Tariff man strikes, loonie sinks, retail rout, Bitcoin’s losing streak
I’m a bit behind today. All the kids wanted morning snuggles. It is a near-perfect way to start the day. Total perfection would be if it happened after an extra hour of sleep.
Tariff Man: The Canadian dollar has plunged to match the lowest level in four years after US President-elect Donald Trump warned he would slap tariffs on Canada. Trump said he would hit Canada and Mexico with a 25% tariff on “all products” on the first day of his Presidency through an executive order. It remains to be seen how much of this is bark vs. bite because Trump is tying this to border security. “As everyone is aware, thousands of people are pouring through Mexico and Canada,” Trump wrote in a post on Truth Social, “…Bringing crime and drugs at levels never seen before. The tariff will remain in effect until such time as drugs, in particular Fentanyl, and all illegal aliens stop the invasion of our country.” Prime Minister Justin Trudeau apparently got on the phone with Trump right away according to multiple reports. Trudeau emphasized that the issues at the northern border pale in comparison to the situation at the Mexican border, according to those reports. There is limited reaction elsewhere in the market even as Trump also promises an additional 10% tariffs on China. Futures are stable and bonds are flat.
Final stretch: Anti-obesity drug makers are rallying after the Biden administration said Medicare and Medicaid should cover those drugs. Shares of Eli Lilly and Novo Nordisk are higher in the pre-market. The proposals would see millions of Americans qualify for coverage, not just those with diabetes or limited definitions of obesity. However, with the drugs costing $1,000 per month that adds up to a pretty penny for the government. The Trump administration would be responsible for finalizing the proposal, so the measures face an uncertain future. Worth noting that both these former high-flyers have struggled recently. Novo is barely up on the year and Eli Lilly has pulled back more than 20% from its peak this year. For now these two have got the market cornered. This morning Amgen released the results of their anti-obesity shots. Amgen shares are down 7% after the study showed only 20% weight-loss, the street was hoping for more.
In the bag: A bunch of retailers are under pressure this morning after reporting quarterly results. Abercrombie & Fitch is down about 3% even as results across the board were solid and it boosted its forecast. Likely just profit taking as the stock has doubled in the last year. Kohl’s is getting crushed, down 17% after cutting its sales outlook. Sales dropped for an 11th quarter in a row and were worse than feared this quarter. There is a new CEO coming in January, so maybe one to put on your watch list if you like turnaround plays, underperformers, and low valuation. Best Buy also cut its sales forecast after warning of uneven demand in part due to the “distraction” from the election and macro uncertainty. Best Buy is down 7% as it says sales are now going to fall more than previously expected. I’ll watch shares of Couche-Tard this morning. The convenience store operator, which has been in hot pursuit of 7-eleven, reported what RBC calls “another solid but uninspiring quarter.” Earnings fell short of expectations and same-store merch sales fell in all geographies.
You’re on mute: Shares of Zoom are down 7% even as results came in much better than expected across the board. Profit and sales grew more than expected and the video-conferencing company is boosting its forecast. Another profit taking story, with shares up 60% from the August low. But even with that rally it is still down 85% from the pandemic peak.
Perspective: Bitcoin is extending its losing streak for an eight day in a row. It is trading below $93,000 as I type. Exactly one month ago the price was $67,000, so the “crash” is all a matter of perspective. Bloomberg is reporting that ETFs that short bitcoin took in a “record” amount. That works out to about $41 million in combined inflows on two ETFs ($SBIT & $BITI) that have about $178 million in total assets. As a reminder, the Blackrock ETF alone ($IBIT) has $47 billion in total assets.
