🍎 Apple Earnings: iPhone Sales Shrink

Good afternoon! A Malaysian entrepreneur has found a bizarre yet profitable niche—getting "beaten up" for a fee. Shazali Sulaiman, often told he looks like a gang member, has launched a "villain for hire" service where clients can stage a heroic moment to impress their partners. For about $22 on weekdays and $33 on weekends, he'll show up, act like a troublemaker, and let his client play the hero.

While some see it as harmless fun, others are raising legal concerns. In Malaysia, public disturbances and harassment—even staged ones—could carry fines or jail time. Sulaiman insists it's all an act, comparing it to WWE-style entertainment, but whether authorities see it that way remains to be seen.

MARKETS

• Wall Street shook off early jitters on Thursday, with stocks rising as investors dissected a wave of Big Tech earnings. The Dow climbed 0.4%, adding 168 points, while the S&P 500 gained 0.5%. The Nasdaq edged up 0.3%, though gains were tempered as traders braced for Apple’s earnings release after the bell.

• Markets wobbled late in the session after President Trump floated a 25% tariff on imports from Canada and Mexico. Despite the tariff talk, Tesla, Meta, and IBM helped push the broader market higher.

STOCKS
Winners & Losers

What’s up 📈

• Oklo surged 18.73% as the Sam Altman-backed nuclear reactor company extended its rebound following DeepSeek-driven losses earlier this week. ($OKLO)

• Vistra climbed 13.59%, continuing its recovery from AI-related sell-offs earlier this week. ($VST)

• IBM soared 12.96% to an all-time high after its AI investments paid off, delivering better-than-expected Q4 results. ($IBM)

• Las Vegas Sands jumped 11.08% after reporting stronger-than-expected Q4 revenue of $2.9 billion, topping analyst forecasts. ($LVS)

• International Business Machines gained 12.96% after beating Q4 earnings expectations, posting $3.92 EPS versus estimates of $3.78. ($IBM)

What’s down 📉

• Whirlpool tumbled 16.48% after issuing weak guidance, raising concerns about future revenue growth. ($WHR)

• UPS plunged 14.11%, suffering its worst trading day ever after announcing it would reduce Amazon shipment volumes by 50% by 2026. ($UPS)

• Comcast dropped 11.00% after losing more broadband customers than expected last quarter, hitting its lowest stock price in over two years. ($CMCSA)

• ServiceNow fell 11.44% after issuing weak Q1 revenue guidance, forecasting lower-than-expected full-year sales. ($NOW)

• Cigna sank 6.70% after missing Q4 earnings estimates, reporting $6.64 per share versus the $7.82 expected. ($CI)

• Microsoft dipped 6.18% following lower-than-expected revenue guidance for Q3, forecasting $67.7B-$68.7B versus a $69.78B consensus. ($MSFT)

• Dow slid 6.09% after missing Q4 revenue estimates and guiding for softer-than-expected Q1 revenue. ($DOW)

• Teradyne dropped 5.71% after issuing mixed guidance, with the lower end of Q1 revenue forecasts falling below analyst expectations. ($TER)

• Caterpillar fell 4.64% after missing Q4 revenue expectations, despite exceeding EPS forecasts. ($CAT)

EARNINGS
Apple iPhone Sales Shrink Slightly as Investors Await AI Payoff

Apple’s latest earnings were a classic case of “good enough.” Revenue climbed 4% to $124.3 billion, but iPhone sales dipped nearly 1% to $69.1 billion—marking yet another quarter where flashy AI features failed to spark an upgrade frenzy. Investors shrugged it off, sending shares up 3% after hours, thanks to Apple’s Services division. The segment, which includes the App Store, Apple Music, and iCloud, hit a record $26.3 billion in revenue, proving that if people won’t buy new iPhones, they’ll at least keep paying for storage and subscriptions.

