📈 Apple's China Problem

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Meta and Amazon smashed earnings, sending their stock prices soaring, whilst Apple is facing troubles with its China market.

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Markets

Meta, Amazon smash earnings expectations, as stock markets surge (2 minute read)
Asian markets experienced a surge this morning following the release of robust earnings reports from tech giants Meta and Amazon, leading to a notable increase in their share prices. Despite the recent downturn in Hong Kong stocks due to weak economic indicators in mainland China, the Hang Seng Index rose approximately 2 percent in morning trading on Friday before moderating gains.

Meta, the parent company of Facebook, reported an impressive fourth-quarter revenue of $40.1 billion and a profit of $14 billion, surpassing analysts' predictions. This performance led to a more than 14 percent surge in Meta's stock price, exceeding $445 in after-hours trading.

Meta achieved a significant milestone by becoming the first among its generation of tech unicorns to declare a dividend of 50 cents per share for its shareholders. Amazon also outperformed expectations in the fourth quarter, with sales reaching $170 billion, resulting in a share price increase of up to 9 percent.

Big tech mixed, focus shifts to US jobs data (2 minute read)
Following big gains in tech stocks, the current market attention is shifting towards the release of US jobs data scheduled for today. Projections indicate an anticipation of the US adding fewer than 200,000 jobs in January, with a consistent pay growth of 4.1%.

The unemployment rate is expected to experience a slight uptick to 3.8%. A relatively modest job addition may bolster the Federal Reserve (Fed) doves, potentially influencing their stance, while a robust job report could diminish expectations for a rate cut in March. The upcoming employment figures are poised to play a crucial role in shaping market expectations and Fed policy considerations.

U.S. winning world economic war (3 minute read)
The United States emerged as the fastest-growing large advanced economy in 2023, outpacing its counterparts by a significant margin, and is poised to maintain this trend in 2024. According to the latest World Economic Outlook, U.S. GDP is estimated to have expanded by 2.5% last year, surpassing all G7 economies (with Japan coming in second at 1.9%).

Despite facing common challenges such as post-pandemic inflation and elevated interest rates to counter it, the U.S. achieved robust growth. Factors contributing to this success include a resilient labor force, marked by increased workforce participation and a surge in immigration, as well as substantial productivity gains propelled by an innovative corporate sector and substantial federal investments in infrastructure and manufacturing capacity. The U.S.'s economic strength is underscored not only by its own performance but also by the distinctive challenges hindering growth in other major economies.

Investing

Apple Faces China Hurdle, iPhone Sales Under Watch (3 minute read)
Apple's stock witnessed a more than 4% decline after its earnings report, despite surpassing estimates, attributed to a notable 13% drop in sales in China. The iPhone revenue of $69.70 billion exceeded expectations of $67.82 billion, reflecting almost 6% growth. However, the concern among investors is the significant sales dip in Greater China, Apple's third-largest market, potentially indicating weakening demand and intensified competition from local players like Huawei.

CEO Tim Cook addressed this issue, emphasizing that adjusting for currency fluctuations would moderate the decline to a mid-single-digit figure. Despite apprehensions about iPhone sales and the Chinese market, Apple's overall growth story remains robust, with a 2% increase in sales reported for the December quarter, breaking a streak of four consecutive quarters of annual revenue declines.

Tesla’s Profit Margins Deserve More Appreciation (4 minute read)
Despite holding the position as the tenth most valuable company, boasting the largest market capitalization, and demonstrating rapid profitability growth among car manufacturers, Tesla appears to face a paradoxical perception. The company, while not achieving the initially anticipated 50% annual growth in a challenging environment, continues to exhibit significant expansion with a 15% to 20% yearly increase in volume, generating an impressive $7,000 per car in gross profit.

Despite media attention on BYD surpassing Tesla in global sales for the fourth quarter, the focus on profitability is crucial for investors. While the Shenzhen-based BYD, converts $100 of sales into $11 of earnings, Tesla outperforms with a conversion of $100 of revenue into $14 of earnings.

Money

Accelerated Learning: Learn Faster and Remember More (5 minute read)
You can train your brain to retain knowledge and insight better by understanding how you learn. Once you understand the keys to learning, everything changes—from the way you ask questions to the way you consume information. People will think you have a superpower.

Young People Are Doing Better (Financially) Than You Think (4 minute read)
A common trend among generations is the belief that those preceding them had it easier, while older generations often perceive the younger ones as softer. Despite varying degrees of fortune, each generation contends with challenges, particularly in their formative years.

Baby boomers navigated the inflationary 1970s and faced double-digit mortgage rates in the early 1980s. Gen X, as it began to accumulate wealth, encountered two recessions and significant stock market crashes. Millennials entered the workforce during the Great Financial Crisis, enduring one of the toughest labor markets in decades. Gen Z currently grapples with the highest inflation in four decades and exorbitant housing costs. A universal experience for every emerging generation is the financial concerns that accompany the transition to adulthood.

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