Fed Holds Rates, Mag Seven Earnings, More
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What is the main topic discussed in this episode?
News when you want it with Bloomberg News Now. I'm Doug Krisner. The Fed left its key interest rate unchanged today in a move that was widely expected. Policymakers pointed to improvements in the economy and the job market.
What decision did the Fed make regarding interest rates?
Here is Chair Jay Powell.
Since last September, we've lowered our policy rate 75 basis points or three quarters of a percentage point, bringing it within a range of plausible estimates of neutral. This normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2% once the effects of tariff increases have passed through.
And as a result, the Fed signaled a more cautious approach when it came to future rate adjustments. Now, away from the Fed's decision, today U.S. Treasury Secretary Scott Besson said President Trump's pick to be the next Fed chair may come in a week. Powell today offered advice to his successor.
Stay out of elected politics.
What insights did Chair Jay Powell share about the economy?
Don't get pulled into elected politics. Don't do it.
Powell's term as chair ends in May, although he can remain on the Fed's Board of Governors through 2028. We move to earnings news next. After the Bell, Tesla reported profit for the latest quarter above expectations. It suggests the company is making progress toward overcoming rising costs. and dealing with an end to those U.S. incentives for electric vehicles. The bigger story on Tesla seemed to be its plans for artificial intelligence. Tesla is planning to invest $2 billion in Elon Musk's AI company, XAI. Here is Ross Gerber, president and CEO of Gerber Kawasaki.
It makes sense for Tesla to invest in XAI. They have $44 billion in cash. And so Elon needs the money to build XAI. And so he's going to use Tesla for that money. And I don't think shareholders should be confused.
Ross Gerber there, president and CEO of Gerber Kawasaki. We also heard from Meta Platforms. The company reported earnings for Q4 above analyst estimates. And Meta raised its guidance for the current quarter. The company said its robust advertising business is making it possible for the company to invest in AI at record levels. And we heard from Microsoft. Earnings and revenue for the latest quarter came in above estimates. However, Microsoft's growth in cloud sales slowed. Here is Gil Luria, head of research at D.A. Davidson.
Let's not forget, a Google Cloud that reports next week is not going to grow 38%. It's more likely to grow in the low 30s. Amazon Web Services reports next week, they're more likely to grow in the low 20s. Azure is still winning. It just didn't quite meet those very, very high expectations.
Gil Luria there from DA Davidson. Now, Microsoft also reported CapEx spending hit a record high. The stock was down 5% in late New York trading. IBM's quarterly sales topped estimates on strong growth for its closely watched software unit, and IBM is projecting revenue will grow in 2026 by more than 5%. We got reaction from Bloomberg analyst Anurag Rana.
It is a bit shocking, I mean, for them to be, you know, total growth rate of 9% and software in double digits. I mean, we were not expecting that. Now, there's a tiny bit of M&A there, but even without that, I mean, I think this is very good. And the big number for us is that the cash flow is going to go up by a billion dollars next year. So I think IBM's turned them around very well. I think the strategy is executing well.
Anurag Rana from Bloomberg Intelligence. Today, U.S. Secretary of State Marco Rubio faced questions from the Senate Foreign Relations Committee on U.S. military operations in Venezuela. And Rubio said the U.S. wants to see Venezuela return to a democratically elected government.
But our desire here is to have, what's the end state? We want a Venezuela that has legitimate democratic elections, sometimes elects leaders that are friendly to the United States, sometimes elects leaders that maybe are not you know, the person we would have wanted to win, but that's not unique for us. That happens all over the world.
Rubio went on to say the Trump administration is prepared to use force to ensure that Venezuela's acting president, Delcy Rodriguez, cooperates with the U.S.
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