Good Morning!
On Tuesday, February 4, the S&P 500 closed at 6,037.88, up 0.31% from the previous trading session. The NASDAQ was up slightly 0.74%, finishing at 19,654.02. The Dow Jones Industrial Average remained flat, down 0.01% to close at 44,556.04. Meanwhile, the Russell 2000 rose 1.9%, ending the session at 2,290.20.
Crypto Highlights
Bitcoin (BTC): Currently trading at $98,382, down 1.4% over the past 24 hours.
Ethereum (ETH): Down 0.93%, now trading at $2,781 per coin.
Solana (SOL): Slid 4.78%, currently trading at $203.95.
Ripple (XRP): Down 5.74% in the last 24 hours, now trading at $2.51 per coin.
Headlines
U.S. Moves Toward Crypto Dominance with New Regulatory Framework and Sovereign Wealth Fund
In a landmark shift for digital assets, U.S. lawmakers have unveiled a comprehensive cryptocurrency regulatory framework, marking a major step toward solidifying the country’s leadership in blockchain innovation. The newly formed bipartisan, bicameral group on digital assets, alongside the SEC’s Crypto Task Force, aims to replace years of regulatory uncertainty with clear guidelines for crypto markets. The framework prioritizes stablecoin legislation, crypto-lending regulations, and expanded investor protections for digital asset markets. AI and Crypto Czar David Sacks emphasized that this initiative ensures the U.S. remains at the forefront of financial technology innovation.
This announcement comes just a day after former President Donald Trump signed an executive order establishing the first-ever U.S. Sovereign Wealth Fund (SWF). While details remain unclear, speculation is growing that Bitcoin could be included in the fund’s portfolio, potentially transforming U.S. financial policy. Treasury Secretary Scott Bessent, a known Bitcoin advocate, and Commerce Secretary nominee Howard Lutnick, who likens Bitcoin to gold and oil, are leading the initiative.
China Responds to U.S. Tariffs with Targeted Trade Measures
In response to President Donald Trump’s sweeping tariffs on Chinese imports, China has implemented a series of measured retaliatory actions, including 10-15% tariffs on U.S. liquefied natural gas (LNG), coal, crude oil, and farm equipment. Additionally, Beijing has launched an antitrust investigation into Google, imposed new export controls on rare metals, and added two U.S. companies to its national security blacklist. However, analysts note that China’s response remains restrained, affecting less than 10% of U.S. exports to China, a stark contrast to Trump’s broad tariff measures.
By targeting energy imports, China is leveraging flexible global markets to minimize domestic economic impact while exerting pressure on the U.S. supply chain. Though U.S. coal and energy producers may face short-term disruptions, China’s growing self-sufficiency in coal and its expected peak crude oil demand by 2027 could limit the long-term effects. Economic experts suggest that China’s cautious approach is designed to maintain leverage in future negotiations while avoiding severe damage to its own struggling economy. Despite claims from Trump’s trade team that talks with Chinese President Xi Jinping are imminent, no meeting has taken place, signaling a potential prolonged standoff between the two economic powers.
Trump Suggests U.S. Sovereign Wealth Fund Could Acquire TikTok
President Donald Trump has formally initiated the creation of a U.S. sovereign wealth fund, signing an executive order on Monday to launch what he claims will become “one of the biggest” investment funds in the world. While details on funding sources remain unclear, Trump has suggested tariffs and other government assets could be monetized to generate revenue for the fund. Treasury Secretary Scott Bessent confirmed that the fund would be operational within the next 12 months, aiming to invest in infrastructure, medical research, and other national projects.
Trump also floated the possibility of using the fund to acquire TikTok, the Chinese-owned social media platform that was recently targeted for a U.S. ban over national security concerns. While the ban has been delayed, Trump has hinted that a government-backed purchase could be one potential resolution. Meanwhile, private tech giants such as Microsoft, Larry Ellison, and Elon Musk have also been mentioned as possible buyers. Trump indicated he would welcome a competitive bidding process for TikTok’s U.S. operations, though no formal deal has been announced.
