SVET Reports
SVET Markets Weekly Update (February 10–14, 2025)
Week 7, began with tariffs’ games pushing up prices for steel, aluminum, gold, silver, and oil. Stocks then rallied as Trump delayed reciprocal levies and initiated peace talks regarding Ukraine. This led to a sharp resurgence in EU equities and a decline in the dollar, followed by oil. BTC, SOL, and ETH remained near their monthly lows as traders navigated political uncertainties.
On Monday, equities rose as investors start to be accustomed to Trump’s threats of levies, focusing instead on gains in the tech sector, bolstered by AI chipmakers. Meanwhile, steel surged due to tariff plans. Stocks also increased across the EU and Asia, particularly in the tech sector. The dollar, gold, oil, aluminum, and other commodities rose in response to the tariffs. BTC, ETH, and SOL prices stabilized somewhat despite widespread bearish sentiment.
World Markets
Mexico’s auto exports fell 13.7% YoY to 219,414 units in January, hitting a three-year low. GM, Nissan, Stellantis, and Volkswagen saw sharp declines, while Toyota surged. The USA remained the top destination, receiving 83.6% of exports. 1Y trend: “Up” (Inegi)
Commodities
Gold hit a record high above $2,900/oz, driven by safe-haven demand amid Trump’s new tariffs, trade war fears, and expectations of looser global monetary policy. Central bank purchases, including the PBoC, further bolstered prices. 1Y trend: “Up”
WTI crude rose 1.3% to $72.3/barrel amid supply concerns from new Trump’s sanctions on Iranian oil shipments. Trade tensions and China’s retaliatory tariffs capped gains, keeping markets cautious amid economic uncertainty. 1Y trend: “Side”
Comment: What’s Up With Autocrats ?
The world is divided into two unequal parts: one that believes a single head is better than many and another that thinks otherwise. Historically, the former has dramatically prevailed. The annals of history are essentially a chronicle of megalomaniacs — autocrats who have brought us the prosperity we enjoy today and, according to the first part of the world, will continue to pave the way for a brighter future.
On the other hand, the second part of the world argues that it is individual ingenuity, talent, and entrepreneurship that have shaped history. They view autocrats as leeches who exploit social cohesion to seize power and accumulate wealth at the expense of others. Who is right? That may be determined in the next 10 to 20 years, perhaps through another total war or, hopefully, through technological and economic competition. Yet, it is unlikely that a clear answer will emerge. Humans are not machines — at least, not yet. Our nature is inherently controversial, which is essential for survival. Therefore, it is better for us to remain contentious without spiraling into thermonuclear conflict over these differences.
I believe the future will be decentralized, allowing individuals to choose where and how to live based on their circumstances, performance, and age. If we indeed remain divided for an extended period, I hope one side will remember that their autocrats’ primary role is to manage competing interests — essentially, to maintain a democracy within their own royal courts. Conversely, those in the second part should not forget that all technical and social advancements have been made by alliances led by megalomaniacs.
Perhaps the solution lies in avoiding the creation of centralized bureaucratic positions altogether — finding ways to redirect the talents of megalomaniacs toward exploration of new planets, so to speak. But this is merely my opinion, coming from the perspective of Part Two, of course :)
On Tuesday, equities closed marginally higher as Powell remarked on the ‘strong economy,’ while small business owner optimism tumbled due to the uncertainty of Trump’s policies. Steel and aluminum stocks were boosted by tariffs. Tesla’s stock dropped following its earnings report. The dollar, oil, gold, and silver continued to rise amidst the trade war. BTC, ETH, and SOL still fluctuate due to traders’ lack of decisiveness.
