February 14th Financial News

WASHINGTON (Fed 13): The U.S. government began firing hundreds of people at multiple agencies on Thursday as President Donald Trump and Elon Musk accelerate their purge of America's federal bureaucracy, union sources and employees familiar with the moves told Reuters.

Termination emails have been sent in the past 48 hours to government workers, mostly recently hired employees still on probation, at the Department of Education, the Small Business Administration, the Consumer Financial Protection Bureau, and the General Services Administration, which manages many federal buildings.

It was not immediately clear how many domestic federal workers stood to lose their jobs in the first wave of layoffs. According to government data, about 280,000 civilian government workers were hired less than two years ago with most still on probation, which makes them easier to fire.

All probationary staff at the Office of Personnel Management, the human resources arm for the U.S. government, were fired in a group call on Thursday and told to leave the agency's headquarters in Washington, two sources said.

OPM officials also met with other government agencies on Thursday and advised them to lay off their probationary employees, with some exceptions, according to a person familiar with the matter.

Even as the firings commenced, a group of 14 states filed a federal lawsuit in Washington alleging that Trump appointed Musk illegally, giving him "unchecked legal authority" without authorization from the U.S. Congress.

Most civil service employees can be fired legally only for bad performance or misconduct, and they have a host of due process and appeal rights if they are let go arbitrarily. The probationary employees targeted in Thursday's wave have fewer legal protections.

Trump and Tesla CEO Musk's overhaul of the federal government appeared to be widening as Musk aides arrived for the first time at the federal tax-collecting agency, the Internal Revenue Service, and U.S. embassies were told to prepare for staff cuts.

Trump has defended the effort, saying the federal government is too bloated and that too much money is lost to waste and fraud. The federal government has some $36 trillion in debt and ran a $1.8 trillion deficit last year, and there is bipartisan agreement on the need for government reform. But critics have questioned the blunt force approach of Musk, who has amassed extraordinary influence in Trump's presidency.

'YOU ARE NOT FIT'

Thursday's moves fulfill Trump's vow to reduce the size of the federal government and root out the "deep state," a reference to bureaucrats he views as not sufficiently loyal to him.

"The Agency finds that you are not fit for continued employment because your ability, knowledge and skills do not fit the current needs, and your performance has not been adequate to justify further employment with the Agency," letters sent to at least 45 probationers at the SBA stated.

Reuters has seen a copy of the termination letter.

Letters to at least 160 recent hires at the Department of Education, also seen by Reuters, told them that their continued employment "would not be in the public interest."

Trump, a Republican serving his second term, on Wednesday reiterated his desire to close the Department of Education.

About 100 probationary employees received termination letters on Wednesday at the GSA, according to two people familiar with the firings.

One GSA employee, who said he had one month left until his probation period ended and had been receiving excellent performance reviews, was told this week he will be fired on Friday.

"Up until two weeks ago, this was an absolute dream job. Now it's become an absolute nightmare because of what is going on. I have small children and a mortgage to pay," the worker told Reuters.

Musk's cost-cutting Department of Government Efficiency, or DOGE, did not immediately respond to a request for comment, but a spokesperson for OPM said the firings were in line with new government policy.

"The Trump administration is encouraging agencies to use the probationary period as it was intended: as a continuation of the job application process, not an entitlement for permanent employment," the spokesperson said.

About 75,000 workers have signed up for the buyout, White House press secretary Karoline Leavitt told reporters. That is equal to 3% of the civilian workforce.

The deadline to take the offer expired on Wednesday evening. Asked why workers were not given extra time to consider the buyout so more would take it, Leavitt said, "I'm not so sure that we didn't hit the numbers we wanted."

MASSIVE DOWNSIZING

Trump has tasked the South Africa-born Musk and his team at DOGE, a temporary government agency, to undertake a massive downsizing of the 2.3 million-strong civilian federal workforce.

Musk, the world's richest person, has sent DOGE members into at least 16 government agencies, where they have gained access to computer systems with sensitive personnel and financial information, and sent workers home.

Gavin Kliger, a top staffer in DOGE, arrived at a new agency, the IRS, on Thursday, people familiar with the matter said.

It was the first time a Musk aide has entered the IRS, a longtime target of Republicans who claim without evidence that the Biden administration weaponized the agency to target small businesses and middle-class Americans with unnecessary audits.