CIA Offers Buyouts to Entire Workforce in Restructuring Effort
The Central Intelligence Agency (CIA) has offered buyouts to all employees in a sweeping move aimed at aligning the agency with President Donald Trump’s national security priorities. The buyout package, confirmed by NewsNation, makes the CIA the first U.S. intelligence agency to implement such an initiative.
CIA Director John Ratcliffe stated that the effort is part of a broader strategy to infuse the agency with “renewed energy” and create leadership opportunities. The move follows the Trump administration’s broader push to reduce the federal workforce, which began with buyout offers to government employees in January. While most national security positions were initially exempt, the CIA’s decision signals a shift in how intelligence agencies may be restructured under Trump’s leadership.
Arab Leaders Reject Trump’s Proposal for U.S. Control Over Gaza
President Donald Trump’s proposal for the U.S. to "take over" Gaza and relocate its 2.2 million Palestinian residents has been met with widespread condemnation across the Arab world. Saudi Arabia, a key U.S. ally, firmly rejected the idea, stating it would not establish diplomatic relations with Israel unless an independent Palestinian state was recognized. Jordan, Egypt, and Oman also denounced the plan, warning that forced displacement would destabilize the region.
Palestinian leaders, including the Palestinian Authority and Hamas, vowed to resist any attempts to remove Palestinians from Gaza, calling Trump’s remarks a violation of international law. European leaders also distanced themselves from the proposal, with the UK and France emphasizing the need for a two-state solution and rejecting any third-party governance of Gaza. Trump's refusal to rule out the use of U.S. troops in Gaza has further heightened concerns, drawing comparisons to the 2003 Iraq invasion and its long-term destabilizing effects.
EU Prepares Retaliation Against U.S. Tariffs, Targets Big Tech
The European Union is preparing to retaliate against President Donald Trump’s proposed tariffs by targeting U.S. technology companies and service industries, marking a potential escalation in transatlantic trade tensions. Brussels is considering deploying its "anti-coercion instrument" (ACI), a legal tool designed to counter trade pressure from foreign governments. Originally developed during Trump’s first term and later used as a deterrent against China, the ACI allows the EU to impose restrictions on foreign direct investment, financial services, and intellectual property rights, including software downloads and streaming services.
EU trade ministers met in Warsaw to discuss the potential tariffs, with most expressing support for firm countermeasures if necessary. Trade Commissioner Maroš Šefčovič emphasized the EU’s preference for negotiations but warned that the bloc would “react firmly” if hit by U.S. tariffs. Some member states, however, remain cautious about engaging in a full-scale trade war amid weak economic growth. France’s trade minister, Laurent Saint-Martin, stressed the need for faster response times compared to the EU’s slower reaction to Trump’s 2018 steel and aluminum tariffs.
U.S. Trade Deficit Reaches Record High in 2024 as Imports Surge
The U.S. trade deficit hit an all-time high in 2024, driven by a surge in imports and a strong dollar that made American goods less competitive abroad. According to data from the Commerce Department, total imports of goods and services grew by 6.6% to $4.1 trillion, outpacing exports, which rose 3.9% to $3.19 trillion. This widened the trade deficit by 17% to $918.4 billion, with the largest deficits recorded with China ($295.4 billion), followed by the European Union, Mexico, Vietnam, and Ireland.
The U.S. economy’s relative strength fueled higher consumer spending on imported goods such as weight-loss drugs, auto parts, computers, and food. Meanwhile, American automotive exports declined due to foreign competition, particularly from China, and a strong dollar making U.S. vehicles more expensive overseas. The trade landscape is set to shift further as President Donald Trump implements new tariffs on key trading partners. While Canada and Mexico secured a temporary reprieve, a 10% tariff on $450 billion worth of Chinese imports took effect Tuesday, prompting immediate retaliatory measures from Beijing, including tariffs on U.S. goods and an antitrust probe into Google.