Details
The NFIB Small Business Optimism Index dropped to 102.8 in January from 105.1 in December 2024, missing forecasts of 104.6. Owners remain hopeful but face hiring challenges, inflation concerns, and reduced capital investment plans. 1Y trend: “Up” (Nfib)
Crypto
The Central African Republic’s memecoin, CAR, has plummeted nearly 97% from its peak within 24 hours. Launched on Sunday, it initially surged but quickly collapsed amid skepticism about its legitimacy. Despite the dramatic fall, the country’s President continues to promote the token. (source)
World Markets
Mexico’s industrial output fell 2.7% YoY in December, marking the fifth straight decline. Construction, mining, and manufacturing dropped, while utilities grew slower. Monthly production fell 1.4%, missing forecasts. Annual 2024 output rose 0.2%. 1Y trend: “Down” (Inegi)
Currencies
The Indian rupee rose to 86.8/USD, supported by RBI intervention after hitting record lows near 88. Despite recovery, it remains Asia’s worst-performing currency due to foreign outflows and slow growth. Tariffs and RBI rate cuts add pressure. 1Y trend: “Up, Depreciating”
The offshore yuan weakened as the dollar strengthened following the imposition of new tariffs on steel and aluminum imports. This move further escalated trade tensions with China, which retaliated with tariffs on coal, LNG, and crude oil. 1Y trend: “Up, Depreciating”
Commodities
Silver stayed near $32/ounce, close to 3-month highs, driven by safe-haven demand after tariffs on steel and aluminum. Investors await inflation data and Powell’s comments, while industrial demand and supply deficits support prices. 1Y trend: “Up”
Brent crude oil prices rose, driven by tighter Russian supply and rising geopolitical risks. New sanctions on Iran and the potential for renewed conflict in the Middle East supported prices. However, gains were limited by concerns over tariffs on steel and aluminum and broader economic uncertainty. 1Y trend: “Side”
Comment: What’s Up With Tariffs?
If politicians are trying to address the issue of 30K to 50K unemployed industrial workers by increasing domestic manufacturing, then they are embarking on a very long and complicated journey. The previous administration’s blatant disregard for this issue has cost them dearly. The idea of training former steel workers to program in Go was absurd from the start. However, while tariffs may momentarily protect certain industries, they are more likely to simply shift production to non-tariff countries, leading to further delays in addressing the issue.
A better solution would be UBI, but the current administration’s rigid adherence to Darwinian capitalism prohibits this approach. As a result, tariffs ultimately fail to benefit the working population.
What about the suggestion to devalue the dollar by 20%, as some economists close to Trump advocate? If the Fed supports this move, devaluing the dollar wouldn’t be particularly challenging — no tariffs would even be necessary. However, if the Fed does not cooperate, then implementing tariffs could trigger more restrictive monetary policies, negating the intended benefits of the tariffs. In this scenario, tariffs become counterproductive. Unless, of course, tariffs are weaponized for the sake of not only external but also internal politics.
As a geopolitical tool, tariffs might have some effectiveness, but history shows that when ‘national pride’ is at stake, rational considerations often go out the window. No local politician wants to be publicly humiliated by yielding to Trump’s tariff threats for any extended period. Thus, tariffs would be counterproductive in that context as well.
Ultimately, we are left with the reality of political games and pure populism boosting approval ratings. In this regard, tariffs may serve a purpose, but they don’t solve the underlying issues.
FYI: Services account for a growing share of global trade but commodities still dominate it, accounting for the 75–80%. This includes goods like raw materials (minerals, agricultural products), manufactured goods, and fuels. However, globally, manufacturing contributes approximately only 15–17% to global GDP. So, surprisingly, commodities tariffs influence on stocks markets worldwide might be very limited.
On Wednesday, stocks ended mixed again, pressured by core inflation rising by 0.5%, but supported by comments from the House Speaker regarding tariff exemptions. The dollar strengthened following the hot CPI report. The EU Market Index reached a 25-year high as European stocks have continued to outperform American equities since the start of 2025 due to Trump’s economic policies. BTC, ETH, and SOL fluctuated, remaining in a bearish trend.
