HI Market View Commentary 02-18-2025
What was your thoughts when Musk took over twitter?
HE way over paid for a political stunt, Then I thought for sure it was going under, shocked when he let go of 80% of the workforce, yet then when it posted a profitable quarter I finally realized he knows what he is doing
Today I saw an Instagram or Facebook reel that showed something in the range of 4.7T wasted government dollars
What is the biggest concern for Musk and DOGE right now= IS that they will get our personal information
I do wonder what economy, stock market, defense, education we would have without the debt hanging over our heads?
Our last “correction” which was a bear market correction was March 2020?
My vote would be more than a year away = Earnings, Less Government regulation, Change
Change from what = Inflation, cheaper gas prices, higher paying jobs, less of the last 4 years of government,
The margins are less and less which means the companies are less profitable and we do have a correction in the near future
Earnings dates:
BABA 02/06 BMO
BIDU 02/26 est BMO
DG 03/13 est BMO
MU 03/19 est AMC
NVDA 02/26 AMC
O 02/20 est AMC
SQ 02/20 AMC
TGT 03/12 est BMO
https://www.briefing.com/the-big-picture
The Big Picture
Last Updated: 14-Feb-25 17:07 ET | Archive
Earnings are the bedrock on which the market stands
The fourth quarter earnings reporting period isn’t over yet, but the end is in sight with only 110 or so S&P 500 companies yet to report. That’s a nearly 80% completion rate and it can be said that the fourth quarter reporting period has unfolded much better than expected.
When we published our preview on January 10, the fourth quarter blended earnings growth rate stood at 11.7%. Today, according to FactSet, it stands at 16.9%, which is the highest year-over-year earnings growth rate since Q4 2021.
Analysts typically cut their estimates as a quarter carries on, thereby making it “easier” for companies to hurdle the lower bar. They did that this time too, but to be fair, the blended growth rate on September 30 stood at 14.3%, so this reporting period has truly been better than expected as opposed simply to better than the lowered estimate.
That’s the good news.
The bad news is the strong earnings growth hasn’t translated into a less expensive market.
Earnings Do the Driving
A market trading with a full, if not rich, valuation has a fuller and richer valuation as the fourth quarter reporting period moves into its final stages. That doesn’t mean the market can’t get fuller and richer on further multiple expansion. One can never know fully the extent to which momentum and animal spirits can take things.
It does suggest, ironically, that there will be a high price to pay if the fundamental ground on which the confident stock market stands is shaken.
There was a little taste of that this past week with the release of the January Consumer Price Index. That report caused a momentary rumble, yet the January Producer Price Index prevented a tectonic shift thanks to a component breakdown that suggested there might not be cause for undue inflation alarm when the January PCE Price Index is released on February 28.
That point aside, earnings are what drive the stock market, so if one wants to make a case for why the stock market has stood strong through the DeepSeek upset, the tariff uncertainty, and the CPI inflation scare, earnings would be the bedrock evidence.
The market cap-weighted S&P 500 is up 4.0% to begin the year and the equal-weighted S&P 500 is up 3.3%. Those moves are the nexus of multiple expansion considering that the forward 12-month EPS estimate has gone up only 0.6% since the start of the year. The calendar year 2025 estimate, meanwhile, has gone down 1.1% since the year began.
The earnings estimate trends bear close watching. If they don’t start picking up with some better momentum of their own, particularly the forward 12-month estimate, then we may be staring at a market that has the unsatisfying disposition of “churning.”
That is market parlance for “spinning its wheels” or not really getting anywhere. Just a lot of chop with some good days and some bad days, creating a feeling of going everywhere and nowhere all at once.
Looking for the Next Level
That is the pratfall of a market that trades with a full valuation in the case of the equal-weighted S&P 500 and a rich valuation in the case of the market cap-weighted S&P 500. It demands good news to hold its form, but it needs “next level” news to get into a sustainable breakout mode given the high valuation at which it now trades.
Some “next level” items would include:
- Inflation getting back to the 2.0% target without the economy tanking.
- A big step up in productivity aided by technological advances like AI.
- Passing tax cuts without increasing the deficit.
- A trade detente between the U.S. and China.
None of that will come easily, if at all, but even baby steps in any of these directions can go a long way toward lifting investors’ spirits and earnings estimates.
