🚙 Ford beats but expects challenges

and things about to get costly

Good morning investors! Some more big earnings are expected today.

Today we cover:

  • Things about to get expensive

  • Ford earnings beat

  • Stocks going out of fashion?

📊 Economy and News 

Things about to get expensive

If you're planning to buy a new computer, TV, or phone, now might be the time. A new 10% tariff on Chinese imports has ended exemptions on consumer electronics, potentially driving up costs. Even Shein and Temu products are about to get costlier.

Affected Goods

  • Electronics: Communications and computer equipment, which accounted for a large share of the $401 billion in US imports from China last year, now face higher costs.

  • Footwear: With 99% of shoes sold in the US being imports, prices are likely to rise.

  • Other Items: Toys, jewelry, and sporting goods—previously exempt—could also see price hikes.

When Will Prices Rise?

Immediate increases are unlikely, as current inventory was imported before the tariff. However, as stock depletes and new shipments arrive, consumers can expect higher prices. Some retailers may absorb the costs, but others will likely pass them on.

Global hits:

Exciting: Gold demand up 1% in 2024, to remain supported by economic uncertainty. Elsewhere, Qualcomm reported fiscal first-quarter results that topped estimates. The company also issued an uplifting forecast for the current period.

Also check: China's services activity grows at slower pace. Elsewhere, Morgan Stanley revises Fed rate cut forecast amid tariff uncertainty. Lastly, Google erases its promise not to use AI technology for weapons or surveillance.

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📈 Stocks

S&P 500 6,061.48 (+0.39%)
DJIA 44,873.28 (+0.71%)
NASDAQ 19,692.33, (+0.19%)
BRENT CRUDE 74.70 (-1.97%)
* Prices as of Feb 6th, 12:20 AM UTC

DOW jumps again

DOW had another good day thanks to big names. Nvidia jumped more than 5% after the server maker Super Micro Computer announced full production availability of its AI data center with Nvidia’s Blackwell platform. Super Micro shares also rose around 8% following the announcement.

Amgen also helped the Dow’s advance in the session, as the stock jumped 6% on the heels of its better-than-expected adjusted earnings and revenue for the fourth quarter.

Alphabet shares tumbled 7% after the Google-parent posted a cloud revenue miss as it ramps up spending on artificial intelligence, spooking investors who worried the megacap technology company will take longer to capitalize on its AI ambitions. However, the company was also in the news for releasing the Gemini 2.0 artificial intelligence model suite to everyone.

AMD shares were also lower by 6% after the company’s fourth-quarter data center revenue came up short of expectations.

Elsewhere in tech, Apple ended the session marginally lower after Bloomberg News reported that regulators in China were considering launching a formal investigation into the company’s App Store fees and policies.

Ford beats but predicts challenges ahead: Ford Motor exceeded Wall Street expectations for Q4 but forecast a challenging year ahead, with CEO Jim Farley emphasizing improved vehicle quality and cost control.

Shares fell -5% in after-hours trading.

Q4 Performance vs. Estimates:

  • EPS: $0.39 adjusted (vs. $0.33 expected)

  • Revenue: $44.9 billion (vs. $43.02 billion expected)

Results:

  • Adjusted EBIT: $10.2 billion ($1.84 EPS)

  • Net Income: $5.9 billion ($1.46 EPS)

  • Record Revenue: $185 billion

2025 Outlook:

  • Adjusted EBIT: $7B–$8.5B

  • Free Cash Flow: $3.5B–$4.5B

  • Capital Expenditures: $8B–$9B

Ford expects headwinds from lower industry pricing (-2%) and softer sales but projects a $1 billion reduction in material and warranty costs. The first half of the year is expected to be weaker, with Q1 EBIT near breakeven due to lower wholesales and plant launches in Kentucky and Michigan.

Good to know: Workday to cut 1,750 jobs in AI push. Also, Amazon is holding a hardware event on Feb. 26 as it races to release new Alexa

💵 Personal Finance

Are stock portfolios going out of fashion?

Things are changing quickly. Back in the day, investing in stocks and bonds was considered the winning formula. However, that isn’t the case anymore now that we have better (and more) options to choose from.

Last year, longer-term Treasury yields hit their highest levels in 16 years, causing havoc. We know that stocks are expensive as well with some top names near 52-week highs. Some suggest that it is time for investors to look elsewhere.

Is the stock market a bad choice? Not really, the S&P 500 Index is still offering great results. But, most experts agree that it has peaked. The chart below highlights the last few years:

It stands at 2.64% so far for 2025. Also, not all experts are now bullish due to the changing geopolitical situation.

Stocks versus real estate: From March 1992 to March 2022, the U.S. average growth rate was 5.3%. The S&P 500 returned 9.65% annualized from the beginning of 1992 to the same period in 2022.

The inflation-adjusted appreciation on the Dow Jones Industrial Average over the same 30-year period was 5.565% per year, and that's just for asset value.

If you assume that dividends are reinvested, the returns are better than 8.044%. Over time, stocks outperformed real estate.

If you look at last year, you will see things were not very interesting. CoreLogic predicts that home-price appreciation will slow to an average growth of 2 percent for 2025, as compared to 4.5 percent growth in 2024.

Here are some great alternative options :

Real Estate Investment Trusts

REITs invest in a range of real estate, including housing, commercial buildings, hotels and warehouses, and then distribute the rental proceeds to the owners. This is a clever way of benefitting from the real estate industry without investing millions.

Comparison: Over a 25 year period, the index returned 9.05% compared to 7.97% for the S&P 500 and 7.41% for the Russell 2000.

Gold

Gold can be a great investment option in today’s environment. You can invest in gold bullion, gold coins, gold mining companies, gold futures contracts and mutual funds that invest in gold. You may, however, need a safe place to store the investment like a safe deposit box at a bank if you choose physical gold.

Comparison: The S&P 500 Index of stocks had a 10.43% average annual total return between 1970 and 2022, according to an analysis by Securian Asset Management. Gold had a 7.7% return over the same period.

Commodities Futures

Commodities are risky but very rewarding. Options include grain, corn, and cotton. However, you have to be careful because external conditions can impact commodity prices.

Comparison: Commodities can be very rewarding but also risky. Lithium, for example, offered 72.49% returns in 2022, in comparison crude oil offered 6.71% returns, and copper offered -14.13% returns.

Don’t give up on stocks altogether. They should remain a part of your portfolio but keep your expectations lower because we may not again see 30% returns anytime soon.

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💰 Be a Better Investor

"The stock market is filled with individuals who know the price of everything, but the value of nothing."

Philip Fisher

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