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📣 Elections have boosted S&P 500 since 1944

📣 Elections have boosted S&P 500 since 1944

Netflix raises prices

Techonomy Barista
January 22, 2025

Your top stories today:

Election cycles boost S&P 500 by 1.6%.
Trump’s economic policies may increase inflation.
Netflix raises its prices, again.
Trump announces $500B AI mega-project.
Instagram offers cash rewards to TikTok creators.
Anthropic gets $1Bn from Google.

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Market Pulse

Markets of the top 5 GDPs. All numbers are as of closing previous day, except for Gold, which shows opening of current trading day.

🗓️ Economic Calendar

Important economic events for the world's top 5 economies. Timings in red are most important meetings. All times US EST.

🔥 Top Stories

1. Election cycles boost S&P 500 by 1.6% 📊

Source: Center for Financial Research and Analysis (CFRA)

⏳️ The deets in 30 seconds:

Since 1944, the S&P 500 has risen 1.6% on average from election to inauguration day.
In the "First 100 Days," it gained another 2.1% on average.
Since 1993, the top 4 sectors during this period outperformed the benchmark 75% of the time.
Sub-industries in these sectors posted a 26.8% annual gain, outpacing the S&P 500's 15.9% average rise.
Bank of America reports investors betting on equity laggards, anticipating Trump's softer-than-feared trade policies.
Risk-on allocations may persist if tariff fears prove unfounded.

💡 How it impacts you:

Expect strong returns in top-performing sectors through the year, based on historical trends.
Risk-friendly portfolios could see gains from lagging equities if trade rhetoric cools.
Sector shifts may benefit focused ETFs tracking high-growth sub-industries.
Tariff clarity could reduce market volatility for long-term investors.
A milder trade stance may support global diversification opportunities.

🔮 Industry prediction:

Election cycles will continue as the crystal ball for equity leadership, with sectors positioning themselves like marathoners drafting behind the S&P 500 curve.

Key Players:
- 🟧 Leading: Financials, Energy, Industrials
- 🔄 Following: Tech-heavy growth stocks
- 🏅 Waiting: Tariff-sensitive sectors (e.g., autos, materials)
Timeline:
- Q1: Equity laggards gain traction on trade optimism.
- Q2: Sectors realign as tariff clarity emerges.
- 2H: Sub-industry leaders drive broader benchmarks higher.

⚡ The bottom line:

Post-election markets follow a predictable rhythm: S&P gains a steady beat, while leading sectors play lead guitar for the year ahead.

2. Trump’s economic policies may push inflation up 📊

Source: Actual - Labor Department for actual; Forecasts - WSJ surveys of economists

⏳️ The deets in 30 seconds:

Economists forecast 2.7% inflation by December 2025, up from 2.3% predicted earlier.
- Trump’s tariffs, tax cuts, and immigration policies are expected to push prices higher.
Tariffs could increase import duties by 23% on China and 6% globally, adding 0.5% to inflation.
Average household costs may rise by $600 annually due to higher prices.
Fed likely to keep interest rates higher, with a 3.89% Fed funds rate projected for 2025.
GDP growth adjusted to 2% for 2025, with tariffs potentially cutting 0.2% from growth.

💡 How it impacts you:

Higher costs for goods due to tariffs, especially on imports from China.
Mortgage rates likely to climb, raising monthly housing costs.
Federal tax cuts may boost disposable income but could be offset by inflation.
Job market steady, with unemployment expected to remain around 4.3%.
Savings and investments face mixed outcomes from sticky inflation and rising interest rates.

🔮 Industry prediction:

Trump’s tariffs could push businesses to reshape supply chains, while inflationary pressures lead the Fed to maintain hawkish policies through 2027. Trade policy’s uncertainty keeps markets volatile, like a constant game of musical chairs—but the music’s speeding up.

Key Players:

🎯 Leading: Federal Reserve, Big Retailers managing supply chain shifts.
⚡️ Making Moves: Export-dependent industries navigating tariffs.
🔎 Worth Watching: Construction and housing markets under higher borrowing costs.

Timeline:

2025: Higher inflation peaks; Fed maintains elevated rates.
2026: Gradual easing of rates as inflation stabilizes.
Beyond: Structural changes in global trade emerge as businesses adapt.

⚡ The bottom line:

Trump’s policies spark higher inflation and borrowing costs, turning the economy into a hot cup of coffee—energizing but risky if spilled.

3. Netflix raises prices again 🏋️‍♂️

Analysis of Netflix’s ad-free plan show customers are paying the least per hour

Source: Nielsen, Netflix; Analyzed by UBS

⏳️ The deets in 30 seconds:

Netflix increased its US standard plan to $17.99/month, up from $15.49, and premium to $24.99/month.
- Ad-supported plan now costs $7.99, up from $6.99.
Despite hikes, Netflix remains the cheapest on a per-hour-of-viewing
- $0.33/hour for ad-free and $0.15/hour for ad-supported plans.
Average Netflix user streams 47-70 hours/month, far outpacing rivals.
Churn rate is an industry-low 1.8%, showing strong customer loyalty.
Added 19M subscribers in Q4 2024, generating $1.8B net income and forecasting $2.5B for Q1.

Analysis of Netflix’s ad plan also show customers are paying the least per hour

Source: Nielsen, Netflix; Analyzed by UBS

💡 How it impacts you:

Higher costs for US subscribers, especially premium and ad-supported users.
Still a bargain compared to rivals like Disney+ ($16/month) or YouTube TV ($73/month).
Low churn rate means most users stick around despite price hikes.
More live content, such as NFL games, might make higher costs worth it for sports fans.
Price hikes signal broader industry trends; expect increases from competitors too.