China Fumbles, AI Stumbles

Apple’s China problem isn’t going away. Revenue from the region cratered 11% to $18.5 billion as domestic brands like Huawei surged ahead. Tim Cook blamed “inventory reductions” for the slump, but the real issue? Apple Intelligence hasn’t launched in China, leaving its iPhones looking second-rate against AI-powered local competition. The fix? Apple plans to roll out Chinese-language AI in April, but whether that move will actually win back market share is TBD.

Tariffs, Trump, and Trouble

Beyond China, Apple is bracing for Trump-era tariffs 2.0, with the administration mulling new levies on Chinese imports. Last time, Cook managed to schmooze his way out of hefty tariffs—he even made an appearance at Trump’s inauguration last week. But with Apple still manufacturing most of its products in China, a trade war could throw a wrench into margins. Meanwhile, Apple’s decision to sit out the AI spending arms race is looking smarter by the day, as rivals like Microsoft and Google face Wall Street backlash for runaway costs.

The AI Waiting Game

Apple’s AI rollout has been... underwhelming. The much-hyped Apple Intelligence features haven’t moved the needle, and early issues—like botched notification summaries—haven’t helped. While Cook insists Apple’s ecosystem will make its AI the best in the long run, consumers aren’t exactly rushing to upgrade. Investors are still buying the vision, but if Apple wants AI to be more than a talking point, it needs to start delivering results.

NEWS
Market Movements

• 💰 SoftBank in Talks to Invest Up to $25 Billion in OpenAI: SoftBank is in discussions to invest between $15 billion and $25 billion in OpenAI, a move that could make it the company’s largest investor, potentially displacing Microsoft. The funding is expected to support OpenAI’s commitment to the $500 billion Stargate AI infrastructure project. ($MSFT)

• 📈 Trump Media Expands Into Fintech With Truth.Fi Launch: Trump Media announced its entry into fintech with the launch of Truth.Fi, a company focused on bitcoin and ETFs, alongside a partnership with Schwab. Shares rose 8%, though concerns remain about potential conflicts of interest as Trump oversees financial markets. ($DJT, $SCHW)

• ☕ Starbucks to Cut 30% of Its Menu to Speed Up Service: Starbucks announced it will slash 30% of its menu to simplify operations, reduce wait times, and improve the customer experience. CEO Brian Niccol said the change aims to reverse declining U.S. sales. ($SBUX)

• 🛩️ Musk Works With Boeing and Air Force on Air Force One Delays: Elon Musk is collaborating with Boeing and the Air Force to accelerate the delayed $3.9 billion Air Force One project, now expected to be completed by 2027. Boeing is facing $2.25 billion in losses related to the jets. ($BA)

• 📉 Intel Issues Weak Forecast Despite Beating on Fourth-Quarter Results: Intel’s revenue declined for the third straight quarter, dropping 7% year-over-year to $14.26 billion, though it still beat estimates of $13.81 billion. The company reported a $126 million net loss and issued a weaker-than-expected outlook for Q1, citing seasonality, economic conditions, and competition. ($INTC)

• 💰 Costco to Raise Hourly Pay for Most U.S. Workers to Over $30: Costco will increase hourly wages for top-tier employees to $30.20 in the first year, with additional raises bringing it above $32 within three years. The move follows union pressure after 85% of Teamsters members voted to authorize a strike. ($COST)

  🏦 Nationwide to Acquire Allstate’s Stop-Loss Insurance Segment for $1.25 Billion: Nationwide announced it will purchase Allstate’s employer stop-loss insurance business to expand its financial portfolio. The deal is expected to generate a $450 million financial gain for Allstate and increase deployable capital by $900 million. ($ALL)

• 🚗 Toyota Remains World's Top-Selling Automaker in 2024: Toyota retained its title as the world’s top-selling automaker, delivering 10.8 million vehicles despite a 3.7% year-over-year decline. Sales in China fell 6.9%, while hybrids accounted for 40.8% of total sales. Volkswagen ranked second with 9 million vehicles sold after a 2.3% decline. ($TM)

