Tariff Tango, Strategic Crypto Reserve and Germany's Money Printer

Welcome to this week's Forward Thesis, where we analyze the technological and market developments shaping our future. This week delivered a roller coaster of market volatility as tariff policies shifted daily, Bitcoin surged on strategic reserve plans, and Germany stunned markets with its most dramatic fiscal pivot in decades.

Let's dive into the key stories moving markets.

Trump's Tariff Tango Sends Markets Spinning

The S&P 500 just experienced its worst week of 2025 as investors grappled with the most aggressive trade war in nearly a century, punctuated by daily policy reversals that left even seasoned traders disoriented.

The volatility was staggering. In just one 27-minute stretch on March 4th, the S&P 500 plunged 105 points without any major headlines, erasing $875 billion in market value. For the week, major indices moved in violent swings, with the Nasdaq briefly entering correction territory (down 10% from its peak), while the S&P 500 ended down 6% from its February high.

The timeline tells the story:

• Monday: Trump confirmed tariffs would proceed, insisting "there will be little disturbance"

• Tuesday: Markets plummeted as 25% tariffs on Canada and Mexico (with 10% on Canadian energy) plus 20% on China took effect

• Wednesday: Stocks rebounded on rumors of compromise after Commerce Secretary Lutnick hinted at potential relief

• Thursday: Trump exempted USMCA-covered goods until April 2, while warning auto manufacturers this relief is temporary

This last-minute USMCA exemption represents a significant reversal. The White House estimates 62% of Canadian imports (mostly energy products at 10% tariffs) and about half of Mexican imports will still face duties. However, sparing automobile supply chains – which are deeply integrated across North America – signals some pragmatism.

When asked about market declines, Trump was blunt: "I'm not even looking at the stock market." Treasury Secretary Scott Bessent reinforced that there "is no put," suggesting the administration will tolerate market pain to implement structural trade changes.

The market implications are profound. Wall Street's long-assumed "Trump Put" – the idea that the president would reverse course if stocks declined significantly – appears significantly weaker than anticipated. Investors who positioned portfolios expecting Trump to prioritize market performance are now recalibrating expectations.

This recalibration is evident in volatility metrics. The VIX has climbed over 54% since February 14th, while bond yields have dropped approximately 50 basis points since the trade war began – suggesting markets are pricing lower growth with higher inflation risks.

Economists are increasingly focused on the "wealth effect" – with some estimating that every $1 decrease in net worth results in a 2-cent decline in consumer spending. With $3.7 trillion erased from stocks in recent weeks and the richest 10% of American households driving nearly half of consumer spending, this wealth erosion creates legitimate economic concerns.

For investors, low-volatility stocks have emerged as 2025's best-performing investment theme. While tech darlings falter (the Magnificent Seven are down 12% since mid-February), defensive positioning is paying dividends.

Bitcoin Strategic Reserve Yields Mixed Reactions

Bitcoin rocketed back above $90,000 this week after Commerce Secretary Howard Lutnick reportedly confirmed plans for a U.S. strategic bitcoin reserve. The digital asset gained approximately 10% in 24 hours after hitting lows earlier in the week, pushing the combined crypto market value back over $3 trillion. Then, shortly after signing the executive order, it drops again.

This development follows Trump's recent Truth Social posts where he outlined plans for a "crypto strategic reserve that includes XRP, SOL, and ADA," adding later that Bitcoin and Ethereum would also be included. While smaller cryptocurrencies being mentioned ahead of Bitcoin sparked criticism from some Bitcoin maximalists, the market response has been decidedly mixed.

Despite the initial enthusiasm, significant questions remain unanswered. First and foremost: how would such a reserve be funded? Congressional authorization seems unlikely, raising speculation about whether the administration might use seized Bitcoin (the government currently holds approximately 200,000 BTC) to establish the reserve. This raises further questions – would they sell Bitcoin to buy other cryptocurrencies like Cardano and Ripple? Or even worse, would they use taxpayer dollars to buy crypto? While this is extremely unlikely, sentiment is generally negative.

More fundamentally, critics question the strategic rationale behind a government cryptocurrency reserve. Unlike strategic petroleum, uranium, or tungsten reserves – which secure commodities that are difficult to acquire quickly in emergencies and have industrial applications – cryptocurrencies don't serve a comparable strategic function. Where is the industrial need for a nation to stockpile Ripple or Cardano? There is none.

