Market Beats | Avocado Price Could Increase Further Post-Trump; Point72 Hires Rival Portfolio Manager for $50mn; US to Start 10% China Tariffs on Feb 1st; Walgreens Drops 17% Amid Dividend Suspension; NYC Luxury Apartment Refinanced at 17% More Value; OpenAI Releases Free Model o3-Mini; US Stocks Tank Amid Tariffs

—— Avocado Price Could Increase Further Post-Trump; Point72 Hires Rival Portfolio Manager for $50mn; US to Start 10% China Tariffs on Feb 1st; Walgreens Drops 17% Amid Dividend Suspension; NYC Luxury Apartment Refinanced at 17% More Value; OpenAI Releases Free Model o3-Mini; US Stocks Tank Amid Tariffs

1. Avocado Price Could Increase Further Post-Trump

The popularity of guacamole in the U.S. faces a potential challenge as President Donald Trump plans to impose a 25% tariff on Mexican imports, which could significantly increase the cost of avocados. Mexico is the primary supplier of avocados to the U.S., providing more than 90% of the avocados consumed. This tariff could have a direct impact on avocado prices, which have already risen by 14% over the past year, despite overall produce costs remaining nearly flat.

The timing is critical as the Super Bowl, the largest avocado consumption day in the U.S., approaches on February 9. This event traditionally drives a significant spike in demand for avocados. The potential price hike comes at a time when avocados have become a staple item in American diets, with few alternative sources available. This dependency has grown as the U.S. has become increasingly reliant on Mexico for its avocado supply in recent years.

Compounding the issue, a drought in Mexico has resulted in a smaller harvest and reduced the average size of avocados, further limiting the availability of the larger avocados preferred in the U.S. This series of events sets up a critical test of consumer behavior, as Americans may need to adjust their buying habits in response to rising costs and limited supply.

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2. Point72 Hires Rival Portfolio Manager for $50mn

Steve Cohen’s Point72 Asset Management has recruited Marshall Wace portfolio manager Kevin Liu, offering him a compensation package worth at least $50 million, insiders report. Liu, who is based in New York, is slated to join Point72 later this year, where he will manage a long-short equity portfolio with a focus on the sectors of technology, media, and telecommunications.

The substantial compensation package includes a multi-year agreement and compensates for earnings Liu forfeited by departing Marshall Wace. The offer, influenced by competitive bids from other firms, reflects the aggressive talent acquisition strategies in the hedge fund industry.

Both Point72 and Marshall Wace have refrained from commenting on the matter and attempts to reach Liu for a statement have been unanswered. This high-value recruitment underscores the ongoing talent war among major multistrategy hedge funds.

Such firms are increasingly offering large signing bonuses and compensation packages, which can exceed $50 million as seen with Balyasny Asset Management’s significant hiring efforts last year, to attract top traders away from launching or joining smaller funds.

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3. US to Start 10% China Tariffs on Feb 1st

President Donald Trump is set to proceed with imposing significant tariffs on imports from Mexico, Canada, and China starting Saturday, according to statements from the White House. This decision includes a 25% tariff on both Mexico and Canada, alongside a 10% tariff on China, countering a recent report suggesting a potential delay in the implementation of these tariffs.

White House Press Secretary Karoline Leavitt confirmed the scheduled tariff imposition during a press briefing on Friday. She emphasized the accuracy of the Feb. 1 deadline, directly refuting the report that suggested a postponement, and affirmed her recent discussion with President Trump in the Oval Office regarding this matter.

The proposed tariffs have been a point of tension, stemming from President Trump’s concerns over undocumented migration and illegal drug trafficking across U.S. borders. The impending tariffs have drawn significant attention from markets as well as business and political leaders, who have been keenly observing Trump’s statements and actions for any signs of deviation from his planned course or an indication that the tariffs might serve as leverage in broader trade negotiations.

Leavitt reiterated, under questioning about the certainty of the tariffs’ effectuation, that they would indeed go into effect on the stated date of February 1.

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4. Walgreens Drops 17% Amid Dividend Suspension

Stefano Pessina, the chairman and largest shareholder of Walgreens Boots Alliance Inc., is facing challenges in finding a deal to revitalize the pharmacy chain he helped to build. Pessina, an 83-year-old Italian entrepreneur, played a key role in the 2014 merger of Alliance Boots with the U.S. pharmacy giant Walgreens, a move that was seen as the pinnacle of his extensive career in pharmacy business development.