Meanwhile, the Trump administration has asked U.S. embassies worldwide to prepare for staff cuts, three sources familiar with the matter told Reuters, as part of the president's effort to overhaul the U.S. diplomatic corps.

Trump has pressed ahead with the effort despite a barrage of lawsuits from labor unions and Democratic attorneys general and criticism, including from several Republican budget experts, that the initiative is ideologically driven.

Source: Theedgemarkets

The US is planning to impose tit-for-tat tariffs globally, but studying tariffs case by case requires time and the tariffs won’t be effective until April. I don’t know if you could call it good news, but the markets’ reaction suggests that the latter has been perceived as good news and helped keeping appetite afloat yesterday.

The US dollar index was sharply sold despite the broadening tariff war, despite the rising worries about the US/Russian negotiations about Ukraine – which do not involve Ukraine nor the Europeans, and despite the mix of stronger-than-expected US PPI and better-than-expected weekly jobs figures.

One of the reasons that could explain the weakness of the yields and the dollar on normally dollar-supportive inflation and tariff news is the fact that some of the components in that PPI report that feed into the PCE index – the Federal Reserve’s (Fed) favourite gauge of inflation – pointed at weakness (these items include healthcare and airfares).

But given that Jerome Powell, himself, told US politicians this week about his concerns about inflation and how the progress has stalled since last year, I believe that a part of yesterday’s selloff has to do with investors closing the crowded long dollar positions, rather than a meaningful shift in the macroeconomic dynamics.

In Europe

The final German inflation figures released yesterday printed negative monthly numbers in January. The Spanish figures will likely point at slowing price pressures in Spain as well, while the Eurozone’s GDP will confirm a no growth in Q4. The combination of slowing inflation and zero growth could only back the idea of further rate cuts from the European Central Bank (ECB) at a time the bets for Fed rate cuts are being kicked down the road.

Therefore, the weakness of the US dollar will likely remain limited and the strength of the euro against the dollar will likely be topped. But in the short run, a soft looking retail sales data from the US could keep the USD under pressure, letting the dollar rally lose some more steam. This being said, many traders may chose not to go short the US dollar into the weekend. You never know, two days is a long time with Donald Trump.

In equities, though, the European stocks continue to ignore the tariff threats and chose to surf on the rotation trade. The Stoxx 600 rallied to a fresh ATH yesterday, while FTSE 100 also hit a fresh high but gave back gains and closed in the negative. Robust earnings and favourable ECB expectations support the positive move. On the individual front, the German champion Siemens – which generously contributes to the Stoxx 600 gains – jumped more than 7% yesterday after announcing a set of better-than-expected Q4 results, while encouraging earnings from Michelin boosted mood among carmakers. Stellantis for example gained 4.5% yesterday.

They will report their earnings on February 26th, but they had announced a 27% decline in last quarter sales – to say that the convergence rebound is interesting but the upside will likely remain limited by the gloomy fundamentals of the continent – that could, on top of all the financial struggles of the moment – may need to find a way to increase their military spending in accordance with the US demands that warns that the transatlantic partner is no longer willing to offer security to its old friends for free. No wonder the BAE systems rose more than 3% yesterday. The European defense stocks are certainly stepping into a new era…

China

The S&P500 flirted with its ATH levels and Apple added nearly 2% yesterday on news that the new low-price iPhones will be out as early as this month and that the company will use Alibaba’s AI to boost the iPhone sales in China. Alibaba, on the other hand, extended rally to the highest levels in three years in Hong Kong on nascent AI optimism in China.

Overall, the Hang Seng index this week has extended gains to nearly 20% since mid-January on optimism that the inflowing Chinese AI models could be pivotal for the Chinese technology stocks that have been heavily battered since 2021. If you ask me, I’m less concerned about government interference in tech (at least negatively). With a worsening demographic and property crisis, alongside deteriorating trade and geopolitical relations, Beijing can hardly afford another crackdown on its tech champions—the last card Xi has left to play.

Source: ACTIONFOREX

BEIJING/HONG KONG (Feb 14): Jeremy Fang, a sales officer at a Chinese aluminium products maker, is trying to export more to markets in Asia, Africa and Latin America to offset the U.S. tariffs' impact. The problem, he says, is that his competitors have the same idea.

"It will only result in a mad rat race," said Fang, expecting his firm will have to reduce prices and accept lower profit margins. "The cake is only that big. We all want to grab a piece so the competition will get intense."