🔮 Industry prediction:

Netflix is doubling down on value through live content and engagement metrics. Streaming platforms are becoming the new cable bundles — where flexibility is a myth and costs creep closer to old TV bills.

Who's Moving:

🏃‍♂️ Leading: Netflix, Disney+, YouTube TV.
🚶‍♂️ Following: Hulu, Max, Amazon Prime Video.
⌛ Waiting: Peacock, Paramount+.

What's Next:

Now: Netflix tests live-event waters.
6 Months: Rivals ramp up sports content to compete.
1 Year: Pricing wars lead to bundled options, mimicking cable deals.

⚡ The bottom line:

Netflix’s price hike is a reminder that streaming is the new cable — and it’s just as expensive.

4. 💰 Trump announces $500B AI mega-project with OpenAI, Softbank, and Oracle

Trump, Son, Ellison and Altman announcing the $500B AI project together.
Source: WSJ

⏳ The deets in 30 seconds:

$500B investment for AI infrastructure
- $100B each from OpenAI, Softbank, Oracle, and other stakeholders.
Named Stargate, it starts with a Texas data center already under construction.
Microsoft is a tech partner, connecting this to OpenAI's $100B AI supercomputer project from last year.
Trump rescinded Biden’s AI executive order, removing guardrails for faster AI development.
Focus on national security: Industry leaders say this helps the US outpace China.
Critics recall past Softbank and Foxconn projects with unfulfilled job promises.
Masayoshi Son called it a “golden age,” echoing Trump’s “energy dominance” pitch.

💡 How it impacts you:

Faster AI advancements could lead to new products but fewer consumer protections.
US tech jobs might see growth, but skepticism remains after past promises.
Privacy risks rise as deregulation prioritizes innovation over safety.
Energy ties mean more AI development depends on increased US energy production.
Could widen the gap between US and global AI competitors.

🔮 Industry prediction:

AI is the new space race—deregulation + private funding will spark faster US innovation, but expect a backlash over consumer risks.

Who's Moving:

🏃‍♀️ Leading: OpenAI, Oracle, Softbank, Microsoft.
🚶‍♂️ Following: Google, Amazon, Meta.
⌛ Waiting: IBM, smaller cloud providers.

What's Next:

Now: Data centers break ground in Texas.
6 Months: Major AI R&D announcements.
1 Year: China responds with aggressive AI investments.

⚡ The bottom line:

Trump’s Stargate AI venture is Silicon Valley ambition meets deregulated cowboy capitalism.

5. Instagram’s Reels gambit: Cashing in on TikTok turmoil 🎉

Source: eMarketer

⏳️ The deets in 30 seconds:

Meta is offering creators up to $50K per month to post on Instagram Reels before TikTok or other platforms.
TikTok’s temporary shutdown due to U.S. government restrictions has opened a window for Instagram.
New bonuses exceed prior payouts, signaling Meta’s aggressive strategy to attract TikTok stars.
Exclusive posting deals now restrict creators from cross-posting for a set period.
Instagram has introduced TikTok-like updates, including vertical photos, 3-minute Reels, and a CapCut clone called Edits.
Meta employees express skepticism about the sustainability of these moves given Instagram’s waning appeal among younger users.
TikTok remains operational but faces regulatory uncertainty, with a possible deal contingent on U.S.-China negotiations.

💡 How it impacts you:

Exclusive content on Instagram: High-profile TikTok creators might shift their best videos to Reels first.
Longer video options: Instagram Reels’ 3-minute limit now mimics TikTok’s extended format.
More creative tools: The Edits app brings CapCut-like video editing to Instagram users.
Platform battles escalate: Users may see faster feature rollouts as apps compete for dominance.
Uncertain TikTok future: If TikTok falters, Instagram could regain younger audiences.

🔮 Industry prediction:

TikTok’s struggles could lead to a creator exodus, sparking a platform loyalty war as apps like Instagram and RedNote fight to dominate short-form video.

Who’s Moving:

🏃‍♀️ Leading: Instagram, TikTok.
🚶‍♂️ Following: YouTube Shorts, RedNote.
⌛ Waiting: Facebook, Snapchat.

What’s Next:

Now: Creators experiment with exclusive deals.
6 Months: TikTok’s fate influences cross-platform shifts.
1 Year: Reels could become dominant or face stagnation if creators find exclusivity restrictive.

⚡ The bottom line:

Meta is throwing money at TikTok chaos, betting cash bonuses can turn Reels into a short-form video MVP—or at least keep it in the game.

6. Google adds $1bn to Anthropic funding 🚀

Source: Crunchbase, Techonomy Barista research

⏳ The deets in 30 seconds:

Google invests another $1bn in Anthropic, pushing its total stake past $3bn.
Anthropic's valuation nears $60bn, fueled by a $2bn funding round led by Lightspeed Venture Partners.
Amazon's $8bn investment integrates Anthropic's Claude into Alexa devices.
Anthropic’s revenue surged to $1bn, growing 10x in a year.
Anthropic prioritizes AI safety and innovation, debuting AI agents for task automation.

Source: CB Insights

💡 How it impacts you:

AI-powered tools like Claude might enhance personal and professional productivity.
Increased AI integrations in consumer tech (e.g., Alexa) mean smarter gadgets at home.
Regulatory reviews could influence data privacy and competition policies.
The race for AI breakthroughs might lower costs for advanced AI tools.
Focus on AI safety ensures better reliability and reduced risk for users.