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Comandante Ferraz Lighthouse, Antarctica
This lighthouse stands at 4 meters tall and was built in 2007. The lighthouse has a range of 10 nautical miles. The solar powered lighthouse is located in an inlet on Antarctica which was officially charted in 2009.
Slettnes Lighthouse, Gamvik, Norway
This lighthouse is the worlds northernmost lighthouse. The lighthouse was originally built in 1905 but was subsequently destroyed in 1944. It was eventually rebuilt through the end of the 1940s. The lighthouse is located in between the Barents Sea and mountains
*Feel free to send us your photos of Lighthouses to be featured in our weekly market observations. *
A bad flashback
In a September 2022 issue of The Wall Street Journal, the publisher made gold its cover story. They were not pushing gold as an option to investors; they claimed that the asset had lost its status as a safe haven. We all know that did not come to be true, as the price of gold has nearly doubled since that date.
The publication claimed investors rotated capital from gold into U.S. Treasuries. U.S. Treasuries have yet to recover from their price in September 2022, and more investors have turned to gold for safety. This is not a new phenomenon. We have stated the global central banks’ gold-buying spree throughout the last four years. When central banks are dumping U.S. Treasuries for a different asset that has tangible applications, you should probably listen and even follow.
Last year, Central Banks were again net buyers of gold. This is the 15th year in a row that Central Banks have bought gold.
We expect this trend to continue. The price of gold moving up in recent years has not scared central banks across the world away from purchasing it. In fact, they continue to flock to gold for a variety of reasons including diversification and safety. China has led the way into gold as it leads global banks and institutions away from U.S. treasuries.
The uncertainty across the world has led to the GLD ETF growing exponentially over the last 15 months. The ETF is 3% below its all-time high in assets under management which it reached in 2019.
So far in 2025, gold has outperformed Bitcoin which many have argued will replace gold as the primary safe haven and inflation hedge moving forward.
Disclaimer: MacNicol & Associates Asset Management holds physical gold bullion and gold securities across various client accounts.
Expensive mornings
Consumers will more than likely face higher coffee prices at their local cafes or Starbucks moving forward. Coffee prices increased by 6% on Monday morning and marked a fresh all-time high for its 12th consecutive trading session.
Industry analysts have said the price of coffee will continue to increase due to historically weak crop yields driven by inclement weather. These supply issues are creating coffee bean shortages and have led coffee prices to increase by over 25% so far this year.
Robust coffee shipments from Vietnam decreased by 45% in November due to a drought. The outlook for coffee crops in Brazil looks uncertain due to unfavourable weather across the country.
Food inflation overall has been on the rise in recent years as supply shrinks partially due to extreme weather events. Food prices in the U.S. jumped another 2.5% last year, and some see the annual price increase of food jumping to 4% in the coming decades.
Powell testifies in the Senate
Jerome Powell, the Chairman of the Federal Reserve testified in Congress on Tuesday morning. During his remarks, he urged Congress to be patient for rate cuts and said the FED will be patient in adjusting interest rates due to inflation which has been sticky and other economic issues. Many politicians have urged Powell and the FED to begin cutting rates at a rapid pace including President Trump. However, the FED is an independent institution that the President does not control.
During Powell’s statement, he offered an upbeat assessment of the U.S. economy pointing to a balanced labor market. Powell also mentioned progress on the inflation front in his remarks. The FED has a dual mandate set by Congress: to pursue maximum employment and price stability.
The Federal Open Market Committee (FOMC) next meets in mid-March. Currently, interest rate futures are pointing to a 10% chance of a reduction in the fed-funds rate. As of Tuesday, the market is pricing in two 25-basis point cuts this year, a significant decrease from what many forecasted just a few months ago. Not even a day after Powell’s testimony, things changed. A hot inflation report was released on Wednesday morning. This surprised many and led to another interest rate future change. Futures are now pointing to only one interest rate cut this year, a 25-basis point cut in December. Headline inflation came in at 3% versus a 2.9% consensus estimate. This is the first time in 7 months that headline inflation has been 3% or higher and the fourth month in a row that the rate of inflation has increased. Core inflation also beat estimates and came in at 3.3% year-over-year. Prices moved up across the board including food prices which continue to move up and shelter prices which shifted higher in January.
Quite the pivot we have seen over the last few months and quite the change-up from what Powell said just a day ago. This hot inflation report could be a reason Powell, and the FED paused rate cuts. They gave themselves some breathing room for a situation like this (if inflation beat expectations and started to heat up). We will say the other reason the FED paused was the election. Coincidentally since the FED had their jumbo 50 basis point cut in September, inflation has increased every month. The FED has lost control, and the market is driving rates and inflation.
Before Wednesday’s inflation data was released, President Trump took to social media once again and took shots at the FED. He claimed interest rates should be lower and that lower rates would go hand in hand with upcoming tariffs. We are truly living in unpredictable times that they will study for generations.
During Powell’s testimony, he stated that the Federal Reserve would never create a Central Bank Digital Currency. This is arguably bullish for crypto as there will be no coin that is backed by the world’s most powerful Central Bank. However, this statement also reflects the resistance of many to adopt crypto.
Tech titans clash
Elon Musk and Sam Altman clashed online over the weekend in a bout that tech bros could not look away from. Sam Altman founded OpenAI which owns ChatGPT. Altman has been an early innovator in artificial intelligence. However, many including Musk have become extremely critical of him recently. Altman changed OpenAI’s structure, board, and compensation packages to benefit himself. Musk has gone as far as to claim that Altman is a swindler due to his recent moves.
