Portfolio Update – February 2025

General news

• On 02/02/2025, The White House announced that President Trump will impose steep tariffs this weekend, including 25% on Mexico and Canada and 10% on China, citing their role in the fentanyl crisis. The news led to a sharp drop in the stock market, with the Dow falling over 300 points and losses in the S&P 500 and Nasdaq. Despite earlier reports suggesting possible delays or exemptions, the administration confirmed the tariffs would take immediate effect. Economists warn that these measures could drive inflation higher just as price pressures were beginning to ease, and the Federal Reserve is closely watching the potential economic fallout.
• Inflation ended 2024 higher than the Federal Reserve’s target, with the personal consumption expenditures (PCE) price index rising 2.6% year-over-year in December, slightly above November’s figure. Core PCE, which excludes food and energy, remained at 2.8%, aligning with expectations. While food prices rose modestly, energy saw a larger jump of 2.7%, and durable goods experienced deflation. The Fed recently paused interest rate cuts, with officials like Michelle Bowman emphasizing the need for more inflation progress before further adjustments. Meanwhile, personal income increased 0.4% in December, and spending rose 0.7%, while employment costs climbed 0.9% for the quarter.
• Stock futures dropped sharply Sunday night as investors reacted to President Trump’s new tariffs on goods from Mexico, Canada, and China, raising concerns about economic and corporate profit impacts. Dow futures slid 463 points (1%), while the S&P 500 and Nasdaq-100 fell 1.6% and 2.1%, respectively. Canada and Mexico announced retaliatory measures, while China vowed to file a WTO complaint. Oil and the U.S. dollar rose in response. Meanwhile, investors are bracing for a busy earnings week featuring major tech and consumer giants, along with the January jobs report, which is expected to show 175,000 new jobs and an unchanged 4.1% unemployment rate.
• On 04/02/2025, President Trump agreed to pause planned tariffs on Canadian imports for at least 30 days following commitments from Canada to combat fentanyl trafficking, Prime Minister Trudeau announced Monday. The decision follows a similar pause on tariffs against Mexico after both nations pledged new measures to curb opioid flow into the U.S. Canada committed to appointing a “Fentanyl Czar” and implementing a $1.3 billion border plan, reinforcing security with additional personnel and technology. Trump called the agreement a positive step toward a potential economic deal, while Trudeau emphasized cooperation in securing the border.
• President Trump announced a one-month pause on the newly imposed 25% tariffs on Mexican imports after Mexico’s President Claudia Sheinbaum agreed to deploy 10,000 soldiers to the U.S. border to curb drug trafficking, particularly fentanyl. Trump stated that negotiations on the tariffs will be led by Secretaries Marco Rubio, Scott Bessent, and Howard Lutnick, with both nations aiming to reach a broader economic deal. The announcement came after Mexico and Canada threatened retaliatory tariffs, while China vowed to challenge the U.S. tariffs at the WTO. U.S. stocks, initially down, rebounded following news of the tariff pause.
• On 05/02/2025, The Bank of England is expected to cut interest rates on Thursday, with money markets pricing in a 98% chance of a quarter-point reduction to 4.5%. This comes amid weak domestic growth, looming business tax hikes, and market uncertainty from President Trump’s tariff threats. Since January, traders have increased bets on BOE rate cuts in 2025, with projections now ranging from three to four reductions. Recent data, including sluggish retail sales and stagnant GDP growth, have fueled expectations for easing. Investors will closely watch the vote split and the BOE’s updated growth and inflation forecasts for further signals.
• China has responded to new U.S. tariffs with retaliatory measures, escalating trade tensions between the two largest economies. Starting Feb. 10, China will impose additional tariffs of 15% on U.S. coal and liquefied natural gas, and 10% on crude oil, agricultural machinery, and certain cars. Beijing also announced export controls on critical minerals like tungsten and molybdenum. Analysts see these moves as largely symbolic for now but warn that a full-scale trade war is in its early stages, with a high likelihood of further tariffs from both sides.
• On 06/02/2025, The American Federation of Government Employees and the American Foreign Service Association sued the Trump administration in federal court on Thursday, challenging its rapid dismantling of the U.S. Agency for International Development (USAID). The lawsuit argues that President Trump’s January 20 order halting all U.S. foreign aid, along with subsequent State Department directives shutting down USAID projects and laying off staff, were unconstitutional and unauthorized by Congress. Billionaire Elon Musk, a key Trump ally, has led the effort to shrink the agency, boasting online about its dismantling. USAID’s website confirms that nearly all employees will be placed on leave, with only a small fraction retained. The lawsuit highlights severe humanitarian consequences, including setbacks in malaria and HIV programs, with claims that preventable infections and maternal deaths are already rising.
