cleared of fraud and stock manipulation charges. Lastly, Nintendo posts profit miss as it slashes Switch forecast again ahead of console’s successor.

💵 Personal Finance

Why invest in real estate

Real estate investing can be a great way to build wealth over the long term. Here are some of the advantages of investing in real estate:

  • Potential for high returns: Real estate has historically outperformed other asset classes, such as stocks and bonds, over the long term. This is because real estate is a tangible asset that is not subject to the same volatility as the stock market.

    Where to invest? Choose states where prices are affordable and increasing. New York, for example, has a very high appreciation rate – up to 15% in some areas – but it is not a very affordable option as the average house in the state costs over $700,000.

    Texas can be a better option with affordable rates and great growth potential. Some other good states include Maine and Connecticut where homes appear to be appreciating at a rate of 8%, more than double when compared to the country’s average of 3%.

  • Cash flow: Rental properties can generate positive cash flow, which can be used to offset the cost of the mortgage, taxes, and other expenses.

    The average apartment rent in the U.S. is $1702, which is a decent amount of money. Moreover, it can increase easily if you have a good house in a decent location.

  • Tax benefits: Real estate investors can take advantage of a number of tax breaks. Here are some of the top write offs and deductions investors enjoy:

    • Passive Income & Pass-Through Deductions

    • Depreciation

    • Capital Gains

    • 1031 Exchange

    • Self-Employment/FICA Tax

    • Tax-Deferred Retirement Accounts

    • Opportunity Zones

  • Appreciation: Real estate values tend to appreciate over time, which can lead to significant profits when the property is sold. The market appears to be ready to go down, which makes it a good time to invest.

  • Special Rates: You might be eligible for special mortgage rates if you are buying a property with the intention to use it as your primary house. Furthermore, there may be some other conditions, such as no previous home ownership.

    The government wants to increase homeownership rate in the country, which currently stands at 66%.

  • Diversification: Real estate can help to diversify your investment portfolio and reduce your risk. Since real estate protects against inflation, it can prove to be a good option. Furthermore, you can diversify more by turning to real estate ETFs.

Also, don’t forget we’re on YouTube. Give us a subscribe and check one of our top videos here:

💰 Be a Better Investor

“I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”

Warren Buffett

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

Disclosures

1 Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.

2 The rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.

3 A minimum investment of $1,950 is required to receive bonus shares. 100% bonus shares are offered on investments of $9,950+.