What It All Means
We said the fourth quarter earnings reporting period would be an important tell for the market. It has told us that U.S. companies continue to exhibit earnings strength in the face of headwinds like the stronger dollar, geopolitical uncertainty, higher interest rates, and sticky inflation.
What it has also told us is that the bar of earnings expectations is rising. That is because companies have easily surpassed lowered estimates, but it also because the market’s high valuation carries the command that earnings growth cannot disappoint, or the price-driven multiple expansion will turn into price-driven multiple compression.
—Patrick J. O’Hare, Briefing.com
Where will our markets end this week?
Lower
DJIA – Bullish
SPX – Bullish
COMP – Bullish
Where Will the SPX end February 2025?
02-18-2025 -1.0%
02-10-2025 -1.0%
02-03-2025 -1.0%
Earnings:
Mon:
Tues: FLR, VMI, BMBL, DVN, FLS, TOL, BIDU
Wed: CNK, GRMN, WING, CF, HLF, IMAX,
Thur: LNG, HAS, SHAK, WMT, DBX, RIVN, BABA, XYZ,
Fri:
Econ Reports:
Mon:
Tue Empire Manufacturing, NAHB Housing Market Index, TIC Flows,
Wed: MBA, Housing Starts, Building Permits, FOMC Minutes
Thur: Initial Claims, Continuing Claims, Phil Fed, Leading Indicators,
Fri: Existing Home Sales, Michigan Sentiment
How am I looking to trade?
Now we are protecting for Q4 earnings in 2025
www.myhurleyinvestment.com = Blogsite
info@hurleyinvestments.com = Email
Questions???
DeepSeek AI breakthrough calls for a rethink on Chinese equities, investors say
Published Tue, Jan 28 20252:34 PM ESTUpdated Tue, Jan 28 20253:35 PM EST
Hakyung Kim@in/hakyungkim/@hakyungkim_
Chinese artificial intelligence upstart DeepSeek shocked many investors and rattled the U.S. stock market, which has relied on gains from AI for the past two years. But now investors who have focused on China say DeepSeek is only one of many examples of China’s innovation prowess — and shows that the country’s battered stock market has been overlooked for too long.
“Chinese stocks have been very unfairly valued just because of this overall geopolitical noise,” said Ben Harburg, MSA Capital managing partner and CoreValues Alpha founder.
“China is a much more formidable business and technology competitor than people have been led to believe — America is definitively not leading on innovation right now — it has yielded its lead to the Chinese … across almost every key vertical,” Harburg continued. “China is building products that are perfect for digital natives.”
Investors have begun to take note. U.S.-traded shares of major internet companies such as Alibaba and Baidu are up more than 1.5% since the start of the week. The iShares China Large-Cap ETF gained more than 1% on Monday, before pulling back from its gains during Tuesday’s session.
Malcolm Dorson, head of emerging markets strategy and senior portfolio manager at Global X, said he has looked at Chinese equity markets using Warren Buffett’s strategy: “be greedy while others are fearful.” The impact of DeepSeek didn’t come as much of a shock to Dorson, who has been bullish on Chinese technology stocks since early 2024.
“But we see our clients taking a closer look with these headlines reminding people that China is a global leader in various spaces in tech, including e-commerce, electric vehicles, solar energy,” Dorson said.
Compared to Nvidia and other Magnificent Seven stocks that have been selling at lofty valuations, Chinese growth stocks have been relatively undervalued. But Chinese technology companies stand to benefit from a late-mover advantage in the tech space, in Harburg’s view. Combined with more central government stimulus measures, investors “should see significant upward movement in Chinese stocks,” Harburg said.
“China definitively, is kind of in a significant lull right now in terms of domestic consumption and domestic market,” Harburg noted. “But Pinduoduo, Alibaba, BYD, Xiaomi and EV makers — these are all global companies [with] international markets that are thriving. China is definitively building hardware that is the product of choice for all the next billion high growth consumer markets, be it Southeast Asia, Middle East and Africa, Latin America; Chinese software, like TikTok, is dominating.”
Trade rhetoric
Although tariff uncertainties continue to weigh on sentiment on Chinese stocks, President Trump’s trade rhetoric could end up being more aggressive than what ends up as law.
“We believe the bark will be worse than the bite,” said Dorson. “The market is currently pricing in the worst. Similar to 2016, we believe the two sides will reach a deal in the middle, which will bring a relief rally and let investors focus on fundamentals again.”