• 🥤 Coca-Cola Recalls U.K. Drinks Over Elevated Chlorate Levels: Coca-Cola has recalled a wide range of drinks in the U.K. due to elevated chlorate levels. The company stated the health risk is "very low." ($KO)

TRANSPORT
UPS to Amazon: “It’s Not Me, It’s You”’

UPS just pulled a classic “we need to talk” on Amazon, slashing its business with the e-commerce giant by more than 50% by 2026. The reason? Amazon might be its biggest customer, but it’s also its least profitable. UPS would rather focus on high-margin shipments, even if it means losing billions in revenue. Investors, however, weren’t sold on the plan—shares cratered 14%, their worst drop since 2008.

Amazon Shrugs, UPS Scrambles

While UPS is downsizing its Amazon deal, Amazon has spent the past decade building its own logistics empire, so it’s hardly sweating the breakup. In fact, it had even offered to ship more with UPS, but the courier declined, choosing to prioritize profitability over volume. Meanwhile, FedEx made a similar move back in 2019, cutting Amazon loose and shifting focus to higher-margin clients. That strategy paid off, leaving UPS now scrambling to course-correct with cost-cutting measures and a push into more lucrative segments like healthcare and business-to-business shipping.

Less Amazon, More Headaches

UPS is rolling out a $1 billion cost-cutting plan, closing facilities, downsizing its fleet, and cutting jobs to offset the revenue loss. It’s also ditching its last-mile delivery partnership with the U.S. Postal Service, opting to handle more deliveries in-house. While the moves are meant to boost margins, the immediate impact isn’t pretty—UPS is bracing for a revenue drop in 2025, falling short of analysts’ expectations.

What’s Next?

CEO Carol Tomé promised more details on UPS' long-term strategy soon—maybe by the end of Q1—but for now, Wall Street isn’t convinced. The big bet is that fewer Amazon packages will mean higher margins, but in the short term, UPS is taking a financial punch to the gut. Investors are left wondering: will this be a painful but necessary pivot, or just a costly breakup?

Calendar
On The Horizon

Tomorrow

The week’s final act? A crucial inflation gut check. The Personal Consumption Expenditures (PCE) index—aka the Fed’s favorite inflation gauge—drops today, and while Jerome Powell tried to sound optimistic in yesterday’s press conference, prices are still running hotter than he’d like. If today’s data shows inflation cooling, markets will start dreaming of rate cuts in March. If not, brace for more Fed-induced suspense.

Earnings season isn’t done yet, with a fresh batch of heavyweights reporting, including Colgate-Palmolive ($CL), Church & Dwight ($CHD), AbbVie ($ABBV), Phillips 66 ($PSX), and Eaton Corporation ($ETN). Expect Wall Street to comb through the numbers for any signs of consumer fatigue or corporate pricing power—because in this economy, margins matter more than ever.

Before Market Open:

• Exxon Mobil is stuck in neutral, but that might be just fine. The energy giant has eked out a 5% gain over the past year, underperforming broader markets but keeping its valuation attractive. If President Trump’s “drill baby, drill” mantra becomes policy, Exxon is well-positioned to cash in. Its diversified operations mean it can weather price swings while still delivering strong returns. Consensus: $1.79 EPS, $88.23 billion in revenue. ($XOM)

• Chevron isn’t winning any speed races either, but slow and steady could pay off. The stock has only climbed single digits in the past year, but with a solid balance sheet, a juicy dividend, and a shift toward long-term investments beyond crude, it’s playing the long game. While lower oil prices may squeeze near-term profits, any shift away from clean energy policies could boost its prospects. Consensus: $2.40 EPS, $48.68 billion in revenue. ($CVX)

NEWS
The Daily Rundown

• 📺 Super Bowl Ads Reach Record $8 Million Per Spot: Advertisers are shelling out up to $8 million for a 30-second commercial during Super Bowl LIX, up from $7 million last year. Brands like Coffee Mate, Instacart, Häagen-Dazs, and Ritz are debuting their first-ever Super Bowl ads, with marketing experts expecting a surge in humor, nostalgia, and AI-themed commercials.