However, the success following the merger was fleeting. After reaching a peak in 2015, Walgreens’ stock has largely been in decline over the past nine years. The situation worsened for shareholders when, on Thursday, Walgreens announced the suspension of its quarterly dividend—a payout that had been a constant for 92 years. The company cited the need to conserve cash as the primary reason for this decision.

This decision came even as the unsettling market conditions led other borrowers to hold off on their debt offerings, highlighting the challenges and opportunities in the current financial landscape.

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5. NYC Luxury Apartment Refinanced at 17% More Value

The 685 First Ave. apartment building in New York City has undergone a significant refinancing and recapitalization, resulting in a new valuation of $450 million, which marks a 16% increase from its 2022 sale price of nearly $390 million.

The current owners, GO Partners—a joint venture between Josh Gotlib and Meyer Orbach—secured approximately $240 million in financing for this deal through Apollo Global Management Inc. The recapitalization also involved participation from RXR and Macquarie Capital, adding further depth to the financial restructuring of the property.

The transaction was facilitated by a team from Newmark Group Inc., including Adam Spies, Adam Doneger, Jordan Roeschlaub, and Nick Scribani. However, representatives from GO Partners, RXR, Macquarie, Apollo, and Newmark have all declined to comment on the specifics of the deal.

Purchased in 2022 from the Soloviev Group, 685 First Ave. offers a range of residential options, from studio to three-bedroom apartments, and boasts high-end amenities such as a pool and sauna room.

This transaction highlights the continued investor confidence and value appreciation in the New York City real estate market, particularly in well-located and well-appointed properties.

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6. OpenAI Releases Free Model o3-Mini

OpenAI has introduced a new AI model named o3-mini, designed to perform human-like reasoning with enhanced efficiency. This release comes at a strategic time as it follows the unveiling of a competitive open-source model, R1, by China’s DeepSeek. OpenAI first mentioned o3-mini in December when they also discussed a more robust model, o3. Both models are aimed at tackling complex queries in areas such as coding, mathematics, and science, with o3-mini being made freely available for use.

The launch of o3-mini was strategically planned for the end of January, aligning with previous announcements by OpenAI. This move seems timely, particularly as the tech industry is currently abuzz with discussions about the advancements demonstrated by DeepSeek’s R1 model. R1 has shown capabilities that rival or surpass those of leading U.S. models in various benchmarks, including mathematical tasks and general knowledge queries. Notably, R1 was developed at a significantly lower cost, sparking a broader debate about the pricing and value of AI models.

In the backdrop of these developments, OpenAI is reportedly in the process of securing a substantial funding round that could value the company up to $300 billion. This potential $40 billion funding round highlights the high stakes and significant interest in the advancement and application of AI technologies.

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7. US Stocks Tank Amid Tariffs

U.S. stocks faced a downturn on Friday afternoon, closing in negative territory as the automotive and Chinese sectors led the fall. This decline was primarily driven by an announcement from the White House confirming President Donald Trump’s intention to proceed with significant tariffs on imports from Mexico, Canada, and China starting Saturday.

Specifically, Trump’s administration plans to impose a 25% tariff on goods from Mexico and Canada, and a 10% tariff on Chinese imports. This news negatively impacted investor sentiment, particularly affecting a UBS Group AG basket of stocks deemed at risk from these tariffs, which plunged by 3.7%. Additionally, despite an initial gain, the S&P 500 Index ended the day down by 0.5%.

The financial markets reacted swiftly, with the Bloomberg Dollar Spot Index reaching a session high, indicating a flight to safety among investors. Meanwhile, the Cboe Volatility Index (VIX), often referred to as the “fear gauge,” increased to just over 16, reflecting growing uncertainty and risk aversion among traders.

The ongoing threat of tariffs has been a significant concern for U.S. equity markets since Trump’s election victory in November. Analysts and strategists have cautioned that such high levies could spark inflationary pressures, potentially leading to broader economic disruptions and negatively impacting stock valuations.

Given this backdrop, sectors such as automotive, technology, and manufacturing, which have substantial exposure to international trade, are particularly vulnerable to the effects of prolonged trade wars and the imposition of tariffs.

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