Larry Tentarelli, Blue Chip Daily Report chief technical strategist, is more cautious on China due to ongoing concerns regarding its struggling property market, but even he views the DeepSeek news as a positive sign for Chinese equities
“In the short term, this is definitely bullish, but I don’t know if it’s big enough to break out of the bear market,” Tentarelli said. “But China has turned a negative — restricted access to the U.S.’s [most advance AI processors] — into a positive, and it’s really caught the U.S. off guard.”
How Elon Musk’s DOGE took over the Education Department, one office at a time
Published Wed, Feb 12 20253:57 PM ESTUpdated Wed, Feb 12 20256:09 PM EST
Key Points
- Staffers from Elon Musk’s secretive government slashing effort, DOGE, have pushed the highest Department of Education officials out of their own offices, rearranged the furniture and set up white-noise machines to muffle their voices, employees at the agency said.
- Instead of collaborating with Trump officials, the DOGE employees appear to be competing with one another to make the biggest budget cuts, employees said.
- What’s more, the DOGE teams’ budget-cutting demands appear to be arbitrary, and not rooted in any political or policy goals, employees said.
Staffers from Elon Musk’s secretive government slashing effort, DOGE, have pushed the highest-ranking officials at the Department of Education — even those recently appointed by President Donald Trump — out of their own offices, rearranged the furniture and set up white noise machines to muffle their voices, employees at the agency said.
Deprived of her office, acting Education Secretary Denise Carter was spotted last week sitting outside the main leadership suite, one staffer said. Meanwhile, acting Under Secretary James Bergeron held off moving into his office, sources told CNBC, because DOGE staffers were occupying it.
“They took over the top real estate; they made themselves at home,” an official told CNBC. “It was that attitude of, ‘We can do whatever we want.’”
Sources for this story were granted anonymity because they feared retribution if they were named.
Having taken over the VIP offices on the seventh floor of the agency’s headquarters in Washington, D.C., representatives of the task force known as the Department of Government Efficiency then went looking for office equipment around the building to “move into their compound,” an Education Department staffer told CNBC.
Asked about the working arrangements and office space, deputy assistant secretary for communications Madi Biedermann told CNBC, “The DOGE employees are federal employees. They have been sworn in, have the necessary background checks and clearances, and are focused on making the Department more cost-efficient, effective, and accountable to the taxpayers.”
Trump has repeatedly stated his intention to dismantle the Department of Education. As an agency authorized by Congress, the department cannot be eliminated without congressional approval.
But in the meantime, Musk and his DOGE team can slowly starve it.
Elon Musk’s biggest problem is that he doesn’t know what he’s doing
A White House spokesperson did not respond to questions from CNBC about the workflow at the Education Department.
Trump’s nominee to lead the Department of Education, Linda McMahon, will have her confirmation hearing Thursday.
Education Department officials described tension between the DOGE team and department leadership — including Republicans who arrived at the department to help implement a conservative education agenda.
Asked about the workplace dynamics, Biedermann said the DOGE staffers “are working in collaboration with Department staff. There is nothing inappropriate or nefarious going on.”
According to employees, however, the DOGE teams appear to be competing with one another to get a very big headline on budget cuts.
On Monday, that headline was indeed very big: ”$881 million” worth of contracts with the Education Department had been canceled, according to the DOGE social media account.
This competitive element of the DOGE cost-cutting effort is likely due in part to the rules that govern the DOGE staffers’ employment.
Most DOGE workers are designated as “special government employees,” a category that insulates them from some federal disclosure requirements. But in exchange, the status limits the total number of days they can work per year to 130.
The way the DOGE teams appear to be operating, they have about four months to make all the cuts they can. After that, the agencies will be left to deal with the fallout.
DOGE’s shifting demands
Day to day, the DOGE team members have been “secretive,” a current staffer said. “They didn’t make conversation.”
Some employees said they feel they need to physically stay out of the way of DOGE staffers, and one official described the overall vibe from the team as “intimidating.”
Constantly shifting demands from DOGE employees about how much funding they need to cut have left employees confused and afraid, two employees told CNBC.
What’s more, they said, the demands of DOGE teams appear to be arbitrary, and not rooted in any political or policy goals.
In many cases, the DOGE teams don’t tell department staffers which contracts they need to cancel, employees said.
Instead, staffers are given a figure, typically in person rather than in writing, and told to cut that much money from programs, sources report. Other times they were given a percentage of funding and told to cut that much.
