SVET Reports
SVET Markets Weekly Update (February 17–21, 2025)
On Week 8, equities are deep in the red as Trump’s tariffs and geopolitical games start to worsen economic data and devalue the dollar. EU markets are mixed, with defense stocks up following Vance’s Munich speech, while tariffs suppress auto and other sectors amid looming German elections. The world’s markets are mostly in the red, led by Indian stocks dragged down by tariff-sensitive resources and pharmaceuticals. Meanwhile, Chinese markets performed well due to PBoC easing and a continuing AI rally. Gold and silver are up as investors de-risk. BTC, ETH, and SOL still can’t recover after Trump’s tariffs plunge a month ago.
On Monday, with main markets closed for a holiday, EU defense equities surged on expectations of increased military spending following Vance’s Munich speech. Gold and oil are fluctuating amid growing anticipation of Ukraine war peace talks. BTC is declining as institutional investors continue to de-risk. SOL has been hit the hardest as ETH outperformed, allegedly due to large purchases by some private funds.
Crypto
Digital asset investments saw $415M in outflows after a 19-week $29.4B inflow streak, likely due to a hawkish Fed stance and high US inflation. BTC led outflows at $430m, while Solana, XRP, and Sui saw inflows. 1Y trend: “Side” (source)
World Markets
European stocks rallied on Monday, hitting new record highs. Defense stocks surged amid expectations of increased defense spending after Vance’s Munich speech. Peace negotiations on Ukraine are set to begin. Trump reaffirmed plans to impose tariffs on foreign cars. 1Y trend: “Up”
In December 2024, the Euro Area achieved a trade surplus of €15,467.70M. Historically, the trade balance averaged €5,649.61M (1999–2024), peaking at €29,946.10M in July 2015 and hitting a low of -€54,922.70M in August 2022. 1Y trend: “Side” (Eurostat)
Comment: What’s Up With DOGE? (2)
Within Accenture, during the era of “business process re-engineering,” we categorized client projects based on a 2x2 matrix. The horizontal axis represented the client’s budget, ranging from no budget to an unlimited one, while the vertical axis represented the client’s needs, from “not needed at all” to “very urgent.”
I suspect that Elon Musk does not perceive his current interactions with governmental bodies as a “re-engineering” endeavor. I believe his approach is closer to a crusade, and his core team likely consists not of business process experts, but of bug-hunters who see themselves as “people’s auditors.”
If I were to classify Musk’s current governmental involvement using our framework, I would place it squarely in the fourth quadrant: “high-need, low-budget.” The term “budget” here encompasses not only financial resources but, more crucially, the time required to re-engineer a vast organization like the bureaucratic apparatus of the world’s largest economy. Even a four-year timeframe (I am not sure Musk has so much time for his escapades) is insufficient for this task, especially lacking the necessary experience and broad political agreement.
Consequently, Musk will likely focus on easily achievable and attention-grabbing initiatives. He will likely overlook the more complex task of achieving substantial improvements in government effectiveness and reductions in long-term costs. This ultimately means that the primary political objective — reducing government spending to curb inflation — will remain elusive. Only systemic, far-reaching changes to the government’s “business processes” can significantly reduce government expenses and meaningfully impact inflation.
On Tuesday, equities were mixed as the holiday-shortened week started, with the S&P and Nasdaq near flat and the Dow down. Meanwhile, manufacturing activity grew above expectations as traders weighed delayed levies, Ukraine peace prospects, and bearish comments from the Fed. European stock indices hit ATH amid optimism over peace talks. Markets in Brazil are rising, boosted by Lula’s plan for infrastructure investments and delayed tariffs. The Indian market is stalling while capital outflow continues as the RBI eases policies and investors expect Trump’s tariffs on chemicals, metals, and autos to be enacted in April. Hong Kong stocks surged after Xi met with tech leaders and promised support to rival American competitors. The resource-driven and China-dependent market in Australia is down as the RBA cuts its rate for the first time since 2020. Its counterparts — markets in South Africa and Nigeria — fluctuated as, correspondingly in those countries, unemployment and inflation pressure eased slightly. Oil, gold, and silver are up marginally, remaining in a weekly side trend amid uncertain outcomes of geopolitical developments. BTC, SOL, and ETH continued to decline amid technical factors and growing bearish sentiment.
The State Of The World Market: Volatile, fearing a downside on a slowing economy but hopeful on the geopolitics.
