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Good morning readers. If you had a bad week last week or are dreading the start to this one, here’s something that might make you feel better. A finance worker at a multinational firm fell victim to a $25 million fraud scheme orchestrated with deepfake technology, as reported by the Hong Kong police. The elaborate scam involved a video conference call where the worker believed he was interacting with colleagues, all of whom turned out to be deepfake recreations. Initially skeptical of a phishing email from the company's CFO, the worker was convinced by the convincing deepfake video call, prompting him to wire $25.6 million to his “coworkers”. So, hey…at least you didn’t wire $25 mil to your “CFO”.

Let’s jump into today’s storylines.

In today’s digest:

• Satya Nadella celebrates 10 years as CEO at Microsoft

• Headline Hustle: Fed hints rate cuts might come later in the year, Senate releases $118 billion aid package for Israel, Ukraine, and border security, U.S. intends to launch additional strikes on Iran-backed groups

• Paramount is debating on who (and when) to sell the company

• The Week Ahead: What to Expect

• Pulse Points: What’s Trending

TECH

Satya Nadella’s been killing it as CEO of Microsoft

As Satya Nadella celebrates a decade at the helm of Microsoft, transforming it into a behemoth with a market cap rivalling the GDP of small countries, it’s worth taking a pause. Under Nadella's watch, Microsoft didn't just grow; it evolved from a company mired in mediocrity into the world's most valuable public company, leapfrogging over Apple with a valuation of $3.06 trillion. A company once synonymous with office software has turned into a cloud computing titan and AI pioneer, all because of…you know.

Nadella's secret sauce

A potent blend of innovation, adaptability, and a touch of customer-centricity that has breathed new life into the company. Gone are the days of Microsoft's notorious closed culture. Nadella’s open-minded approach has seen the company embrace open-source projects, release software under open-source licenses, and form alliances with former rivals. In doing so, he's not only improved Microsoft's reputation but also ensured the company's relevance in a rapidly changing tech landscape.

Nadella’s dealmaking skills are worth a standing ovation:

• GitHub, LinkedIn, Mojang (parent company of Minecraft), Nuance Communications, and the colossal $75 billion purchase of Activision Blizzard all bear his fingerprints.

• These strategic acquisitions have not only bolstered Microsoft's growth but also fortified its competitive edge.

But it’s the CEO’s faith in cloud computing, particularly Azure, that has paid off handsomely. The platform has witnessed robust revenue growth, positioning Microsoft as a cloud computing powerhouse and securing the company's future. It’s now become a benchmark in the competitive cloud market, setting the stage for Microsoft's future dominance.

Nadella isn't resting on his laurels. The top boss must ensure Microsoft remains relevant to younger generations, retain top talent, and enhance its product development and innovation cycle. Regulatory scrutiny is also a concern, with antitrust officials keeping a close eye on the tech giant's activities.

Looking ahead…Nadella is on an endless pursuit to identify the next revenue-generating category for the company. Despite the introduction of the HoloLens augmented reality headset in 2016 and the addition of an AI Copilot to the Bing search engine in February 2023, neither has achieved significant success. While AI is considered Microsoft's potential "next big thing," the company must continuously seek innovative avenues for growth.

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Headline Hustle

📉 J. Pow hints rate cuts are coming, just not as many as we thought…and not just yet. Federal Reserve Chair Jerome Powell, in a recent interview with "60 Minutes," affirmed the central bank's cautious approach to interest rate cuts in the coming year. Powell expressed confidence in the economy's strength and emphasized the need for more evidence of sustainable inflation reduction before considering rate cuts. Contrary to market expectations, Powell hinted at a slower pace of cuts, with the possibility of delaying the first move beyond March. He highlighted the economy's resilience, citing robust job creation and the absence of expected negative impacts from prior rate hikes. Powell also reiterated the Fed's commitment to making apolitical decisions.

💰️ Senate releases $118 billion bipartisan aid proposal for Israel, Ukraine, border security. After months of closed-door negotiations, Senators have unveiled a $118.2 billion bipartisan aid proposal encompassing Ukraine, Israel, and the southern U.S. border. The bill allocates $60.1 billion for Ukraine, $14.1 billion for Israel, and $20.2 billion for border security. It also includes funding for humanitarian assistance in war-torn regions, defense operations in the Red Sea and Taiwan, and grants President Biden emergency authority for border control. Senate Majority Leader Chuck Schumer has scheduled a vote for Wednesday, but the proposal faces opposition from House Republicans, including Speaker Mike Johnson, who favors funding Israel separately.