One employee recalled a demand by DOGE employees to slash around 80% of the funding for websites and services that support federal student loan applications.
Around 17 million families apply for college aid each year using the Free Application for Federal Student Aid, or FAFSA, according to higher education expert Mark Kantrowitz.
Elon Musk calls for the U.S. government to delete entire agencies: ‘Remove the roots of the weed’
Published Thu, Feb 13 20253:48 AM ESTUpdated Thu, Feb 13 20251:23 PM EST
Key Points
- “I think we do need to delete entire agencies, as opposed to leave part of them behind. … It’s kind of like leaving a weed,” Musk said.
- The South African-born engineer and tech entrepreneur has been named by Trump as a “special government employee” and the head of a new entity under the administration called or the Department of Government Efficiency, or DOGE.
DUBAI, United Arab Emirates — The U.S. government needs to “delete entire agencies” in a cost and efficiency drive, tech billionaire and Tesla co-founder and CEO Elon Musk said Thursday when asked about whether the changes he is implementing as part of President Donald Trump’s administration will last beyond Trump’s term.
“I think we do need to delete entire agencies, as opposed to leave part of them behind. … It’s kind of like leaving a weed,” Musk said. “If you don’t remove the roots of the weed, then it’s easy for the weed to grow back. But if you remove the roots of the weed — it doesn’t stop weeds from ever going back, but it makes it harder.”
Musk, who also founded SpaceX and owns social media platform X, made the comments while speaking via video link to an audience at Dubai’s annual World Governments Summit, as part of a conversation hosted by the UAE’s artificial intelligence minister, Omar Sultan Al Olama.
“So we have to really delete entire agencies, many of them,” Musk said. “And that’s not to say there won’t be an increase over time of bureaucracy in some new administration, but it will be from a much lower baseline. So certainly it’s a step in the right direction.”
“Nothing’s forever,” he added, “but I think we can strengthen the foundations of the United States substantially.”
Trump appointed the South African-born engineer and tech entrepreneur as a “special government employee” and the head of a new advisory body called the Department of Government Efficiency, or DOGE, under the administration. Musk has been vocal about his aims to improve government efficiency and reduce bureaucracy and regulations, and on Thursday said that such efforts could amount to a $1 trillion reduction in the federal deficit by 2026.
Musk has already taken an axe to U.S. Agency for International Development, the international humanitarian and development arm of the U.S. government, by essentially furloughing the majority of its staff and freezing its funding. The sudden change is affecting millions of people around the world, particularly in poorer countries.
The Trump administration in early February said that USAID would shut down as an independent agency and be moved under the State Department, a change that would require congressional approval.
Chinese tech giant Baidu to release next-generation AI model this year as DeepSeek shakes up market
Published Tue, Feb 11 202511:30 PM ESTUpdated Wed, Feb 12 202512:04 AM EST
Evelyn Cheng@in/evelyn-cheng-53b23624@chengevelyn
Key Points
- China’s Baidu plans to release the next generation of its artificial intelligence model in the second half of this year, according to a source familiar with the matter.
- The planned update comes as Chinese companies race to develop innovative AI models to compete with OpenAI and other U.S.-based companies.
- Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from large tech companies such as Alibaba and ByteDance as well as startups.
BEIJING — China’s Baidu plans to release the next generation of its artificial intelligence model in the second half of this year, according to a source familiar with the matter, as newer players such as DeepSeek disrupt the segment.
Ernie 5.0, called a “foundation model,” is set to have “big enhancements in multimodal capabilities,” the source said, without specifying its functions. “Multimodal” AI can process texts, videos, images and audio to combine them as well as convert them across categories — text to video and vice-versa, for instance.
Foundation models can understand language and perform a wide array of tasks including generating text and images, and communicating in natural language.
Baidu’s planned update comes as Chinese companies race to develop innovative AI models to compete with OpenAI and other U.S.-based companies. In late January, Hangzhou-based startup DeepSeek prompted a global tech stock sell-off with the release of its open-source AI model that impressed users with its reasoning capabilities and claims of undercutting OpenAI’s ChatGPT drastically on cost.
“We are living in an exciting time … The inference cost [of foundation models] basically can be reduced by more than 90% over 12 months,” Baidu CEO Robin Li said at the World Governments Summit in Dubai this week. That’s according to a press release of his fireside chat with Omar Sultan Al Olama, UAE’s minister of state for artificial intelligence, digital economy, and remote work applications.
