—— Meta Shares Surge 20% on Q4 Report; Fed Hikes 25bps as Powell Turns Upbeat; Goldman Commodity Traders Earn $3B; U.S. Inflation Bonds in High Demand; Bridgewater Appoints First Female CIO; 30-Year Mortgage Rate Nears 6%; Ferrari Posts Record Financials
1. Meta Shares Surge 20% on Q4 Report
On Wednesday, Facebook parent company Meta Platforms reported that Q4 revenue declined 4% year-over-year to $32.2 billion, slightly beating analyst expectations. The company also announced it would cut 2023 costs by $5 billion and launched a $40 billion share buyback plan.
Buoyed by the news, Meta’s stock jumped more than 19% in premarket trading, adding $76 billion in market cap and nearly reversing the $89 billion wiped out in Q3.
However, due to large-scale layoffs and project cuts during Q4, Meta incurred $4.2 billion in related expenses, and net income fell 55% year-over-year to $4.7 billion—missing analysts’ $6 billion estimate.
On a call with investors, CEO Mark Zuckerberg said Meta will prioritize operational efficiency in 2023, eliminating underperforming projects and unnecessary management layers.
Zuckerberg pledged to lead Meta to become a dominant force in artificial intelligence.
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2. Fed Hikes 25bps as Powell Turns Upbeat
On Wednesday, the Federal Reserve raised its benchmark interest rate by 25 basis points.
Fed Chair Jerome Powell told reporters it’s too early to declare victory, and the Fed may still raise rates another two times by 25 bps.
Still, Powell’s tone was notably more dovish at this meeting—he appeared more optimistic and upbeat about the economy and the Fed’s anti-inflation efforts. He said it’s possible to bring inflation down to 2% without severely damaging the economy or labor market.
Following Wednesday’s meeting, both the S&P 500 and Nasdaq Composite rose.
Though Powell expects the inflation battle to continue, investors appear even more optimistic than he is.
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3. Goldman Commodity Traders Earn $3B
Sources say Goldman Sachs’ commodities trading division generated over $3 billion in revenue in 2022, well above the $2 billion range of the prior two years.
While Goldman’s overall net profit was halved to $10.8 billion in 2022, the trading team led by Ed Emerson remained one of the bank’s top-performing units.
Five years ago, Goldman’s commodities desk was considered minor. But recent geopolitical instability and pandemic disruptions created high volatility in energy, metals, and agricultural markets—providing lucrative trading opportunities.
Last year, Trafigura Group, the world’s largest oil and metals trading firm, posted $7 billion in profit—more than the previous four years combined. Citadel, led by Ken Griffin, also aggressively expanded into the commodity space.
Goldman’s once-overlooked commodities desk has become a major profit driver.
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4. U.S. Inflation Bonds in High Demand
According to the U.S. Treasury, American investors bought $4.26 billion worth of Series I savings bonds in January—up from $3.29 billion a year ago and just $106 million in January 2021.
Last year, both U.S. stocks and bonds suffered sharp declines. In contrast, the inflation-protected I bonds emerged as a rare safe haven. The current I bond rate is 6.89%, down from the previous 9.62%, yet still attracting fresh inflows.
Each investor is allowed to purchase up to $10,000 of I bonds annually. As new allocations opened in the new year, investors quickly moved in.
The I bond rate includes both a fixed and a floating component, the latter tied to CPI and updated by the Treasury in May and November each year.
I bonds remain attractive for their inflation protection and appealing yield.
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5. Bridgewater Appoints First Female CIO
Bridgewater Associates, founded by billionaire Ray Dalio, has appointed Karen Karniol-Tambour as its third co-chief investment officer.
At 37, Karen becomes the first female executive to hold a CIO role at the world’s largest hedge fund. She will lead investment strategy alongside 47-year-old Greg Jensen and 64-year-old Bob Prince.
Karen joined Bridgewater immediately after college in 2006. During the 2008 financial crisis, she worked closely with Dalio and the CIOs. She later led investment research and co-led sustainable investing.
Greg noted that he recruited Karen while she was still an undergraduate and praised her qualities, expressing excitement to work alongside her.
Karen has spent nearly two decades in investment roles at Bridgewater and has earned the firm’s trust.
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6. 30-Year Mortgage Rate Nears 6%
According to Freddie Mac, the average U.S. 30-year fixed mortgage rate fell from 6.13% last week to 6.09%, down from the November peak of 7.08%.
Recent cooling in bidding wars and home prices may give buyers more opportunities in coming months. However, affordability remains strained due to limited supply.
Freddie Mac’s Chief Economist Sam Khater said the rate drop could enable 3 million more buyers to qualify for mortgages. Based on median home prices, these buyers may apply for loans of about $400,000.
Freddie Mac forecasts that 30-year rates could fall to around 5% by 2024.
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7. Ferrari Posts Record Financials
According to the latest financial report from luxury sports car brand Ferrari, the company posted record highs in revenue, net profit, and free cash flow for 2022. It also expects both revenue and profit to continue rising in 2023.
Last year, Ferrari’s sales in China surged 73% to 1,552 units. In the U.S., sales increased by 22% to 3,447 units. In Europe—Ferrari’s largest market—sales rose 8% to 5,958 units. The top revenue contributors were the entry-level Portofino M and the hybrid supercar SF90.
Ferrari’s well-known personalization program often adds tens of thousands of pounds on top of the base price of £170,000, also significantly boosting revenue.
Last year, the company’s net profit rose 13% to €939 million, and free cash flow increased 18% to €758 million.
Ferrari forecasts 2023 revenue to reach €5.7 billion, and expects net profit margins to rise from 24% last year to 26%.
Bernstein automotive analyst Daniel Röska said Ferrari vehicles hold strong collectible value, and many buyers purchase them not only for driving but also as investments. Despite economic uncertainty in 2023, demand for Ferrari cars may increase rather than decrease.
This year, Ferrari will also launch its much-anticipated first SUV—the Purosangue. The order backlog already stretches into 2024.
Ferrari cars are considered highly collectible, with strong liquidity and value retention in the secondary market.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.