On Friday, crypto industry leaders met at the White House Crypto Summit where they discussed and announced the official executive order. David Sachs, Brian Armstrong of Coinbase, Michael Saylor of Microstrategy, Brad Garlinghouse of Ripple and many notable leaders attended this meeting.

Many market observers believe Trump's ambitious announcements may be negotiating tactics – opening with extreme proposals before settling on more moderate outcomes. Some speculate that the mention of multiple cryptocurrencies might ultimately lead to a Bitcoin-only reserve, or perhaps no reserve at all.

While crypto does serve a significant use case to decentralize finance, decrease latency of legacy financial platforms, and serve as a deflationary asset in many cases, there is little reason to justify a stockpile of crypto assets while those funds can redirected into something much more productive.

Germany's Fiscal Big Bang Shocks Global Markets

German bonds just suffered their worst day since the fall of the Berlin Wall, as Chancellor-in-waiting Friedrich Merz unveiled a sweeping fiscal overhaul that will unleash hundreds of billions of euros for defense and infrastructure investments.

The yield on Germany's 10-year bonds jumped 30 basis points in a single session – the biggest surge since March 1990. The scale is sizeable: a €500 billion ($538 billion) special fund for infrastructure, alongside a provision that defense spending over 1% of GDP would be exempt from the country's constitutional borrowing limits (the famous "debt brake").

This represents nothing less than a tectonic shift in European fiscal policy. Germany's traditional fiscal conservatism has long been cited as a key factor in sluggish Eurozone growth. The nation's unwillingness to leverage its strong fiscal position has frustrated economists, investors, and European partners for years.

What's driving this dramatic change? Two factors stand out. First, the urgent need to bolster European defense capabilities in response to U.S. President Trump's apparent appetite for a quick settlement to the Ukraine war. Second, the recognition that Germany's aging infrastructure and technological competitiveness require massive investment.

The market reaction has been profound. The euro is on track for its best three-day run since 2015, gaining over 1% to trade above $1.07 for the first time in four months. European equities staged one of their strongest advances of 2025, extending an international rotation trade that has held sway most of the year.

"It feels like a game changer," said Jack McIntyre, portfolio manager at Brandywine Global Investment Management, who has been adding to his fund's long euro position since Merz's announcement.

The ripple effects extend beyond Germany. The European Commission has proposed extending €150 billion in loans to boost defense spending across the bloc, while also loosening fiscal rules constraining national spending. With traders already paring bets on further interest rate cuts, it seems that European countries will continue to print money to boost their economy and increase defense investments.

For global investors, this shift creates compelling opportunities. European markets have been trouncing U.S. stocks in early 2025 – an ominous historical signal for U.S. equities, according to Bloomberg Intelligence. In 35 years of data, the S&P 500 has never outperformed global peers on an annual basis when it has trailed the international benchmark by more than 2.8 percentage points by mid-February, as it did this year.

After decades of prioritizing budget discipline above all else, Europe's largest economy appears ready to embrace a more balanced approach that acknowledges the critical importance of infrastructure and defense investment.

This could potentially reshape the economic landscape of Europe and provide some fresh momentum for the continent's markets.

GitLab Rides the DevSecOps Wave

GitLab delivered strong Q4 results, with revenue growing 33% year-over-year to $164 million and dollar-based net retention at 130%. CEO Sid Sijbrandij highlighted three key growth areas: security and compliance capabilities, AI offerings with GitLab Duo, and Enterprise Agile Planning.

The company's AI strategy centers on GitLab Duo ($19 per month), which has positioned itself as having "the most currently available features of any DevOps platform" according to a recent Omdia report. Perhaps most impressive was GitLab's dramatic operating leverage improvement. Non-GAAP operating profit reached $13.2 million or 8% of revenue, compared to a loss of $13.8 million in the previous year. Free cash flow was $24.5 million in Q4, compared to negative $12.8 million a year prior.

The company has successfully become cash flow positive a year ahead of commitment and delivered its first year of non-GAAP operating profit. For FY2025, GitLab expects revenue of $725-731 million, representing approximately 26% growth.

Flutter Bets Big on U.S. Sports Betting Expansion

Flutter Entertainment delivered exceptional Q4 results, with revenue up 14% and strong momentum in its U.S. FanDuel business. The company has established unparalleled strength in the American market, with a sportsbook market share of 43% and an iGaming market share of 26%, making it the clear #1 online sportsbook operator in the U.S. and now also the top iGaming operator.