“If you can reduce the cost by a certain percentage, then that means your productivity increases by that kind of percentage. I think that’s pretty much the nature of innovation,” Li noted.
Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from startups as well as large-tech companies such as Alibaba and ByteDance.
While Alibaba shares have soared 33% for the year so far, Baidu shares are up 6%. Tencent has notched gains of about 4% for the year so far. ByteDance is not listed.
Goldman Sachs: China stands to gain as AI focus shifts toward applications layer
Baidu’s Ernie model already supports the integration of generative AI across a range of the company’s consumer and business-facing products, including cloud storage and content creation.
Last month, Baidu said its Wenku platform for creating presentations and other documents had reached 40 million paying users as of the end of 2024, up 60% from the end of 2023. Updated features, such as using AI to generate a presentation based on a company’s financial filing, started being rolled out to users in January.
The current version of the Ernie model is Generation 4, released in Oct. 2023. An upgraded “turbo” version Ernie 4.0 was released in August 2024. Baidu has not officially announced plans to release the next generation update.
The latest version of OpenAI’s ChatGPT, GPT-4o, was released in May 2024. OpenAI CEO Sam Altman said in a Reddit “ask me anything” session earlier this month that there wasn’t a public timeline for GPT-5′s release.
Baidu did not respond to a request for comment.
https://finance.yahoo.com/news/baidu-q4-earnings-ai-cloud-124240346.html
Baidu Q4 Earnings: AI Cloud Grows, Margin Slides, Expects AI Investments To Bear Fruit In 2025
Anusuya Lahiri
Tue, February 18, 2025 at 5:42 AM MST
Baidu Q4 Earnings: AI Cloud Grows, Margin Slides, Expects AI Investments To Bear Fruit In 2025
On Tuesday, Baidu, Inc (NASDAQ: BIDU) reported fiscal fourth-quarter revenue of $4.68 billion, down 2% year-on-year, topping the analyst consensus estimate of $4.56 billion.
Baidu’s adjusted earnings per ADS of $2.63 beat the analyst consensus estimate of $1.78. The stock price slid after the report.
Also Read: Applied Materials Navigates China Slowdown, Analysts See Early Recovery Despite Soft Guidance
Segments: Baidu’s Core revenue grew by 1% year over year to $3.8 billion; Online marketing revenue declined by 7% year over year to $2.46 billion.
Non-online marketing revenue grew 18% year over year to $1.34 billion, driven by the AI Cloud business. AI Cloud business grew by 26% during the quarter.
Revenue from IQIYI, Inc (NASDAQ: IQ) decreased 14% year over year to $906.00 million, missing the analyst consensus estimate of $909.96 million.
Baidu’s SG&A expenses were $915 million, up 14% year over year, primarily due to an increase in expected credit losses, channel spending, and promotional marketing expenses. R&D expenses declined 12% year over year to $756 million.
Baidu’s adjusted EBITDA margin declined by 600 bps to 20%, and its Core adjusted EBITDA margin decreased by 600 bps to 24%. As of December 31, 2024, Baidu had $19.1 billion in cash and equivalents and generated $3 million in free cash flow during the quarter.
Co-founder and CEO Robin Li said 2024 marked a pivotal year in the company’s transformation from an internet-centric to an AI-first business. AI Cloud gained momentum, fueled by broad market recognition of its full-stack AI capabilities.
In the Mobile Ecosystem, Li noted that it was steadfast in advancing the AI transformation. Apollo Go paved the way for global expansion and scalable, asset-light strategies. Li expects its AI investments to deliver more significant results in 2025.
Baidu stock declined 8% in the last 12 months as its AI models failed to gain traction, like Alibaba Group Holdings (NYSE:BABA), ByteDance, and DeepSeek. The Chinese search engine giant plans to launch Ernie 5.0 in late 2025 and offer Ernie Bot free to all users. Baidu is also a key Apple Inc (NASDAQ:AAPL) partner as the latter aims to add AI features to its iPhones for China.
Price Action: BIDU stock traded lower by 2.29% at $95.25 premarket at the last check Tuesday.
Here’s What Happened After Elon Musk Cut 80% Of X’s Employees—As He Eyes Reshaping Federal Workforce
Forbes Staff
Elon Musk’s campaign to get rid of 10% of the U.S.’ 2.3 million-strong federal workforce, including all 10,000 employees in the U.S. Agency for International Development, has little historic precedent, but it does evoke memories of the world’s richest man’s 2022 takeover of social media company Twitter, now known as X.
