Good Morning and Happy Friday! 60,000 federal employees were ready to take a buyout and leave their jobs, but a federal judge just put Trump's program on hold. Meanwhile, Trump laid out his tax agenda, which includes ending the private equity carried interest loophole.

In markets: Amazon reported slower growth, Honeywell is splitting into three companies, and KKR says private credit is having its “iPhone moment.” Meanwhile, Shein and Temu are getting more expensive after a new 30% levy.

Plus: McKinsey considering pulling out of China, and why your VO2 max is such an underlooked fitness indicator. 

Get the license. Get the job. Get ahead with Knopman Marks.

_{SQUEEZ OF THE DAY}

AmaZyn Earnings

Philip Morris International (“PMI”), the tobacco giant best known for Marlboro, just hit an all-time high yesterday after crushing earnings expectations, thanks to Zyn nicotine pouches. 

PMI posted Q4 revenue of $9.71 billion, surpassing analyst expectations of $9.44 billion and up from $9.05 billion a year ago. Operating income hit $3.26 billion, up from $2.89 billion in 2023. And shares closed 11% higher yesterday.

Zyn's performance has been nothing short of stellar. The company noted a 25% year-over-year increase in smoke-free product volumes, with U.S. shipments of Zyn reaching 165 million cans in Q4, a 42% surge.

The FDA's recent authorization of 10 Zyn flavors, including coffee, mint, and menthol, underscores the product's potential as a less harmful alternative for adult smokers.

To keep up with demand, PMI is scaling production. A new manufacturing facility in Colorado is set to boost capacity, with US shipments projected to reach 780-820 million cans next year—a 34%-41% increase. The company is also ramping up its Kentucky facility to hit 900 million cans annually, while the Colorado plant is expected to go live in early 2026. 

And good news for finance bros - the company’s CFO told investors that Zyn shortages should stabilize in 2025.

There are still concerns about Zyn. While it avoids the tar and harmful chemicals associated with smoking-related diseases, its growing popularity among finance professionals and college students has led to a rise in nicotine addiction. To limit youth exposure, PMI has committed to using only models aged 35 and older in its marketing.

Takeaway: PMI is proving that nicotine is still a big business (an over $225 billion one), even without cigarettes. The company’s smoke-free segment is already accounting for 40% of revenue, the company is well on its way to making Marlboro look like a relic of the past.

_{PRESENTED BY KNOPMAN MARKS}

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_HEADLINES

Top Reads

• US judge blocks Trump buyout program as 60k sign up to quit (CNBC)

• Trump looks to end carried interest, expand SALT in tax bill (YF)

• Shein and Temu are getting more expensive after a new 30% levy (BB)

• Retail traders are breaking all records (Sherwood)

• Amazon signals growth slowdown (CNBC)

• Amazon plans to spend $100 billion this year to capture ‘once in a lifetime opportunity’ in AI (CNBC)

• KKR calls private credit’s ‘iPhone moment’ (YF)

• India’s central bank cuts rates for the first time in nearly five years (CNBC)

• Labor groups sue to keep DOGE from key economic data (Axios)

• Honeywell will split into three companies after activist investor pressure (CNBC)

• Feud between Elon Musk and Sam Altman turning into legal war (YF)

• McKinsey partners question China presence as U.S. tensions mount (BB)

• Jamie Dimon spoke with Bezos about becoming Amazon President before JPM (YF)

• Why individual investors may want to rethink a 'set-it-and-forget-it' strategy (CNBC)

• Elon Musk promises to make Tesla great again (CNN)

_{CAPITAL PULSE}

Markets Rundown

Markets Climb as Labor Data Supports Economic Momentum

U.S. equity markets finished higher on Thursday, led by consumer staples and financial stocks. Bond yields rose, with the 10-year U.S. Treasury yield at 4.44%.

In global markets, European stocks gained after the Bank of England cut rates by 0.25%, while the U.S. dollar strengthened against major currencies.

Oil prices rose as Saudi Arabia increased crude prices for March.

Jobless claims ticked up to 219,000, slightly above expectations of 213,000, though still below last year’s average, signaling a resilient labor market.

With an unemployment rate at 4.1% and job openings exceeding unemployment, wage gains are expected to stay above inflation, supporting consumer spending.

The January jobs report on Friday is projected to show 170,000 new jobs, with unemployment holding steady.

Labor costs and productivity trends suggest inflation remains in check.

Unit labor costs rose 3.0% annualized in Q4, below forecasts, while hourly compensation grew 4.2% year-over-year, keeping consumer purchasing power strong.

Productivity increased by 1.2%, slightly exceeding expectations, helping moderate inflation pressures into 2025.

Movers & Shakers

• (+) Peloton Interactive ($PTON) +12% after the exercise equipment company reported strong sales; a strong outlook.

• (+) Yum! Brands ($YUM) +10% because of strong sales at Taco Bell.

• (–) Roblox ($RBLX) -11% after the gaming platform missed targets for users, bookings.

Private Dealmaking

• TPG bought Altus Power, a commercial-scale solar owner, for $2.2 billion

• Kinderhook Technologies sold ZP Better Together for $490 million

• Bain Capital bought a 51% stake in Milacron, an equipment provider, for $287 million

• XOi, a field service tech provider, raised $230 million

• Riverwood Capital bought Quicklizard, a dynamic pricing platform, for $52 million

• Berry Street, a nutrition counseling platform, raised $50 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

_{BOOK OF THE DAY}

Onyx Storm

After nearly eighteen months at Basgiath War College, Violet Sorrengail knows there’s no more time for lessons. No more time for uncertainty.

Because the battle has truly begun, and with enemies closing in from outside their walls and within their ranks, it’s impossible to know who to trust.

Now Violet must journey beyond the failing Aretian wards to seek allies from unfamiliar lands to stand with Navarre.

The trip will test every bit of her wit, luck, and strength, but she will do anything to save what she loves—her dragons, her family, her home, and him.

Even if it means keeping a secret so big, it could destroy everything.

They need an army. They need power. They need magic. And they need the one thing only Violet can find—the truth.

But a storm is coming...and not everyone can survive its wrath.

“Discover the instant #1 New York Times bestseller. TV series now in development at MGM Amazon Studios with Michael B. Jordan’s Outlier Society.”

_{DAILY VISUAL}

Zyn Delivers

Philip Morris' smoke-free business has grown its revenue by more than $1 billion since it bought Swedish Match, the maker of ZYN, in 2023.

_{WHAT ELSE TO READ}

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_{DAILY ACUMEN}

Mindful Engagement

Mindful engagement in relationships enhances connection and desire by emphasizing present-moment awareness. 

This involves active listening during communication, fostering empathy and understanding. 

Mindful intimacy encourages full presence during physical connection, intensifying the experience. 

Small acts of kindness, or "pebbling," demonstrate appreciation and strengthen bonds. 

Shared mindfulness practices, like meditation or yoga, create shared experiences and reduce stress. 

Expressing gratitude and forgiveness mindfully deepens emotional connection. 

Finally, approaching conflicts with a mindful pause, allowing for emotional acknowledgment before reacting, facilitates constructive resolution. 

By integrating these strategies, couples can revitalize their relationship, fostering deeper intimacy, improved communication, and a stronger bond.

_{ENLIGHTENMENT}

Short Squeez Picks

• What can your VO2 max tell you about fitness?

• 10 behaviors of people who light up every room

• The power of solitude

• A simple 10-minute workout to improve your mobility

• How low-buy challenges are good for your wallet and mental health

_{MEME-A-PALOOZA}

Memes of the Day