Good morning! The Federal Reserve held rates steady, and Trump slammed Powell for not cutting. Meta crushed earnings as its AI push delivers big returns, while Tesla missed expectations, and Microsoft slipped on disappointing cloud revenue.

Meta also reportedly settled a lawsuit with Trump over his 2021 account suspension, and Zuckerberg is eyeing property in D.C. to work more closely with the Trump administration.

Plus: OpenAI is investigating whether DeepSeek trained its chatbot using its models, Spirit rejected a fresh takeover bid from Frontier, and Adam Grant on the psychology of career pivots.

Streamline your financial workflow with Hebbia’s Matrix—tailored for leaders in finance.

_{SQUEEZ OF THE DAY}

Wall Street’s 2025 Dark Age: More Trades Are Going Dark

For the first time in history, the majority of U.S. stock trading is happening off-exchange, meaning the market isn’t as public as it used to be.

Bloomberg data projects that off-exchange trading will hit 51.8% of total market volume in January, setting a new record. This marks the fifth consecutive monthly high and the third straight month where hidden trades have made up more than half of all transactions.

So, where is all this trading happening? A large chunk is moving to dark pools and internal trading desks at firms like Citadel Securities and Virtu Financial, which handle order flow internally rather than sending trades to public exchanges like the NYSE and Nasdaq. Alternative trading systems (ATS) allow institutional investors to execute large trades without tipping off the market, limiting price movements and front-running.

The trend isn’t new, but it’s accelerating. Experts warn that if this shift continues, it could impact pricing accuracy in the long run. With fewer trades happening on public exchanges, price discovery—the process of determining a stock’s fair market value—could weaken.

The SEC has attempted to rein in this trend with new rules aimed at encouraging more on-exchange trading, but the effect has been limited. It’s also worth noting that much of the off-exchange activity is driven by sub-$1 stocks, which are often traded by retail investors and executed internally by market makers. When penny stocks are excluded, off-exchange trading falls below 40% of total volume, suggesting the impact on larger-cap stocks may not be as drastic - yet.

Takeaway: In 2025, off-exchange trading is thriving. It’s a win for hedge funds and high-frequency traders looking to keep their moves discreet, but it raises concerns for regulators and market participants who rely on transparent pricing. The shift has been gradual, but by the time the market fully realizes what’s happening, it may already be too late.

_{PRESENTED BY HEBBIA}

Work Smarter, Not Harder

Finance professionals need tools that work as hard as they do. Hebbia’s Matrix delivers powerful solutions to streamline your workflow and give you a competitive edge.

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• Turn diligence notes into investment memos that impress.

Whether you’re tracking opportunities, managing risk, or drafting memos, Hebbia helps finance teams get more done in less time—without sacrificing quality.

_HEADLINES

Top Reads

• Powell says central bank is in no hurry to cut rates again (CNBC)

• Trump attacks Fed after no change in interest rates (BBC)

• Tesla earnings miss the mark as full-year adjusted net income drops 23% (YF)

• Meta shares pop after company beats on revenue (CNBC)

• Mark Zuckerberg seeks to advise Trump on AI (NYP)

• Microsoft Q2 cloud revenue falls short of expectations (YF)

• Trump signs settlement agreement with Meta (CNN)

• Starbucks is cutting 30% of its menu (YF)

• OpenAI is probing whether DeepSeek used its models to train chatbot (WSJ) 

• IBM stock soars after profit beat as software business surges (YF)

• Spirit Airlines rejects new takeover offer from Frontier (Axios)

• Howard Lutnick says it's 'nonsense' that tariffs cause inflation (Fox)

• How retail traders won the Nvidia rout on Monday (Axios)

• After DeepSeek, VC investors face questions about AI investments (NYT)

_{CAPITAL PULSE}

Markets Rundown

Stocks Decline on Fed Day

U.S. markets closed lower Wednesday, with large-cap stocks underperforming as real estate and tech sectors led declines. 

Bond yields rose, with the 10-year Treasury at 4.54%. European markets gained on earnings, while Asia was mostly higher.