🇺🇸 U.S. intends to take ‘additional strikes’ against Iran-backed groups. National Security Adviser Jake Sullivan has announced that the United States plans to conduct further military actions against Iran-backed groups in the Middle East, citing responses to attacks on American forces. Sullivan emphasized that while the U.S. will respond to attacks on its personnel, it does not seek a broader conflict in the region. Recent strikes targeted Iran's Revolutionary Guard and affiliated militants in Iraq and Syria, with the possibility of future actions remaining unclear. The situation in the Middle East remains tense, with the U.S. trying to prevent further escalation while addressing various regional challenges.

MEDIA

Paramount eyes right deal at the right time

In the media industry, few names carry as much weight as Shari Redstone and Paramount Global. In recent months, the nonexecutive chair and controlling shareholder of Paramount, has engaged in increasingly serious discussions with potential buyers eyeing her media empire.

This heightened sense of urgency comes as the media landscape undergoes a seismic shift, leaving legacy media companies like Paramount Global searching for a path forward.

What’s driving this urgency?

Paramount Global, home to iconic brands like Paramount Pictures, CBS, and popular franchises like "Star Trek" and "SpongeBob SquarePants," finds itself at a crossroads. Despite amassing an impressive 63 million subscribers for its flagship streaming service, Paramount+, the bottom line is still tinged in red, albeit less so than in the past.

This financial uncertainty has taken a toll on Paramount Global's publicly traded shares, which have witnessed a sharp decline, plummeting by 56% over the past two years. Not surprisingly, private equity firms and notable buyers like David Ellison from Skydance Media and media mogul Byron Allen have taken notice of Paramount Global's predicament, considering the acquisition of either the entire company or its assets.

But it's not just the industry's evolving landscape that's pushing Redstone towards these discussions.

• Redstone faces a substantial financial obligation linked to National Amusements Inc. (NAI), the majority owner of Paramount Global's voting shares.

• Inherited from her father, Sumner Redstone, these shares come with a hefty tax bill of over $200 million, which she has deferred until 2034, with a $7 million payment due this year.

Redstone's search for the right deal, at the right price, has led to discussions with potential suitors, including Warner Bros. Discovery and Skydance Media. However, no deal is imminent, with various factors, including the deal's structure and investor buy-in, influencing the outcome.

Big picture: Paramount Global's future is hanging by a thread, and the outcome of these negotiations could decide if it's a streaming success or box office flop.

WEEK AHEAD

What to expect

• Peak week for corporate earnings in the US: Key reports are expected from media companies (Fox, News Corp, Disney, Thomson Reuters, The New York Times Company), carmakers (Nissan, Toyota, Ford), and tech firms (Alibaba, Arm, Spotify, Uber) this week.

• Upcoming political events: Includes US presidential primary contests in Nevada, a major contest in South Carolina later in the month, and Finland's presidential run-off election on Sunday.

• Economic updates include: International service industry PMI data, US trade figures, CPI inflation rate revisions, and China's CPI, PPI inflation, and credit aggregates.

What else is happening:

• Lunar New Year celebrations begin this Saturday, marking the year of the dragon in many Asian countries.

• Pakistan holds elections amidst political controversy.

• Super Bowl 58 takes place Sunday where the Kansas City Chiefs look to win their third championship over the San Francisco 49ers. It also means extensive coverage of Taylor Swift.

SNIPPETS

Pulse Points

• The Labor Department's report revealed a booming hiring trend with 353,000 jobs added last month, significantly surpassing economists' expectations and indicating a robust economy.

• Halfway into the earnings season, corporate profits are significantly exceeding expectations, making the fourth quarter the best of 2023 despite macroeconomic challenges.

• Following Meta's exceptional quarterly results, CEO Mark Zuckerberg's net worth surged to $165 billion due to a 22% increase in the company's stock, making him richer than Bill Gates. He’s also poised to receive a $174 million cash dividend in March.

• Spotify has entered into a new multiyear partnership with Joe Rogan, allowing his popular podcast to be distributed across various platforms instead of being exclusive to Spotify.

• More than 11 million Californians face a high risk of life-threatening flooding, with forecasts predicting nearly half a year's rain in parts of the Los Angeles area by Tuesday.

• According to the Wall Street Journal, some Tesla Inc. board members felt pressured to use drugs with CEO Elon Musk, fearing they would upset him if they refused.

• Tesla is recalling almost all of its electric vehicles sold in the U.S. due to the visual warning lights' font being too small, representing a further safety issue for the leading automaker.

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