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Warm-Up
- January is in the books - interesting outcome
- Let's work at Costco - wow!
- Fed is out with their rate plan - not confident in the future
- Fed Workers getting buyouts
- The latest from the Just Kidding department...

Markets
- Investors Betting Trump will soften his stance on Tariffs
- Trump playing chicken on weekends that other countries will bend
- Some recovery after last Monday's beating
- But the questions is - how long until global upheaval with all of these threats and bashing?

Tariffs - Threats to Canada and Mexico
- 25% across the board on Canada and Mexico
- 10% in China
- Blaming immigration, drugs and trade imbalance
--- Oil could become an issue with Canada as they send us cheaper (dirty crude) - but several regions could see higher prices by 20% if these tariffs stick
- After the close - Trump said at the White House Friday he would 'absolutely' put tariffs on the nation's EU allies.
- 'You want the truthful answer or should I give you a political answer?' Trump said when asked about it – underlying his commitment to the issue. He said the tariffs on the EU would be 'very substantial,' without providing details.
- Markets closed in the red Friday on this tidbit
-------- Follow up - futures and markets off considerably before the open on Monday. 2%+ across the board. Oil UP.
-------THEN - A PHONE CALL WITH MEXICO! PAUSE ON RATES FOR A MONTH (10am news)

Bitcoin <$97,000 over the weekend, then popped back up
-- Again is this supposed to be a alt asset class or it is simply a risk asset now?

Musk has the keys
- The Trump administration has approved plans to grant Treasury officials affiliated with Elon Musk’s team access to the federal system that handles trillions of dollars in payments, according to two people familiar with the situation.
- Senator Warren is apoplectic

Tesla also not thrilled
- CFO "Over the years we've tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses," Taneja said. He said the "imposition of tariffs" would "have an impact on our business and profitability."
--- Oh and Tesla's earnings were uninspiring. Big drop in sales and profitability
---- HOWEVER - Musk and team promised that a cheaper car will be coming this year and that left the carrot dangling for investors

General market update for January - Internal notes
- The U.S. markets finished the month on a downturn as news of upcoming tariffs triggered renewed market concerns. January proved to be a volatile month, marked by a record-high closing for the S&P 500®, followed by a steep decline after the release of a new AI model from China caused global turbulence. Despite this, robust earnings reports and strong consumer spending helped the S&P 500 end the month with a 3% gain.
- Mid-cap and small-cap stocks outshone their larger counterparts, with the S&P MidCap 400® and S&P SmallCap 600® rising 4% and 3%, respectively. Investors remained cautious due to ongoing uncertainties about Federal Reserve rate cuts and inflation.
- Most sectors saw gains in January, with Communication Services, Health Care, and Financials leading the charge. Information Technology was the sole underperformer, declining 3% due to AI-related challenges.
- In January, most sectors experienced gains, with Communication Services, Health Care, and Financials at the forefront. The only sector to underperform was Information Technology, which declined by 3% due to challenges related to artificial intelligence.
- International stocks outshone their US counterparts, with notable performances from Latin America and Europe. Additionally, value stocks outpaced growth stocks, aligning well with our client positioning strategy.

DONATIONS - VERY POOR START TO THE YEAR

Costco - Why Isn't everyone working there?
- Retailer Costco Wholesale will increase pay for most of its hourly U.S. store workers to more than $30, according to a memo sent to employees this week.
- The company will increase hourly pay for its top of the scale employees over the next three years, with the pay rising by $1 to $30.20 in the first year and an extra $1 each in the subsequent two years
- THAT IS MORE THAN $60,000 per year!

Earnings
- Microsoft’s results for the fiscal second quarter exceeded Wall Street consensus, but revenue guidance for the current quarter did not.
- The Azure cloud business is dealing with execution challenges and ongoing supply shortages.
- But Microsoft touted the growth of its artificial intelligence business, which is doing $13 billion in annualized revenue.
- Earnings per share: $3.23 vs. $3.11 expected
- Revenue: $69.63 billion vs. $68.78 billion expected
- Stock was down 5% on the news...

