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Tonight: Why tech stocks are losing their luster. Plus: big fancy cars just had a big fancy year. Let's get into it.

By Allison Morrow

📈 VALUE VS. GROWTH

Tech stocks may finally be falling out of fashion. Again.

If that prompts any of you to roll your eyes, I hear you. Advisers have been predicting for a while now that market is cycling into a "value" mentality, only to have the growth stocks come surging back to the lead.

For the uninitiated, stocks typically fall into one of two categories — growth or value. In short, growth stocks are shares in companies that are typically younger and poised for big things in the future — Tesla, a company that didn't turn a full-year profit until 2020, is a classic example. Value stocks, on the other hand, are a little less sexy but reliably profitable — think JPMorgan Chase or ExxonMobil.

But, as my colleague Paul R. La Monica explains, there are early signs 2022 will be Team Value's year. Here's why:

Big Tech stocks are tumbling. The so-called FAANGs — Facebook, Apple, Amazon, Netflix and Google — have all fallen sharply, as have Microsoft, Nvidia and Tesla.
The tech-heavy Nasdaq is now 8% below its recent all-time high, putting it in danger of falling into a correction, defined as 10% lower than its most recent peak.
The SPDR Portfolio S&P 500 Growth ETF is down more than 6% already in 2022.
The iShares Russell 2000 Growth ETF, which owns shares of smaller growth stocks, has plunged 8% since the start of the year.

On Monday, the Nasdaq was trading down nearly 3% before reversing course and eking out a small gain. The Dow and the S&P 500 both fell.

So why are the growth guys (potentially) falling out of favor? Blame inflation and the promise of higher interest rates.

Growth stocks tend to underperform in periods of high inflation, like now, because rising prices and rates discount those companies' future earnings. That's true for value companies as well, but they tend to weather inflation better because demand for staples, such as food and energy, are less elastic, giving those companies stronger pricing power.

Meanwhile, two key value sectors, financial stocks and oil firms, are thriving, Paul explains.

The Invesco KBW Bank ETF is up 10% this year. Banks are beneficiaries of higher interest rates because it makes lending more profitable.
The Energy Select Sector SPDR ETF, which owns Exxon Mobil, Chevron, ConocoPhillips and other oil giants, is up 9% this year as crude prices have risen from about $72 a barrel to $78 in the past month.

Look ahead: On Wednesday, we'll get a status update on inflation with the release of the US Consumer Price Index. Later in the week, investors will be watching earnings from megabanks JPMorgan Chase, Citigroup and Wells Fargo and what those say about higher bond yields.

#️⃣ NUMBER OF THE DAY

400%

The UK's Labour Party called on Prime Minister Boris Johnson to impose a windfall tax on companies pumping oil and gas from the North Sea, saying that the money raised could be used to cut roughly £200 ($272) from soaring household bills. British consumers will pay roughly $1,000 more to heat and light their homes this year, according to Bank of America. Wholesale European gas prices have jumped by 400% over the previous year and electricity prices have increased by 300%, driven by cold weather, nuclear plant outages in France and reduced gas flow from Russia. The opposition party wants energy companies such as BP and Shell to pay more in corporate taxes to offset costs for consumers.

💰 RICH FOLKS

Once again, we have an economic indicator confirming that a) the super-rich are getting richer and b) being that loaded must be a lot of fun.

The evidence: Luxury car makers are doing better than ever.

Rolls-Royce delivered a record 5,586 cars around the world last year. That's the most cars it's ever sold in a single year in more than a century of existence.
Bentley also set a record, selling 14,659 cars and SUVs. That was an increase of 31% over the year before.

In raw numbers, those sales would be laughable for a mainstream car maker. Toyota and Ford each sell about 2 million cars a year. Even all-electric Tesla, whose sales are dwarfed by its rivals, sold over 900,000 vehicles last year.

But the prices for these ultra-lux wheels are on par with what you might pay for a whole house — the Rolls-Royce Phantom is a cool $455,000, while the Bentley Flying Spur will run you about $200,000 — so the companies don't need to sell nearly as many as their non-luxury counterparts.

The super-rich also poured money into yachts last year. Global sales in 2021 grew 29% over 2020, according to Yacht Sales United, a yacht brokerage. That's after a 31% sales surge in 2020 over 2019.

Big picture: In case you missed it, 2021 made the world's wealthiest even wealthier. The 500 richest people collectively gained $1 trillion last year, thanks to a booming stock market and rising values for countless other assets such as cryptocurrencies, commodities and property.

At the same time, rich people want to avoid getting Covid-19 like the rest of us, so they funneled more money into cushier modes of travel by land and sea.

"Covid forced many people to ground, not to travel anymore, and for that reason there is quite a lot of wealth accumulated and that is spent on luxury goods," Rolls-Royce CEO Torsten Müller-Ötvös told Reuters. "We profited from that development."

WHAT ELSE IS GOING ON?

📈 The Federal Reserve is likely to raise interest rates four times this year — one more than previously expected — in response to high inflation and low unemployment, Goldman Sachs said.

🏦 Citigroup staff in the United States who have not been vaccinated against Covid-19 by Jan. 14 will be fired at the end of the month unless they are granted an exemption.

🎮 Zynga, the mobile game developer known for hits like FarmVille and Words With Friends is pairing up with Take-Two Interactive, the developer of Grand Theft Auto.

💸 Mukesh Ambani, Asia's richest man, is buying the Mandarin Oriental in New York for $98 million.

🔥 Arby's is selling what it deems the "spiciest sandwich on the market," the Diablo Dare, which is so spicy it comes with a free 12-ounce vanilla milkshake.