For the week ended 2/1/2025

Unless you’ve been living in a Wi-Fi-free cave, you’ve heard about the latest wave of tariffs against Mexico, Canada, and—take a wild guess—China. In a seemingly arbitrary move, Canada and Mexico were hit with 25% levies (though energy products from Canada got off with just 10%), while China got a flat 10% across the board. One has to wonder: Was this the result of rigorous economic analysis or just someone making it up as they went along? My money’s on the latter.
Meanwhile, U.S. GDP grew 2.5% in 2024. Not much buzz about it, but that’s a notable slowdown from the third quarter’s 3.2%. And, as expected, consumer spending carried most of the weight—because if there’s one thing Americans do well, it’s spend. Not that it’s a bad thing. Consider China, where only one-third of what they produce is consumed domestically; the other two-thirds must be shipped abroad. Germany faces a similar challenge, and with global trade shrinking—thanks in part to those ever-present tariffs—that’s not a boat you want to be in.
On the markets, foreign bonds and shares led the pack with 0.6% gains for the week, while domestic stocks and commodities took a 1.0% hit. The drop in U.S. stocks was largely tied to news of DeepSeek’s breakthrough in AI technology—a cheaper model that sidesteps the brute computing power required by Nvidia and other Western AI giants. If this turns out to be the real deal, brace for impact across the board, from AI firms to data center real estate and infrastructure. This could be huge.
Looking ahead, the economic calendar is stacked with manufacturing data and January’s unemployment rate. And with that, enjoy your caffeine-fueled morning and have a great week.




Interesting data point of the week.
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