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✈️ Earnings From American Airlines, EA, & SK Hynix

+ Trump Takes Center Stage At Davos World Economic Forum

January 23, 2025

Good afternoon! Warren Buffett’s Berkshire Hathaway, long a crypto skeptic, is now sipping the “rat poison” Buffett once denounced. The company has invested over $750 million in Nu Holdings, a Brazilian digital bank with a crypto platform. As Nu’s stock soared 34% year over year, Berkshire upped its stake to 0.4%, translating to a $1.2 billion valuation.

Nu launched its crypto platform, Nubank Cripto, in 2022, supporting Bitcoin, Ethereum, and others. While Buffett maintains his stance against cryptocurrency, Berkshire’s crypto-adjacent investments hint at a quiet pivot. Even so, Berkshire stays true to its cautious roots, holding over $325 billion in cash and Treasury bills by late 2024.

MARKETS

  • The S&P 500 ticked up 0.53% to 6,118.71, notching its first record close of 2025 and surpassing December’s previous high. The Dow Jones climbed 0.92% to 44,565.07, while the Nasdaq eked out a 0.22% gain to close at 20,053.68. It was the fourth straight winning session for all three major indexes.

  • Fueling the rally were President Trump’s comments at Davos, where he called for lower interest rates and cheaper oil, spurring midday momentum. Nvidia ended the day flat after supplier SK Hynix flagged weak chip demand, weighing on the sector. Wall Street stayed optimistic, with the S&P leading the charge into the new year.

STOCKS
Winners & Losers

What’s up 📈

  • Tripadvisor soared 13.91% following news of an alternative acquisition offer, despite its ongoing merger discussions with its parent company. ($TRIP)

  • Guidewire Software jumped 11.50% after Goldman Sachs initiated coverage with a buy rating, citing the company’s strong position in cloud software for property and casualty insurers. ($GWRE)

  • GE Aerospace gained 6.6% after delivering a stellar quarter with earnings of $1.32 per share and $9.88 billion in revenue, surpassing estimates. The company also announced a share buyback plan. ($GE)

  • Union Pacific rose 5.20% thanks to better-than-expected Q4 earnings of $2.91 per share, coupled with management’s reassurances about navigating economic challenges. ($UNP)

  • Alaska Air Group climbed 2.15%, buoyed by strong Q4 earnings of $0.97 per share, beating analyst estimates. ($ALK)

What’s down 📉

  • AST SpaceMobile plunged 11.96% after announcing a $400 million convertible senior notes offering to raise funds. ($ASTS)

  • Plexus fell 10.08% as disappointing Q2 revenue guidance overshadowed its recent earnings beat. ($PLXS)

  • Electronic Arts dropped 16.70% after slashing its net bookings guidance for Q3 and the full year, citing weak performance in its soccer franchise. ($EA)

  • American Airlines slid 8.74% following a downbeat Q1 outlook, with a projected loss wider than analysts’ expectations. ($AAL)

  • Arm Holdings declined 7.43% amid investor concerns over its role in the controversial Stargate project. ($ARM)

EARNINGS
Big Earnings Day: American Airlines, EA, & SK Hynix

American Airlines: Turbulence Ahead

American Airlines warned of a Q1 loss between $0.20-$0.40 per share, stunning a market expecting a small profit. Non-fuel costs are rising, fueled by labor contracts and a regional fleet expansion. The fallout from a misfired business travel strategy still lingers, even as revenue forecasts remain upbeat, with full-year growth projected at 3%-7.5%. Shares nosedived 9%, but American’s trans-Pacific routes and $590 million in Q4 profit offered some hope. ($AAL)

EA: Games Fall Short

EA’s holiday lineup disappointed, driving its stock down 16.7%—its worst drop since 2008. Flagship EA Sports FC 2025underperformed, while Dragon Age: The Veilguard missed expectations by 50%, hitting just 1.5 million players. Bookings fell short at $2.22 billion, and the company cut FY25 guidance to $7.0-$7.15 billion, down from $7.5-$7.8 billion. EA is now banking on a FY26 rebound, but for now, the gamers aren’t biting.

