The overnight equity sell off isn’t as bad as I imagined it might get—and interest rates are falling by 3-4 basis points.
I suspect over the course of the day we will see a lot of up moves and then down moves in stocks, while it would appear that maybe bonds will kind of tread water.
I would expect that in spite of interest rates moving a bit lower we will see some red in income issues as the baby gets tossed out with the bath water–I know for sure I won’t be tossing any bath water out. Sometimes one thinks they can either buy or sell during the course of one of these days and gain some type of advantage–seldom, if ever, is that the case–you sell at the wrong time and also try to time a buy only to see the issue move sharply lower. On the other hand if solid quality issues get slammed hard and you simply are focused on locking in a great yield that is safe maybe legging in to some shares is in order.
One needs to watch for quick reversals in markets–remember that we could get an announcement at any minute that tariffs are now off–or more tariffs are on the way–one never knows.
I will now just watch.
A lot of pain in Canada and Mexico (maybe after a month delay). Some in the automakers (recovering rapidly). China got off with a light touch and seems relieved. Barely any headlines or coverage on tariffs in big Chinese newspapers, more on the Lunar New Year. With a 5% US general tariff on other nations expected, the China 10 per center greatly reduces their feared offshoring to India or Vietnam. China Large-Cap ETF FXI is up today.
Unlike Canada and Mexico, China was curiously quiet on retaliation. Winner here may be CHS with less risk of retaliatory tariffs on soy and corn exports. Also, benefiting CHS, the much smaller than feared tax on imported CA crude. (IMHO, Tankers are a bet for crude oil pricing differentials. Valero is up today – they claim easy seaborne replacement of pricey MX crude. )
Sectors most outperforming the S&P 500 SPY now are XLV, XLC, XLE
Sectors most under performing the S&P 500 are XLY, XLK, XLI
Cheer leading on Bloomberg this morning noting the sharp rise in futures … off the bottom. Marketwatch just ran a buy the dip headline. Would not surprise me if the market closed up or only slighly down. “The system will be fine, providing nobody panics.” — “Rollover,” 1981. JMO. DYODD,
Watch out for potash imports from Canada and CHS. The U.S. is heavily dependent on Canada for potash, a key ingredient to fertilizer. Grassley is publicly asking for an exemption.
I don’t understand what Trump wants from Canada that relates to migration or fentanyl or why Canada wouldn’t cooperate on such minor issues (minor to them.) What are both sides hiding?
Good point on potash, thanks.
I don’t believe he wants anything from Canada that relates to migration or fentanyl. The U.S. has no significant concerns with Canada regarding either issue.
Maybe he just wants to encourage Canada to apply to become part of the US. If we could leave Quebec behind, I could get behind that.
(Just kidding – have to look for humor where you can nowadays).
So what does he want? (and I swear I’m trying my darnedest to not get political)
You’re fine WKFI
So what does he want?
Many commentators suggest that this is an attempt to, in effect, start renegotiation of the USMCA free trade agreement early; it otherwise would not be renegotiated until mid-2026.
I am certainly not trying to be political by posting this link to the very political Atlantic Council, and for what it’s worth I don’t really agree with them, but this article could provide some insight into what some of those in office might want from such a renegotiation.
https://www.atlanticcouncil.org/blogs/new-atlanticist/trump-has-the-advantage-in-upcoming-usmca-trade-talks-heres-how-his-team-can-use-it/
No big deal Mike D. It is near impossible to not have a tiny bit of politics on the subject.
Seems as though China and Mexico are working on the USA concerns. In contrast, Canada is just following thru with social media theatrics. Canada doesn’t buy much from the USA so its mainly saber rattling. If they want to go more extreme on some type of oil / gas ban, that would be interesting.
2022 stats show almost the same export $ to the US as our imports- over $400B for each. Canada is #2 in exports at ~ 17%of the total. Not small potatoes. Probably a lot more now.