Details
Annual inflation rose to 3% in January, exceeding forecasts and December’s 2.9%, signaling stalled progress. Energy costs increased 1%, while core inflation unexpectedly climbed to 3.3%. Shelter and transportation costs drove the rise. 1Y trend: “Down” (BLS)
Crypto
Robinhood’s Q4 crypto trading volume soared 400% to $70B, driven by BTC surpassing $100K and renewed crypto interest. Total transaction revenue doubled to $672M, with crypto revenue surging 700% to $358M and equity revenue up 144% to $61M. (source)
World Markets
European stocks hit new highs as strong earnings offset Fed hawkishness. The STOXX 50 gained 0.3%, nearing a 25-year peak, while the STOXX 600 edged up 0.1%. Heineken, Kering, and banks like Santander led gains 1Y trend: “Side”
India’s industrial production grew 3.2% YoY in December 2024, below forecasts of 3.9%, slowing from November’s revised 5%. Manufacturing eased to 3%, while mining and electricity rose. Monthly output rebounded 6.1%. April-December growth was 4%. 1Y trend: “Side” (MOSPI)
Currencies
The dollar index neared 108.5, its highest in over a week, as CPI data revealed rising inflation, with headline at 3% and core at 3.3%. The Fed remains cautious on rate cuts, with Powell reiterating no rush. Traders expect only a 25 bps cut by December. Trump urged lower rates, linking them to tariffs. 1Y trend: “Up”
Comment: What’s Up With AI?
We — those of us who think for a living — are not all going to be unemployed because of AI. That belief is fundamentally misguided. Throughout history, new technologies have never resulted in a net loss of jobs. Instead, they have always prompted people to acquire new skills, and the number of jobs has only increased.
Consider the transition from typewriters to computers. One person with a typewriter has evolved into several individuals: those who input text (analysts), correct it and add images (assistants), create PowerPoint presentations and spread it (consultants). The same dynamic will occur with AI. For every person who currently generates analytical reports, there will be many others involved in sorting and fine-tuning information for AI (training it), crafting prompts, and interpreting its results.
So, analysts, secretaries, and traders can relax. Do not buy into the mainstream media hysteria — AI is not coming for your jobs, not yet :)
On Thursday, stocks close higher despite rising producer inflation and falling jobless claims, reinforcing Fed’s hawkish stance. European equities rally on hopes for war resolution after Trump’s press conference. EU manufacturing slowdown continues, but decelerates. BTC, SOL, and ETH fluctuate in bearish territory amid market uncertainty.
Details
Annual core producer inflation was 3.6% in January, slightly below December’s revised 3.7% but well above market forecasts of 3.3%. From 2011 to 2025, it averaged 2.61%, peaking at 9.70% in March 2022. 1Y trend: “Up” (DOL)
Initial jobless claims dropped to 213K in early February, below forecasts, signaling labor market strength. The four-week average also declined, supporting the Fed’s stance on delaying further rate cuts. 1Y trend: “Side” (DOL)
World Markets
Eurozone industrial production fell 2.0% YoY in December 2024, less than the expected 3.1% decline. Since 1991, it averaged 0.86%, peaking at 41.60% in April 2021 and hitting a low of -28.40% in April 2020. 1Y trend: “Up” (Eurostat)
European stocks surged, driven by strong earnings and hopes for a Ukraine conflict resolution. The STOXX 50 hit a 25-year high, rising 1.7%, while the STOXX 600 gained 1.1%. Autos and tech led gains, with Adyen up 14%. 1Y trend: “Up”
Japan’s producer prices rose 4.2% yoy in January, the highest since May 2023 and the 12th straight month of producer inflation, driven by increases in transport, food, and metals. Monthly prices grew 0.3%, matching forecasts but easing from December’s 0.4%. Chemical and steel prices declined. 1Y trend: “Up”
Commodities
Nickel futures dropped below $15,250/tonne, nearing a 4-year low, as potential Indonesian output cuts didn’t offset oversupply concerns. Despite Indonesia’s plan to slash mining quotas (to 150M/t from 270M/t), Chinese smelting growth and reduced nickel use in batteries weighed on prices. 1Y trend: “Side”
Comment: What’s Up With Inflation?