Intel
- Intel issued disappointing quarterly guidance on Thursday, but reported earnings and revenue that topped estimates.
----- Here's how the company did in the fourth quarter compared with LSEG estimates:
- Earnings per share: 13 cents adjusted vs. 12 cents expected
- Revenue: $14.26 billion vs. $13.81 billion expected
- Shares at the lowest point in price in the range from July 2024 - not looking any better

Apple Earnings
- China sales dropped 11% on an annual basis
- 1/2 the decline was due to inventory issues
- It was the worst quarter by growth rate since the December quarter a year ago, and marks the sixth straight quarter of declines in Apple’s third-largest region by revenue.
- Cook tried to make up for the poor performance of the company overall by pointing to stimulus that could benefit Apple's products
- Also blaming that Apple Intelligence is absent in China (I am still wondering what this does)
---- Isn't he forgetting that Apple can be used as a leverage point by China in the impending trade war?

Boeing Earnings
- Boeing posted a nearly $4 billion loss for the fourth quarter.
- The company has taken charges that span its defense and commercial airplane units.
- CEO Kelly Ortberg said Boeing is making progress on stabilizing the manufacturer.

Looking back - on the DeepSeek (CheapSeek) news
- Stocks took a beating last Monday - NVDA and other chip players, Nuclear Energy and tech in general
- Now, as expected, there is a twist to the story - the narrative machine is hard at work
---- Suspicion that the stole LLMs and other tech from possibly APIs and then built on top of that
------ Could it be that it is a Chinese spy! (Navy banned use on its vessels)
-- Even is dangerous - China’s DeepSeek AI is full of misinformation and can be tricked into generating bomb instructions, researchers warn
---- Some stocks made a nice comeback - SMR and other energy plays - NVDA still suffering. (down ~ 20% from high and now under its 200 DMA)

Something we have been waiting for
- The Food and Drug Administration on Thursday approved Vertex Pharmaceuticals' non-opioid painkiller pill, a new alternative for pain relief that comes without the risk of addiction.
- Vertex is now the first drugmaker in decades to gain U.S. approval for a new type of pain medicine.
- Vertex's drug is specifically approved for the treatment of moderate-to-severe acute pain, which is usually caused by injury, surgery, illness, trauma or painful medical procedures and likely eases with time.
-- VRTX moved up nicely after this news
- TAM > 80 million patients in USA ($1 billion in annual sales potential)

Thank you - Goodbye
- The Trump administration is offering millions of federal workers the option to accept buyouts through a government-wide "deferred resignation" program if they resign by Feb. 6.
- Those who accept the offer will receive pay and benefits through Sept. 30, according to a draft email obtained Tuesday by NBC News.
- The emails will be started to be sent today, NBC reported.
- The White House expects up to 10% of federal employees to take the buyout, a senior administration official told NBC on condition of anonymity.
- Doesn't this leave holes?

The Fed
- The Federal Reserve held its key interest rate in check Wednesday, reversing a recent trend of easing policy as it examines what is likely to be a bumpy political and economic landscape ahead.
- "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid," the new language read. "Inflation remains somewhat elevated."
- Seemed much less confident about their view on the trajectory about inflation
---NOTE - On next Week's TDI Podcast - Fed Insider Danielle Dimartino Booth with be the guest!

Pickleball!
- Major League Pickleball is on the brink of profitability and is now looking to expand, a league source tells CNBC.
- The MLP, which started in 2021, is targeting profitability at the league level by the fourth quarter of this year, according to the source, who spoke on the condition of anonymity to discuss nonpublic matters.
- For the first time in two years, the league is offering investors the opportunity to get in on America's fastest-growing sport with the sale of up to two expansion franchises, the source said.

 

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