Your Stock Market Breakdown

HEADLINES
What You Need To Know

Chinese EV makers like Changan and Xpeng are growing, pressuring Tesla to cut Model Y prices and extend a 0% loan offer in China. Tesla also launched a refreshed Model Y but hasn’t introduced a new model since the Cybertruck in 2023. Investors await a mass-market EV, expected in early 2025. Meanwhile, Tesla aims to roll out its “Full Self-Driving” system in China this year as competition in autonomous driving heats up.

A federal judge in Boston temporarily halted the Trump administration’s federal employee buyout program just hours before the deadline. Judge George O’Toole Jr. paused the plan until at least Monday when he will hear arguments from unions challenging its legality. Over 60,000 federal workers had already accepted the offer, which lets employees resign but receive pay and benefits until September.

Activist investor Elliott Management has taken a stake in BP, potentially pressuring the oil giant to refocus on its core oil and gas business. The size of the stake remains undisclosed, and BP has declined to comment. The company is set to report fourth-quarter earnings on Tuesday after warning last month of higher corporate costs, lower refining margins, and charges related to its bio-ethanol acquisition.

President Trump signed an executive order to create a U.S. sovereign wealth fund aimed at economic development, infrastructure, and expanding U.S. influence abroad. Treasury Secretary Scott Bessent said the fund will be established within a year by monetizing government assets.

UPCOMING
What You Need To Watch

On Monday, China will impose a 15% tariff on coal and LNG, along with a 10% tariff on American oil and certain cars. The move escalates trade tensions and could impact global energy markets.

On Tuesday, Fed Chair Jerome Powell will testify before Congress, providing insights on monetary policy and the economic outlook.

On Wednesday, the January Consumer Price Index (CPI) report will be released, offering a key update on inflation and its potential impact on interest rates.

On Friday, the latest retail sales report will be released, providing insight into consumer spending and the strength of the economy.

TIP
INVEST IN MOATS

A strong competitive advantage, or "moat," helps a company stay ahead of competitors and generate steady profits. Some of the best businesses have durable moats that protect them over time. Brand power, like Apple and Coca-Cola, creates customer loyalty. Network effects, seen with Visa and Mastercard, make services more valuable as more people use them. Companies like Microsoft and Adobe benefit from high switching costs, while Amazon and Costco dominate through cost advantages. Patents and proprietary technology also give companies an edge. When evaluating a stock, ask yourself what makes it hard to compete with—those companies often make the best long-term investments

CHART
BUY THE DIP

TERM
COST OF CAPITAL

Cost of capital is the return a company needs to generate to justify the money it raises through debt or equity. It represents the company’s “hurdle rate” for making profitable investments. For example, if a company borrows money at a 6% interest rate and issues stock expecting a 10% return for shareholders, its overall cost of capital might be 8%. If the company can only generate a 5% return on new projects, it’s destroying value. Investors use this metric to assess whether a company is deploying capital efficiently and earning more than it costs to fund its growth.

Actions
Steps to Level Up

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