AMD Accelerates Launch of Next-Gen Data Center GPUs Amid High Demand
AMD has announced that it will release its next-generation data center GPUs, the AMD Instinct MI350 series, earlier than originally planned. During the company’s Q4 2024 earnings call, CEO Lisa Su stated that AMD will begin sampling the MI350 with key customers this quarter and will ramp up production shipments by mid-2025, moving the timeline forward from the previously expected second half of the year. Su attributed the accelerated rollout to better-than-expected development progress and strong customer demand.
AMD Reports Strong Earnings, but Stock Drops 9% Amid Data Center Concerns
Despite posting a 14% annual revenue increase to $25.8 billion in 2024, Advanced Micro Devices (AMD) saw its stock fall 9% in after-hours trading. The decline came as the company provided lower-than-expected guidance for data center sales, a crucial segment in its push into the AI chip market dominated by Nvidia. AMD’s fourth-quarter revenue reached $7.7 billion, up 24% year over year, with earnings per share rising 42% to $1.09.
While the data center segment surged 69% to $3.9 billion, the gaming division struggled, dropping 59% due to lower semi-custom sales. CEO Lisa Su projected AI chip sales in the “tens of billions” over the next few years but acknowledged near-term challenges. AMD expects Q1 2025 revenue to reach $7.1 billion, slightly above Wall Street’s $7 billion estimate. However, ongoing sector weaknesses, particularly in gaming and embedded markets, have raised investor concerns.
Alphabet Shares Drop Over 7% on Revenue Miss, High AI Investment Plans
Alphabet shares fell more than 7% on Wednesday after the company reported fourth-quarter revenue that narrowly missed Wall Street expectations and announced significant capital expenditures for artificial intelligence (AI) infrastructure. Despite topping earnings estimates by 2 cents per share, Alphabet’s revenue came in at $96.47 billion, slightly below the expected $96.56 billion. Growth in YouTube advertising, search, and services slowed year over year, adding to investor concerns.
The company revealed plans to spend $75 billion on AI-driven investments, far exceeding Wall Street’s $58.84 billion estimate. The spending will primarily fund servers, data centers, and networking infrastructure to support Google Services, Google Cloud, and DeepMind. Analysts at JPMorgan and Bernstein pointed to rising costs and cloud segment performance as key factors driving the stock’s post-earnings decline.
Constellation Brands Stock Drops as Trump’s Tariffs Threaten Mexican Beer Sales
Constellation Brands (STZ), the company behind popular beer brands Modelo and Corona, saw its shares drop 4% on Monday following President Donald Trump’s announcement of 25% tariffs on Mexican imports. The tariffs, which also apply to Canadian and Chinese goods, could significantly impact Constellation’s business, as Mexican beer sales have been a key growth driver.
Constellation’s Modelo Especial became the best-selling beer in the U.S. in 2023, surpassing Bud Light amid a consumer boycott. However, the company recently reported slowing growth, with a 3% rise in beer sales offset by a 14% decline in wine and spirits revenue. Monday’s stock decline pushed Constellation Brands to its lowest valuation in over four years, raising concerns about future profitability under the new trade policies.
Bezos Earth Fund Ends Support for Climate Group Amid Political Shifts
Jeff Bezos’s $10 billion philanthropic Earth Fund has cut ties with the Science Based Targets initiative (SBTi), a leading climate standards organization, following rising scrutiny over its influence on the group. The decision comes as Bezos and other tech executives, including Meta’s Mark Zuckerberg, seek to align more closely with the Trump administration amid regulatory pressures on Big Tech.
