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- Meta, Microsoft passes as Tesla fails
Meta, Microsoft passes as Tesla fails
and no rate cut from Fed
Good morning investors! As expected, there was no rate cut yesterday and most big names met expectations.
Today we cover:
Fed holds rates steady
Meta, Microsoft beats as Tesla fails
More earnings
** We’ll be hosting a CFP focused on Retirement Planning on the YouTube channel soon. What do you want us to cover? Reply to this email with your questions.
📊 Economy and News
Fed Holds Rates Steady, Signals Inflation Concerns Amid Political Pressure
The Federal Reserve maintained its target interest rate range at 4.25% to 4.5% following its January meeting, cautioning that inflation remains "somewhat elevated." This pause comes after three consecutive rate cuts to close out 2024.
Fed Chair Jerome Powell reinforced the central bank’s patient approach, emphasizing that policymakers see no urgency to shift policy while the economy remains strong.
Addressing political pressure, Powell stated he has had "no contact" with former President Trump, who recently demanded an immediate rate cut. Despite external pressures, Powell reiterated the Fed’s commitment to achieving a 2% inflation target.
Some analysts, including Christopher Rupkey, suggest Trump’s presence could influence the Fed’s future decisions, potentially pushing policymakers to lower rates further. However, for now, the Fed appears focused on balancing economic stability with inflation control.
Global hits:
Turkey monthly inflation to accelerate in January, annual rate seen slowing to 41.25%.
Lending to euro zone businesses surges after rate cuts.
Bank of Canada cuts rates, says tariffs could stoke persistent inflation as it cuts growth forecasts for 2025 and 2026.
Look at this: Germany slashes growth outlook in ‘serious’ diagnosis of Europe’s largest economy.
Widening gap: The U.S. trade deficit in goods widened to a record high in December, likely as businesses front-loaded imports of industrial supplies and consumer goods in anticipation of broad tariffs from President Donald Trump's new administration.
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📈 Stocks
S&P 500 6,039.31 (-0.47%)
DJIA 44,713.52 (-0.31%)
NASDAQ 19,632.32 (-0.51%)
BRENT CRUDE 76.66 (-0.76%)
* Prices as of Jun 30th, 12:20 AM UTC
Big tech earnings
📱 Meta's shares jumped 4% after reporting fourth-quarter earnings that surpassed expectations. Here's how it compared to analyst estimates:
Earnings per share: $8.02 vs. $6.77
Revenue: $48.39 billion vs. $47.04 billion
For Q1, Meta projected revenue between $39.5 billion and $41.8 billion, slightly below analysts' expectations of $41.73 billion. Daily active users reached 3.35 billion, up from 3.29 billion last quarter, exceeding the 3.32 billion forecast.
The company’s Q1 costs and expenses were $25.02 billion, a 5% increase from last year. Meta reiterated plans to invest $60-$65 billion in capital expenditures for its AI strategy in 2025.
Meta’s total 2025 expenses are expected to range from $114 billion to $119 billion, largely driven by infrastructure investments. It also plans to hire staff in key areas like infrastructure, AI, and regulation.
As of December 31, 2024, Meta's headcount had grown 10% year-over-year to 74,067.
Also, rumors say that Trump has signed settlement agreement with Meta.
💻 Microsoft reported better-than-expected earnings of $3.23 per share (vs. $3.11 expected) and $69.63 billion in revenue (vs. $68.78 billion expected), but shares fell 5% in extended trading as Azure growth disappointed.
Revenue rose 12.3% year-over-year, the slowest pace since mid-2023. Net income climbed to $24.11 billion from $21.87 billion a year ago. Intelligent Cloud revenue hit $25.54 billion, missing analyst expectations, while Azure and other cloud services grew 31%, down from 33% in the prior quarter. Microsoft’s AI-related revenue now stands at a $13 billion annual run rate.
🚗 Tesla fell short of analyst expectations in the fourth quarter, reporting adjusted earnings of 73 cents per share (vs. 76 cents expected) and $25.71 billion in revenue (vs. $27.26 billion expected). Shares initially dropped in extended trading before rebounding.
Revenue rose just 2% year-over-year, while automotive sales fell 8% to $19.8 billion. Operating income declined 23% to $1.6 billion, with lower average selling prices across its vehicle lineup contributing to the drop. Net income plunged 71% to $2.32 billion, though last year’s figure was inflated by a $5.9 billion tax benefit.
Also, Tesla says it will begin robotaxi business and Optimus "pilot" production in 2025.
🖥 IBM surpassed Wall Street’s fourth-quarter forecasts, reporting adjusted earnings of $3.92 per share (vs. $3.75 expected) and $17.55 billion in revenue (vs. $17.45 billion expected). Net income fell to $2.92 billion from $3.29 billion a year ago. Shares initially jumped 10% in after-hours trading before settling up 8%. Looking ahead, IBM projects 5% currency-adjusted growth and $13.5 billion in free cash flow for 2025.
👕 Levi Strauss surpassed Wall Street’s earnings and revenue expectations but forecasts a sales slowdown next year, partly due to a strong U.S. dollar. The company projects a 1% to 2% decline in sales but expects revenue growth when adjusting for currency fluctuations and a shorter selling period. Under CEO Michelle Gass, Levi’s has expanded its women’s segment and strengthened direct-to-consumer sales.
Worth knowing: World’s largest sovereign wealth fund reports record $222 billion annual profit on tech rally.
Good to know: Starbucks will cut many drinks and food items soon to streamline service, reduce wait times, and enhance customer experience. Also, Frontier Airlines is again proposing a merger with bankrupt Spirit Airlines, nearly two years after their last attempt failed. Lastly, Fox has sold out of ad spots for the upcoming Super Bowl on Feb. 9, with more than 10 commercials selling for a record $8 million.
💵 Personal Finance
Preparing for Tax Filing
Let’s resume this week’s topic and talk about filing taxes. It’s all about preparation, so check these tips:
Review Your 2023 Return: Your previous tax return is a helpful guide for gathering necessary documents.
Account for Life Changes: Major life events in 2024—such as marriage, divorce, having a child, starting a new job or side gig, or selling significant assets—can affect your tax liability, deductions, and credits.
Gather Tax Documents: Collect all relevant forms, including W-2s, 1099s, donation receipts, and statements from banks or brokerages. Many of these documents may be delivered electronically, so check email and online accounts as well as your mailbox.
Changes to 1099-K Reporting
Small business owners, gig workers, and independent contractors may receive 1099-K forms for payment platform transactions exceeding $5,000 in 2024. Previously, the threshold was $20,000.
Some states, including Maryland, Massachusetts, Vermont, and Virginia, have even lower reporting thresholds of $600. If you receive a 1099-K in error (e.g., for personal transactions), consult IRS guidance on correcting the issue.
💰 Be a Better Investor
“Buy when everyone else is selling and hold until everyone else is buying. That's not just a catchy slogan. It's the very essence of successful investing.”
Watch yesterday’s livestream about how everyone is buying Bitcoin and why you should consider it:
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.