One of the biggest lessons I have learned in my decades as a market analyst and my studies of market and economic history is that markets hate tariffs, markets despise tariffs. Tarriffs dump sand in the gears of the global economy and markets hate them.
Hopes that Treasury Secretary nominee Bessent could potentially soften rhetoric about new US tariffs came to an quick and abrupt end overnight. President-Elect Trump announced that he intends to impose 25% tariffs on goods from Canada and Mexico unless they help to tighten up borders and reduce illegal immigration and drug smuggling. Trump also announced plans to increase tariffs on goods from China by 10%.
This news has had an impact across world markets overnight. Canada TSX 60 Index futures are down 0.15% this morning while S&P 500 futures are up 0.25%, a 0.40% underperformance. European markets like the FTSE and the Dax are also down 0.15%.
The impact has been particularly large in currency markets. The Canadian Dollar is down 0.8%, while the Mexican Peso is down about 1.0%. Cryptocurrencies, which can be seen as proxies for risk appetite at the margins are getting hammered across the board today. Bitcoin continues to back away from $100,000, falling 2.4%, while Ether is down 4.8% and Dogecoin is down 7.3%.
Precious metals are rebounding today with Gold up 0.8% and Silver up 1.4%. In commodity action US Crude Oil is up 0.8% today, while Copper is up 0.2%.
Black Friday, the busiest shopping day of the year in the US is fast approaching but Santa’s sack may be a mixed bag for retailers this year. Electronics retailer Best Buy missed on earnings and cut guidance. On the other hand the outlook for clothing retailers appears brighter as Abercrombie and Fitch raised their sales guidance. This week’s slate of US economic releases gets crammed into two days. Today’s releases are later in the morning headlined by house prices at 9:00 am EST, new home sales and consumer confidence at 10:00 am EST, and Fed minutes at 2:00 pm EST.