SBTi, which helps corporations establish credible net-zero strategies, had received $18 million from the Bezos Earth Fund in 2021. However, concerns over the fund’s push for greater use of carbon credits and broader efforts to diversify funding led to the split. While Bezos’s fund insists it remains committed to climate action, critics argue the move reflects a broader retreat from environmental initiatives under Trump’s presidency, who has historically dismissed climate change concerns.
Stripe Finalizes $1.1 Billion Acquisition of Bridge Network, Expands Stablecoin Strategy
Stripe has officially closed its $1.1 billion acquisition of Bridge Network, marking its largest purchase to date and signaling a major push into stablecoin payments. Bridge, a startup specializing in stablecoin infrastructure, enables businesses to accept stablecoin transactions without directly handling digital tokens. The acquisition positions Stripe to modernize its global payment operations and expand its presence in crypto, an area where it previously struggled.
The move comes after Stripe’s earlier attempts to integrate cryptocurrency payments, including support for Bitcoin in 2014, which it later discontinued due to scalability issues. With stablecoins offering a more efficient solution for cross-border transactions, Stripe sees them as a key part of its future strategy. The company’s head of money movement products, Neetika Bansal, highlighted how Bridge’s technology will enhance Stripe’s capabilities in global commerce, reducing costs and streamlining payments.
BlackRock Plans to Hire 1,200 Employees in India to Expand AI Capabilities
BlackRock, the world’s largest asset manager, is set to expand its presence in India by hiring nearly 1,200 new employees, according to Bloomberg News. The hiring spree aims to strengthen the firm’s artificial intelligence (AI) capabilities and enhance operations at its two existing support hubs—known as iHubs—in Mumbai and Gurugram. The expansion will add to BlackRock’s current workforce of approximately 3,500 in these locations, with a focus on engineers and data specialists.
Yesterday's Earnings
Alphabet C (GOOG): Actual EPS: $2.15 (Beat by 1.42%), Expected EPS: $2.12, Actual Revenue: $96.47B (Miss by 0.24%), Expected Revenue: $96.7B, Market Cap: $2.36T
Alphabet A (GOOGL): Actual EPS: $2.15 (Beat by 1.42%), Expected EPS: $2.12, Actual Revenue: $96.47B (Miss by 0.23%), Expected Revenue: $96.69B, Market Cap: $2.34T
Merck & Co (MRK): Actual EPS: $1.72 (Miss by 4.97%), Expected EPS: $1.81, Actual Revenue: $15.6B (Beat by 0.84%), Expected Revenue: $15.47B, Market Cap: $224.56B
PepsiCo (PEP): Actual EPS: $1.96 (Beat by 0.51%), Expected EPS: $1.95, Actual Revenue: $27.78B (Miss by 0.61%), Expected Revenue: $27.95B, Market Cap: $198.85B
AMD (AMD): Actual EPS: $1.09 (Beat by 0.93%), Expected EPS: $1.08, Actual Revenue: $7.7B (Beat by 2.12%), Expected Revenue: $7.54B, Market Cap: $174.63B