This fourth uptick in annual inflation could indeed be a game changer for crypto. Inflation crossing 3% sends a strong signal to the Fed that its easing policy must not only be halted but also reversed. Of course, the Fed bears responsibility for the inflation itself, as all business owners have simply priced in the Fed’s rates and passed those costs on to consumers. Naturally, trade wars and the endless geopolitical havoc also do not help to ease food and energy prices. With the economy, particularly the manufacturing sector, continuing to slow down, it appears my predictions from nearly two years ago have come true: we are entering an era of prolonged stagflation. This could have mixed implications for crypto, depending on the Fed’s actions.
If the Fed reverses its policy and begins tightening on its nearest meetings, it could trigger a new bear market for stocks, which would likely affect crypto as well. This is currently the most probable outcome. The less likely scenario is that the Fed will maintain rates at their current level for two to four sessions, till, roughly Q4. If that happens, we may have a bit more time to take profits.
On Friday, markets closed mixed as retail sales plummeted due to cold weather and LA fires, while manufacturing continued to decline on Fed rates. The dollar and oil fell on prospects of EU peace talks and delayed reciprocal tariffs. Europe’s GDP rose, though the German economy remained stagnant. Chinese banks issued a record amount of new loans as the PBoC pledged economic stimulus. Argentina’s inflation fell tenfold compared to a year ago due to Milei’s reforms. BTC, ETH, and SOL showed technical gains.
Details
Retail sales fell 0.9% in January, the largest drop since March 2023, missing forecasts of a 0.1% decline. Severe weather and LA fires impacted spending, with notable declines in sporting goods (-4.6%) and autos (-2.8%). Source: U.S. Census Bureau. 1Y trend: “Down” (Census)
Manufacturing production (78% of industrial production) rose 1% YoY in January, the largest increase since December 2023, rebounding from a 0.1% decline. Historically, it averaged 3.55% from 1920 to 2025, peaking at 67.9% in July 1933. At the same time, industrial production rose 0.5% MoM, beating forecasts of 0.3%, driven by a 0.2% boost from aircraft production. Utilities surged 7.2% but mining dropped 1.2%. 1Y trend: “Side” (Fed)
Crypto
El Salvador is reducing BTC role in its economy under pressure from the IMF, despite President Nayib Bukele’s support for BTC. The government has amended laws, removing BTC’s ability to pay taxes, sparking debates about its legal tender status. (source)
World Markets
In January, Chinese banks issued a record CNY 5.13T in new loans, surpassing December’s CNY 990B and forecasts of CNY 800B, driven by policy stimulus. Money supply grew 7% YoY, while total social financing hit a record CNY 7.0T. 1Y trend: “Up” The PBoC plans to adjust policies to support China’s economy amid external challenges and weak domestic demand. It will use tools like interest rates and reserve requirements, maintain liquidity, stabilize the yuan, and expects steady 2025 growth after 2023’s 5.0% expansion. (PBC)
The Eurozone’s GDP grew 0.9% annually in Q4 2024, matching earlier estimates and marking the fastest expansion since early 2023. Spain grew 3.5%, while Germany contracted by 0.2%. Lower borrowing costs and easing inflation supported growth. 1Y trend: “Up” (Eurostat)
Argentina’s consumer prices rose 2.2% monthly in January, the lowest since July 2020 and down from 20.8% a year ago, below forecasts of 2.3%. Annual inflation slowed to 84.5%, the ninth straight decline and the lowest since September 2022. 1Y trend: “Down” (Indec)
Currencies
The dollar index dropped to 106.6 as weak retail sales, down 0.9%, raised concerns about consumer spending. Harsh weather and wildfires likely impacted spending. CPI and PPI exceeded forecasts, but PPI components for the PCE index showed cooling. Powell reiterated a cautious stance on rate cuts. Meanwhile, Trump’s new tariff directive sparked investor uncertainty, though hopes remain for negotiated solutions. 1Y trend: “Up”
On Week 8, investors will focus on FOMC minutes, Fed speeches, and housing data, alongside S&P Global PMI and, of course, on new Trump’s levies initiatives. Global highlights include rate decisions in Australia, New Zealand, and China; inflation data from Canada, UK, South Africa, and Japan; and PMI figures for major economies.
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