🏀 When investing meets sport

What’s going on here?

Ferrari’s financial results and stock both broke records, as the luxury carmaker’s – ahem – formula won again.

What does this mean?

Ferrari’s business model should be on the classroom blackboard every time an economics professor mentions supply and demand. While most carmakers jostle for peak sales by making their prices as competitive as possible, Ferrari churns out a handful of finely crafted four-wheelers and charges a ton for them. Case in point: just over 13,000 status-symbol-granters rolled out of the luxury carmaker’s factories last year. And with the limited run of 599 new Daytona SP3 models hitting showrooms at over $2 million each, the average Ferrari – if there is such a thing – cost more than the year before. Those ever-increasing price tags meant the carmaker made 17% more in sales and 34% more profit. Vroom vroom, indeed.

Why should I care?

For markets: The sound of the future.

Petrolheads can recognize a Ferrari with their eyes shut: the signature sound of het-up horsepower is a siren call for billionaires with a penchant for country drives. Now, the uber-wealthy are infamous for casting Mother Nature aside for private jets and engine revs loud enough to scare small children. And that could threaten Ferrari’s position in the transition toward electric vehicles – or it would’ve, if the carmaker hadn't added artificial engine sounds to hybrid cars. They’re easily pleased, the rich and famous: those noisy hybrids made up 44% of Ferrari’s deliveries last year.

The bigger picture: The business of brand.

Ferrari’s found a place to build its brand awareness that’s as lucrative as it is fast: the racetrack. The company’s Formula One team – which will soon be home to racing icon Lewis Hamilton – is said to be the most valuable squad of all, bringing in a stream of sponsorship and prize money that makes Ferrari’s balance sheets blend in better with those of designer fashion houses than the likes of Ford and General Motors.

What’s going on here?

US employment data showed that the job market stayed firm in January, a release that will dominate the Federal Reserve’s (the Fed) decision-making.

What does this mean?

Believe it or not, many economics enthusiasts compromise precious hours of their Friday and Saturday to run through nonfarm payroll figures – and if you’re reading this, you're included. In fairness, though, this one was worth missing the first pint at the pub for. The US filled 353,000 jobs in January, and with companies competing for top talent, they pushed the average wage up a more-than-expected 4.5% over the month. Good news: that means more money in Americans’ pockets. Bad news: that means they can keep up with higher prices, potentially stoking inflation just when it seems to be calming down.

Why should I care?

For markets: In one ear, out in the markets.

The Fed has plainly said not to expect an interest rate cut anytime soon. Investors seem to think they know better, though, sticking to their predictions of six interest rate cuts this year. But they might want to heed the warning: interest rates are still wearing down inflation, and with the economy and job market holding up, there’s no reason for the Fed to rush to grab the scissors.

The bigger picture: Every little counts.

S&P 500 businesses managed to make 1% more profit last year than the one before. That’s a small but mighty feat in this economy, not least because interest rates have been making it more expensive for companies to invest in themselves. What’s more, analysts are now expecting US firms to bring up profit another 12% this year, a performance that would prove the country’s companies are tougher than steel. Or at least, interest rate hikes.