Amgen (AMGN): Actual EPS: $5.31 (Beat by 5.36%), Expected EPS: $5.04, Actual Revenue: $9.1B (Beat by 2.82%), Expected Revenue: $8.85B, Market Cap: $163.44B
Pfizer (PFE): Actual EPS: $0.63 (Beat by 31.25%), Expected EPS: $0.48, Actual Revenue: $17.8B (Beat by 3.01%), Expected Revenue: $17.28B, Market Cap: $146.61B
KKR & Co (KKR): Actual EPS: $1.32 (Beat by 0.76%), Expected EPS: $1.31, Actual Revenue: $3.26B (Beat by 67.18%), Expected Revenue: $1.95B, Market Cap: $132.42B
Regeneron Pharma (REGN): Actual EPS: $12.07 (Beat by 7.10%), Expected EPS: $11.27, Actual Revenue: $3.79B (Beat by 0.80%), Expected Revenue: $3.76B, Market Cap: $78.09B
PayPal (PYPL): Actual EPS: $1.19 (Beat by 6.25%), Expected EPS: $1.12, Actual Revenue: $8.4B (Beat by 1.45%), Expected Revenue: $8.28B, Market Cap: $77.67B
Chipotle Mexican Grill (CMG): Actual EPS: $0.25 (Beat by 2.46%), Expected EPS: $0.24, Actual Revenue: $2.85B (Met Expectations), Expected Revenue: $2.85B, Market Cap: $77.05B
Mondelez (MDLZ): Actual EPS: $0.65 (Miss by 4.14%), Expected EPS: $0.68, Actual Revenue: $9.6B (Miss by 1.23%), Expected Revenue: $9.72B, Market Cap: $73.96B
Transdigm (TDG): Actual EPS: $7.83 (Beat by 2.49%), Expected EPS: $7.64, Actual Revenue: $2.01B (Miss by 0.50%), Expected Revenue: $2.02B, Market Cap: $72.76B
Simon Property (SPG): Actual EPS: $1.84 (Beat by 1.10%), Expected EPS: $1.82, Actual Revenue: $1.58B (Beat by 12.06%), Expected Revenue: $1.41B, Market Cap: $57.72B
Cummins (CMI): Actual EPS: $3.02 (Miss by 35.88%), Expected EPS: $4.71, Actual Revenue: $8.45B (Beat by 4.57%), Expected Revenue: $8.08B, Market Cap: $50.11B
Marathon Petroleum (MPC): Actual EPS: $0.77 (Beat by 24.19%), Expected EPS: $0.62, Actual Revenue: $33.47B (Beat by 0.72%), Expected Revenue: $33.23B, Market Cap: $49.55B
Ametek (AME): Actual EPS: $1.87 (Beat by 1.08%), Expected EPS: $1.85, Actual Revenue: $1.76B (Miss by 3.30%), Expected Revenue: $1.82B, Market Cap: $41.97B
Fair Isaac (FICO): Actual EPS: $5.79 (Miss by 4.77%), Expected EPS: $6.08, Actual Revenue: $440M (Miss by 2.53%), Expected Revenue: $451.42M, Market Cap: $41.92B
Gartner (IT): Actual EPS: $5.45 (Beat by 67.48%), Expected EPS: $3.26, Actual Revenue: $1.7B (Beat by 0.59%), Expected Revenue: $1.69B, Market Cap: $41.84B
Prudential Financial (PRU): Actual EPS: $2.96 (Miss by 12.43%), Expected EPS: $3.38, Actual Revenue: $14.25B (Miss by 1.79%), Expected Revenue: $14.51B, Market Cap: $40.41B
Electronic Arts (EA): Actual EPS: $2.83 (Miss by 1.74%), Expected EPS: $2.88, Actual Revenue: $2.22B (Beat by 0.45%), Expected Revenue: $2.21B, Market Cap: $33.52B
Willis Towers Watson (WTW): Actual EPS: $8.13 (Beat by 2.26%), Expected EPS: $7.95, Actual Revenue: $3.04B (Miss by 0.33%), Expected Revenue: $3.05B, Market Cap: $32.70B
WEC Energy (WEC): Actual EPS: $1.43 (Miss by 2.72%), Expected EPS: $1.47, Actual Revenue: $2.28B (Miss by 10.94%), Expected Revenue: $2.56B, Market Cap: $31.88B
Earnings Today
