Market Report.
📊 Today, the news focuses on events involving large US corporations. The market again experiences certain corrections, this time, by the technological sector, Trump had nothing to do with it.
💻 The semiconductor industry is facing a complex environment, with both positive and negative developments impacting the leading players like AMD and Nvidia
📉 Advanced Micro Devices (AMD) reported better-than-expected Q4 earnings, but its stock plunged over 8% in extended trading due to weaker-than-expected guidance.
🖥️ AMD’s main rival, Nvidia, is facing its own challenges. Nvidia CEO Jensen Huang told CNBC’s Jim Cramer that there is “no drama involved” between Nvidia and OpenAI, and that their $100 billion investment deal is “on track.” However, a Wall Street Journal report stated that Nvidia’s investment in OpenAI is “on ice,” contradicting Huang’s comments.
📉 Following the WSJ report, Nvidia’s stock fell over 3.4% on Tuesday.
🔁 As we warned months ago, this sector operates as a closed‑loop economy. These companies feed off one another, which significantly increases the risk of contagion across the entire space. Microsoft, which has a 27% stake in OpenAI worth $135 billion, is failing to capitalize on its exclusive access to OpenAI’s intellectual property and models through 2032. Microsoft’s flagship AI tool Copilot, which is based on OpenAI’s technology, lags behind competitors like Anthropic’s Claude Cowork in terms of functionality and user experience.
⚠️ And this is where the bubble begins to shake. Pay close attention to this: asset management firms with heavy exposure to AI are starting to run into trouble. Blue Owl, TPG, Ares Management, and KKR plummeted on Tuesday, driven by concerns about their exposure to industries being disrupted by artificial intelligence (AI), particularly the software sector.
📉 UBS analysts estimate that 25-35% of the private credit market is exposed to the risk of AI disruption, compared to only 8% exposure in the high yield corporate bond market.
📊 UBS forecasts default rates for private credit firms could rise to 13% in the U.S. if AI triggers significant disruption, compared to a 4% default rate for the high yield bond market.
₿ Michael Burry is warning that the current Bitcoin drawdown is exposing BTC as a speculative risk asset rather than a “digital gold” or safe-haven hedge. Burry notes that Bitcoin is down about 40% from its October peak, and has failed to behave like a hedge during recent macro and geopolitical stress, contrary to the “digital gold” narrative. Something we have repeatedly pointed out in our reports. The only exception to this was the spring of 2023, when the regional banking crisis in the US produced strong stock market corrections, with bitcoin surges.
🚨 Burry is concerned that if Bitcoin keeps falling through key levels, the losses could “rapidly strain the balance sheets” of major corporate and institutional holders, leading to forced selling and a potential “death spiral” or “cascading effects” across crypto-exposed balance sheets.
📉 He sketches scenarios where large corporate treasuries suffer multi-billion losses, highly leveraged players face margin calls, and crypto miners are pushed into bankruptcy, further amplifying the downside.
🦠 Investor Mike Novogratz describes the pullback as a “seller’s virus” – after Bitcoin broke above $100k, euphoric sentiment led to aggressive profit-taking and de-risking, driving the market lower.
💸 The current crypto rout has erased around $468 billion in market value, with Bitcoin down ~13% year-to-date and ~39% below its October peak.
🥇 Strong volatility has returned to the gold market, with gold futures surging to around $5,100 per ounce, representing a gain of more than 15% since Monday, following the dramatic sell‑off seen last week.
🤔 Speculative buying appears to have exited both gold and silver. Has the market shaken out all the opportunistic traders? Have Chinese investors stepped away from the precious metals space? It is still too early to say.
🏗️ What we do know is that the Shanghai market has experienced some of the busiest trading days in its history, particularly in markets such as copper. This, however, was largely to be expected, given the global transition towards electrification and renewable energy, a process in which many countries are now deeply engaged.
🌍 Menwhile, legendary investor Ray Dalio warned that the world is “on the brink” of a capital war, where money is weaponized through measures like trade embargoes, blocking access to capital markets, or using ownership of debt as leverage.