• On 07/02/2025, The Reserve Bank of India (RBI) cut its key interest rate by 25 basis points to 6.25% on Friday, marking its first reduction since May 2020, as cooling inflation allows room to support the slowing economy. RBI Governor Sanjay Malhotra announced the decision, which signaled a shift in focus from inflation control to economic growth. Analysts predict further easing, with forecasts of an additional 75 basis points in cuts. The central bank revised its real GDP growth projection for the next fiscal year to 6.7% while lowering its estimate for the current year to 6.4%, the weakest in four years. Despite expectations of a shift to an “accommodative” stance, the Monetary Policy Committee unanimously maintained a “neutral” stance. While inflation has eased to 5.22% in December, concerns remain over the rupee’s weakness and potential capital outflows. Following the announcement, Indian stocks dipped, bond yields rose, and the rupee modestly strengthened to 87.47 against the U.S. dollar, with the RBI reportedly intervening in forex markets to stabilize the currency.
• On 10/02/2025, U.S. President Donald Trump announced plans to impose new 25% tariffs on steel and aluminum imports, adding to existing duties without specifying a timeline. The move is expected to impact industries reliant on these metals, such as construction and transportation. While the U.S. could benefit in the long run through increased domestic investment in steel and aluminum production, analysts warn of potential short-term demand disruptions. Since Trump’s first tariffs in 2018, the U.S. steel sector has seen investment growth, and the government has collected significant revenue from these levies. However, major exporters like Canada and Mexico, which supply large amounts of steel and aluminum to the U.S., could suffer economic setbacks despite previous exemptions from blanket tariffs.
• President Donald Trump ordered a halt to new penny production, calling it a move to reduce wasteful government spending, as each penny costs more than its face value to mint. While it’s unclear if the president has the authority to stop production without congressional approval, analysts suggest the order could survive legal challenges and lead to a shortage. Some expect this to accelerate the shift toward electronic payments, benefiting companies like Visa and Mastercard. The U.S. Mint reported in 2024 that producing a penny costs 3.69 cents, continuing a long-term trend of the coin costing more than its worth, with similar concerns arising for the nickel, which costs 13.78 cents to manufacture.
• On 11/02/2025, Federal Reserve Chair Jerome Powell reaffirmed the Fed’s commitment to controlling inflation and signaled no urgency in cutting interest rates, citing a strong economy and a solid labor market. Speaking before the Senate Banking Committee, he warned that easing policy too quickly could stall inflation progress, while moving too slowly could hurt economic growth and employment. Powell’s testimony largely aligned with previous Fed statements, but the hearing also touched on financial regulation, with Sen. Elizabeth Warren criticizing President Trump’s halt of the Consumer Financial Protection Bureau’s work. Powell assured that the banking system remains stable but acknowledged the Fed is reviewing Trump’s concerns about de-banking. While Powell avoided direct commentary on Trump’s aggressive tariff policies, he reiterated that trade matters fall outside the Fed’s responsibilities.
• On 12/02/2025, Inflation rose more than expected in January, with the consumer price index (CPI) increasing 0.5% for the month and 3% annually, exceeding Dow Jones estimates. Core inflation, excluding food and energy, also came in hotter than anticipated at 0.4% monthly and 3.3% annually. The data shook markets, causing a sharp drop in Dow futures and a rise in bond yields, while analysts predicted the Federal Reserve would delay rate cuts until at least September. Fed Chair Jerome Powell urged caution, emphasizing that the Fed looks at broader inflation trends rather than reacting to individual reports. Shelter costs remained a key driver, accounting for 30% of the CPI increase.
• On 13/02/2025, JPMorgan Chase has begun job cuts, informing some employees of layoffs expected to impact fewer than 1,000 workers in February, with more reductions planned later this year. The bank, which had over 317,000 employees at the end of 2024, continues hiring for 14,000 open positions and aims to redeploy affected staff. Despite these layoffs, JPMorgan posted record annual profits in 2024, benefiting from a strong U.S. economy and increased dealmaking activity. While market activity is expected to rise, some companies remain cautious amid economic policy uncertainties under the Trump administration. Investment banking fees have grown in the first quarter, reflecting growing client optimism.
