The xAI-SpaceX merger, Palantir earnings, China's frowning horses and more in Morning Squawk

In an exciting development for investors, billionaire entrepreneur Elon Musk has announced the merger of his space exploration company SpaceX with his artificial intelligence venture, xAI. This strategic alliance, revealed yesterday, is anticipated to pave the way for a significant initial public offering (IPO) for the newly formed entity. This merger represents the most considerable consolidation in Musk's portfolio to date, combining two rapidly growing companies that have seen their valuations soar in private markets. According to Nevada public records obtained by CNBC, the merger was officially finalized yesterday. In a blog post, Musk described the partnership as the creation of 'the most ambitious, vertically-integrated innovation engine on (and off) Earth.' A key motivation behind this union is Musk's vision of establishing 'orbital data centers'—data hubs located in space. CNBC's reporters noted that SpaceX could serve as a crucial source of funding that xAI needs to turn this ambitious vision into reality. On a broader economic note, after a challenging January, the stock market kicked off the new trading month with optimism. The Dow Jones Industrial Average surged by over 500 points, while both the S&P 500 and Nasdaq Composite saw gains exceeding 0.5%. In other news, Palantir Technologies has surpassed market expectations in its fourth-quarter earnings report, resulting in a share price increase of more than 11% in after-hours trading. CEO Alex Karp characterized Palantir's performance as 'indisputably the best results that I'm aware of in tech in the last decade.' He highlighted that the company experienced higher revenues from both commercial and government sectors than Wall Street had anticipated. Karp also mentioned that strong demand in the U.S. has led to a strategic delay in launching new products for American allies. In international relations, former President Trump announced a new trade agreement between the United States and India, which involves mutual tariff reductions on exports. This deal follows a recent trade agreement between the European Union and India. Trump stated that India would increase its purchases of U.S. products significantly and hinted at a shift away from Russian oil towards American and possibly Venezuelan supplies. Meanwhile, on Capitol Hill, House Speaker Mike Johnson is pushing for a funding agreement to end the ongoing partial government shutdown, which began on Saturday. The Bureau of Labor Statistics indicated that this shutdown would postpone the release of January's jobs report, previously scheduled for Friday. In a lighter yet poignant story, recent trends in consumer sentiment in China reflect a gloomy outlook, symbolized by the emergence of a frowning horse plushie. Initially a manufacturing blunder with an upside-down smile, this 'crying horse' has become a representation of the discontent felt by consumers amid economic uncertainty. As one toy seller remarked, 'The crying horse reflects how people feel inside.' Lastly, the retail landscape in the U.S. is showing signs of recovery, with store closures projected to reach three-year lows after a wave of bankruptcies, indicating a potential rebound for the industry.