Three Things (2/12)

Powell stays patient

No rush … Federal Reserve Chair Jerome Powell told the Senate Banking Committee on Tuesday that the central bank isn’t in a hurry to cut interest rates, citing a strong economy and persistent inflation. Here are the key takeaways from his testimony:

— Interest Rates: Powell stressed that lowering rates too soon could backfire. “Reducing policy restraint too fast or too much could hinder progress on inflation,” he warned.

— Inflation: While inflation has cooled from its peak, it remains above the Fed’s 2% target. “We will do everything we can to achieve maximum employment and stable prices,” Powell said. 

— Tariffs & Trade: Powell dodged direct criticism of Trump’s new tariffs but reaffirmed that “free trade still makes sense” and the Fed’s job is to react to, not set, trade policy.

— Stablecoins: Powell voiced support for regulating stablecoins, or digital assets pegged to traditional currencies or commodities to maintain a stable value. He noted they “may have a big future,” but need clear oversight. 

— Federal Deficit: Powell warned that the nation’s current deficit path is unsustainable and will need to be addressed.

The Fed’s next rate decision comes in March, but for now, Powell’s message is clear: the economy is strong, inflation is stubborn, and patience is the game plan.

Carbonated comeback

Knockout earnings … Coca-Cola (KO) wrapped up 2024 with a strong fourth quarter, beating Wall Street estimates and reversing a recent sales dip. The soda giant reported a 6% revenue increase to $11.54 billion, with earnings per share at 55 cents, surpassing expectations of 52 cents. Growth came from both higher pricing (up 9%) and increased demand in key markets like China, Brazil, and the U.S.

Coke’s Zero Sugar line led the way, posting 13% volume growth, while its core sparkling soft drinks rose 2%. Its water and tea categories also saw gains, but juice and plant-based beverages declined by 1%. Meanwhile, new limited-time flavors like Oreo Coke and Fanta Beetlejuice also helped lift sales.

Despite a strong quarter, Coke faces potential challenges ahead, including a 25% tariff on aluminum imposed by the Trump administration. However, CEO James Quincey downplayed the impact, stating that the beverage giant could shift to plastic bottles and other cost-saving strategies.

Elsewhere in the world of trendy soda startups, a social media feud is bubbling over. Poppi, known for its prebiotic sodas, sparked backlash after gifting luxury vending machines to influencers instead of everyday fans. Rival Olipop seized the moment, fueling the controversy online and throwing shade at Poppi’s so-called misstep. We can’t help but wonder what La Croix (FIZZ) would have to say about all this.

Back to the future

Titan talks … Titan’s first-ever Summit, held Tuesday in New York and streamed live on YouTube, tackled a big question: How do historical patterns shape the future of investing?

Co-founders and co-CEOs Joe Percoco and Clay Gardner, alongside venture investor David Tisch, laid out a framework for understanding technological revolutions. Percoco described it as a “layered cake,” where foundational infrastructure (picks and shovels) comes first, followed by platforms, and finally applications. “In a gold rush, sell shovels,” Percoco said. “Right now, we’re in the picks and shovels phase of AI.”

The AI boom has fueled massive market gains, but is it a bubble? Gardner pointed to the volatility in AI stocks, noting that infrastructure investments—such as NVIDIA’s (NVDA) dominance in AI chips—tend to be more resilient. Meanwhile, Tisch emphasized that despite AI’s rapid advancements, human intuition remains critical. “Winning is tactics. Picking is taste,” he said.

Looking ahead, Titan sees major opportunities in “test-time compute,” where AI models don’t just generate outputs but actively reason and make decisions, driving exponential demand for more advanced computing power. They also highlight hyperscaler efficiency, emphasizing that while tech giants are investing heavily in AI, the real metric to watch is return on capital—how effectively these companies monetize their AI infrastructure. Additionally, Titan predicts that nuclear energy will become a crucial solution for AI’s growing energy demands, with hyperscalers increasingly turning to uranium as a long-term power source to sustain AI-driven workloads.

One more thing: Trump wants to kill the penny, but can he? He’s directed the Treasury to stop minting new pennies, arguing they cost more to make than they're worth, but Congress has the final say—just like when past lawmakers, including Obama and McCain, pushed for the same change. While some fear price rounding could hurt consumers, other countries, including Canada, have successfully phased out low-value coins, proving it can be done.

Disclosures

As of writing, NVIDIA is a holding in Titan's Flagship strategy.

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