>>> US Close Dow -0.31% S&P -0.47% Nasdaq -0.51% Russell -0.25%

Closing Stock Market Summary
The stock market had a somewhat mixed showing today. There was not a lot of conviction on either side of the tape in the early going as participants waited on the FOMC policy decision at 2:00 ET, followed by Fed Chair Powell's press conference at 2:30 ET.

The FOMC voted unanimously to leave the target range for the fed funds rate unchanged at 4.25-4.50%, which was widely expected by the market. The language of the directive changed to exclude the line that "Inflation has made progress toward the Committee's 2 percent objective..." Instead, the January directive said that "Inflation remains somewhat elevated."

This wasn't too surprising and the market already expected the Fed to remain cautious as the economy and labor market continue to evolve. Fed Chair Powell's remarks at the press conference echoed this. He said "The broad sense of the Committee is that we don't need to be in a hurry to adjust the policy stance."

There was some volatility in stocks and bonds in immediate response to these developments, but markets ultimately settled little changed from levels seen ahead of the 2:00 ET policy announcement. This was an indication that participants didn't see anything truly surprising in today's decision or in the Fed Chair's comments.

The S&P 500 closed 0.5% lower, the Nasdaq Composite declined 0.5%, and the Dow Jones Industrial Average logged a 0.3% decline. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, settled two basis points higher at 4.23% and the 10-yr yield was unchanged at 4.56%.
  • Dow Jones Industrial Average: +5.1.% YTD
  • S&P Midcap 400: +3.5% YTD
  • S&P 500: +2.7% YTD
  • Russell 2000: +2.4% YTD
  • Nasdaq Composite: +1.7% YTD

Reviewing today's economic data:
  • Weekly MBA Mortgage Applications Index -2.0%; Prior 0.1%
  • December Adv. Intl. Trade in Goods -$122.1 bln; Prior was revised to -$103.5 bln from -$102.9 bln
  • December Adv. Retail Inventories -0.3%; Prior was revised to 0.0% from 0.3%
  • December Adv. Wholesale Inventories -0.5%; Prior was revised to -0.1% from -0.2%

Looking ahead to Thursday, market participants receive the following economic data:
  • 8:30 ET: Advance Q4 GDP (consensus 2.3%; prior 3.1%), advance Q4 GDP Deflator (Briefing.com consensus 2.4%; prior 1.9%), Weekly Initial Claims (consensus 221,000; prior 223,000), and Continuing Claims (prior 1.899 mln)
  • 10:00 ET: December Pending Home Sales (consensus 0.8%; prior 2.2%)
  • 10:30 ET: Weekly natural gas inventories (prior -223 bcf)

Microsoft beats by $0.12, beats on revs; Azure +31% CC vs +31-32% CC prior guida

Microsoft beats by $0.12, beats on revs; Azure +31% CC vs +31-32% CC prior guidance; IC segment revs a bit light of guidance (442.33 -4.87)
  • Reports Q2 (Dec) earnings of $3.23 per share, $0.12 better than the FactSet Consensus of $3.11; revenues rose 12% year/year to $69.63 bln vs the $68.87 bln FactSet Consensus.
    • Azure and other cloud services revenue growth of +31%, +31% constant currency vs +31-32% CC prior guidance.
    • Productivity and Business Processes segment revs grew 14% (+13% CC) to $29.4 bln vs $28.70-29.00 bln prior guidance.
      • Microsoft 365 Commercial products and cloud services revenue increased 15%, driven by Microsoft 365 Commercial cloud revenue growth of 16% (up 15% in constant currency).
      • Microsoft 365 Consumer products and cloud services revenue increased 8% driven by Microsoft 365 Consumer cloud revenue growth of 8%.
      • LinkedIn revenue increased 9%.
      • Dynamics products and cloud services revenue increased 15% (+14% CC) driven by Dynamics 365 revenue growth of 19% (+18% CC).
    • Intelligent Cloud segment revs grew 19% to $25.5 bln vs $25.55-25.85 bln prior guidance.
      • Server products and cloud services revenue increased 21% driven by Azure and other cloud services revenue growth of 31%.
    • More Personal Computing segment revs were flat yr/yr at $14.7 bln vs $13.85-14.25 bln prior guidance.
      • Windows OEM and Devices revenue increased 4%.
      • Xbox content and services revenue increased 2%.
      • Search and news advertising revenue excluding traffic acquisition costs increased 21% (+20% CC).
  • "We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead," said Satya Nadella, chairman and chief executive officer of Microsoft. "Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year... This quarter Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year," said Amy Hood, executive vice president and chief financial officer of Microsoft. "We remain committed to balancing operational discipline with continued investments in our cloud and AI infrastructure."