The trade war between Washington and Beijing, which escalated this month with U.S. President Donald Trump imposing additional 10% tariffs on Chinese goods as an "opening salvo," could deal a new supply shock to the rest of the world.

Chinese producers, facing weak demand at home and harsher conditions in the United States, where they sell more than $400 billion worth of goods annually, have no choice but to rush to alternative export markets all at the same time.

But no other country comes even close to U.S. consumption power, significantly limiting the production the rest of the world could absorb from its second-largest economy.

This will intensify price wars among Chinese exporters, squeezing their profitability, while also risking further political backlash in the new markets and fanning deflationary forces, if smaller margins result in job losses, wage cuts and reduced investment.

Frederic Neumann, chief Asia economist at HSBC, says market diversification is an understandable but unsustainable strategy.

"One risk is that suddenly every Chinese exporter will look to develop the same other markets," said Neumann, adding it would weigh on profits.

"But the real risk is that the receiving countries might ultimately then be forced to raise restrictive measures on China, because their own producers are coming under pressure."

Tensions are already high. Over the past year, the European Union has increased tariffs on Chinese electric vehicles while India, Indonesia and other emerging markets have raised their own trade barriers on certain Chinese products.

China is a formidable competitor in some sectors. Major electric vehicle makers such as BYD or DeepSeek's AI platform have already made a mark on the global stage.

"We have very strong supply chain systems," said Dave Fong, who manufactures school bags, talking teddy bears, stationery and consumer electronics in China and is investing 30-40% more on advertising and business development in Europe and Asia.

"From one idea to mass production, everything is very fast."

But smaller firms worry about survival.

Richard Chen, who owns a Christmas decorations factory in southern China, says he operates on almost no profit margins and is unsure whether he can keep all of his 80 staff this year.

"We tried to go into Poland, but they simply don't buy things like customers in the U.S. do," said Chen. "This is the worst things have ever been."

The price wars abroad risk accelerating deflationary forces at home.

A manager at a bathtub factory in Shijiazhuang, some 300km (190 miles) south of Beijing, says he is trying to sell more in Brazil and Argentina to cushion the impact of the 35% tariffs he now faces in the U.S. after the latest hike.

He said American retailers pressure him to cut prices by 10%, but he hesitates, having already slashed wages by 10-15% to stay competitive.

"There are many Chinese foreign traders in the same industry. For everyone it's so difficult," said the manager, who asked not to be named because of the sensitivity of the topic.

Li Yongqi, manager at Jialifu Electric Vehicle Company, which makes electric scooters and tricycles, sells mostly domestically, but expects that wage cuts and job losses at other factories, and the ongoing property crisis in China, will shrink demand at home and shave 20%-30% of his profits.

"Chinese firms in every industry are going abroad and rushing into overseas markets, then foreign governments all place tariffs and sanctions," Li said. "Most of these factories are laying off workers to reduce costs."

The Politburo, the Communist Party's top decision-making body, called on industries last year to avoid destructive competition. Chinese solar panel producers have urged the government to intervene to curb overcapacity.

Alicia Garcia-Herrero, chief Asia Pacific economist at Natixis, said the only way out for China is to produce less.

"It will be very painful," she added. "Nobody is going to take your products forever. So it's just a choice: if you want to create more welfare, more growth, then you need to consume more."

Neumann at HSBC says policies that boost household consumption may benefit China internationally as well.

"Ultimately, to lower trade frictions with the rest of the world ... it's also about developing domestic demand to help absorb some of the production," Neumann said.

Source: Theedgemarkets

US President Donald Trump said on Thursday that Indian Prime Minister Narendra Modi offered to talk about easing tariffs; buying more US oil, gas and combat aircraft; and concessions amid a standoff on trade.

The offer emerged from the two leaders' White House talks, just hours after Trump railed against the climate for American businesses in India and unveiled a roadmap for reciprocal tariffs on every country that puts duties on US imports.

"Prime Minister Modi recently announced the reductions to India's unfair, very strong tariffs that limit us (the US) access to the Indian market, very strongly," Trump said. "And really, it's a big problem, I must say."

Some of the new goals were aspirational: India wants to increase by "billions of dollars" its purchases of US defence equipment, including fighter jets, and may make Washington the "number one supplier" of oil and gas, Trump said at a press conference. And Delhi wants to double trade with Washington by 2030, Modi said.