• On 14/02/2025, India and the U.S. plan to more than double bilateral trade to $500 billion by 2030, with leaders Narendra Modi and Donald Trump emphasizing a mutually beneficial trade agreement. While Trump acknowledged India’s tariff reductions, he announced plans for “reciprocal tariffs” to address trade imbalances. India’s surplus with the U.S. was $45.7 billion in 2024, with total trade at $129 billion. The U.S. will boost military sales to India, including F-35 jets, while both nations collaborate on AI, semiconductors, and strategic mineral supply chains. Experts see the target as achievable, particularly with India’s shift from Russian to American defense imports and increased LNG purchases. However, challenges remain, including U.S. concerns over India’s ties with Russia and illegal immigration.
• The producer price index (PPI) rose 0.4% in January, slightly above expectations, though some signs suggest easing inflation pressures. Core PPI, excluding food and energy, matched forecasts at 0.3%. Despite the higher headline number, stock futures rose, and Treasury yields dropped as certain costs, like healthcare and airfares, declined. Over the past year, PPI increased 3.5%, keeping inflation above the Fed’s 2% target. The data pushed back expectations for interest rate cuts until the second half of 2025. December’s PPI was revised upward, further complicating the inflation outlook. Key price jumps included diesel fuel (10.4%) and eggs (44% monthly, 186.4% annually) due to avian flu. Meanwhile, jobless claims remained stable, reflecting a strong labor market.
• On 17/02/2025, India and the U.S. aim to more than double bilateral trade to $500 billion by 2030, Indian Prime Minister Narendra Modi announced alongside U.S. President Donald Trump in Washington. The leaders discussed finalizing a trade agreement and addressing tariff disparities. Trump emphasized “reciprocal tariffs,” imposing the same rates as trading partners, including India. The U.S. also plans to increase military sales to India, including F-35 fighter jets, while both nations collaborate on AI, semiconductors, and strategic minerals. Despite progress, tensions persist over tariffs, illegal immigration, and India’s ties with Russia.
• On 18/02/2025, The Reserve Bank of Australia (RBA) has lowered the official cash rate from 4.35% to 4.10%, citing declining inflation, subdued private demand, and easing wage pressures as key factors. The widely anticipated move will provide relief to mortgage holders, saving those with a $500,000 loan around $80 per month. While the RBA acknowledges progress in controlling inflation, it remains cautious due to potential risks, including a stronger-than-expected labor market and lingering inflationary pressures. The central bank will reassess its monetary policy stance at its next meeting on March 31-April 1.
• On 19/02/2025, The U.K.’s inflation rate rose to 3% in January, surpassing expectations of 2.8%, driven mainly by higher transport and food costs, while housing and household services provided downward pressure. Core inflation climbed to 3.7%, its highest since April 2024, with core services inflation rising to 5%. Despite recent economic challenges, Chancellor Rachel Reeves emphasized the government’s commitment to economic growth and easing financial strain on families. The Bank of England recently cut interest rates to 4.5% and signaled further reductions, though it anticipates inflation peaking at 3.7% in late 2025 before returning to its 2% target by 2027, alongside a revised economic growth forecast of 0.75% for this year.
• New Zealand’s central bank cut interest rates by 50 basis points to 3.75%, its fourth consecutive reduction, as easing inflation allows for economic stimulus. The move, aligning with expectations, brings rates to their lowest since November 2022. Inflation, at 2.2% in Q4 2024, has declined in seven of the last eight quarters, while economic growth has contracted for five consecutive quarters. The Reserve Bank of New Zealand expects growth to recover in 2025 but warns of near-term inflation volatility due to a weaker currency and rising fuel prices. Analysts predict further rate cuts, potentially reaching 2.25% in the long term.
• On 20/02/2025, U.S. and Russian officials met in Saudi Arabia for over four hours on Tuesday, marking the first formal diplomatic talks between the two nations since January 2022. U.S. Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov led the discussions, which aimed to lay the groundwork for potential peace negotiations over the war in Ukraine. The meeting followed a call between U.S. President Donald Trump and Russian President Vladimir Putin, in which they agreed to start peace talks. While both sides tempered expectations, Russia signaled openness to discussions but questioned Ukrainian President Volodymyr Zelenskyy’s legitimacy due to wartime martial law preventing elections. U.S. officials emphasized that ongoing efforts are needed to establish lasting peace.