• 🔍 OpenAI and Microsoft Investigate DeepSeek for Alleged IP Theft: OpenAI and Microsoft are probing whether Chinese AI startup DeepSeek used unauthorized techniques to train its latest AI model, which caused a $1 trillion loss in US stock value. The controversy stems from DeepSeek's use of "distillation," a common AI training method that OpenAI prohibits for competitors. Critics argue OpenAI’s stance is hypocritical, given its own history of scraping data for AI development.

• 📖 US Reading Scores Continue to Decline: A new report from the National Assessment of Educational Progress revealed that just 67% of eighth-graders and 60% of fourth-graders read at a basic or better level. The decline, which has been ongoing since 2017, is linked to increased screen time and absenteeism. Experts warn that lower literacy rates could lead to significant long-term economic losses.

• ⚖ RFK Jr. Faces Scrutiny in Heated HHS Confirmation Hearing: Robert F. Kennedy Jr.’s first confirmation hearing before the Senate Finance Committee was marked by outbursts, scrutiny over past vaccine skepticism, and tense exchanges with Democratic lawmakers. Kennedy defended his stance on vaccines, denied past controversial statements, and pledged to align with President Trump’s policies, including restricting late-term abortions. With corporate America wary of his nomination due to his criticism of Big Food and Big Pharma, Kennedy faced another Senate committee hearing before a final vote.

• ⚖ Former Senator Bob Menendez Sentenced to 11 Years in Prison for Bribery: Former New Jersey Senator Bob Menendez was sentenced to 11 years in federal prison after being convicted on bribery and corruption charges. Prosecutors revealed Menendez accepted luxury gifts, including gold bars and a high-end car, in exchange for political favors. Two businessmen involved in the scheme received sentences exceeding seven years.

• 📉 Federal Reserve Holds Interest Rates Steady for Now: The Federal Reserve announced it would maintain its current interest rate range of 4.25% to 4.5%, signaling no immediate cuts. Chair Jerome Powell stated that the Fed needs to see more progress on inflation or labor market weakness before adjusting rates. Powell also confirmed he had not communicated with President Trump, despite the latter’s public calls for rate cuts.

• 🖊 Trump Signs Laken Riley Act Into Law: President Trump signed the Laken Riley Act after it passed the House and Senate with bipartisan support. The law mandates ICE to detain any non-citizen arrested for or convicted of burglary, theft, larceny, or shoplifting. Named after a 22-year-old nursing student murdered by an undocumented immigrant, the legislation marks Trump's first bill signed in his second term.

• 🛑 Hamas Releases Eight Hostages in Ceasefire Agreement: Hamas released three Israeli and five Thai hostages as part of ongoing negotiations with Israel. The individuals were transferred to Israeli authorities via the Red Cross. Medical evaluations are underway, and further prisoner exchanges may follow.

• 🚨 Trump Administration Freezes Federal Grants Before Reversing Course: The Trump administration temporarily halted federal grants and loans, leading to widespread confusion among nonprofits and agencies reliant on government funding. After a federal judge blocked the freeze, the Office of Management and Budget issued a memo appearing to reverse the decision, though the White House insisted the original directive remains in effect.

• 📡Logitech Unveils Office Monitoring Device to Track Workplace Activity: Logitech introduced "Logitech Spot," a radar-based sensor designed to monitor office space usage. The device, which runs on a four-year battery, tracks occupancy, air quality, CO2 levels, temperature, and humidity. While marketed for corporate offices, the technology could see broader applications in public spaces.

RESOURCES
The Federal Reserve Resource

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