The Rundown - Big Banks Rake in Profits, Quantum Stocks Make a Comeback

Episode Date: January 15, 2025

Stock market update for January 15, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadad Mani, and today is Wednesday, January 15th. In today's episode, we're talking inflation. The latest CPI report just came out, and the markets are loving it. We'll tell you why. We also recap earnings from big banks like J.P. Morgan and Wells Fargo. Then stick around to the end of the show to find out why quantum stocks are rallying,

and the latest substance to get banned by the FDA that, might be in your pantry right now. All right, let's go. Yesterday was another up and down day for the stock market. The S&P was able to squeeze out a 0.1% gain, but the NASDAQ had another down day dropping 0.2%. On the other hand, it's been a pretty good couple days for crypto, especially Bitcoin. Bitcoin's price is almost back to $100,000 this morning after dropping to nearly $90,000 on Monday. So solid rebound from Bitcoin over the last 48 hours. Now, today the attention turns to the CPI report. You know, we've had one positive inflation report already this week.

The PPI report also referred to as wholesale inflation. We talked more about that report on yesterday's show, so go check that out if you missed it. But today we are getting the CPI report. That's the popular one that everyone refers to when talking about inflation. And it looks like we got some more good news. Inflation in December came in at 2.9%, which was in line with expectation. And core CPI, which removes volatile prices like food and energy, came in at 3.2%. which is lower than the 3.3% that was expected.

So not a bad report. Obviously, the Fed still has some work to do because they want inflation to be under 2%. But at least things aren't getting worse. The markets are definitely loving this report. I'm recording this before the market opens, but I'm seeing green across the board and pre-market numbers. So let's hope the stock market can build some momentum off of this

right as we enter the thick of earnings season. Let's run through some headlines. Let's start with meta. Bloomberg announced that they are cutting 5% of their staff. The tech giant is letting go of its lowest performing employees ahead of what Mark Zuckerberg is calling an intense year for the company. Meta's got a lot going on right now, and they're hoping 2025 is a big year for them.

Meta is planning to release an update to their Rayban smart glasses, which have been very popular. I own a pair. They're pretty solid. They also continue to develop Lama, which is an AI open source model. They're also working on AR smart glasses called Orion. And don't forget what the potential TikTok ban happening in four days,

they're probably going to get a surge of users on Instagram Reels, but Zuck still plans to cut 5% of their lowest performing employees. That's about 3,000 employees and they should be notified by February 10th. Meta is not the only big tech company trying to cut costs. Microsoft announced that they are doing a hiring freeze for their U.S. consulting business, along with some job cuts as well. The consulting division saw sales fall by 1% in Q3, and they're also cutting back on other spending as the company continues to spend big on AI development.

I think this marks a pretty big shift for tech industry in general. I think before 2022, big tech jobs were seen as these cushy jobs where you got paid a lot of money to not do much. Like, if you watch the show Silicon Valley on HBO, it does a good job of highlighting that. It looks like those days are gone. Companies like meta and other big tech companies will start cutting underperforming employees as they try to cut costs. I feel like the big tech industry has turned into big banking. Because in banking, it's pretty brutal. The bottom 5% of 10% of people will get cut every year.

Actually, speaking of banking, let's talk about big bank earnings because we got a ton this morning. And the numbers look to be pretty solid across the board. Let's start with JP Morgan. Their profits jump 50% in Q4, and they saw solid numbers across all banking divisions. Investment banking revenue grew by 46% due to higher fees, fixed income markets revenue grew by 20% and equity markets grew by 22%. JP Morgan's CEO Jamie Diamond noted that economy is acting pretty resilient in the company's earnings and he seemed to be optimistic about the economy under a Trump presidency.

Goldman also had some solid earnings. They reported their best equity trading year ever. rising by 32% year over year. Investment banking fees were up 24% and the company's fixed income commodities and currencies division grew by 35%. Everyone's favorite bank Wells Fargo also saw solid earnings.

Their profits grew by 47%. Similar to JP Morgan, their investment banking fees were up 59%. And the companies said that their wealthy clients were funneling more money into higher-end savings products. On a side note, why are wealthy people banking at Wells Fargo? And finally, Citibank also reported earnings today.

They also topped expectations. and had a profitable quarter. I was going pretty faster. That was a lot of numbers. Overall, solid earnings across the board for the banking industry. And the markets were loving it too. Shares of J.P. Morgan are up more than 1%.

Goldman Sachs shares are up 4%. Wells Fargo is up 5%. And City is up around 4%. Let's talk about some stocks making moves today. Quantum stocks are back, everybody. Two major quantum computing companies were Getty Computing and D-Wave Quantum are both up big this month.

morning. Raghetti is up around 15%. D-Wave is up more than 25%. And this is after both these stocks had a massive run-up yesterday as well. Raghetti was up more than 40% on Tuesday. D-Wave was up more than 20%. So it looks like the hype is back in quantum stocks after they got demolished last week

thanks to NVIDIA's CEO Jensen Huang's comments. Funny enough, the catalyst for this jump might be because of NVIDIA and Microsoft. NVIDIA said that it's hosting its first ever quantum day at NVIDIA's GTC. It's their annual conference where it shows off its AI and GPU tech innovations. And to make this even funnier, Nvidia CEO Jensen Huang will actually share the stage with executives from the companies he indirectly threw shade at last week when he said that quantum computing was 15 years away.

Microsoft probably deserves some credit here as well. They posted a blog post yesterday calling 2025 the year to become quantum ready. That was enough to bring the hype back into the quantum space. So shout out to everybody that bought the dip last week. The stocks haven't fully recovered from the Jensen bomb, but there's definitely some life here. I think the 2025 meme theme is going to be quantum stocks.

Now, on the flip side, a stock that had a lot of hype last year, Eli Lilly is down this morning after the pharma giant announced disappointing sales numbers for their popular weight loss drugs, Zepbound and Manjaro. That took the market by surprise,

including me. I was pretty shocked, given how popular those drugs have been. As a result, the stock was down more than 6% yesterday and down more than 1% this morning. Let's wrap the show with a fun fact. The FDA is set to ban

the artificial food coloring red number three due to its link to cancer. Now, this dye was banned 35 years ago for use in cosmetics, but somehow it's still commonly used in candies and bakery items. In fact, it's an 11% of cookies and 26% of baking decorations, according to the food app GoCoco. Now, this change, which seems to be well overdue, is going to force companies, including General Mills, to find an alternative.

It's actually not even just food. It's also in heartburn pills sold at Costco and Wright. aid and it's also in drugs like Vivance. This dye was originally approved for use back in 1969. I feel like we've learned a thing or two since then. And pressure has started to build to ban it in recent years, with states including California, taking it into their own hands and passing their own laws. Food manufacturers will have until January 15th, 2027 to reformulate their products. So it's not going away just yet, but in a couple years should be gone. I should probably check my pantry to see how how much red three I have.

Well, all right, guys, that's the rundown for today. Got a lot of information on today's show. I feel like the rest of the week is going to be the same with more earnings set to be released this week. So it's a great time to be subscribed to the podcast and stay in the loop of everything that's happening. If you guys enjoyed today's show, consider giving us a five-star rating on Apple, on Spotify,

vote in today's Spotify poll. Leave us a comment on Spotify. Follow our Instagram account for bonus content and clips of the show. All of that engagement really does help us out and it helps other people find the show. Thank you, guys. so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow.

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