February 2025 Watchlist: Entry Points

Market Overview

Welcome back to The Wealth Catchers' watchlist. I want to begin with sending out thoughts and prayers to those affected by the disastrous fires in the state of California. I will also like to send out thoughts and prayers for the lives lost in the horrible helicopter and airplane crash that shocked the nation. The month of January highlighted so much loss, from lives to property. Even though my site is dedicated to increasing financial knowledge and encouraging financial growth, we as investors need to understand this: there are real humans and lives affected on the other side of these ticker symbols. To hear about pundits speaking about what insurance companies would be affected by the fires and how American Airlines stock took a dive shines a light on how many of us have lost empathy for one another. I'm not instructing you to cry your heart out or take to social media and post like crazy. Just have empathy for your fellow man and woman, and whenever you can offer assistance to another, do so. The cruelty of the world doesn't have favorites; it can come for any of us at anytime. Uplift and be a beacon for good; regardless of how big your light is, it still shines. If you would like to donate to help the victims of the California fires, you can start here: Make Big Talk. Anything is greatly appreciated. Now onto the recap of January.

Fed & Monetary Policy

The month of January for the stock market ended in the green for all of the indexes. We also had the pleasure of hitting an all-time high in the S&P 500. January brought in a whirlwind of news. Donald Trump was inagurated, the Fed paused interest rate cuts, Deepseek sent the market into a downward spiral, and tariffs were cemented. Some of these carry much more importance than others so let's dive in. On January 29th, the Fed chose to pause interest rate cuts. This was already highly expected, as many of us already knew we should not be expecting many, if any, rate cuts this year. It seems as though the Fed is in no hurry to cut rates as they are still data dependent when it comes to their decisions. Inflation is moving towards their 2% goal but still remains elevated, and the labor market is still strong. Also, the consumer is proving to be resilient even through higher prices. The next Fed meeting is March 19th. According to the FedWatch Tool, rates are expected to remain unchanged. The biggest story of the month was the surprising release of a generative AI called DeepSeek. DeepSeek is a Chinese-based generative AI that came onto the scene with ferocity. Now we have other AIs and LLMs on the market, such as Google's Gemini, Anthropic's Perplexity, and OpenAI, so what's the big deal about DeepSeek? DeepSeek is on par with these other AIs, and what sets them apart is the reported cost. Based on reports, DeepSeek was able to be created with around $6 million compared to the billions that we in the U.S. are spending on our own AI and LLMs. This is what sent the markets spiraling. Now how true are these numbers? Who knows, but its the fact that this is the story that is circulating and grabbing headlines, and with this story there are now a lot more questions than answers. Investors are wondering why so much money is being poured into the capex of these hyperscaler companies if this tiny, unknown company in China was able to develop the same product at a fraction of the cost? Also keep in mind the latest and most sophisticated chips are restricted from being sold to China. DeepSeek was able to build this technology using H800 chips, which is a watered-down version of Nvidia's H100 chips. So with lesser technology, China was able to build something that can compete with the biggest names in the space. This raises many concerns, such as how far ahead is the U.S. really in the AI race? Outside of the hyperscalers and big tech being hit, other sectors that suffered a major hit were the energy, nuclear energy, and construction sectors. A ton of money is being poured into these sectors in order to power these data centers and build them out. To reiterate, DeepSeek is on the same level as these hyperscalers at a fraction of the cost and investment, allegedly. Also, DeepSeek has made its technology open source, just like Meta has with LLAMA. This will allow anyone to gain access and build on it to develop their own technologies. While many have viewed DeepSeek as a threat to our AI industry, I believe the narrative has to be switched to this being a win for the overall AI industry. DeepSeek has proven that this AI revolution can potentially be done in a more efficient way and has opened the floodgates to innovation. This was a short-term hit to our AI companies and complementary sectors, but all of these industries and technologies will still be needed to push this revolution forward. The cost seems to just need some adjusting. Heading into the last weekend of January President Trump reaffirmed his stance on implementing tariffs on our trading partners. On February 1st, Trump signed an executive order that imposes a 25% tariff on imports from Canada and Mexico, and a 10% tariff on imports from China. These tariffs have already faced retaliation from Canada, which has implented their own tariffs on the U.S. and we can expect to see the same in the coming weeks from Mexico and China. Trump is adamant on sticking through this due to what he believes is "taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immagration and stopping poisonous fentanly and other drugs from flowing into our country." There is an extremely mixed bag when it comes to the implementation of these tariffs as many believe that this will only hurt consumers in the end while others believe this is necessary in the short term for negotiations. Regardless of how you look at it, the American consumer most likley will be paying the price when it comes time to swipe their card as many of these countries have already stated they will just pass the cost on to the consumer. This article gives a great breakdown on how this tariff story affects all of those involved, you can check it out here.

Crypto & Digital Assets

Donald Trump was inaugurated on January 20th, and with that, he also signed off on numeruous executive orders. The stock market and crypto market climbed higher around this event, but one of the things that took some of the limelight was what occurred prior. That weekend before the inauguration, President Trump and the First Lady both launched meme coins that skyrocketed to ridiculous valuations. This led to some criticism from the crypto market because it has been believed that this stunt will put a negative light on the crypto market. There are many people who already believe that crypto is a scam and holds no real value, and for these two, in their highly regarded positions, to issue coins did not help the story. Billions of dollars were poured into these coins, which led to them eclipsing the market cap of many companies on the stock market. The Trump meme coin went from a market cap of $14 billion to $4 billion in a matter of weeks, leaving many in the red. This type of activity sets a bad precedent if we begin having political figures, especially those that run the country, extract capital out of the hands of working people and leave those same people in financial ruin. This highlights the need for crypto regulation, which ironically thrived off of being nonregulated. I assure you this is not what the crypto community expected when they backed Trump's campaign; we'll see how it plays out in the long run.

Closing Note

I appreciate you all checking in this month. Stay invested, stay positive. Also, here's your friendly reminder:

“The time to buy is when there's blood in the streets.”

Keep on buying assets and keep your money working.