>>> Tesla misses by $0.04, misses on revs; plans for new vehicles remain on trac

Tesla misses by $0.04, misses on revs; plans for new vehicles remain on track for start of production in 1H25; Cybercab scheduled for volume production in 2026 (389.10 -8.99)
  • Reports Q4 (Dec) earnings of $0.73 per share, $0.04 worse than the FactSet Consensus of $0.77; revenues rose 2.1% year/year to $25.71 bln vs the $27.26 bln FactSet Consensus.
    • Total gross margin down 138 bps yr/yr to 16.3%.
    • Total Deliveries of 495,570, up 2% yr/yr.
    • Increased AI training compute by over 400% in 2024.
  • Outlook:
    • Affordability remains top of mind for customers, and continue to review every aspect of cost of goods sold (COGS) per vehicle to help alleviate this concern.
      • In Q4, COGS per vehicle reached its lowest level ever at <$35,000, driven largely by raw material cost improvement, helping to partially offset our investment in compelling financing and lease options.
    • 2025 will be a seminal year in Tesla's history as FSD (Supervised) continues to rapidly improve with the aim of ultimately exceeding human levels of safety. This will eventually unlock an unsupervised FSD option for customers and the Robotaxi business, which expect to begin launching later this year in parts of the U.S. Also continue to work on launching FSD (Supervised) in Europe and China in 2025.
    • Co added, "With the advancements in vehicle autonomy and the introduction of new products, we expect the vehicle business to return to growth in 2025. The rate of growth will depend on a variety of factors, including the rate of acceleration of our autonomy efforts, production ramp at our factories and the broader macroeconomic environment. We expect energy storage deployments to grow at least 50% year-over-year in 2025."
    • Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025. Robotaxi product -- Cybercab -- will continue to pursue a revolutionary "unboxed" manufacturing strategy and is scheduled for volume production starting in 2026.

>>> Meta Platforms beats by $1.26, beats on revs; guides Q1 revs in-line, reiter

Meta Platforms beats by $1.26, beats on revs; guides Q1 revs in-line, reiterates FY25 capex guidance (676.49 +2.16)
  • Reports Q4 (Dec) earnings of $8.02 per share, $1.26 better than the FactSet Consensus of $6.76; revenues rose 20.6% year/year to $48.38 bln vs the $46.99 bln FactSet Consensus.
  • Family daily active people (DAP) -- DAP was 3.35 billion on average for December 2024, an increase of 5% year-over-year.
  • Ad impressions -- Ad impressions delivered across our Family of Apps increased by 6% and 11% year-over-year for the fourth quarter and full year 2024, respectively.
  • Average price per ad -- Average price per ad increased by 14% and 10% year-over-year for the fourth quarter and full year 2024, respectively.
  • Co issues in-line guidance for Q1, sees Q1 revs of $39.5-$41.8 bln vs. $41.68 bln FactSet Consensus. While company is not providing a full year 2025 revenue outlook, expects the investments we are making in core business this year will give an opportunity to continue delivering strong revenue growth throughout 2025.
  • FY25 Guidance: Expect full year 2025 total expenses to be in the range of $114-119 billion. Expects the single largest driver of expense growth in 2025 to be infrastructure costs, driven by higher operating expenses and depreciation. Anticipates capital expenditures will be in the range of $60-65 billion, in-line with recent guidance from January 24. Expects capital expenditures growth in 2025 will be driven by increased investment to support both our generative AI efforts and core business.