SK Hynix: AI Boost, Stock Blues

SK Hynix shattered records with a 2,236% surge in Q4 operating profit to 8.08 trillion won ($5.6 billion), fueled by booming demand for its high-bandwidth memory (HBM) chips—the tech Nvidia loves for AI. HBM accounted for 40% of DRAM sales, and the company expects those sales to double this year. Yet, investors weren’t sold. Shares slipped initially but rose 2.28%, thanks to concerns over cooling AI spending and modest capex plans. (000660.KS, $KOREAN EXCHANGE)

The Bottom Line:

A record-breaking chipmaker, a struggling airline, and a gaming giant all walk into earnings season...and none emerge unscathed. AI and travel might be soaring, but challenges like uncertain demand and unsteady consumer trends are proving that no sector is bulletproof.

NEWS
Market Movements

  • 🏥 UnitedHealthcare Appoints New CEO Amid Crisis: UnitedHealthcare named Tim Noel as its new CEO after the targeted killing of Brian Thompson. Noel previously led the company's Medicare and retirement division, which serves nearly 13.7 million patients. ($UNH)

  • 📺 CNN to Lay Off Hundreds of Employees: CNN is set to lay off hundreds of employees as part of a strategy to focus on digital operations, reduce production costs, and consolidate teams. NBC News is also planning smaller layoffs. ($WBD)

  • 🇬🇧 U.K. Launches Antitrust Probes Into Apple and Google: The U.K.’s competition watchdog is investigating Apple and Google over alleged mobile market dominance, focusing on operating systems, app stores, and browsers. ($AAPL, $GOOGL)

  • 📹 Instagram Offers Creators Big Bonuses for Reels: Instagram is allegedly offering creators $10,000-$15,000 per month to solely post Reels, which replicate TikTok's bite-sized videos, on its platform. ($META)

  • 🚪 Amazon to Close Quebec Operations Amid Union Tensions: Amazon is closing its Quebec operations, laying off 1,700 workers, citing cost efficiencies. Unions allege the move aims to stifle labor organizing. ($AMZN)

  • 🚀 Trump Signs Executive Order on Crypto Policy: President Trump signed an executive order promoting cryptocurrency advancement, including the potential creation of a national digital asset stockpile. The order prioritizes protections for blockchain developers and miners while supporting dollar-backed stablecoins globally. ($BTC)

  • ✈️ Boeing Projects $4 Billion Quarterly Loss Amid Challenges: Boeing anticipates a $4 billion Q4 loss, citing strikes, safety crises, and weaker-than-expected revenue of $15.2 billion. The company has not posted an annual profit since 2018. ($BA)

  • 📈 Twilio Issues Optimistic Profit Forecast for 2027: Twilio expects its operating margin to grow to 21-22% by 2027, surpassing Wall Street estimates, and predicts $3 billion in free cash flow over the next three years. Shares surged over 10% post-announcement. ($TWLO)

  • 💵 Walmart Boosts Regional Manager Pay to Over $600K: Walmart is raising compensation for regional store managers while scaling back pay packages elsewhere and aligning office employees with health insurance plans for store workers. ($WMT)

  • 🍴 McCormick Forecasts Weak Sales Growth: McCormick forecast weak annual sales and profit growth due to declining demand for spices and higher marketing costs, particularly in China. Shares fell 1.4% premarket and ended the day in the green by 2.08%. ($MKC)

POLICY
Trump Takes Center Stage At Davos World Economic Forum: Oil, Interest Rates, and Tariffs

President Trump didn’t hold back during his virtual address to the World Economic Forum in Davos, hitting all the high notes of his “America First” symphony. With global CEOs watching, he laid out a wishlist that included lower oil prices, interest rate cuts, and hefty tariffs for businesses operating outside the U.S.

Oil Prices: The OPEC Ultimatum

Trump called on OPEC and Saudi Arabia to drop oil prices, tying the move to ending the Russia-Ukraine war. His logic? Cheap oil would drain Russian revenues and force a ceasefire. Markets reacted immediately, with crude oil prices falling 1.62%. But convincing OPEC—keen on keeping prices high—might be a tougher sell than Trump anticipates.