Key Facts
Just six months after closing his $44 billion acquisition of Twitter in October 2022, Musk told the BBC he culled the company’s headcount to 1,500, down about 80% from 7,500 employees as of the end of 2021, as noted in the company’s last annual report as a public company.
The dramatic restructuring came as a result of firings and voluntary resignation packages as the social media company pivoted to Musk’s “extremely hardcore” culture, laid out in an all-hands email with the subject line “A Fork in the Road.”
That’s the same subject line all federal employees got last week in their email offering voluntary buyouts, an offer about 20,000—or 1%—of workers have taken thus far, while Musk and his allies have orchestrated the administrative leave of almost all USAID employees.
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What Happened To Twitter (now X) After Musk’s Job Cuts?
The social media company initially took a massive financial hit as its workforce shrank. Its advertising revenue in 2023, Musk’s first full year at the helm of X, declined to a reported $2.5 billion, a more than 45% decrease from Twitter’s ad sales in 2021, its final full year as a public company, causing Fidelity to write down its valuation of X to as little as $9 billion by last September, just a fifth of the sticker price Musk paid two years prior. After Musk’s takeover, the company overhauled its operations, cutting its content moderation and communications teams, and reshaped its platform, focusing on premium monthly subscriptions and algorithm-based feeds like TikTok’s.
Has Musk’s X Rebounded Since His Layoffs And Restructuring?
To a degree, yes. In recent months, X has begun to show signs of recovery. Fidelity upped its X valuation to about $13 billion in December and several major advertisers, including Amazon, are renewing their presence on the platform. X’s financials recovered in 2024 on its leaner model, as Bloomberg reports X brought in $1.2 billion in adjusted earnings last year, within striking distance of 2021’s $1.4 billion, with a much leaner staff.
PROMOTED
Will X’s Rebound Continue?
X’s recent rebound traces back to Musk’s chummy relationship with President Donald Trump, but Musk’s activities outside of his corporate role are a big part of why the company landed in hot water in the first place. Major companies like Disney and Apple paused ads on X in late 2023 after Musk endorsed an antisemitic conspiracy theory, while others balked at the lack of content guardrails on the site.
How Messy Were Musk’s Layoffs At X?
Very. The Musk-led push to trim 6,000 positions at X, a much smaller scale than the government job cuts he hopes to oversee, brought significant legal challenges from employees—including more than 2,000 arbitration cases, after X did not pay the severance package Musk promised, and several broader lawsuits. The fate of those lawsuits has been mixed: A federal judge tossed one lawsuit accusing him of skimping on a half-billion in severance payments, while another severance-based suit was allowed to proceed in part.
Chief Critic
Musk is taking “the same Twitter playbook now with the federal government,” Shannon Liss-Riordan, an attorney representing many of the former Twitter/X employees in arbitration against their former employer, told NPR. “And he couldn’t even come up with a new subject line for the email,” Liss-Riordan continued.
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News Peg
In the latest signal of institutional confidence in X, banks which helped finance Musk’s 2022 acquisition plan to sell $5.5 billion of X’s debt at 97 cents on the dollar, Bloomberg reported Wednesday.
Tangent
Government agencies do not have a similar catch-all performance metric as corporations do with the yardstick of profit, but Musk’s private sector resume shows clear evidence of operational efficiency leadership. Tesla, Musk’s most valuable company and the primary source of his wealth, grew to be an investor favorite due to its high profit margins compared to other car companies, made possible in part by its relatively lean headcount. Tesla had 141,000 employees worldwide at the end of 2023, compared to Ford’s 177,000 and General Motors’ 163,000, according to the company’s most recent proxy statements. And yet Tesla brought in $10.9 billion in net income in 2023, besting Ford’s $8.1 billion net profit and General Motors’ $10.5 billion despite the legacy automakers’ higher headcount.
Forbes Valuation
Musk is worth $400 billion, according to Forbes’ calculations, making him the world’s richest person by a roughly $150 billion margin. X accounted for less than $7 billion of his fortune as of November.
Stuck stock market is worried about economic growth as Trump’s tariffs dominate headlines
Published Sat, Feb 8 20257:21 AM EST
Michael Santoli@michaelsantoli
The stock market is rather calm but can’t seem to relax.