Details
The NY Empire State Manufacturing Index rose to +5.7 in February, beating forecasts and indicating a slight rebound. New orders and shipments grew, but employment fell. Input costs surged, while business optimism declined despite expectations of future improvement. 1Y trend: “Side” (NYFed)
The NAHB Housing Market Index dropped to 42 in February, a five-month low, due to tariff concerns, high mortgage rates, and housing costs. Current sales, future expectations, and buyer traffic all declined, reflecting weakened builder optimism. 1Y trend: “Down” (Nahb)
World Markets
Germany’s ZEW Economic Sentiment Index jumped to +26 in February, its highest since July 2024, exceeding forecasts of +20. Optimism grew over the new government’s potential and improved private consumption and construction sector outlooks, though current economic conditions stayed weak. 1Y trend: “Down” (ZEW)
South Africa’s unemployment rate dropped to 31.9% in Q4 2024, the lowest since Q3 2023, as employment rose to 17.078M. Finance and manufacturing sectors saw job gains, while youth unemployment fell to 59.6%, a one-year low. 1Y trend: “Down” (Statssa)
Currencies
The euro fell to $1.45 amid concerns over rising defense spending’s impact on inflation and rates. European leaders discussed Ukraine support but took no concrete steps, while the ECB is expected to cut rates three times, potentially below 2% by 2026. FYI: Additional military expenditure for the next 10 years is estimated at USD 3.1T. Combined EU yearly GDP is about USD 25–30T. Top five EU economies’ GDP is about USD 15T (Germany: $4.5T; UK: $3.5T; France: $3.3T; Italy: $2.2T; Spain: $1.6T). So defense expenditures is expected to stay at 2–3% of combined EU yearly GDP or twice of that for leading economies. 1Y trend: “Down, Depreciated”
Commodities
Silver prices edged higher to near $32.5 per ounce , continuing their recent range-bound trading. Global trade uncertainties and safe-haven demand supported silver. Trump’s tariff threats and the ongoing Ukraine war added to the uncertainty. Strong industrial demand, especially from the solar and wind power sectors, also boosted silver prices. 1Y trend: “Up”
On Wednesday, equities are up, with the Nasdaq and S&P making new ATHs, as housing starts decline sharply and despite new tariff threats and FOMC minutes showing the majority on a rate-cutting pause in view of tariffs. Japanese markets are down, keeping inside of their narrow 12-month-old side-range after the BoJ started its rate hike. Australian shares hit a one-month low on tariffs, with the jobless rate the highest in 3 months. The EU’s, as well as Canadian, Brazilian, and Indian stock markets, are down as auto, chip, and drug stocks were pressured by Trump’s new levies. The South African rand keeps depreciating on slow growth, high debts, and a budget deficit. Chinese equities are in the green on a continuing DeepSeek rally. Natural gas surged to a 5-year high on cold weather. Lumber keeps rising on tariffs. BTC, SOL, and ETH are in slight green but still in a bear trend. Other news: Microsoft introduced a quantum chip.
The State of the World Market: Mostly Down, suppressed by new tariffs, rising inflation and mounting debts.
Details
Housing starts dropped 9.8% MoM to an annualized 1.366M units in January, after a revised 16.1% surge in December. Historically, housing starts have averaged 0.31% since 1959, peaking at 29.3% in July 1982. 1Y trend: “Side” (Census)
Fed policymakers urged caution in adjusting monetary policy amid high uncertainty. Some favored maintaining restrictive rates if inflation stayed high, while others supported easing if growth slowed. Upside inflation risks were noted. Rates held at 4.25%-4.5%. 1Y trend: “Down” (Fed)
Crypto
Microsoft introduced Majorana 1, a quantum chip leveraging topological superconductivity, a unique state of matter. The chip uses a custom topoconductor to control Majorana particles, advancing quantum computing. It requires extreme cooling and precision. (source)
World Markets
China’s FDI fell 13.4% YoY to CNY 98B in January 2025, marking the weakest start in four years. Declining foreign confidence, deflation risks, and opaque balance sheets persisted, though government support and tech sector easing boosted sentiment. 1Y trend: “Down” (CN
The People’s Bank of China held key lending rates steady for the fourth month in February, keeping the one-year LPR at 3.1% and the five-year LPR at 3.6%, both at record lows. The decision aligns with market expectations amid yuan pressure and trade tensions. Last week, the PBoC hinted at future policy adjustments to support the economy. 1Y trend: “Down” (PBC)
Currencies
The South African rand fell to an over two-week low of 18.6 per USD after Finance Minister Enoch Godongwana’s budget speech was postponed, the first delay in three decades. Coalition divisions deepened as the Democratic Alliance opposed a VAT hike, complicating fiscal reforms amid economic challenges, which include slow growth and high debts, exacerbated by budget deficit which was caused by expanding social programs and support for state-owned enterprises. 1Y trend: “Side”
Commodities
Natural gas futures surged over 7% to $4.36/MMBtu, hitting a December 2022 high amid extreme cold boosting demand and disrupting output. Prices rose for seven days, the longest streak since July 2021, with a 29% weekly gain lifting gas producer stocks. The oil-to-gas ratio fell to 17-to-1, its lowest since December 2022, reflecting gas’s strength. Analysts expect cold weather to sustain high demand through February 22. 1Y trend: “Side”
Lumber futures neared $620 per thousand board feet in February, the highest since October 2022, driven by tight supply and tariff concerns. North American production fell in 2024 due to sawmill closures, while tariff hikes on Canadian lumber risked price spikes (up to 40%). 1Y trend: “Up”
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)
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.
