Trail 179 — Buy the Dip
Markets Update by Aashish Singh
Business Update by Sylvia Lo
Financial markets are fascinating. They are constantly evolving, they follow no predetermined path and much like humans, their behaviour at times is completely irrational. Every day their movements are thoroughly analysed, yet their next steps are a complete mystery. They follow a random walk and therein lies their beauty. Each week I briefly recap a few stories that captured my interest.
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A strong risk off sentiment gripped markets as Trump escalated the tariff wars while also publicly sparring (and rebuking) with Zelenskyy in a live televised sit-down, long-term inflation expectations jumped up across multiple surveys and stagflation fears surfaced as consumer spending fell by the most in 4 years (although after a strong holiday season).
Bitcoin slid to $86k (after trading as low as $80k) with ETF flows turning most funds negative since inception in Jan 2024. Benchmark equity indices S&P and NASDAQ were down for the week. Treasury yields saw sharp dips with 2-year trading below 4% as haven demand intensified. Dollar strengthened on higher tariffs. Cross asset volatility was higher as demand for protection bets increased. Gold retreated from lifetime highs amidst the greenback’s strength.
The buy the dip mentality that has persisted will be tested by Trump’s policy shakes up investor confidence. Fundamentals are still strong on 2 accounts — the high M2 supply will persist, and corporate earnings will remain strong. But these will act more as support rather than growth catalysts from here on.
New US Tariffs
China threatened to hit back at Donald Trump’s trade threats after the US president unveiled additional tariffs on Chinese imports, raising the risk of tensions spiralling between the world’s two largest economies.
Hot Money
Investors have pulled a record $3.3 billion from US spot-Bitcoin exchange-traded funds in February, poised for the biggest monthly exodus since they debuted, as investors sought refuge in safer assets amid rising geopolitical tensions and persistent inflation concerns.
The group’s net outflow came amid a slide of as much as 28% in Bitcoin from its record high on the day Donald Trump was inaugurated as president, including its steepest monthly decline since June 2022. Other cryptocurrencies have also faltered, with an index tracking top digital tokens reaching its lowest level since the US Election Day in November. In all, the rout has wiped out roughly $1 trillion in crypto market value. Fidelity Wise Origin Bitcoin Fund (ticker FBTC) has posted the biggest outflow among these funds, amounting to more than $1.4 billion.
Leveraged ETF Losses
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They were all the rage on the way up: high-risk, high-return exchange-traded funds, minted in bulk by Wall Street product managers in the euphoria of the post-election bull market. Now these speculative products are dealing their owners a gut punch after a series of disappointing economic reports and anxiety over US trade policy have put a brake on risk tolerance across the markets.
In The World of Business
This week, Citigroup accidentally credited a customer account $81 trillion instead of $280 last April. It took three employees and several hours to realise and correct the error.
Nvidia has managed to exceed lofty expectations yet again, with the chip behemoth’s fourth-quarter results beating Wall Street’s forecasts as management also offered bullish guidance.
Unilever ousted CEO Hein Schumacher after 18 months, appointing CFO Fernando Fernandez to lead its cost-cutting and brand prioritisation overhaul amid investor pressure and market challenges.
$81 Trillion Blunder
Citigroup narrowly avoided a catastrophic mistake when it accidentally credited a customer with $81 trillion instead of $280, an error that went unnoticed by two employees before being caught 90 minutes later. While no funds left the bank, the incident highlights ongoing operational risks and weaknesses in Citi’s internal controls, which have long been under regulatory scrutiny. A spokesperson downplayed the impact, stating that Citi’s controls ultimately prevented the error from causing financial damage, but experts argue the mistake exposes deeper issues in risk management and oversight.
This high-profile blunder follows a pattern of near misses at Citigroup, including a 2020 incident where it mistakenly wired $900 million to Revlon lenders, resulting in a costly legal battle and fines. Regulatory agencies have pushed the bank to improve its compliance and risk controls, yet recent errors suggest lingering vulnerabilities. While Citi CFO Mark Mason insists the bank is investing in technology and data improvements to prevent such mistakes, financial experts warn that even rare errors of this scale can erode trust and raise concerns about systemic risks in banking operations.
Nvidia’s AI Boom Continues
Nvidia shattered expectations once again, reporting a record $39.3 billion in quarterly revenue, a 78% increase from last year and surpassing Wall Street’s projections. The company’s data centre division, fuelled by Big Tech’s insatiable demand for AI computing power, drove most of the gains, bringing in $35.6 billion — up 93% year-over-year. Despite slightly declining gross margins due to the Blackwell chip roll out, Nvidia remains at the forefront of the AI revolution, forecasting $43 billion in revenue next quarter. Its stock, which surged 171% in 2024, continues to be a key driver of the broader market, solidifying its status as the linchpin of the generative AI boom.
While Nvidia’s dominance remains unchallenged, recent developments such as Chinese AI startup DeepSeek, have created headwinds with Nvidia suffering a $600 billion market cap loss. However, global demand remains strong, with tech giants like Meta, Amazon, Google, and Microsoft set to invest $320 billion in AI infrastructure. Nvidia’s H20 chips, designed to comply with U.S. export controls, are also seeing increased sales in China, possibly in anticipation of tighter trade restrictions. Despite market uncertainties, Nvidia’s latest earnings reinforce its critical role in shaping the AI-powered future.
Unilever’s CEO Shake-Up
Unilever ousted CEO Hein Schumacher just 18 months into his tenure as the company accelerates its turnaround plan, focusing on cost cuts and brand prioritisation. CFO Fernando Fernandez will step in as the new CEO, with Unilever’s board praising his decisive leadership. The leadership shift comes as the consumer goods giant struggles to regain market share, balance pricing strategies, and navigate investor pressure — particularly from activist investor Nelson Peltz. Under Schumacher, Unilever announced plans to spin off its ice cream business, cut 7,500 jobs, and divest under performing brands. While the company reported 4.2% sales growth in 2024, a cautious outlook for 2025 rattled investors, underscoring the challenges ahead.
The abrupt CEO transition adds uncertainty as Unilever competes with rival Nestlé, which is also undergoing a major restructuring to drive growth. Fernandez, previously the head of Unilever’s Beauty & Well being division, is seen as a bold yet unconventional choice, with analysts noting his strong but maverick leadership style. Unilever insists its strategic direction remains unchanged despite the leadership shake-up, maintaining its 2025 outlook.
Until next week.