"We're also paving the way to ultimately provide India with the F-35 stealth fighters," said Trump.

The F-35 is the most expensive US defence programme and Lockheed Martin's biggest revenue generator. The F-35 Lightning II was on display at an airshow in India this week.

The White House did not respond to a request for comment on any deal, and the agreements announced by the leaders do not yet resolve trade issues between the countries.

Although Trump had a warm relationship with Modi in his first term, he again on Thursday said India's tariffs were "very high" and promised to match them, even after his earlier levies on steel and aluminum hit metal-producing India particularly hard.

"We are being reciprocal with India," Trump said during the press conference. "Whatever India charges, we charge them."

But the two leaders agreed to trade talks to resolve those differences, and expressed optimism they could wrap up those talks soon. A senior Trump administration official said a deal could be reached as soon as this year.

"One thing that I deeply appreciate, and I learn from President Trump, is that he keeps the national interest supreme," Modi said earlier, as he sat alongside Trump in the Oval Office. "Like him, I also keep the national interest of India at the top of everything else."

The two leaders praised each other and agreed to deepen security cooperation in the Indo Pacific, a thinly veiled reference to competition with China, as well as to start joint production on technologies like artificial intelligence (AI) and on nuclear energy. Little discussed, at least in public, were the sensitive subjects of human rights.

Asked before the meeting about the steps India was taking, one source described it as a "gift" for Trump, designed to lower trade tensions. A Trump aide, meanwhile, said that the president sees defence and energy sales to India lowering the US trade deficit.

It's not clear whether the case of billionaire Gautam Adani came up in the talks, after his indictment by the US Justice Department in November over an alleged bribery scheme. Adani hails from Modi's western state of Gujarat, and his Adani Group runs several key infrastructure projects across the globe.

Opponents and critics often allege the meteoric rise of Adani's ports-to-energy empire was partly due to his close relations with, and favourable treatment by, administrations run by Modi's BJP and its allies. The duo have repeatedly denied impropriety.

On Thursday, Modi, irked by a question from a reporter on whether he discussed Adani with Trump, said countries don't meet to discuss such topics.

What Trump wants

Tariffs will continue to dominate the two countries' relationship, said Richard Rossow, head of the India programme at the Center for Strategic and International Studies, a Washington think tank.

"It's going to be a boxing match," he said. "India is willing to take a few hits, but there's a limit."

The US has a US$45.6 billion (RM202.21 billion) trade deficit with India. Overall, the US trade-weighted average tariff rate has been about 2.2%, according to World Trade Organization (WTO) data, compared with India's 12%.

Trump wants more help from India on unauthorised immigration. India is a major source of immigrants to the United States, including a large number in the tech industry on work visas, and others in the US illegally.

The United States approved the extradition of a suspect in the 2008 extremist attacks in India's financial capital Mumbai, in which over 160 were killed, Trump said.

Modi met with Elon Musk on Thursday at Blair House, where the prime minister is staying opposite the White House. Musk is a key Trump ally and his Starlink company's bid to enter the South Asian market could come up for discussion.

He also held a meeting with Tulsi Gabbard, Trump's newly installed director of national intelligence, and they discussed enhancing counter-terrorism and cybersecurity cooperation.

India may prove critical to Trump's strategy to thwart China, which many in his administration see as the top US rival. India is wary of neighbouring China's military buildup and competes for many of the same markets.

Modi also worries that Trump could cut a deal with China that excludes India, according to Mukesh Aghi, president of the US-India Strategic Partnership Forum lobbying group.

Trump said on Thursday that he hoped to be of help in resolving skirmishes on the India-China border.

India has continued its ties with Russia, as it carries out its war with Ukraine. India has remained a major consumer of Russian energy, for instance, while the West has worked to cut its own consumption since the war started.

"The world had this thinking that India somehow is a neutral country in this whole process," said Modi. "But this is not true. India has a side, and that side is of peace."

Source: Theedgemarkets

“Historical trends indicate that a downturn in whale deposits on spot exchanges often precedes a bullish Bitcoin rally.”

Bitcoin Exchange Whale Ratio (screenshot). Source: CryptoQuant

This follows a six-month spate of near-uninterrupted outflows from miner wallets and coincides with a fresh “capitulation” phase, which tends to mark local market bottoms.

BTC/USD chart with Bitcoin miner netflows data. Source: Charles Edwards/X

Source: Cointelegraph

Source: Poundsterlinglive