In a noisy and fast-shifting news environment, stocks were quietly flattish last week from point to point, even after Friday’s almost 1% drop, which extends a sideways three-month range during which the S&P 500 has traded no more than 3% above or below its closing level from the day after the U.S. election.
The index has been sticky near the 6,000 level, caught between the opposing currents of a deeply split market, in which stocks and sectors are moving their own way rather than as a bloc. Helps explain why the CBOE S&P 500 Volatility Index (VIX) has been testing its recent floor near 15 in recent weeks.
Is this action best understood as resilience, fatigue or confusion?
A bit of each, most likely. The market action suggests investors are comforted by a sturdy economic starting point and the consensus will not easily surrender their faith in a “growth-friendly” policy mix to come.
Yet day to day, the many-forked path of policy-setting involving tariffs, immigration crackdowns, executive-branch program curbs and, eventually, a tax-and-spending package has sapped market confidence in an imminent economic acceleration.
Many of the textbook “Trump trades” pricing in a strong growth impulse driving a higher-nominal-growth economy have largely unwound. The small-cap Russell 2000 has rolled back to mid-October levels. And as shown here, the beloved industrial sector has also slid back relative to the broader market.
The selective nature of the tape is also visible in the waning proportion of large stocks that remain in a technical uptrend. This chart from Strategas Research shows the percentage of such stocks slipped just below 60%, lowest in more than a year.
Strategas
It’s a testament to the market’s recent knack for clockwork rotations and the constant aggression of small retail traders (detailed here last week) that the index has stayed within a couple of percent of record highs even as broad momentum is lacking and so many individual stocks consolidate.
It’s tough to deny that the clench-and-release of tariff threats is the proximate mover of tactical trading flows and the public mood. The S&P 500 low for last week came less than an hour after Monday’s opening bell, when 25% tariffs on Canada and Mexico were freshly imposed. A 3% multi-day relief rally from there eventually took the S&P 500 to a high right at 6,100 – upside resistance unless and until proven otherwise – on Friday morning.
That was just before the University of Michigan consumer survey showed a big jump in one-year inflation expectations, almost certainly tied to tariff fears, with stocks legging lower still after President Trump vowed “reciprocal tariffs” on countries now imposing duties on U.S. goods. Stocks fell 1% from there into the weekly close.
‘Growth scare’
Still, beyond the daily games of headline pinball, investors as a group understand, or should, that whatever ultimate tariffs are or aren’t imposed will likely not be the deciding factor in whether the economic expansion and bull market persist. The trade balance in goods isn’t crucially important to the trajectory of the entire U.S. economy in a given year.
A tariff conflict, rather, is treated by the market as a “war of choice” that might have positive eventual objectives but in the here and now threatens to throw sand in the gears of commerce and kick dust into the eyes of CEOs and capital allocators.
More tangibly, an aggressive tariff war could be one more thing inviting the sort of “growth scare” the markets have come to consider a possibility. Friday’s job number, 145,000 for January, was light at the headline level though broadly “fine” given upward payroll revisions for prior months, weather disruptions and a dip in the unemployment rate. But along with a sluggish hiring rate from the JOLTS survey and tepid employment gains outside of services and the public sector, it suggests a low-velocity, steady-state labor market.
3Fourteen Research co-founder Warren Pies has been on “growth scare” alert for a while now, seeing a hobbled housing sector, interest-rate-constrained consumers and reduced fiscal liquidity — potentially exacerbated by a Federal Reserve unwilling to ease further given tariff effects on inflation. He also notes that in the years following a 20%-plus gain in the S&P 500, payments for capital gains the following spring tend to unsettle the stock market by early in the second quarter.
This is all swirling around a market that came into 2025 priced for good things to happen, with investor expectations high, making it tough for reality to surprise pleasantly. Earnings growth in aggregate has been strong, with the usual rate of outperformance against forecasts.
Barclays strategist Venu Krishna calculates that “the median miss (-3.3%) among companies that printed below-consensus EPS was not much worse than recent quarters. Despite this, the share price reactions have been notably worse, with average post-print move in reaction to an EPS miss nearly [one percentage point] lower than the long-term average.”
Krishna adds that revisions to estimates for first-quarter profits outside of the tech sector are running a percentage point weaker than the historical norm, concluding that “we think markets will find plenty to nitpick by the end of this reporting season.”
Magnificent 7 underperformance
Alphabet shedding 9% and Amazon losing 4% last week after solid results but subdued guidance and radically increased capital-spending plans could be called nitpicks.