WSJ : Major Penn Entertainment Shareholder Is Launching Proxy Fight

Major Penn Entertainment Shareholder Is Launching Proxy Fight
The firm has criticized the casino operator’s M&A history, share performance

Investor HG Vora is launching a proxy fight at casino operator Penn Entertainment PENN 4.77%increase; green up pointing triangle and is submitting nominations for three independent board seats, according to people familiar with the matter.

The details
The Wall Street Journal reported in late 2023 that HG Vora was looking to win representation on Penn’s board. The push has taken some time to play out.

New York-based HG Vora said in a securities filing earlier this month that it had reduced its stake in Penn to less than 5% to be able to launch a proxy battle.

The firm had been talking to gambling regulators in more than two dozen states to obtain the required gambling licenses to submit nominees to Penn’s board. HG Vora said it was caught up in one jurisdiction, and it cut its stake so it could proceed with its nominations.

HG Vora’s nominees are:

Carlos Ruisanchez, former chief financial officer of Pinnacle Entertainment (which was bought by Penn in 2018).
William J. Clifford, former chief financial officer at the gambling-focused real-estate investment trust Gaming & Leisure Properties.
Johnny Hartnett, former chief executive officer of the European gambling-and-tech business Superbet Group.
It marks the first time in HG Vora’s 15-year history that the firm has launched such a fight.

The context
Penn operates 43 casinos and racetracks in 20 states, as well as online sports betting and online casino gambling in numerous jurisdictions, according to its website.

HG Vora, which isn’t typically an activist firm, believes Penn has a poor record of capital allocation, including what it views as failed acquisitions.

The company bought Barstool Sports in a two-step process that kicked off in 2020, spending a total of around $550 million on the sports-media publisher. In 2023, Penn largely unwound the deal, which gave it exclusive rights to use the Barstool brand in its sports-betting products. It said it would use ESPN’s brand in its online sportsbook and sell its Barstool ownership back to the founder, David Portnoy, for $1.

Penn’s Barstool sportsbook was later rebranded to ESPN Bet.

Penn’s share price has tumbled since hitting a record in early 2021, significantly underperforming the S&P 500 and its closest peer in the industry, Boyd Gaming. The company now has a market value of around $3.1 billion.

HG Vora said it believes Penn’s stock is deeply undervalued and sees untapped opportunities in the firm’s portfolio.

HG Vora was founded in 2009 by Parag Vora. The firm is known for working with gambling companies and their boards, including when it helped sell U.K.-based Gamesys Group to Bally’s.

>>> Microsoft: DeepSeek R1 is now available on Azure AI Foundry and GitHub (443.

Microsoft: DeepSeek R1 is now available on Azure AI Foundry and GitHub
  • "DeepSeek R1 is now available in the model catalog on Azure AI Foundry and GitHub, joining a diverse portfolio of over 1,800 models, including frontier, open-source, industry-specific, and task-based AI models. As part of Azure AI Foundry, DeepSeek R1 is accessible on a trusted, scalable, and enterprise-ready platform, enabling businesses to seamlessly integrate advanced AI while meeting SLAs, security, and responsible AI commitments—all backed by Microsoft's reliability and innovation."

FT : Activists hold US Steel CEO’s feet to the smelter

Activists hold US Steel CEO’s feet to the smelter
David Burritt will have to provide a vision of how the company can thrive on its own if a Nippon Steel deal does not materialise

Donald Trump’s re-election shows America is big on comebacks. And his 2020 electoral defeat suggests bitter losses can still lead to future success. US Steel CEO David Burritt is seeking a similar redemption arc.

Burritt engineered the $15bn sale of his company to Nippon Steel in 2023, only to see it blocked in the last weeks of Joe Biden’s presidency. Trump, for his part, never favoured selling the company to a foreign buyer. Nor did the United Steelworkers of America. But the buyout agreement has yet to be terminated and US Steel and Nippon are holding out hope that the newly inaugurated Trump can be persuaded to reverse Biden’s verdict.