On Friday, equities plummeted as consumer sentiment and business activity dropped sharply to a 17-month low on tariffs, spending cuts, and hectic Trump’s politics blowing up inflation expectations to a one-year high.
World’s Markets:
EU manufacturing continued to contract at a slower pace while services growth slowed.
EU stocks are flat, positioning for Germany’s Sunday election, where right-wing parties, headed by CDU, CSU, and far-right AfD, are leading.
The Brazilian market closed in red as retailers went down due to tariffs resetting long-term growth perspectives, despite still growing revenues.
The Indian market ticked down again, dragged by finance, auto, and pharma on tariff expectations, despite the local economy continuing to expand.
Chinese equities rallied, hitting a 7-week high on AI optimism and PBoC liquidity injections. This was joined by Japan’s stocks led by tech, despite inflation hitting a 2-year high.
Mexican GDP growth is the lowest in 3 years.
Commodities and Currencies:
Gold is hanging near ATH as oil goes down on a looming global economic depression, even as supply concerns rise due to volatile geopolitics.
The dollar is depreciating on economic worries.
Crypto: BTC, ETH, and SOL dropped on stocks and the ByBit hack. The crypto market has stayed in the red for a month, unable to recover after the end-of-January risk-off Trump’s tariffs crash.
The State of the World Market: Deeper Down, investors’ unease on hectic Trump’s politics is increasing as data shows an accelerating economic downturn. Meanwhile, Chinese market stood out supported by AI and PBoC.
Details
The S&P Global US Composite PMI fell sharply to 50.4 in February from 52.7, signaling near-stagnation in the private sector. Service sector contraction offset manufacturing gains, weakening new orders and employment. Input costs rose, while business optimism hit a near two-year low amid policy and economic concerns. 1Y trend: “Up” (PMI)
The University of Michigan consumer sentiment for the was revised down to 64.7 in February, the lowest since November 2023. Declines were seen across age, income, and wealth groups, driven by fears of tariff-induced price hikes and rising inflation expectations. 1Y trend: “Down”
Crypto
Arkham Intelligence reported that the Lazarus Group hacked Bybit for over $1.5B, citing evidence from online sleuth ZachXBT. Bybit confirmed the breach, assuring client withdrawals would be processed. This marks the largest single crypto theft in history. (source)
World Markets
The HCOB Flash Eurozone Manufacturing PMI rose to 47.3 in February 2025 from 46.6, exceeding forecasts. The sector’s downturn eased to a nine-month low, with slower production declines, falling new orders, and reduced workforce numbers. Input prices rose, while selling prices and business sentiment dipped. Source: S&P Global. 1Y trend: “Up” (SP)
On Week 9, investors will focus on Fed speeches, major economic data (PCE, GDP, consumer sentiment), and housing metrics. Globally, inflation figures, GDP growth, and key indicators like Germany’s Ifo Index and retail sales will be in the spotlight.
Comment: On A Strategy of The Betrayal.
This week, crazy geopolitical developments are reminiscent of eighteenth-century war games played on European terrain, with their pawn armies driven by kings and royal courts’ cliques, motivated by selfish ambitions, national pride, and military voluntarism. Machiavellian ‘the ends justify the means’ is a hashtag in almost every latest political tweet. Munich 2.0 — an attempt to redirect resources to the Pacific front by sacrificing elementary ethical and humanitarian considerations to accounting reasoning — may or may not play out as well as Munich 1.0. One thing is clear, however, from the latest economic data: both investors and consumers do not appreciate interference with their basic necessities. Might this be the first call for multitudes to start seeing the light of day and to understand that giving so much power to one individual is the worst idea that has ever come into humanity’s collective mind?