Image Source:   Mexico and Canada have now gone through the preliminaries and started their first round of negotiation battles with President Donald Trump. China, which is currently talking with the White House administration, appears to be looking for a gentler path. China has gone through this before with Trump, so it knows what to expect as it enters its second trade confrontation.What are the countries trying to do, and what will be the likely or possible results for the market going forward?  Trump: Truth or ConsequencesUS President Trump has threatened to hit a wide array of imports with tariffs ranging from 25% to 10% hikes. Manufacturers like computing, pharmaceuticals, machinery, some food staples, and resources that the U.S imports all could be affected. However, specifics remain in short supply and because negotiations continue, rhetoric could morph into new threats or alternatively tariff threats could be defused.While some economists see the threat of inflation if tariffs are imposed, the potential outcome is hard to quantify. Bluster is part of the tariff rhetoric from all sides. Some believe tariffs will not cause massive increases in consumer prices. When China was hit by trade sanctions under the first Trump administration, prices did not spike.The potential consequences of fear generated from not negotiating with President Trump were quickly seen on 3rd February 2025 in the reaction of financial institutions. The selloff on Wall Street also highlighted the potential of tariffs to cause economic pain for corporations. However, a lot of the fear generated in the […]

GBP/USD rises maintaining position above the 50-day SMA as market digests US tariff negotiations. US labor market shows strength with ADP employment figures surpassing expectations, spotlight on Nonfarm Payrolls. UK economic indicators show slight downturn, with market eyes on BoE’s anticipated rate cut. The Pound Sterling remains bid for the third consecutive day, edges up 0.34% as the  trades at 1.2519 above the 50-day Simple Moving Average (SMA) at 1.2501.  GBP/USD ascends modestly, bolstered by positive market sentimentThe Greenback has erased most of its Monday’s gains, spurred by the US imposing tariffs on Mexico and Canada. However, both countries reached agreements with Washington. Therefore, investors who once seemed uncertain about US trade policies are confident that US President Donald Trump is using tariffs as a “tool” to negotiate with allies and adversaries.Data has taken a backseat, with traders eyeing the release of US  figures for January. Wednesday’s US docket featured ADP National Employment Change for January. The numbers exceeded estimates of 150K and rose by 183K, an indication of strength in the labor market.At the same time, business activity continued to deteriorate. S&P Global featured Services PMI for January, which dipped from 56.8 to 52.9, better than the 52.8 expected. Up next, the Institute for Supply Management (ISM) will feature the Non-Manufacturing PMI, foreseen to increase from 54.1 to 54.3.Across the pond, January’s UK S&P Global Services  dipped from 51.1 to 50.8 as economic conditions worsened. Traders await the Bank of England’s (BoE) monetary policy decision on Thursday, poised to reduce  by 25 basis points […]

S&P 500 indeed ran to the daily bearish gap, testing it twice, and I discuss it excessively in the client section – plenty of smashing opportunities for . Earnings hadn‘t been smashing, after I had been calling , turned out well, and the day after DeepSeek I had been explaining the .GOOGL missed on cloud, META is the (open source) winner, AMZN I‘m leaning a bit bearish (AWS not making its numbers all too greatly) – this is just anotherr example of what kind of guidance clients are getting (ARM is closer to being my cup of tea really!).Bitcoin and crypto lanscape look to be slowly decaying – that‘s the near-term, and I am not lulled to sleep by BTC being still above $92K – $93K for now, you do remember my mid Dec call for $72K not being all that inconceivable (over the many months ahead I mean), right?What implications does that have for risk taking and equities today, after Trading Signals clients benefited on bullish precious metals and selling the oil rip calls already? What‘s next in store following the underwhelming JOLTs job openings and factory orders yesterday? This ADP employment change beat is but one piece of the puzzle (services PMI roughly in line next I assume) – see the continued China trade war also spilling into regulatory as US tech behemoths can attest to? I was clear for clients about bearish AAPL implications, .In today‘s punchy and quick video I dive into cryptos, real assets and equities, what conclusions would […]

Participating in a recent VRIC panel with my two favorite economists was fun, and I have included the video clip below.As the only money manager on the panel, I must add a caveat to David’s comments about the Canadian stock market being relatively cheaper than the U.S. That’s true, as I have noted many times, including most recently in .U.S. stock markets are trading at the highest valuations in the world and higher than 92% of all historical incidents on the insightful, cyclically adjusted price-to-earnings ratio “CAPE.” Canadian stocks have appreciated less, to be sure, but at 25x earnings, they rank second only to the U.S. globally and more than 69% of historical incidents.Unfortunately, being less overvalued does not mean the Canadian stock market will be saved from a bear market. If that were true, life as a capital protector would be much easier. In reality, global stock markets are highly correlated.Canadian stocks were less overvalued in the 2000 tech bubble, and Canada did not follow America into an official recession in 2001. Still, the TSX lost 50% (2000-2003) while the Nasdaq fell 80%. In 1980-1982, the TSX dropped 45%, 1990-1993 (24%), and 2008-2009 (50%). In the 2020 COVID meltdown, the more ‘fairly valued’ TSX fell 37% in 3 weeks as global markets crashed.Apart from the highly irregular COVID plunge and 11-month bounce back, the shortest recovery time was four years to 1984 to recoup the 1980-82 losses. It took eight years to 1995 to recover from the 1987 market drop, […]

Image Source:   The US dollar continues to ease back along with bond yields, a move triggered by Trump’s decision to delay tariffs on the USA’s northern and southern neighbours on Monday. We have since had weaker-than-expected JOLTS jobs openings and factory orders data from the US, both helping to further. Some of the biggest beneficiaries of a weaker US dollar have been currencies of countries that were subject to being slapped with hefty tariffs – including the Canadian dollar. But a last minute decision to postpone 25% tariffs on Canada (and Mexico) by Trump following discussions with the leaders of countries, meant that the USD/CAD would reverse sharply after breaking to a new multi-year high momentarily on Monday, as the news also sent risk assets higher and relieved pressure on the Canadian dollar and Mexican peso. Today’s focus will momentarily turn back to data with the release of ADP private payrolls and ISM services PMI. The big day for the USD/CAD is on Friday when official jobs report from both North American nations will be released simultaneously.  Tariff threats remainWhile Canada and Mexico averted tariffs, a 10% levy on China took effect yesterday, with Beijing retaliating with new tariffs of its own on selected US imports. Therefore, the threat of a trade war between the world’s largest economies remains, even if deals with America’s neighbouring countries suggest Trump is willing to negotiate on making deals that work for all parties. However, striking deals with China and the eurozone might be […]