Divergence in Global Central Bank Policies as the U.S. Economy Stays Strong

As 2025 begins, the U.S. economy remains strong, while many other global economies are struggling. This has led to a divide in interest rate policies. The Federal Reserve has paused rate cuts due to strong economic growth, whereas central banks in Europe, Canada, India, and Mexico continue to lower rates to boost their economies.

As a result, the U.S. dollar strengthens, making foreign goods cheaper for American buyers, which undermines tariffs. However, this also means higher borrowing costs in the U.S.. Central banks are treading carefully to avoid excessive currency devaluation and inflation risks. The Fed remains cautious, aiming to control inflation while navigating global economic challenges.

Source: https://www.reuters.com/markets/rates-bonds/leaving-fed-behind-top-central-banks-have-room-ease-2025-02-07/?utm_source=chatgpt.com

The Biggest Tax Season Threat Isn’t an IRS Audit

 

Tax season for 2024 has begun and while many people worry about IRS audits, a bigger risk is tax-identity theft. Scammers are targeting personal information and it has been recorded that recent data breach has exposed 2.9 billion records including Social Security numbers. With more than 140 million individuals filing for tax, nearly 40% of taxpayers relying on refunds to make ends meet. This threat is a serious economic concern. Fraudulent activities could potentially decrease total tax revenue or cause individuals who rely on refunds to incur extra debt while working to resolve these issues.

To protect yourself, it is important to file your tax return early and consider using an IRS identity protection PIN. Filing early can help prevent fraudsters from using your Social Security number to file a fake return. If you decide to work with a tax professional, make sure they use secure online processes rather than email to share sensitive information. Check that your tax preparer signs your tax returns with a valid Preparer Tax Identification Number (PTIN) and use trusted directories like the IRS Directory of Federal Tax Return Preparers to verify their credentials.

Staying alert to scams is also essential. The IRS typically communicates by mail and does not send initial messages via email or text. So if you receive an unexpected message claiming to be from the IRS and asking for personal or financial details, do not click on any links or provide your information. Scammers may promise large refunds, credits, or even pandemic-related payments as a trick.   Understanding these risks is important because identity theft can lead to significant financial problems.  

source 

https://www.cnbc.com/2025/02/07/its-tax-season-prepare-for-fake-irs-emails-texts-scams.html

 

Rising Tensions Regarding the Panama Canal

    In recent years, the cost of using the Panama Canal has risen. The rising fees were not much of a concern until President Trump asserted the rise had been "excessive," accusing the canal operators of overcharging American shipping companies. Additionally, there has been fear among politicians concerning the potential control China may have over the canal since China recently funded its infrastructure; additionally, a company based in Hong Kong is responsible for the canal operation on both sides, thus creating fear among politicians about China's control over the canal.     Although the canal's revenues have risen faster than traffic, the President of Panama has claimed that the increased prices are due to the country's issues with droughts and their investments in upgrades and general maintenance to keep the canal in smooth operating condition. In the 12 months through September, tools and service fees were calculated to be 62% higher than five years earlier; passages rose only 2% during that period. Although there is an additional fee placed on the products imported through the canal, the cost is more minor compared to the expectations of some consumers, such as an extra $11 for a French door refrigerator that sells for over $1,000 and 10 cents for a $40 coffee maker. However, if Trump were to get lower tool fees as he demands, the average American consumer's savings would be minuscule due to a decreased tool.     As a result of increased prices and security concerns, President Trump threatened to reclaim the Panama Canal and stated that "military force is not out of the question" when speaking to reporters. The President of Panama, José Raúl Mulino, addressed Trump's threats and asserted that "there is no question that Panama operates the canal and will continue to be so." With the introduction of tariffs against Canada and Mexico and now growing tensions between Trump and the President of Panama, there are increasing concerns for the imports and exports of the U.S. economy in the upcoming months. The canal is crucial for the U.S. economy, as it permits a shorter route between the East Coast and Asia than traveling across the Atlantic. Additionally, 40% of U.S. container traffic and energy exports travel through the canal, and damaged relations with Panama would result in more expensive imports if the situation were to escalate. https://www.nytimes.com/2025/02/03/business/economy/panama-canal-fees.html

DeepSeek causes a Deep Sink in the US Stock Market

DeepSeek recently released globally, and the US Stock Market took a massive hit. DeepSeek, a Chinese AI company, produced a chatbot that runs on significantly cheaper equipment than that of Open AI, Google, Microsoft, etc. It initially was said to produced and trained for about $5.6M.

NVIDIA, who had been a force in the market during 2024, took a $560B market cap hit - and the market was down 600 points during the day. 

As the week has gone on, more and more people have looked into DeepSeek, and how it was even possible that it was produced for that cheap. After some investigation, multiple experts are estimating DeepSeek actually costed about $1B to produce. While still significantly cheaper than development costs for other US AI's, the alarm bells may not be as bad as initially anticipated.