• On 21/02/2025, Japan’s inflation surged to 4% year-on-year in January, its highest level since early 2023, reinforcing expectations for Bank of Japan (BOJ) rate hikes. Core inflation rose to 3.2%, exceeding forecasts, while core-core inflation edged up to 2.5%. Inflation has now stayed above the BOJ’s 2% target for nearly three years. The yen strengthened slightly following the data, which highlighted concerns about monetary easing and a weakening currency. BOJ officials, including Governor Kazuo Ueda, have signaled readiness to adjust policy, with some advocating rate hikes to curb excessive risk-taking and inflation. Despite strong recent GDP data, Japan’s full-year growth slowed to 0.1% in 2024. Analysts expect the BOJ to raise rates in June and December, with further hikes projected into 2026 and 2027.
• On 22/02/2025, A federal judge ruled Friday that the Trump administration could proceed with its plan to remove thousands of U.S. Agency for International Development (USAID) employees from their jobs. U.S. District Judge Carl Nichols denied a request from labor groups for a preliminary injunction, allowing the administration to place thousands of USAID workers on administrative leave and order overseas personnel to return within 30 days. Nichols stated that assessing the claims of both sides—one arguing USAID’s work is vital to human well-being and the other asserting it conflicts with current policies—was not legally or equitably clear enough to justify an injunction. Earlier, the judge had temporarily halted the administration’s move, pausing administrative leave for 2,200 staff and reversing leave for 500 workers, but that restraining order expired with his Friday ruling.
• On 24/02/2025, Warren Buffett’s cautious approach has raised questions after Berkshire Hathaway sold more stocks, built a record $334 billion cash reserve, and halted share buybacks—moves not fully explained in his annual letter. While Buffett reassured investors of his commitment to equities, he acknowledged that attractive opportunities remain scarce. Despite a strong bull market, concerns over economic slowing and market volatility under President Trump’s administration may be influencing his strategy. Berkshire’s largest holdings, Apple and Bank of America, have been reduced, and Buffett appears to be preparing the company for his successor, Greg Abel, who now has final say on investments. However, Buffett did hint at increasing stakes in Japanese trading houses, marking one clear investment direction amid his broader caution.
• On 25/02/2025, President Donald Trump confirmed that tariffs on Canadian and Mexican imports will take effect next week as planned, following a temporary pause after border security commitments from their leaders. The tariffs include a 25% duty on various products and a 10% tariff on Canadian energy, with Trump emphasizing the need for reciprocal trade measures. His decision raises concerns over escalating trade tensions, as both Canada and Mexico have threatened retaliatory tariffs, while similar U.S. tariffs on Chinese imports have already triggered countermeasures from China.
• On 26/02/2025, President Donald Trump announced plans to replace the EB-5 immigrant investor visa program with a new “gold card” that would cost $5 million and provide a path to U.S. citizenship. Unlike the EB-5 program, which grants green cards to foreigners investing in U.S. businesses, the gold card would offer additional privileges and attract wealthy individuals. Trump suggested that even Russian oligarchs might qualify and criticized the EB-5 program as fraudulent and ineffective. Commerce Secretary Howard Lutnick echoed this sentiment, stating that the new initiative aims to eliminate past issues while bringing high-net-worth individuals into the country. More details are expected in two weeks.
• On 27/02/2025, President Donald Trump announced that tariffs on Mexico and Canada will take effect on March 4, alongside an additional 10% tariff on Chinese imports, bringing total tariffs on China to 20%. Initially paused for a month, the tariffs are being reinstated due to unverified claims that illicit drugs continue to flow from Mexico and Canada. Trump also confirmed that the reciprocal tariffs set for April 2 will proceed as planned. His announcement contradicted earlier remarks by a White House official, who suggested a broader tariff policy review would take place in April. In addition to these measures, Trump has imposed global 25% tariffs on steel and aluminum, set to take effect on March 12, as part of his broader trade strategy.
• China is set to acknowledge weakening domestic demand at its upcoming “Two Sessions” parliamentary gathering, where it will unveil fiscal stimulus plans to counter U.S. trade tensions. The National People’s Congress is expected to lower its inflation target to 2%, signaling persistent deflation concerns, while also raising its budget deficit to 4% of GDP and tripling sovereign bond sales to 3 trillion yuan. Despite setting a GDP growth target of around 5%, analysts believe Beijing will take a cautious approach to stimulus, waiting until the second half of the year. The meetings coincide with President Donald Trump’s March 4 speech to Congress, where he may outline further trade measures, adding uncertainty to China’s economic outlook.