Core Insights - Netflix reported solid earnings with Q4 revenue exceeding $12 billion, an 18% increase year-over-year, and earnings per share of $0.56, slightly above Wall Street projections. However, the stock dropped due to management's forecast of slower revenue growth for 2026, projecting a growth rate of 12-14% compared to 16% in 2025 [2][3][10] Financial Performance - Q4 revenue was over $12 billion, up 18% from the previous year [2] - Earnings per share stood at $0.56, slightly above expectations [2] - The company reached approximately 325 million global paid memberships, adding 23 million subscribers in 2025 [2][3] Growth Outlook - Management anticipates a revenue growth rate of 12-14% for 2026, a decrease from 16% in 2025 [2][7] - The ad business is growing significantly, with ad sales expected to double in 2026 from $1.5 billion in 2025 [6][7] - The company is transitioning into a more mature phase, focusing on sustaining its business rather than hypergrowth [3][4] Strategic Moves - Netflix amended its bid for Warner Brothers Discovery to an all-cash offer of $27.75 per share, valuing the deal at approximately $72 billion, or $83 billion including debt [9][10] - The acquisition aims to secure a vast content library, enhancing Netflix's competitive position in the streaming market [10][15] - The all-cash structure is designed to provide immediate value to Warner Brothers shareholders and reduce stock price volatility [10] Debt and Financing - Netflix's debt is projected to increase from $34 billion to $42 billion to finance the acquisition, raising concerns about financial flexibility [10][11] - The company had $15.8 billion in debt at the end of 2020, which has been decreasing as it used debt to acquire content [11] - Management believes they can handle the increased debt and maintain cash flow, indicating confidence in long-term financial stability [11][12] Market Position - Netflix is recognized as the leader in streaming, but faces increased competition from platforms like YouTube, which is gaining market share [4][6] - The company is adapting to a more mature business model, focusing on content acquisition and strategic investments rather than rapid growth [3][4] - The acquisition of Warner Brothers Discovery is seen as a critical move to bolster Netflix's content offerings and market power [15]

Core Insights - The iShares MBS ETF (MBB) illustrates the importance of price appreciation in total returns, beyond just yield, particularly in the context of interest rate movements [1][4] Fund Overview - MBB provides exposure to agency mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae, which carry government guarantees, thus eliminating credit risk [2] - The fund manages $39 billion in assets, resulting in a low expense ratio of 0.04%, enhancing efficiency and ensuring more income flows to investors [3] Return Dynamics - MBB has shown strong total returns over the past year, primarily driven by price appreciation as mortgage spreads compressed, alongside a steady 4% yield [4] - The fund's performance is influenced by interest rate sensitivity and prepayment risk, which can affect future income [6][7] Investment Considerations - MBB may not be suitable for investors with short time horizons or those prioritizing capital preservation due to potential monthly swings of 2% to 3% during rate volatility [8] - Growth-focused investors may find MBB limiting, as it serves more as a diversification tool rather than a wealth-building investment [9] Alternative Options - Vanguard's Mortgage-Backed Securities ETF (VMBS) offers a lower annual fee of 0.03%, which can lead to significant savings over time for long-term investors [10] Best Use Case - MBB is best suited as a core bond holding for investors who understand the dual return mechanism of mortgage-backed securities, contingent on favorable rate environments and manageable prepayment risk [11]

Group 1: Dollar Index and Federal Reserve - The dollar index rose by +0.09% on Monday, recovering from early losses due to a jump in T-note yields, which strengthened the dollar's interest rate differentials [1] - The near-term upside for the dollar is limited as the market expects the Fed to cut the federal funds target range by 25 basis points at the upcoming FOMC meeting [1][3] - A 99% chance is being discounted by the markets for a 25 basis point cut in the federal funds target range at the conclusion of the FOMC meeting [3] Group 2: Eurozone Economic Indicators - Losses in the euro were limited due to better-than-expected Eurozone economic news, including a rise in the Eurozone Dec Sentix investor confidence index by +1.2 to -6.2, surpassing expectations of -6.3 [4][5] - German Oct industrial production increased by +1.8% month-over-month, significantly above expectations of +0.3% month-over-month, marking the largest increase in seven months [5] Group 3: Central Bank Policies - Divergent central bank policies are supportive of the euro, as the ECB has concluded its rate-cutting cycle while the Fed is expected to continue cutting interest rates [5] - Hawkish comments from ECB Executive Board member Isabel Schnabel indicated comfort with market expectations for the ECB's next interest rate move being an increase [4]

Currency Market Overview - The dollar index (DXY00) increased by +0.11% due to a rise in T-note yields, which enhanced the dollar's interest rate differentials [1] - The dollar's near-term upside is limited as the market anticipates a 25 basis point cut in the federal funds target range at the upcoming FOMC meeting [1][3] Federal Reserve Leadership - President Trump plans to announce his selection for the new Fed Chair in early 2026, with Kevin Hassett being the likely candidate [2] - Hassett's nomination is expected to be bearish for the dollar as he is viewed as a dovish candidate, raising concerns about Fed independence [2] Eurozone Economic Indicators - The Eurozone Dec Sentix investor confidence index rose by +1.2 to -6.2, surpassing expectations of -6.3 [5] - German Oct industrial production increased by +1.8% month-over-month, significantly above the expected +0.3% and marking the largest rise in seven months [5] European Central Bank (ECB) Stance - ECB Executive Board member Isabel Schnabel expressed confidence in the market's expectation of an interest rate increase as the next move by the ECB [4][6] - Divergent central bank policies are supporting the euro, as the ECB has concluded its rate-cutting cycle while the Fed is expected to continue cutting rates [5]