NVIDIA has responded while posting a relatively strong week, up 3%. While still not to the levels it was before DeepSeek was released, it is a good sign for the US Stock Market and AI alike. The market has stabilized after its free fall on the 27th of January.

The jury is still out on what the implications of DeepSeek will be. The US Government is pushing to get it banned from government devices, but we will wait and see if it can beat the AI giants of the US, or if it will be another failed attempt to disrupt the industry.

https://www.visualcapitalist.com/deepseek-tanks-stock-market-nvidia/

https://www.afr.com/markets/equity-markets/us5-6m-probably-100-times-that-says-fundie-of-deepseek-price-tag-20250131-p5l8mj

Economy Bessent says Trump is focused on the 10-year Treasury yield and won’t push the Fed to cut rates

 President Trump wants to lower rates, Bessent says he will do so by using the 10-year treasury bond, not the federal funds rate. In September, the Fed used a rare-cutting cycle to lower the fed funds rate by 100 basis points. Trump believes that if they deregulate the economy, the rates will take care of themselves. The 10-year last traded at 4.45%. Trump not commanding the Fed to lower rates could ease tension between the two.

https://www.cnbc.com/2025/02/06/bessent-says-trump-is-focused-on-the-10-year-yield-wont-push-fed-to-cut-rates.html

Trump’s Foreign Aid Freeze and Its Impact on Haiti

President Trump has implemented a 90-day freeze on all foreign aid, raising concerns beyond the implications for the Ukraine war. Many countries that the U.S. has been assisting are now facing significant challenges, particularly Haiti. There, a U.N.-backed mission aimed at combating gang violence in the capital was impacted. While the mission relies mainly on volunteer assistance, support from the U.S. and Kenya has been crucial. With the aid freeze, $13.3 million in funds is now unavailable, threatening the effectiveness of forces on the ground. Gangs already control approximately 85% of Port-au-Prince, and without the necessary funding, the situation could deteriorate further. 

Additionally, the aid freeze affects humanitarian efforts. U.S. support for health and social programs, including child care, food assistance, and medical treatments, has all come to a halt, jeopardizing vital initiatives. Some argue this might push Haiti’s government to take more responsibility, but given the country's systemic instability, international support remains essential. This crisis highlights the dangers of heavy reliance on U.S. aid and raises discussions on sustainable development and alternative global partnerships. 

U.S. Secretary of State Marco Rubio has proposed a waiver for life-saving programs, but there is confusion regarding qualifications for exemptions from the stop-work orders. This situation exemplifies the dependence some countries have on foreign aid. While U.S. assistance has been critical in Haiti, experts argue that the country must focus on governance reforms and economic self-sufficiency to reduce reliance on external support. 

I believe that some countries do need foreign aid to help combat national problems; however, the issue arises when they become dependent on that aid. The moment the aid is withdrawn, the country is left struggling. I think more stable nations should establish guidelines to provide aid through structured programs for struggling nations. However, they cannot take the lead on these efforts; countries must also take action alongside this aid to start building a stable foundation. This way, when the aid is no longer available, they are not left vulnerable. Haiti is a prime example: its long-term stability requires both internal reforms and diversified international support. We must learn to approach these situations differently to prevent countries from becoming reliant on foreign aid.

Source: https://apnews.com/article/haiti-un-us-halt-aid-trump-e32763c0446b268b421f3b409c4dc147

The Future that Amazon sees in Ohio

 The Future that Amazon sees in Ohio

    Recently, Amazon has spent over $100 million to purchase land for data centers in Fayette County right next to Honda and LG’S battery plant, and this isn’t the only sizable piece of land they have bought in this area. By 2030, Fayette County expects to see $5 billion spent on construction for the new data centers. These data centers are physical facilities that store the hardware and equipment that powers Amazon's cloud computing services. This new center will be the company’s first data center outside of central Ohio, and is projected to create more than 100 Amazon jobs and support others throughout the supply chain. According to the company, they plan to expand their statewide footprint in up to eight new locations. This influx of data centers around the greater Columbus area is expected to eat up so much energy that demand for power in the region will be similar to all of Manhattan by 2030. According to American Electric Power, their transmission system in central Ohio was serving about 600 megawatts from data centers which is enough to power 250,000 homes. 

    I think that the industrial developments around central Ohio show definite promise for a great future, but I worry that too much development could drive people away from the area in the future. I just always think of the guy who cut down all the trees in the Lorax, causing all the little bears to leave their home. Luckily we have government policies that would hopefully stop any sort of situation like that from happening, but that doesn’t mean it won’t happen to a certain extent. I know Intel is building two semiconductor chip factories in New Albany which will also be great for employment, but I wonder what the impact on other things like the environment this will have on the surrounding area. For right now, Columbus shows lots of promise as a place to find a job and make a decent living. I think it will be interesting to hee how sustainable some of these new factories are in retaining the growth and prosperity that we see within Columbus today.    