Interest Rates: Turning Up the Heat on the Fed

Taking his critique of the Federal Reserve up a notch, Trump demanded immediate rate cuts, claiming high interest rates were stifling growth. While central banks traditionally steer clear of political interference, Trump’s blunt remarks underscored his ongoing tension with Fed Chair Jerome Powell, who might need a thicker skin for round two of Trump’s presidency.

Tariff Talk: Allies Beware

European regulators didn’t escape Trump’s crosshairs either. He threatened new tariffs on foreign goods, pitching it as a way to funnel “hundreds of billions” into U.S. coffers. His message to global businesses? “Make it in America or pay the price.” While allies bristled, Trump’s rhetoric resonated with those eager for a manufacturing revival.

Big Picture: Bold Claims, Big Stakes

Trump painted an ambitious vision for the U.S. as a manufacturing superpower, AI hub, and energy giant. But with tariffs, sanctions, and sweeping policy changes on the table, global leaders face a choice: adapt to Trump’s economic playbook or brace for impact. For now, markets—and world leaders—are left wondering what’s next in Trump’s unfiltered economic strategy.

Calendar
On The Horizon

Tomorrow

The weekend’s in sight, but there’s still a bit more to chew on before you call it a wrap. Real estate checks in with existing home sales, while flash readings will offer a peek at the state of the services and manufacturing industries.

Earnings-wise, things are winding down. Verizon ($VZ), American Express ($AXP), and NextEra Energy ($NEE) are on deck to report tomorrow morning.

NEWS
The Daily Rundown

  • 🔥 Hughes Fire Forces Evacuations in California: A wildfire near Castaic Lake has burned over 5,000 acres, prompting mandatory evacuations as firefighters battle challenging conditions.

  • 🤴 Prince Harry Settles Lawsuit with News Group Newspapers: Prince Harry reached a settlement with Rupert Murdoch’s newspapers over phone hacking allegations, concluding a legal battle that brought renewed scrutiny to media practices.

  • 🏦 JPMorgan and Goldman Sachs Face DEI Backlash: Activist groups are urging JPMorgan and Goldman Sachs to scale back DEI initiatives, citing legal risks, but both banks remain committed to inclusive workplace policies.

  • 📊 TikTok Ban and Tariff Talks Dominate Davos: At the World Economic Forum, Trump’s proposed tariffs sparked debate, while ByteDance’s CEO insisted TikTok is not for sale despite mounting pressure from U.S. lawmakers. Meanwhile, ByteDance’s director says a deal will get done to ensure TikTok is available in the U.S.

  • ✈️ JetBlue Now Accepts Venmo for Flights: JetBlue became the first major airline to integrate Venmo as a payment option, targeting younger travelers and boosting convenience amid its ongoing financial struggles.

  • 🤖 Musk Questions Trump’s Stargate AI Deal: Elon Musk criticized the $500 billion Stargate AI investment announced by Trump, claiming the funding isn’t secured. OpenAI's Sam Altman defended the initiative, emphasizing its importance for U.S. innovation.

  • 💼 Trump Pardons Silk Road Founder Ross Ulbricht: President Trump granted clemency to Ross Ulbricht, who founded the Silk Road dark web platform. The move has been celebrated by libertarians and Bitcoin advocates who long championed his release.

  • 🎵 Kidz Bop Releases 50th Album: Kidz Bop continues its legacy with its 50th album, featuring family-friendly covers of popular songs. The franchise has sold over 23 million albums globally since its debut in 2001.

  • 🛡 Trump Deploys Additional Troops to Southern Border: Trump signed an order to send 1,500 active-duty troops to the U.S.-Mexico border, bolstering security with drones and surveillance equipment to curb illegal immigration.

  • ⚔️ Israel’s Operation Iron Wall Sparks Outcry: Israel's military operation in Jenin resulted in casualties and displacement, raising concerns among international observers over escalating violence in the West Bank.

RESOURCES
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