Walt Disney (DIS): Actual EPS: $1.76 (Beat by 21.38%), Expected EPS: $1.45, Actual Revenue: $24.7B (Met Expectations), Expected Revenue: $24.7B, Market Cap: $213.24B
Qualcomm (QCOM): Expected EPS: $2.97, Expected Revenue: $10.93B, Market Cap: $188.69B
Arm (ARM): Expected EPS: $0.25, Expected Revenue: $761.71M, Market Cap: $170.47B
Boston Scientific (BSX): Actual EPS: $0.70 (Beat by 6.06%), Expected EPS: $0.66, Actual Revenue: $4.56B (Beat by 3.40%), Expected Revenue: $4.41B, Market Cap: $156.26B
Uber Tech (UBER): Actual EPS: $3.21 (Beat by 555.10%), Expected EPS: $0.49, Actual Revenue: $12B (Beat by 1.95%), Expected Revenue: $11.77B, Market Cap: $137.63B
Fiserv (FI): Actual EPS: $2.51 (Beat by 0.80%), Expected EPS: $2.49, Actual Revenue: $5.25B (Beat by 5.85%), Expected Revenue: $4.96B, Market Cap: $127.60B
MicroStrategy (MSTR): Expected EPS: -$0.122, Expected Revenue: $123M, Market Cap: $87.27B
McKesson (MCK): Expected EPS: $8.27, Expected Revenue: $95.77B, Market Cap: $77.50B
O’Reilly Automotive (ORLY): Expected EPS: $9.73, Expected Revenue: $4.04B, Market Cap: $77.36B
Illinois Tool Works (ITW): Actual EPS: $2.54 (Beat by 1.60%), Expected EPS: $2.50, Actual Revenue: $3.9B (Miss by 2.26%), Expected Revenue: $3.99B, Market Cap: $74.19B
Emerson (EMR): Actual EPS: $1.38 (Beat by 7.81%), Expected EPS: $1.28, Actual Revenue: $4.17B (Miss by 1.42%), Expected Revenue: $4.23B, Market Cap: $71.77B
Aflac (AFL): Expected EPS: $1.62, Expected Revenue: $4.23B, Market Cap: $59.23B
MetLife (MET): Expected EPS: $2.20, Expected Revenue: $19.28B, Market Cap: $58.31B
Johnson Controls (JCI): Actual EPS: $0.64 (Beat by 8.47%), Expected EPS: $0.59, Actual Revenue: $5.43B (Beat by 1.12%), Expected Revenue: $5.37B, Market Cap: $57.33B
Allstate (ALL): Expected EPS: $5.70, Expected Revenue: $13.79B, Market Cap: $50.95B
Cencora Inc (COR): Actual EPS: $3.73 (Beat by 6.87%), Expected EPS: $3.49, Actual Revenue: $81.5B (Beat by 4.19%), Expected Revenue: $78.22B, Market Cap: $50.12B
Corteva (CTVA): Expected EPS: $0.3233, Expected Revenue: $4.07B, Market Cap: $44.08B
Old Dominion Freight Line (ODFL): Actual EPS: $1.23 (Beat by 5.13%), Expected EPS: $1.17, Actual Revenue: $1.39B (Met Expectations), Expected Revenue: $1.39B, Market Cap: $41.36B
Cognizant A (CTSH): Expected EPS: $1.12, Expected Revenue: $5.08B, Market Cap: $40.96B
Ford Motor (F): Expected EPS: $0.3623, Expected Revenue: $47.79B, Market Cap: $40.78B
Yum! Brands (YUM): Expected EPS: $1.61, Expected Revenue: $2.36B, Market Cap: $36.50B
AvalonBay (AVB): Expected EPS: $1.28, Expected Revenue: $738.72M, Market Cap: $31.66B
CDW Corp (CDW): Actual EPS: $2.48 (Beat by 6.44%), Expected EPS: $2.33, Actual Revenue: $5.19B (Beat by 4.64%), Expected Revenue: $4.96B, Market Cap: $28.54B
Corpay (CPAY): Expected EPS: $5.32, Expected Revenue: $1.06B, Market Cap: $26.74B
T Rowe (TROW): Actual EPS: $2.12 (Miss by 4.07%), Expected EPS: $2.21, Actual Revenue: $1.82B (Miss by 3.19%), Expected Revenue: $1.88B, Market Cap: $24.88B