Can Money Fix a Season? Manchester City's $223 Million Gamble

Manchester City's January Spending Spree: Economic Implications for Football

    The 2025 Premier League January transfer window ran from January 1 to February 3. One club in particular, Manchester City, took advantage of the window by using a different strategy than the club typically has used in the past. The reigning champions, who are pursuing their fifth consecutive Premier League title, spent near-record amounts during this transfer period. This bold move offers insights into football economics and the financial operations of top clubs. City's unusual January activity comes from a challenging season, as they trail Liverpool by 15 points and face the risk of an early Champions League exit. Their actions demonstrate how on-field performance can drive significant financial decisions, even for a club accustomed to success.

    City bought Omar Marmoush (£60m), Abdukodir Khusanov (£40m), and Vitor Reis (£30m), aiming to address both current needs and long-term plans. This spending was largely funded through player sales, including Julián Álvarez's £81m move to Atletico Madrid and the sale of academy graduates. Notably, the club has generated significant profit from academy sales, potentially totaling £276m in the past five years. This strategy highlights the value of developing and selling players to stay financially flexible under league rules, with academy sales counted as pure profit in terms of Profit and Sustainability (PSR) rules.

    City's spending makes up nearly half of the Premier League's January transfers. While the other 19 clubs spent £270 million combined, City alone spent £223 million, with £130 million going to just three players. This large investment can affect player values and transfer fees across football, showing how one club's decisions can impact the whole market.

Read more about Manchester City's transfer strategy here

    As football evolves, money management is becoming important for success on the field. It'll be interesting to see if City's big spending can save their season. Other clubs, like Chelsea in 2023, have tried this with mixed results. The next few months will show if City's huge investment pays off or becomes another warning story in football economics.

Extreme Concern Regarding Tariffs Within Wall Street

On Monday, Wall Street visibly showed their concerns for President Trump’s tariffs, as stock prices declined sharply in U.S stock markets. S&P 500 dropped by 0.8%, Dow Jones Industrial Average dropped .28% and Nasdaq by 1.2%. The main concern was that the tariffs could lead to higher prices for goods like groceries and electronics, ultimately raising inflation and halting the Federal Reserve's efforts to lower interest rates. Tech companies were hit the hardest however, as those who are sensitive to higher rates fear the negative effects global trade could have on corporate profit. 

Stocks were able to recover after Mexico announced its one month delay on tariffs following discussions with Trump. This indicated some optimism that tariffs could potentially be a negotiation strategy rather than a permanent policy. Some industries are very reliant on Canada’s crude oil for example, which causes panic and a widespread concern when the topic of tariffs is mentioned.

Monday’s  market activity highlighted the uncertainty surrounding the tariffs and their economic consequences. Global markets also saw losses, with significant declines in Europe and Asia. The upcoming week will feature crucial economic reports and earnings reports from major companies, which will likely further influence the attitude of the market.

Link : https://www.mercurynews.com/2025/02/02/wall-street-falls-following-trumps-tariffs-but-not-as-badly-as-feared-in-the-morning/ 

China factory activity growth slows again as Trump tariffs loom

China’s factory growth slowed down in January with the Caixin PMI dropping slightly to 50.1. It’s still growing, but just barely. A big reason for this slowdown is trade uncertainty, which has led to the biggest drop in factory jobs in almost five years. Some companies are stockpiling products because they’re worried about possible U.S. tariffs, but at the same time export orders are shrinking, and manufacturers are being forced to lower prices to stay competitive. It’s clear China’s manufacturing sector is feeling the pressure, and if they want to stay strong, they’ll need to adapt and this could maybe be done by trading with more countries, investing in new technology, or focusing more on selling within China instead of relying so much on exports.

 https://finance.yahoo.com/news/china-factory-activity-growth-slows-015509187.html

Ontario to remove U.S. alcohol from shelves after Trump’s tariffs announcement

President Trump has always emphasized to keep our country American named and American owned. Recently he enacted the "America First" agenda putting tariffs on our top trade partners. Ever since he signed for this executive decision there has been a great amount of backlash. Specifically one of our highest Alcohol trade partners, The Liquor Control Board of Ontario, has announced they move to pull all American alcohol from their shelves and will take American products out of their catalogue so no retailers can restock. Ontario Premier Doug Ford announced this after the Prime Minister requested 25% of all U.S. goods. Ford states that "Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirts and seltzers." The LBCO is Americas second main expert in Canada with a 25.9 million trade value. This move from the LBCO has influenced other Canadian Premier's to retaliate against Trumps tariffs. Premier Tim Houston directing the Nova Scotia Liquor Corporation is removing all American alcohol from their shelves. Also, actions have came arise in other areas as well. British Columbian David Eby of  BC Liquor Distribution took perhaps a more fair action and announced that they plan to "immediately stop buying American liquor from "red states' and removes the top-selling "red-state" brands from the shelves.

https://www.cnbc.com/2025/02/02/ontario-to-remove-us-alcohol-from-shelves-after-trumps-tariffs-announcement.html