The U.S. dollar strengthened, and WTI oil fell on rising U.S. crude inventories.

Fed Holds Rates Steady

The FOMC kept rates at 4.25%-4.5%, maintaining quantitative tightening.

With core PCE inflation at 2.8%, the Fed remains restrictive but could ease toward 3.5%-4.0% as inflation slows.

Lower rates would support economic growth and corporate earnings.

Tech Earnings in Focus

Investors await management’s response to Chinese AI startup DeepSeek, whose low-cost model challenges U.S. tech giants.

While tech remains key, broader earnings growth is driving a shift in market leadership, favoring consumer, financials, and industrials.

Expect continued diversification beyond mega-cap tech.

Movers & Shakers

• (+) Brinker International ($EAT) +16% after the Chili’s parent company posted strong sales growth.

• (+) Starbucks ($SBUX) +8% because the coffee chain beat on top and bottom lines.

• (–) Moderna ($MRNA) -9% after the vaccine maker was downgraded by Goldman.

Private Dealmaking

• Skild AI, an AI robotics company, in talks to raise $500 million

• NinjaOne bought Dropsuite, a cloud data backup provider, raised $252 million

• UVeye, a vehicle inspection tech startup, raised $191 million

• Veir, a superconductor startup, raised $75 million

• Oligo Security, an application detection startup, raised $50 million

• VideaHealth, a dental AI startup, raised $40 million

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

_{BOOK OF THE DAY}

The Holy Grail of Investing

Tony Robbins concludes his financial freedom trilogy with The Holy Grail of Investing, revealing the power of alternative investments. Partnering with renowned investor Christopher Zook, Robbins interviews top experts in private equity, private credit, real estate, and venture capital, uncovering their most effective strategies.

For decades, trillions in “smart money” have flowed into alternative investments, generating outsized returns. Robbins and Zook sit down with legendary investors like Robert F. Smith, Vinod Khosla, and Michael B. Kim, who share insights on building wealth. 

This book explores how to profit from private equity, earn higher returns with private credit, invest in major sports teams, and capitalize on the energy evolution. Readers will learn how private real estate serves as an inflation hedge and discover how top investors thrive in any market, providing a roadmap to financial success.

“Take advantage of the trillions flowing into private equity by becoming an owner of firms that actually manage the assets and share in the revenue they generate.”

_{DAILY VISUAL}

This Is Not a Correction

The DeepSeek correction in tech stocks has not changed the overall concentration problem in the S&P 500, see chart below. Investors in the S&P 500 continue to be dramatically over-exposed to the tech sector.

_{PRESENTED BY MACABACUS}

Lightning Fast Pitch Decks, Flawless Tombstones

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💼 Tombstone generator: Create deal-ready tombstones with customizable templates.

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_{DAILY ACUMEN}

Decision Making

Every day, we make thousands of decisions—what to eat, what to wear, how to respond to an email. While some choices are trivial, others shape the course of our lives. But how can we improve our decision-making skills?

According to cognitive science, the key lies in balancing intuition and rational analysis. Research suggests that overanalyzing simple choices can lead to worse outcomes, while ignoring data in complex decisions can be equally harmful.

One strategy is the "satisficing" method—making a decision that's "good enough" rather than striving for perfection. Nobel laureate Herbert Simon argued that this approach prevents analysis paralysis and leads to greater satisfaction.

Another useful tool is pre-mortem thinking—imagining a decision has failed and working backward to identify potential pitfalls. This method, championed by psychologist Gary Klein, helps us make more informed and resilient choices.

Ultimately, good decision-making isn’t about perfection—it’s about minimizing regret, staying adaptable, and learning from experience. So next time you're stuck on a tough choice, trust your process, embrace uncertainty, and move forward with confidence.

_{ENLIGHTENMENT}

Short Squeez Picks

• Why metamorphosis is an underrated business skill

• How leaders enhance their communication and influence

• Just because you want to lead doesn’t mean you should

• Why self-improvement needs a software update

• Adam Grant on the psychology of career pivots

_{MEME-A-PALOOZA}

Memes of the Day