"Risk comes from not knowing what you're doing." – Warren Buffett
In this edition:
→ Singapore denies involvement in DeepSeek’s rise
→ BP considers selling Castrol
→ Multiplier effect in Keynesian economics
Spotlight
Intel stock surges amidst news of strategic deals
Intel's shares have been trending, which can be attributed to the involvement of TSMC and Broadcom. Credits: aiinvest
Intel saw its biggest stock rally since 2020 on Tuesday. The stock surged by 16% following speculations about potential agreements involving TSMC and Broadcom Inc. Both companies are interested in acquiring Intel’s assets. As per reports, TSMC is interested in acquiring a controlling stake in Intel’s US factory operations.
On the other hand, Broadcom has held informal talks about purchasing Intel’s chip design and advertising business. Shareholders and Investors of Intel have long discussed the potential breakup of Intel’s divisions to unlock value. The company has struggled to keep pace with its competitors and has seen its stock struggle over the past few years.
Singapore denies role in Nvidia selling chips to DeepSeek
A senior official in the Singapore government denied any involvement of Nvidia in the rise of DeepSeek. Tan See Leng clarified that the country buys a small percentage of Nvidia’s chips. He added that most of the purchased chips are used by major enterprises and the government. Nvidia attributed about 22% of its quarterly figures last year to Singapore.
Tan explained that this figure is misleading, reflecting billing locations rather than actual physical shipments. Singapore is a major hub for global corporations, and companies often centralize invoicing in specific hubs, which is why Singapore appears to be a large buyer of Nvidia chips. The Trump administration is investigating whether DeepSeek acquired advanced Nvidia semiconductors through third parties in Singapore.
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🇪🇺 European stocks climb as US and Russia discuss Ukraine ceasefire
European stocks reached record highs on Tuesday. Equities rallied on optimism related to the end of the Ukraine war after renewed diplomatic talks between the United States and Russia. The Stoxx 600 Index rose 0.3% at the end of trading day, while the Euro Stoxx 50 reached an all-time high. The United States and Russia are in active talks, and a summit between President Trump and President Putin is expected.
Despite the rally, some analysts maintain their cautious outlook. Panmure Liberum strategist Joachim Klement warned that despite the ongoing talks, obstacles remain in the way of a ceasefire, including the need to secure Ukraine’s agreement with any proposed resolution.
🇬🇧 BP considers selling Castrol lubricants as investor pressure increases
Energy giant BP is considering selling its Castrol lubricants business. The activist investor Elliott Management is ramping up pressure on the company for strategic measures to unlock shareholder value. The company might announce the potential divestment during its Capital Markets Day.
BP has struggled in recent years, with the stock value continuing on a downward trajectory since the company announced its strategy of moving away from traditional fuels by 2030. More recently, the company’s Q4 earnings dropped 61% year on year, the weakest since the pandemic-driven downturn in 2020.
🇶🇦 Qatar commits $10 Bn investment in India to strengthen economic ties
Qatar plans to invest $10 Bn in India as part of its effort to strengthen bilateral ties. Qatar’s sovereign wealth fund, Qatar Investment Authority (QIA), will open an office in India to facilitate further investments. The Indian government and the state of Qatar signed several agreements related to the Bilateral Strategic Partnership and a revised Double Taxation Avoidance Agreement.
Both countries have strong strategic ties. Qatar is India's largest supplier of liquefied natural gas. The Gulf nation has invested in several Indian companies, including Reliance Industries’s retail arm and Adani Group’s power distribution businesses. Qatar’s rising investments in the country align with India’s broader efforts to attract foreign capital.
Plot twist
Crypto Politics
The House shows overwhelming support for crypto, while the Senate is resistant.
→Republicans favor crypto: They show stronger support across elected offices, backing deregulation and innovation. Texas, Florida, and Wyoming lead in passing crypto-friendly legislation.
→Democrats are split: Some support crypto, but many push for strict regulations, citing financial risks.
→House leans pro-crypto: More lawmakers advocate for crypto-friendly policies.
→Senate more resistant: A greater share of anti-crypto members slows regulatory approvals.
→Trump shifts stance: Once skeptical, he now supports crypto, energizing Republican lawmakers. Pro-crypto lobbying funds candidates to shape regulation.
Markets
Stocks
→Trump plans sweeping 25% tariffs on automobiles, semiconductors, and pharma imports. If implemented, this would significantly complicate the ongoing trade war. The move would impact European and Asian automakers, for whom vehicles sold in the US account for nearly 50% of their total sales (details).
→Biogen will invest up to $550 Mn in an epilepsy drug agreement with Stoke Therapeutics. The drug, zorevunersen, targets the genetic mutation responsible for Dravet syndrome, aiming to reduce seizures and improve cognitive function (details).
→Lyft has been downgraded to sell from neutral as Uber competition threatens margins. The ride-hailing firm has received its first sell rating. Uber’s ability to replicate the firm's innovations at lower value puts pressure on Lyft’s margins (details).
Commodities
→Chocolate’s market value could rise by 50%. Mondelez and Hershey Co. have warned that chocolate value could increase due to soaring cocoa values. Mondelez shares have declined nearly 14% over the last half-year, while Hershey’s stock has declined about 17% (details).
→Sugar traders push for tighter delivery rules as exchange disputes grow. The Intercontinental Exchange (ICE) committee is set to vote on these proposed rule changes at the end of the current month. Proposed rules include higher charges for sellers in the event of loading delays and a steeper increase in demurrage (details).
Currencies
→Global firms shift to longer hedges and FX options amid rising currency volatility. A recent survey revealed that more than 75% of senior leaders in the US and UK reported losses in 2024 due to unhedged currency exposures (details).
→The US dollar strengthened as Ukraine peace talks stalled and tariff concerns rose. On Tuesday, the dollar surged against major currencies. The euro fell 0.4%, and the British pound slipped 0.2% against the greenback (details).
Crypto
→Blockaid secured $50 Mn from Ribbit Capial. The company is expanding its efforts to combat rising cybercrime in the digital asset industry. Chainalysis data shows that funds stolen by crypto hackers rose 21% year-over-year to $2.2 Bn in 2024 (details).
→FTX begins repayments to creditors after a two-year bankruptcy battle. The firm went bankrupt in November 2022, leading to one of the biggest frauds in crypto history (details).
Foundations
The multiplier effect in Keynesian economics
President Donald Trump tours a Honeywell International Inc. factory producing N95 masks. Credits: Brendan Smialowski/AFP via Getty Images
The multiplier effect is an economic concept that explains the relationship between spending and economic output. The theory suggests that an initial increase in spending can generate an outsized impact on overall economic output.
As governments or businesses inject currency into the economy, it results in higher income, which leads to additional spending and higher growth. This cycle of spending and re-spending continues, leading to a greater increase in the GDP than the original investment.
Example: Government spending after pandemic
The multiplier effect becomes a key tool for stimulating demand amidst recessions. Governments worldwide use fiscal tools like increased spending to spur economic growth. For example, after the pandemic, major governments implemented stimulus packages to leverage the multiplier effect and prevent economic collapse.
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The content in this email is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Investing involves risks, including the loss of principal. Past performance does not guarantee future results.
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