TLDR

MARKET RECAP → The S&P 500 (VOO) closed at a fresh record high on Thursday as all three major stock indexes clawed back some of the losses suffered earlier in the week. The January retail sales report was the big news of the day, which came in way below expectations… and the inflation debate roars on.

SALES SLIP → 📊 Retail sales took an unexpected -0.8% nosedive in January, hinting at economic headwinds despite underlying signs of resilience in the labor and manufacturing sectors.

DELTA'S GENEROUS SHARE→✈️ Delta's (DAL) $1.4 billion profit-sharing flies high, rewarding employees with a windfall that's 146% up from last year, proving the sky's the limit for gratitude.

NYC SUES TECH GIANTS → 🚨 NYC takes on tech titans TikTok, Facebook (META), & YouTube (GOOG) in court, charging them with fueling a youth mental health crisis, while the firms stand firm on their safety efforts.

CISCO CUTS DEEP  → 📉 Cisco (CSCO) trims 5% of its crew amid tech's tightening belt, balancing stronger-than-expected earnings with a cautious outlook and a slight stock stumble.

Sean Horgan

Head of Investor Relations @MoneyLion

$shorgan*

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Today’s Top News

SALES SLIP

📉 Unexpected Dip: January saw a significant 0.8% drop in retail sales, doubling down on a revised 0.4% gain from December and far exceeding economists' modest 0.3% decline expectations. This sharper-than-anticipated fall signals potential early economic stress, with even non-auto sales slipping by 0.6%.

❄️ Seasonal Shifts: The decline was broad, with building materials and garden equipment sales falling 4.1%, and even gas station sales dipped 1.7% despite lower fuel prices. However, restaurants and bars bucked the trend with a 0.7% uptick, hinting at changing consumer priorities or seasonal adjustments.

🛠️ Economic Underpinnings Remain Strong: Despite the retail retreat, other economic indicators like unemployment claims and regional manufacturing surveys suggest underlying resilience. The labor market continues to show strength, and manufacturing in Philadelphia and New York is either growing or contracting less severely, offering a mixed but hopeful economic outlook.

DELTA'S GENEROUS SHARE

✈️ Sky-High Bonus: Delta Air Lines (DAL) distributed a whopping $1.4 billion in profit-sharing to its employees, marking a 146% increase from the previous year. This generous payout, amounting to about 10% of an employee's annual pay, underscores the airline's robust recovery and commitment to its workforce.

💰 Record Rewards: This payout is the second largest in Delta's history, only trailing behind the $1.6 billion shared for 2019's performance. It reflects not just a bounce-back from the pandemic's lows but also Delta's leading position in offering the most lucrative profit-sharing scheme in the airline industry.

🤝 Profit-Sharing Dynamics: Delta, primarily a nonunion entity, showcases a model where profit-sharing plans serve as a strategic component of employee compensation. This approach, favored by management to align labor costs with financial performance, contrasts with unions' preference for steadier pay rates, highlighting the balance between reward and risk in the airline's compensation strategy.

NYC SUES TECH GIANTS

🗽 Big Apple's Big Move: New York City, led by Mayor Eric Adams, filed a lawsuit against the giants of social media - TikTok, Instagram, Facebook (META), Snapchat (SNAP), and YouTube (GOOG). The suit accuses these platforms of harming the mental health of the city's youth, alleging that these companies have designed their products to be addictive with minimal parental oversight.

📚 Legal Grounds and Claims: Filed in Los Angeles county, the lawsuit argues that these tech behemoths violated city laws through their product design and marketing strategies. It highlights the burden on New York's educational and health services, dealing with the fallout from children's exposure to harmful online content.

💬 Tech's Defense: In response, the accused companies defended their practices, emphasizing their efforts to create safe, age-appropriate online environments. TikTok touted its "industry-leading safeguards," while Google dismissed the allegations as untrue, and Meta and Snap outlined their decade-long commitment to online safety for teens.

CISCO CUTS DEEP

🔍 Workforce Whittled Down: Cisco (CSCO) announced a 5% reduction of its global workforce, translating to about 4,250 jobs cut, as part of a restructuring move. This decision aligns with a broader trend in the tech industry, where companies are trimming their sails in response to the economic downturn, marking January as the busiest month for tech layoffs since March.

💸 Earnings Exceed, Guidance Falls Short: Despite posting strong fiscal second-quarter results with earnings and revenue surpassing expectations, Cisco's forward-looking guidance was less rosy. The company's revenue dipped 6% year over year, and its projections for the upcoming quarters fell below analyst predictions, reflecting cautious optimism in an uncertain macroeconomic environment.

📉 Market Reaction and Restructuring Rationale: Shares dropped up to 9% in extended trading following the announcement. CEO Chuck Robbins cited heightened deal scrutiny and delayed customer deployments as key challenges. Despite the workforce reduction, Cisco is raising its dividend, signaling a complex balancing act between cost-cutting and maintaining investor confidence.

Keep Reading

SpaceX files to move incorporation site from Delaware to Texas (CNBC)

Twilio begins operational review of activist-targeted business unit (CNBC)

Singapore’s economy grew 2.2% in the fourth quarter, slower than forecast (CNBC)

Oil prices give up advance as U.S. crude stockpile surges (CNBC)

Elon Musk’s Starlink internet service is coming to a Gaza hospital (CNN)

Tinder downloads are falling but the dating app era isn’t over yet (CNN)

ChatGPT will now remember things about you (Mashable)

Meta’s big vision for face computers might be better than Apple’s (The Verge)

Former gas station owner and J.C. Penney manager who became a millionaire after 50 dies at 94, leaving his company to employees (Fortune)

And if you want more, be sure to check out the MoneyLion blog for tips, hacks and all things money. (MoneyLife)

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