Thursday's Markets Update (February 20, 2025)

21 Feb 2025 by rate3

On Thursday, equities closed in the red on earnings, despite rising jobless claims and falling manufacturing. Palantir dropped due to expected Pentagon budget cuts. In Europe, construction output continued to decline while consumer confidence is rising in anticipation of the ECB easing rates. EU stocks are mixed as traders assess corporate profits, with chip stocks going up while FMCG stocks went down. The Brazilian market is neutral, while Indian stocks are down due to selling in IT and banks. Chinese equities are in the red on profit-taking. The Japanese yen is at a two-month high as the flight from USD assets intensifies amid Trump's 'aggressive negotiation' tactics. Oil prices are rising while the dollar is down, as tariffs and rate projections remain uncertain. Gold has reached a new ATH amid ongoing risk-off sentiment. BTC, SOL, and ETH are in the green on cautious buying. SOL continues to struggle after a sharp decline in meme coin trading.

The State of the World Market: Down, investors fleeing to safety from US assets amid growing geopolitical and economic worries.

Details

Initial jobless claims rose to 219K for the week ending February 15th, exceeding forecasts of 215K. The labor market remains tight, though federal employees affected by DOGE layoffs are excluded from state data. 1Y trend: "Up" (DOL)
The Philadelphia Fed Manufacturing Index fell to 18.1 in February from 44.3 in January, missing forecasts of 20. While activity expanded, growth slowed as new orders, shipments, and employment eased. Price pressures rose, and six-month growth expectations softened. 1Y trend: "Up" (PhFed)

Crypto

Meme tokens, typically buoyed by strong BTC performance, have seen subdued volumes and declining interest as BTC trades sideways. Most cult tokens have lost over 70% of their value, with SPX6900 being an exception. Overall crypto open interest has dropped to $63.95B from December's $94B peak, with meme tokens like PEPE, WIF, and BONK experiencing significant outflows. Traders are shifting focus to airdrops and older coins, reducing meme token mindshare. (source)

World Markets

Euro Area construction output fell 0.1% YoY in December 2024, with declines in specialized activities (-1.4%), buildings (0.1%), and civil engineering (2%). France and Italy saw drops, while Germany and Spain rebounded. Annual output declined 0.9%. 1Y trend: "Up" (Eurostat)
Euro Area consumer confidence rose to -13.6 in February, a four-month high, surpassing expectations of -14. Optimism grew as the ECB is expected to cut rates further, with forecasts suggesting rates below 2% by 2026. EU sentiment also improved to -12.9. 1Y trend: "Up" (EU)
1Y trend: "Side"

Currencies

The yen strengthened past 149 per dollar, hitting a two-month high as expectations of a BoJ rate hike and global uncertainties boosted demand. BoJ's Takata hinted at further policy adjustments, while Japan's GDP growth and upcoming inflation data added optimism. Trade tensions and geopolitical risks also supported the safe-haven currency. 1Y trend: "Side"

Commodities

Gold hit a record high above $2,950 per ounce amid rising global uncertainties, fueled by escalating trade tensions from Trump's tariffs and geopolitical risks. FOMC minutes noted inflation concerns, delaying rate cuts, while Trump's comments on Ukraine added to market unease. 1Y trend: "UP"

Comment: What's Up With Trexit?

Trexit, US-turn, Munich 2.0—Vence's speech in front of Brussels' entrenched bureaucrats signifies that a new generation of politicians—much younger but no less greedy—is taking hold of the world.

Since 2017, I have been writing about the upcoming generational shift and its implications for the economy and politics. This shift occurs in cycles: four smaller ones every 20-25 years and one large cycle every 80-100 years. Each generation tends to adopt ideologies and strategies that are oppositional to those of the preceding one. For example, Musk/Vence/Hegseth and the Millennial generation may lean toward authoritarianism, contrasting with Boomers' tolerance.

The new White House administration has already implemented substantial tariffs and divisive rhetoric. While some believe this is empty talk, I contend that worldwide conflicts are inevitable due to the desires of a generation seeking rapid change.

From an evolutionary perspective, humans are designed to adapt. With the global population now at 8 billion, competition for resources has intensified. Globalization has pushed many out of lucrative jobs, leaving a small number of moguls in control.

Decentralization will offer more opportunities for local talents to prosper, as they will only need to compete with their immediate neighbors instead of the entire world. While corporations will continue to exist, the fight among them will become fiercer, allowing room for small businesses. This results in a precarious but inevitable evolution that could eventually lead to a new global order.