While the US Steel boss fights the last battle, some investors have moved on to a new one. Earlier this week, hedge fund Ancora Holdings declared it wants fellow shareholders to replace the board and sack Burritt, whom it thinks can no longer effectively govern. It is not uncommon for a CEO to leave when a big transaction falls apart, but Burritt insists that his final chapter is not written.


Ancora may be harsh to fault Burritt for pursuing the deal with Nippon, as if an unprecedented brawl over a buyer from an allied nation was predictable. The Nippon share price offer, more than double where US Steel was previously trading, came amid a process kicked off by a hostile bid for US Steel from another rival, Cleveland Cliffs. 

Moreover, it’s not like buyer and seller didn’t try to get the deal through. Nippon made generous, if uneconomic, concessions to allow local control of its prey. With Burritt at the helm, US Steel is pursuing two lawsuits, one over the Washington rejection and another over the union and Cleveland Cliffs’ attempts to scotch the deal. Besides, failure isn’t so bad. A Nippon abandonment would secure a $565mn termination fee for US Steel.

If the merger proves truly dead, the question of who should run the steelmaker is worth asking. Ancora says Burritt has failed as an operator and describes its candidate to replace him, industry executive Alan Kestenbaum, as a steel-sector “legend”. Such a person would come in handy: US Steel’s current share price is just $36, far below the $55 on offer from Nippon.

The biggest challenge for Burritt is that, unless he can revive the Nippon deal before its June drop-dead date, he must provide a persuasive vision of how US Steel can thrive on its own. Yet his brokering of the Nippon deal suggests he doesn’t think it can. It wouldn’t be surprising if shareholders are ready to give Ancora, which may have its own M&A angle, a hearing.

WSJ : Soho House Drama: Dan Loeb Is Picking a Fight With Ron Burkle

Soho House Drama: Dan Loeb Is Picking a Fight With Ron Burkle
Third Point’s Loeb pushes back on ‘sweetheart’ buyout deal

The super rich are still obsessed with Soho House SHCO 3.73%increase; green up pointing triangle after all.

The chain of swanky clubs with outposts in New York and London had been losing its cachet after a rapid expansion and growing membership wore away at its air of exclusivity. Now, Dan Loeb and his activist hedge fund Third Point are questioning a bid backed by fellow billionaire Ron Burkle to take the club private.

Loeb unveiled a nearly 10% stake in the company in a regulatory filing Wednesday. In a letter to its board, Loeb argued that the $1.7 billion offer was a “sweetheart” deal that resulted from an opaque process.

The offer was supported by a consortium of investors including supermarket mogul Burkle, who has served as Soho House’s chairman since his investment firm The Yucaipa Cos. acquired a majority stake in 2012.

“While we applaud the decision to return the company to private ownership, it appears to us that the board has failed to perform its most important responsibility: to ensure a fair sales process that achieves maximum value for all shareholders,” Loeb wrote.

The $9-per-share bid announced last month represented a significant premium to where the stock had been trading.

Loeb is pushing the board to consider outside bidders, who he said would pay a better price for the company, and said members would benefit from a visionary new owner. Loeb is one of the best known hedge-fund managers of his generation and in recent years has pushed for change at Advance Auto Parts and Bath & Body Works.

Representatives for Burkle and Soho House didn’t immediately respond to requests for comment.

Soho House was founded in London in 1995 and became a place where the rich could enjoy a cocktail with the hope of rubbing elbows with celebrities and power brokers. It opened a New York outpost in 2003 and saw its profile rise after being featured in an episode of “Sex and the City,” with Samantha’s struggles to get into the club burnishing its cred as a hangout spot for the elite.

The chain expanded, and had more than 42 clubs as of the end of 2023. Complaints of overcrowding and surging membership have weighed on Soho House, which stopped accepting applications in some cities in recent years. Annual memberships start at around $3,150 for those over 27, according to its website.

Shares of Soho House were up 4.6% in afternoon trading Wednesday.