CEO Peter Jackson emphasized that the underlying business fundamentals remain robust. Average monthly players grew 37%, driven by product innovations including NBA Super Slam games and the FanDuel Reward Machine.

Looking forward, Flutter expects U.S. existing state revenue and adjusted EBITDA midpoints of $7.72 billion and $1.4 billion respectively for 2025, representing year-over-year growth of 33% and 176%. The company continues to invest in new state launches, with Missouri planned for Q4 and Alberta for Q1 2026.

Marvell's AI Infrastructure Play Takes Shape

Marvell Technology reported Q4 revenue of $1.43 billion, slightly above guidance midpoint and growing 1% sequentially. The company's data center end market drove record revenue of $765 million, growing 54% year-over-year and 38% sequentially, primarily due to AI-related demand.

CEO Matt Murphy outlined Marvell's strategic positioning in the AI infrastructure market: "The seismic shift driven by AI in the data center market is creating new opportunities, and we are actively investing to lead the next wave of innovation." The company has a full suite of solutions across data center interconnect, switching, and compute.

For fiscal 2024, Marvell's AI revenue contributed over 10% of total company revenue, a substantial increase from approximately 3% in the prior year. This momentum accelerated, with AI revenue exceeding $200 million in Q4, driven mostly from optics.

Looking ahead, Marvell expects its cloud optimized silicon programs to reach high-volume production with overall cloud optimized revenue exceeding $200 million exiting the fourth quarter, putting them ahead of their $800 million annual target. While Marvell's carrier and enterprise end markets remain challenged, expected to decline approximately 50% and 40% sequentially in Q1, the company forecasts a recovery in the second half of fiscal 2025. Longer term, Marvell expects both markets to eventually return to contributing over $1 billion each in annual revenue.

Broadcom Provides Stunning AI Outlook

Broadcom delivered a blockbuster quarter with consolidated revenue of $14.1 billion, up 51% year-on-year, and operating profit of $8.8 billion, up 53%. CEO Hock Tan outlined a staggering vision for the company's AI business, projecting a Serviceable Addressable Market (SAM) of $60-90 billion in fiscal 2027 for AI XPUs and networking, up from approximately $15-20 billion in fiscal 2024. This projection is based on Broadcom's current hyperscale customers, each planning to deploy 1 million XPU clusters across a single fabric over the next three years.

For fiscal 2024, Broadcom's AI revenue grew 220% from $3.8 billion to $12.2 billion, representing 41% of semiconductor revenue. In Q4 specifically, AI revenue grew 150% year-on-year to $3.7 billion, while non-AI semiconductor revenue declined 23% to $4.5 billion.

On the software side, Broadcom has largely completed the integration of VMware, with revenue now on a growth trajectory and operating margin reaching 70% exiting 2024. The company expects to exceed its initial target of $8.5 billion in incremental adjusted EBITDA much earlier than the initial three-year timeframe.

Broadcom now expects to shift to guiding its semiconductor business by AI and non-AI revenue segments, recognizing that "the AI semiconductor business will rapidly outgrow the non-AI semiconductor business."

Other Notable Results

Costco reported mixed results with EPS of $4.02, missing estimates by 1.7%. However, the company delivered impressive comparable sales excluding gas and foreign exchange impacts, with U.S. comps increasing 7.5%.

JD.com beat expectations with EPS of $0.97, exceeding forecasts by 15.5%. The Chinese e-commerce giant reported better-than-expected net revenue of $42.4 billion with annual active customer accounts increasing to 644.7 million.

Veeva Systems exceeded forecasts with EPS of $1.19, beating estimates by 16.7%. The life sciences cloud software provider posted revenue of $630.6 million, up 15% year-over-year, driven by the continued adoption of Veeva Vault Clinical, Quality, and Regulatory applications.

AST SpaceMobile reported narrower losses than expected with EPS of -$0.12 versus estimates of -$0.14. The space-based cellular broadband company reported progress on its commercial satellite program, with the first five commercial satellites planned for launch in 2024. The stock has surged over 300% year-to-date on growing excitement about its space-based cellular network technology.

That's all for this edition of Forward Thesis, where we analyze the tech trends and market shifts that matter.

See a trend we should cover? Let us know.

Until next time.