Altman has even pushed for OpenAI to become a for-profit enterprise (currently it’s a not-for-profit enterprise). He has previously claimed that the capabilities of AI are too powerful for a private enterprise and AI should focus on bettering all of humanity.
So, what happened this week? Elon Musk offered OpenAI $97.4 billion for the company’s nonprofit assets. The offer was reported by The Wall Street Journal and Musk’s group includes numerous investors. This report led Altman to claim his company is not for sale. He even swiped back at Musk saying he would pay $9.74 billion for X (Musk bought Twitter for close to $50 billion a few years back).
Altman went further to discredit Musk by saying he was not a serious person, and his offer was meant to slow down a competitor.
OpenAI promised investors that it will complete a subsidiary transition into a traditional for-profit company by 2026 as part of an October 2024 funding round which valued the company at $157 billion.
Altman reportedly did not slam Musk’s offer as it was too low in comparison to the company’s October valuation. He reportedly slammed it because he is quietly trying to buy OpenAI’s for-profit assets alongside a group of investors. Yes, you read that right, he is the seller and the buyer in this transaction. Talk about conflict of interest. The issue with Altman trying to buy and sell OpenAI is the rumored price is well below market value. Altman and his investors would be scooping OpenAI’s for-profit assets up for a steal. Musk is reportedly trying to expose this through a higher offer that OpenAI’s board must review and compare to other offers.
There is also the other side of this feud which goes back quite some time. Musk helped cofound OpenAI with Altman back in 2015. He has tried to regain control of the company a few times since, perhaps this is his latest attempt at doing so.
It is interesting to note that as Elon Musk dove into politics by leading the Department of Government Efficiency (DOGE) and advising President Trump on other matters, Tesla’s share price has struggled. Shares dropped over 5% on Tuesday.
We know this piece had a lot of jargon and back and forth and its hard to follow, but it is very interesting and something we will be keeping an eye on moving forward.
Trump administration all in on AI
The Trump administration appears to understand the potential of artificial intelligence moving forward. Vice President JD Vance spoke at the AI Action Summit in Paris on Tuesday and highlighted the potential, the revolutionary applications, and the benefits of AI. He also pointed to the relaxation of regulations in the industry to enable rapid innovation. Do not expect Trump’s administration to be friendly with the entire world when it comes to AI. We expect them to take a hardline approach against countries and companies they view as America’s adversaries.
While the vice president did not directly refer to the emergence of China’s DeepSeek in his speech, Vance emphasized the importance of working with allies to “close pathways to adversaries attaining AI capabilities that threaten all of our people.” Vance pointed to the overregulation by the EU in recent years as a hurdle and encouraged its leaders to stop restricting the industry’s growth. He claimed that this overregulation has stunted the advancement of both European and American firms.
Vance went on to say that he and Trump will implement policies to make sure AI systems and chips are made on U.S. soil. He claimed this policy would safeguard America’s advantage in AI and reduce its supply chain exposure. Currently, 90% of the world’s most advanced chips are made in Taiwan-by-Taiwan Semiconductor Manufacturing Co. TSMC is building a production plant in Arizona, but it will only be a fraction of its worldwide capacity.
Intel has long tried to provide an alternative to TSMC by offering chip-manufacturing foundry services to other semiconductor companies but has had limited success. Intel shares jumped by over 6% after Vance’s speech on Tuesday as many investors see Intel, an American firm benefiting from Trump’s domestic agenda in the AI industry. Intel lost over 60% of its market value last year as the company fell behind its competitors in AI.
Perhaps this bounce by Intel is nothing but false hope – you buy Intel shares for pennies on the dollar with some downside risk. However, what if Trump is committed to creating a dominant American firm in this hot, innovative, and growing industry? How far will he go to make Intel successful? It is the only logical company that fits the bill for what Vice President JD Vance described.
Despite the upside, there are major risk factors when analyzing Intel shares. We will continue to monitor the company, however, despite the attractive valuation, we cannot purchase shares at this point until we see signs of positive earnings. We will be monitoring this topic closely.
On the AI front, there is a new wrinkle to the DeepSeek story. Apple decided not to partner with the start-up in a China-based AI venture, they instead chose to partner up with Alibaba. The partnership will bring AI features to iPhones in China. Alibaba shares have been on fire in recent months but continue to trade at a large discount. Geopolitical risk has impacted the performance of China’s equity markets over the last few years. However, many are stomaching that risk and buying China at its current valuation. Investors including David Tepper, and Michael Burry seem all in on China and are betting on the country’s domestic growth. For some investors, China is the only option for tech exposure as its firms are comparable to U.S. firms but U.S. names trade at an extreme premium relative to China or any other country’s technology names.
However, we will once again warn our readers to weigh the risks and rewards of this trade. Buying China is not suitable for every investor and there could be major downswings in equity prices due to geopolitical risk in China and across the world.
MacNicol & Associates Asset Management
February 14, 2025
Click here for the PDF: The Weekly Beacon February 14 2025 US
Happy Valentine’s Day
Why is the 14th Valentine’s Day?
While imprisoned, Valentine cared for his fellow prisoners and also his jailor’s blind daughter. Legend has it that Valentine cured the girl’s blindness and that his final act before being executed was to write her a love message signed ‘from your Valentine’. Valentine was executed on 14 February in the year 270.
