🐂 Tech Rivalry

Markets

The stock market showed minimal movement yesterday, grappling with the perplexing nature of recent tepid inflation data. A notable development was the successful debut of spot bitcoin ETFs, indicating investors' interest in convenient access to cryptocurrency. Additionally, Netflix experienced a slight increase in value, propelled by the growing momentum for its ad-supported subscription tier.

Tech

Microsoft bigger than Apple?

Yesterday, Microsoft briefly surpassed Apple as the world's most valuable publicly traded company, with a market capitalization of $2.9 trillion, outpacing Apple's $2.89 trillion. This momentary shift in leadership, the fourth occurrence since 2018, suggests a potential turning of the tables between these long-standing rivals.

The history of Microsoft and Apple has seen phases of collaboration, rivalry, and competition. In the early days of Big Tech, they collaborated when Apple's hardware used Microsoft-developed software. However, tensions arose in the 1980s when Apple sued Microsoft, alleging software imitation, and in the 1990s when Steve Jobs criticized Microsoft's products publicly. A significant twist occurred in 1997 when Microsoft invested $150 million to rescue the financially struggling Apple, marking a turning point in their relationship.

In the current landscape, Microsoft and Apple collectively contribute to approximately 14% of the S&P 500. Over the past year:

• Microsoft's strategic investment in OpenAI, the creator of ChatGPT, materialized with the introduction of Copilot, an Office AI tool for Microsoft 365, expected to generate $10 billion annually by 2026.

• Microsoft's stock witnessed a 63% increase, surpassing Apple's 39% growth, according to the Wall Street Journal.

Looking ahead, Apple is grappling with reduced demand for iPhones, especially in China, while Microsoft is bolstering its business with advancements in AI. Apple's foray into mixed reality with the upcoming release of its Vision Pro device will determine its success in this evolving technological landscape.

Politics

Trump gave his own closing argument

Following Judge Arthur Engoron's reconsideration of allowing the former president to address the court during the closing arguments of his civil fraud trial in New York, Trump embarked on a five-minute monologue. In this address, he asserted the perfection of all his company's financial statements and labeled the trial as a "political witch hunt." The trial, led by New York Attorney General Letitia James, aims to secure $370 million in damages and a prohibition on Trump from conducting business in the state. The allegations include inflating asset values to secure better loans and engaging in other deceptive practices. With the trial concluded, Judge Engoron, who experienced a "swatting" incident at his home on Thursday, will now independently determine the verdict as there is no jury involved.

Auto

Hertz needs to offload EVs

Hertz is considering an unconventional move by offering to sell you the Tesla you originally rented. The rental car company recently announced its intention to sell 20,000 electric vehicles (EVs) from its U.S. EV fleet, which comprises approximately 50,000 vehicles. This decision includes using a portion of the proceeds to acquire traditional gas-powered cars.

This marks a significant shift in Hertz's strategy. In 2021, after emerging from bankruptcy, Hertz garnered attention for its ambitious plan to fully embrace EVs, aiming to purchase 100,000 Teslas for its fleet by the end of 2022. However, by October 2023, the company had only acquired around 35,000 Teslas. Additionally, Hertz had previously disclosed plans to buy a total of 240,000 EVs from Polestar and GM over the next five years, but there is no mention of how this sell-off might impact those agreements.

Hertz attributes this change in direction to a decline in demand for EVs and the higher maintenance and repair costs associated with them. The decision to sell the vehicles is expected to result in a depreciation-related loss of approximately $245 million, attributed to Tesla's reduction in vehicle prices.

Hertz's experience reflects a broader trend in the automotive industry, with the demand for EVs slowing down considerably over the past year. This deceleration has prompted several automakers to reconsider and scale back their plans for large-scale adoption of EVs.

Sports

Belichick reign comes to an end

Get ready for Patriots sweatshirts to become sought-after collector's items, as Bill Belichick revealed yesterday that he is stepping down as the head coach of the New England Patriots after an impressive 24-year tenure.

Belichick's legacy is nothing short of legendary, featuring six Super Bowl titles in nine appearances with the Patriots, a record 31 postseason victories, and numerous years as the highest-paid coach in U.S. professional sports. The period between 2001 and 2019, during which Belichick collaborated with quarterback Tom Brady, witnessed remarkable success, with the Patriots winning 76% of regular-season games. This transformative era elevated the team from a struggling franchise to one of the greatest sports dynasties of all time.

However, as the saying goes, stars can't shine forever. Belichick's final season in 2023 saw the Patriots finish with a 4–13 record, drawing criticism for certain player personnel decisions. Some critics likened his situation to a startup CEO stretched too thin, handling both head coaching and de facto general manager duties. If Belichick decides to coach another team, it's unlikely that he will enjoy the same level of autonomy.

Interestingly, it seems to be a week of departures, as Belichick's former colleague Nick Saban announced his departure from the University of Alabama after 17 seasons, and longtime Seattle Seahawks coach Pete Carroll is stepping down after 14 years in the Emerald City. Notably, all three were among the top 10 highest-paid coaches in U.S. sports.

Economy

Latest inflation data is confusing

In December, US consumer prices recorded a slightly higher-than-anticipated increase of 0.3%, primarily driven by a surge in shelter costs. However, when excluding the volatility of food and fuel prices, the "core" inflation measure revealed a 3.9% rise in the year through December. This figure represents a slight decrease from the 4% recorded in 2022 and marks the first time since May 2021 that the metric has fallen below 4%. The data suggests that, despite a lackluster December, there are indications that inflation is on a trajectory to ease. The coming months will reveal whether this moderation is sufficient for Federal Reserve officials to consider interest rate cuts later in the year.

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