⚔️ Dalio pointed to escalating tensions, such as the Trump administration’s push to bring Greenland under U.S. control, as examples of the growing fears that could lead to a capital war.
🏦 He said central banks and sovereign wealth funds are already making “provisions” and preparing for potential capital controls, as institutions fear being sanctioned or losing access to capital markets.
📚 Historically, capital wars have developed around “great conflicts”, like the U.S. imposing sanctions on Japan before World War II, which Dalio sees as analogous to the tensions between the U.S. and China today.
🛡️ Despite the recent sell-off, Dalio still believes gold remains the best place to store money as a diversifier, as it tends to perform well during times of crisis. Dalio advised that institutions and investors should maintain a certain percentage of their portfolio in gold as a hedge, rather than trying to time the market and buy/sell based on daily price fluctuations, which is quite reasonable and wise.
📅 Meanwhile, the macroeconomic agenda continues with today’s European inflation data and the ECB rate decision tomorrow.
🇪🇺 As policymakers closely monitor the strength of the euro, preliminary inflation data for the euro zone on Wednesday will set the tone for markets ahead of the European Central Bank’s rate decision a day later. Consumer prices in the bloc are predicted to have slightly decreased to an annual 1.7% last month.
🇩🇪 German inflation surprisingly increased somewhat in January, according to recent figures, but French inflation was lower than anticipated. ECB policymakers, who last month expressed growing concerns about the euro’s rapid appreciation versus the dollar and its potential to drive inflation even lower if it continues to rise, may get alarmed by a big miss.
🌐 Gepolitics.
✈️ A U.S. F-35C warplane shot down an Iranian drone that was “aggressively approaching” the U.S. aircraft carrier USS Abraham Lincoln in the Arabian Sea. The U.S. said the drone was approaching with “unclear intent.”
🛢️ The drone incident has heightened tensions between the U.S. and Iran, causing a spike in oil prices as investors weighed the risk of a broader escalation in the Middle East.
🚢 Separately, a U.S. merchant vessel was “harassed” by Iranian Revolutionary Guard boats and a drone in the Strait of Hormuz, which the U.S. said would not be tolerated and increases the risk of miscalculation and regional destabilization.
🗣️ However, the White House Press Secretary stated that U.S.-Iran talks scheduled for this Friday are still on, and the President remains committed to pursuing diplomacy first, though he has a range of options including the use of military force.
🇮🇱 Tel Aviv is reportedly making intensive efforts to prevent an agreement between Iran and the United States, according to Israel’s Channel 12. Israel’s Channel 12 has reported that Israeli officials are lobbying US envoys to avoid any agreement that leaves Iran with a functioning nuclear program.
📄 According to Epstein’s published files, Bill Gates discussed with Epstein an agenda for pandemics and coordinating the WHO with the CDC in ‘co-branding’. ‘I hope we can pull this off…’
📈 Market View.
📉 Markets moved lower again during yesterday’s session, driven mainly by weakness in the US technology sector. S&P 500 futures have once again fallen below the 7,000‑point level, currently trading around 6,960 points. Nasdaq 100 futures have also lost the 26,000 mark and are now trading near 25,500 points.
💵 The US Dollar Index (DXY) climbed back above 97.50 points during yesterday’s session but has eased slightly in recent hours to around 97.35. This has allowed EUR/USD to regain the 1.18 handle, currently trading close to 1.1830.
📉 In Europe, equity markets were also dragged lower by the sell‑off on Wall Street. DAX 40 futures, which had approached the 25,200‑point level, have retreated to around 24,930 points. Euro Stoxx 50 futures, after nearing 6,085 points yesterday, have pulled back to approximately 6,015 points.
🛢️ The oil market rebounded during yesterday’s session, with spot Brent crude climbing towards $68 per barrel, before retreating to around $67.40. We have outlined the underlying drivers in the news section.
🥇 Gold has once again adopted a strongly bullish tone, with gold futures currently trading above $5,100 per ounce.
₿ Finally, Bitcoin continues to weaken, marking another session low yesterday after falling below the $73,000 level, from where it has staged a modest rebound. We have also provided key details on this move in the news section.
