Money Talks Report 28/Feb/2025.

?? Market Report.

?? A quick reminder once again, today we will have inflation data from Germany, according to the ECB we should reach the inflation target of 2% by the middle of this year, but inflation is on the rise again since September 2024. In the US we will also see the PCE inflation data, which will give us a clue as to the Fed's next move, making stock markets volatile.

?? Jobless claims in the U.S. for the week ended Feb. 22 rose more than expected and were the highest since early October. The revised growth rate for the US economy during Q4 2024 was in line with expectations, showing growth of 2.3% for that period.

?? On the other hand, pending home sales fell much more sharply than expected, contracting by 4.6% compared to an expected contraction of 0.9%. This could indicate that interest rates are putting pressure on the housing market, yet another reason for the Fed to lower them.

???? In addition to threatening to impose a 25% tax on the European Union on Wednesday, U.S. President Donald Trump announced on Thursday that he would approve tariffs on Canada and Mexico, which are currently on hold.

?? In a Thursday morning post on Truth Social, U.S. President Donald Trump announced that his proposed 25% tariffs on Canada and Mexico would take effect on March 4. Additionally, he stated that on the same day, China will be subject to an additional 10% duty on top of the ones it currently faces.

?? Trump cited insufficient progress on curbing fentanyl flows into the U.S. as the reason for the tariffs, despite recent actions by Mexico to extradite drug lord Rafael Caro Quintero to the U.S. The new tariffs on China coincide with the start of China's annual parliamentary meetings, giving Beijing less than a week to respond with countermeasures. There are signs the Trump administration is preparing for a wider economic decoupling from China, with the White House labeling China as a "foreign adversary" and reviewing the VIE structure that allows Chinese firms to list in the U.S.

???? Chinese authorities are under pressure to unveil consumer-focused policies with longer-term impact as China fights a trade war with the U.S. and needs Chinese consumers to boost domestic demand. However, these structural reforms could shift resources away from the export sector and President Xi's priority of developing "new productive forces," raising near-term stability and growth concerns.

?? TSMC, based in Taiwan, produces the majority of Nvidia's cutting-edge AI hardware. While on trial, Trump claimed that Taiwan had stolen the U.S. semiconductor market and threatened to impose taxes on Taiwanese chips. It will appear considerably worse, and not just for the chipmaker, if duties are also imposed on Taiwan. Nvidia's stock fell 8.5% on Thursday, wiping off $273 billion in value and leaving the business with a $2.94 trillion market capitalisation, losing its status of more than a trillion dollars.

?? Gold futures are up over 9% so far in 2025, outpacing the S&P 500's 1% advance. Gold is currently trading around $2,900 per ounce, with the potential to reach $3,000 for the first time. Central banks have been net buyers of gold for 15 straight years, and in 2022 they added a record high of 1,082 metric tons. This trend continued in 2024, with over 1,000 metric tons added.

?? Market View:

?? The worst-case scenario is materialising, and US futures have recorded sharp falls in the last few hours. During yesterday's interventions, we highlighted a fairly negative and clearly bearish crossover of the moving averages on the S&P 500 and Nasdaq futures charts. Currently, the Mini S&P 500 futures have lost 5900 points, trading at 5875 at the moment. Meanwhile, Nasdaq 100 futures have fallen below 21,000 points, now standing at 20,600.

?? Yesterday's macroeconomic data, which could have encouraged the prospect of rate cuts, seems to have had the opposite effect. The dollar has strengthened again, with the DXY index rising to 107.40 at the moment.

?? Consequently, the EUR/USD pair has lost the 1.04 level and is currently trading at 1.0390.

?? However, bond yields have declined, with the US 2-year bond approaching 4%, suggesting that the stock market declines are more related to risk factors than to Federal Reserve decisions.

???? The European market is also showing setbacks, although to a lesser extent. The DAX 40 Future is slipping towards 22,300 points.

?? On the other hand, gold remains relatively weak compared to previous days, currently trading at $2,875 per ounce.

??? As for oil, there was an attempt to recover prices. Yesterday, a barrel of Brent approached $74, but then fell back to the current $72.95.

? Finally, Bitcoin continues to fall, as we anticipated days ago. At the moment, the cryptocurrency is approaching $79,500. According to our previous projections, this movement could take Bitcoin to levels close to $72,000.

?? Geopolitics:

?? While the US makes progress on the peace agreements with Russia, the EU will discuss how many more billions it will send to the war. Despite the collapse of the Ukrainian army on the eastern fronts, the European bureaucratic machine is reluctant to admit they were wrong.

???? European Union leaders will discuss the appointment of a special envoy to represent the EU in potential negotiations around ending Russia's invasion of Ukraine at a meeting next week. Several European leaders have previously called for such a position to be created, after the U.S. shocked Europe by speaking directly with Vladimir Putin and leaving the EU out of the early talks. The European Commission is expected to unveil a plan to inject hundreds of billions of euros into the EU's defense industry at the summit. The U.S. President's envoy for Ukraine and Russia, Keith Kellogg, has been meeting with European officials and told them they would likely not be involved in the negotiations.

??? Publication of Epstein's list? The much-anticipated "Epstein list", mentioned during the election campaign by figures such as Elon Musk, does not actually exist in the way it's often portrayed. Contact lists and flight logs provide limited information at best. The phased release of the files, while presented as transparency, is likely more about prolonging drama and intrigue rather than providing substantive new information. However, the hypothetical existence of a comprehensive "client list" has become a powerful blackmail tool, keeping many public figures in line out of fear of being implicated.

???? There are calls for Britain to rejoin the European Union, with a parliamentary debate expected on March 24. The push for Britain to rejoin is viewed as a desperate attempt by the EU to sustain its failing economic model, as the European economy falters under the weight of its own policies. Britain's vote for Brexit was a clear rejection of unelected Brussels bureaucrats dictating national policy. Bringing Britain back into the fold is seen as a way for the EU to get a financial lifeline.

??? The EU itself is seen as a crumbling institution, with Germany's economic dominance declining, Southern Europe drowning in debt, and Brussels resorting to economic warfare against member states. Factors like the climate change agenda, financial volatility, trade restrictions, open borders, and the Ukraine war are pushing capital out of Europe at an alarming rate.