February 15, 2025
Markets and tariffs
Equities were broadly positive, with the S&P 500 at 6,066.44, the Nasdaq at 19,714.27, the Russell 2000 at 2,287.94, the FTSE 100 at 8,767.80, and the Nikkei 225 at 38,801.17. WTI crude was $73.82, and the 10-year Treasury yield was 4.525%.
China responded to new U.S. tariffs with 15% duties on U.S. coal and LNG, plus 10% higher duties on crude oil, agricultural machinery, and some vehicles. Beijing also introduced export controls tied to critical minerals including tungsten, tellurium, and ruthenium. For recruiting, the point is not just that tariffs are negative. The better angle is that tariffs can move through energy costs, supply chains, margins, and guidance.
Eurozone inflation rose to 2.5% in January, above the 2.4% estimate. Energy costs rose 1.8% year over year, core inflation stayed at 2.7%, and services inflation eased to 3.9% from 4.0%. The ECB still cut rates by 25 basis points to 2.75%.
Consumer and labor
Canada reported a C$708 million goods-trade surplus in December, its first since September, helped by energy exports to the U.S. and a weaker Canadian dollar. U.S. consumer sentiment fell about 5% in the preliminary February University of Michigan survey, while 2025 inflation expectations jumped from 3.3% to 4.3%.
Housing demand stayed weak. Mortgage applications from buyers fell 4% from the prior week, the 30-year fixed mortgage rate was around 7%, and purchase applications were down about 39% since February 2019. U.S. job creation slowed to 143,000 in January from 307,000 in December, below the 169,000 estimate. Unemployment fell to 4.0%, labor force participation rose to 62.6%, and wages increased 0.5% for the month and 4.1% year over year.
Autos, banks, and AI
Nikola was nearing bankruptcy after struggling to raise funds and losing hundreds of thousands of dollars per unit sold. The stock fell 20% after hours to $0.60, cash declined to $198.3 million from $464.7 million at the end of 2023, and the company had lost 99% of its value since its 2020 IPO. My read is that Nikola is a blunt reminder that growth stories need unit economics and funding access.
Nissan and Honda ended talks over a possible $58 billion combination after disagreements over equity ratio, valuation, and management structure. Honda's proposal to make Nissan a subsidiary was a major sticking point, and Honda also wanted Nissan to cut production capacity by 20%.
UBS reported $770 million of fourth-quarter profit attributable to shareholders, above the $483 million estimate, and announced a planned $1 billion buyback in the first half of 2025, with up to $2 billion more in the second half. Shares still fell 5.5% because the buyback depended on Swiss capital regulation stability. Google also released Gemini 2.0 as competition in AI agents intensified.