The Rundown - Big Tech Dominance, SoFi Earnings Surge

Episode Date: January 29, 2024

Stock market update for January 29, 2024. The S&P 500 Rallied to Records on the Back of Just One Sector (WSJ) Amazon terminates iRobot deal, Roomba maker to lay off 31% of staff (CNBC) SoFi Stock Soars After Company Posts First-Ever Quarterly Profit (Barron's) The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome to the rundown, your daily market update in under five minutes. My name is Zadadmani, and today is Monday, January 29. In today's episode, we set the table for a huge week on Wall Street. We got big tech earnings. We got Fed meeting. We got a jobs report. It's going to be a fun week. We also talk about how dominant the tech sector has been this year and why it's making

some investors kind of nervous. Then we discuss ads coming to Amazon Prime video and how much money Amazon is expected to make from ads. Then we wrap the show with some market winners and losers and end with a not so fun fact about remote work. All right, let's go. It's a huge week for the market, but let's start the show with a recap from last week. Stocks finished higher across the board last week. The Dow, S&P, and NASDAQ all finished in the green.

Stocks continue to set record highs, but it's mostly off the back of the tech sector. I'm going to share some stats with you that might give you some perspective on how dominant tech has been. The S&P 500 is up 2.5% this year, with the tech sector making up 5.9% of that. The other 10 sectors are trading 15% below their all-time highs. And this stat kind of blew my mind. If you look at the equal weighted S&P 500, which gives the same weight to small and large companies, that index is down 0.3% this year.

Again, crazy. It just goes to show you how dominant the tech sector has been in the market rally this year, which is really no different from what happened last year where big tech, specifically the Magnificent 7 dominated the market rally. But this is starting to make some investors kind of worry because when the markets are dominated by only a handful of stocks, It could be a sign of an unhealthy market. And if one of these big name stocks starts declining, it could take the whole market down with it.

But look, I'm not trying to freak anybody out. It's just something to keep in the back of your mind. As for markets today, it's off to a pretty slow start. The Dow and S&P are flat. And the NASDAQ is up slightly at the time that it's recording around noon, eastern, as investors prepare for a huge week. So let's talk about the huge week. The actual Super Bowl might be two weeks away with the Chiefs and 49ers, but this week is a Super Bowl for Wall Street. On Tuesday, we get earnings from Microsoft and Google.

Wednesday is the Fed meeting where we're going to get Jerome Powell's thoughts on the economy. Then on Thursday we get earnings from Amazon, Apple, and meta. And then finally on Friday, we have the jobs report. I don't know why everything has to be scheduled in one week. Like, why can't we spread this out? But don't worry, we're going to cover all this on the rundown. So make sure you're tuning in every day to stay in the loop. All right, let's run through some headlines.

If you watch Amazon Prime Video today, you're going to start seeing some ads. Because if you didn't know already, Amazon Prime Videos will have ads starting today. This is a trend that we've seen over the last year or so. More streamers are embracing ads. Disney had ads starting a couple years ago. Netflix now has ads after years of saying they weren't going to do it. And you know, it's easy to see why, because it's more ways for the streamers to make money. Like, for example, some estimates say that Amazon will make an extra $5 billion in revenue from ads just on Amazon Prime Video.

That is insane. Now, you will have the option to turn off ads by paying an extra $3 a month. Estimates are saying that more than 65% of people aren't expected to pay the extra money. We're just going to suffer through the ads. And Amazon is making the pitch to advertisers that Amazon is the best place to show ads because of all the data they have on viewers, right? Because a lot of people shop on Amazon and they know what we like to buy. But there is one problem that Amazon has compared to other streamers. They don't really have a hit show, even though they've spent billions of dollars on content.

But yeah, get ready to see more ads on streaming. It's just turning into cable at this point, right? Oh, one more quick note about Amazon, totally unrelated to the streaming thing. They officially terminated their $1.4 billion iRobot acquisition. I talked about this in previous episodes. Amazon initially acquired the Rumba maker over 18 months ago for $1.4 billion, but they faced some regulatory issues. Deal got blocked in the EU, and Amazon's just backing out completely.

So that deal is dead. Unfortunately, I Robot announced that they would be cutting 350 jobs now that this deal is officially terminated. All right, let's talk about some stocks making moves today. So-Fi stock is up more than 20% today at the time of this recording around noon Eastern after reporting their Q4 earnings. SoFi reported record revenues and surprise investors by reporting their first profitable quarter ever. Wall Street was actually expecting a loss. So it's easy to see why investors are hyped. It's always a nice surprise when you report profits instead of a loss.

As for losers, PDD stock is down more than 8% today. PDD is the parent company of TEMU, the shopping app that's gotten really popular recently where you can buy like a blender for $8. The reason the stock is down is because Morgan Stanley reported potential slowdowns in the shopping app. On a side note, Timmu will have a Super Bowl ad this year. So be on the lookout for that. All right, let's wrap up the show with a stocking stuffer where I share something about stocks, economics, or anything that I found to be interesting. Today's fun fact.

Actually, it's not really a fun fact. It's kind of a somewhat depressing fact, but it's still worth sharing. According to some employment data, people who worked five days per week at home were 35% more likely to be laid off last year compared to employees who made an appearance at the office. This is according to data provider live data technologies. The most likely reason for this is that people that work from home don't. don't tend to have a personal connection with their manager. And the truth is that it's a lot easier for managers to lay off someone that they don't have a personal

connection with. It's kind of a depressing stat to start off the week. You know what? I'm going to have a more fun set for tomorrow's show. All right, guys, that's all I got for you guys today. It's going to be a fun and busy week. So make sure you tune into the rundown every day this week to stay in the loop. We'll see you guys back here tomorrow.

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