The Magnificent 7 giants of the Nasdaq as a group have underperformed the S&P 500 by six percentage points since just before the Fed’s “hawkish rate cut” Dec. 19. And so, the market so far has indeed grown less beholden to those names- just as the vociferous consensus has insisted would happen for many months – though the overall index is flat since then.
The crowd calling for a more inclusive market like to insist that stocks outside those seven dominant tech leaders look considerably less expensive. Yes and no. While there is a decent gap between the forward price/earnings ratio of the top seven and the “other 493,” in absolute terms the rest of the market trades at a 19 multiple, above most periods in history. This is why the call for a broadening of earnings growth is crucial to the 2024 bull case for the rank and file of the market.
Morgan Stanley
Of course, as they say, valuation is a weighing machine with little to say about what comes next, while stocks on a shorter frame are a voting machine. And right now, the most active retail-trading voters continue to bombard the market with aggressive buying in their favorite momentum names.
Dollar volume in retail favorite Palantir Technologies shares on Friday was almost double that in Apple, a company with 13-times its market value, on no fresh news aside from Palantir’s torrid stock-price momentum itself, which carried the stock up 38% for the week and 370% over the past year.
JPMorgan equity-trading analysts calculated that retail-trader sentiment on Wednesday was the highest the desk ever recorded, based on flow metrics, even “higher than the peak of the meme mania in 2021.”
In the immediate term, JPMorgan says, the market tends to perform well on average following such extremes in retail buying over the next two weeks, after which the signal loses any value.
JPMorgan manager says his $39 billion ETF can profit from volatility in 2025 — and it yields 7%
Published Mon, Feb 10 20253:21 PM EST
With investors expecting a volatile market in 2025, many are turning to options strategies to help smooth the ride — and produce income.
Stocks have bounced around this year, with tech names getting rattled by China’s DeepSeek AI model and Trump administration trade policies causing uncertainty.
Exchange-traded funds like the JPMorgan Equity Premium Income ETF (JEPI) have been employing options strategies for years, but they are becoming increasingly popular. Morningstar calls these types of funds a “hot corner” of the ETF market. The derivative income ETF category raked in $33 billion in 2024 — bringing the total assets to $97 billion, the fund tracking firm said. That’s up from $3 billion at the end of 2020, according to Morningstar.
JPMorgan Equity Premium Income ETF one-year performance
Hamilton Reiner, head of U.S. equity derivatives at JPMorgan Asset Management and manager of the Equity Premium fund, still expects the stock market to deliver low double-digit earnings growth this year across the board, not just in the Magnificent Seven.
“If you keep [price-to-earnings] multiples the same or if you have a slight reduction in multiples, we should probably see stocks up high single digits, low double digits,” he said.
He also anticipates a slightly higher level of volatility than last year, when the S&P 500 returned 23%.
“A strategy like this is going to seek to take advantage of that higher volatility by providing our investors two things — one, maybe a little more income, but also a little more upside,” he said.
Reiner’s ETF has a 30-day SEC yield of 7.12%, as of Jan. 31, and an expense ratio of 0.35%. It had assets of $38.71 billion, as of Friday.
The fund’s mission is to balance income and total return, Reiner explained. When choosing stocks, the team focuses on those it believes are fundamentally attractive and have persistence of earnings. The team also makes sure there is diversification across all sectors and names, with no single stock allowed to account for more than 2% of the portfolio.
The managers also sell out-of-the money options on the S&P 500, so that investors still get some of the market’s upside.
“We ladder and stagger our options, doing a portion of them each and every week, so our strategy is never, ever fully capped out,” Reiner said.
Investors get income in the form of the options premiums and any dividends on stocks within the fund. The dividends are a bonus and not the main driver of equity selection, he stressed.
Reiner said the strategy is not meant to replace bonds or equities.
“You can complement those wonderful allocations by taking some of your stock, some of your bonds, and investing in a strategy like this, but maintaining that same risk profile,” he said.
The Equity Premium Income ETF can also be a home for part of investors’ excess cash, he added. Some $6.92 trillion is currently sitting in money market funds, according to the Investment Company Institute.
“Cash is sort of like that silent killer,” Reiner said. “It feels good today, but when you start thinking about compounding wealth over the next 10, 20, 30 years, you are really going to be left on the sidelines.”
HI Financial Services Mid-Week 06-24-2014