Replies to post #2227 on Mining Sector Ideas

[gfp927z]

Drama Queen Don - >>> Markets (and the world) on edge as Trump’s tariff deadline approaches


Yahoo Finance

by Ben Werschkul

January 30, 2025


https://finance.yahoo.com/news/markets-and-the-world-on-edge-as-trumps-tariff-deadline-approaches-201455496.html


A self-imposed Feb. 1 deadline by Donald Trump for a first round of tariffs on Canada, Mexico, and China looms in less than two days as economic observers and world leaders try to plan amid the uncertainty.

On Thursday afternoon, Trump reiterated his plans to put a 25% tariff on imports from Mexico and Canada, repeating his warning against America's top U.S. trade partners. But even then he added to the uncertainty by saying some provisions remain undecided.

"We may or may not," Trump told reporters at the White House about whether the tariffs would apply to oil. "We're going to make that determination probably tonight."

It was the latest in a series of comments in recent days from the president and his commerce secretary pick that have offered little clarity, leaving many in wait-and-see mode.

The uncertainty could already be weighing on business decisions, according to Charles Schwab's Kevin Gordon, citing the effects of last weekend's 10-hour trade war with Colombia that ended as quickly as it began.

"That nature of policy-making is what causes companies to maybe take a step back and halt their spending," he said during a live conversation on Yahoo Finance.

Trump's last round of trade tensions and brinksmanship in 2018 and 2019 also saw business spending slow materially, he added.

Leaders in Canada and Mexico have expressed confusion and frustration about what they can do this time around, with Trump promising 25% tariffs on them as soon as this Saturday over issues of migration and illegal fentanyl.

China could also be in line for 10% duties over those issues.

'Waiting mode'

Each utterance from Trump's administration has been closely watched this week, but the comments have sometimes offered little clarity.

Commerce secretary nominee Howard Lutnick even offered material for both sides of the debate.

Lutnick — who is set to be Trump's top trade official if he is confirmed — began his Senate confirmation hearing this week by saying "I prefer across the board" duties and specifically cited why he thinks they are preferable when dealing with countries like Mexico.

But then later in response to a different question he reminded that the Trump administration has a clear short-term off-ramp, calling this weekend's possible duties "separate" from overall plans.

He also said if places like Mexico take action to shut their border to staunch migration and illegal drugs then — at least for now — "there will be no tariffs."

Another back-and-forth came on Monday following a Financial Times report that newly confirmed Treasury Secretary Scott Bessent is pushing a market-friendly plan that could see Trump's plan for universal tariffs start at a lower level of 2.5% and then rise gradually.

But Trump himself immediately poured cold water on the idea when speaking to reporters on Air Force One.

The lack of clarity has left a wide array of officials, from Fed Chairman Jerome Powell to the president of Mexico, in wait-and-see mode.

"We are going to be watching carefully," Powell offered Wednesday. The central banker added that the range of possibilities remain "very, very wide" and that it's not yet known precisely how any duties would filter through to US consumers.

As for Mexican President Claudia Sheinbaum, she was asked about 25% tariffs on her country this week and offered, "We don't expect it will happen ... but if it does, we have our plan."

Likewise, Canadian Prime Minister Justin Trudeau warned Wednesday that his government is preparing a strong response if the US imposes tariffs on his nation.

Economists have projected that Trump going forward with his tariff plans for the two nations in full — and keeping them in place — could push both into a recession.

As for markets and the US economy, Deutsche Bank chief US economist Matthew Luzzetti offered in a live interview with Yahoo Finance Thursday that Trump going forward on Canada and Mexico would "tend to dent growth but also lift inflationary pressures this year."

"They're in waiting mode," he added of Powell and the Fed's possible monetary policy measures to counteract the duties.

And if things weren't uncertain enough, Tobin Marcus of Wolfe Research offered in a new note Thursday that economic observers also have to weigh duration when looking at these tariff threats — especially if Trump moves forward on Canada or Mexico.

He wrote that this wave of threats — put forth over drug and migration issues — "clearly fall into the 'negotiation tool' bucket, which we think makes it much less likely that Trump will tolerate significant economic pain for an extended period in this case."

But Marcus, like many on Thursday, had no certainty on what to expect this weekend, though he underlined that Trump and his team are determined to put tariffs in place at some point.

"On China, as with the global tariffs," he wrote, "our mantra remains 'big but slow.'"

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[gfp927z]

Bigworld, It looks like the period ahead will be bad for the stock market, but you should be ideally positioned in the UVXY play. Fwiw, I'm thinking of picking up some of the 1X short ETF (SH) on Monday, to hedge the 10% Core stock position. It figures that once the core position was in place, the market would fall apart, lol. But SH should be an effective way to hedge.

With SH, the expense ratio is high (0.89%), so similar to UVXY (0.95%), but SH doesn't have the contango / erosion problem, at least not much. Hopefully the position won't be needed for too long. Unlike UVXY, the idea with SH isn't to make money, but to merely offset the expected losses in the 10% LT core position. Not thrilled about having to use SH, but we can thank the bonehead in the White House. On the plus side, Trump should still be able to end the Ukraine War and the slippery slope to WW 3. And maybe he'll come to his senses about the tariffs, although probably not until the damage is done.

Trump has surrounded himself with yes-men who are afraid to speak the truth or set him straight when he's clearly wrong. The risk with these mega tariffs is so obvious, it's hard to believe Trump is going full speed ahead with them. In business he went bankrupt four times, but survived despite some faulty judgement.
He could benefit having some independent advisors who can look at all sides of each policy.



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[bigworld]

Gfp: I have though for or some time that these tariffs were just Trump's way of negotiating. It get's attention and deals are worked out. Like a shot across the bow. Seems to be working. Canada and Mexico look to be more cooperative on border enforcement. Denmark is signaling they would not stop America from beefing up defense assets in Greenland. Some further deals on expoiting Greenland resources will come with Denmark getting some royalties along with the actual citizens of Greenland. Trumpism is working. I expect a Ukraine- Russia settlement by spring. More progress in the Middle East. Trump is moving fast. He knows Henry only have 2 years to get what he wants done.