From: Donald Trump Jr. <donjr@email.donjr.com>
Date: Tue, Mar 4, 2025 at 4:15 PM
Subject: The theme for Trump's address tonight
To: Friend <david.raymond.amos333@gmail.com>
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Day One of Trump's Trade War Delivers Wild Ride for Wall Street
The first trading day of President Donald Trump’s trade war with Canada and Mexico brought no shortage of drama to Wall Street.
Author of the article:
(Bloomberg) — The first trading day of President Donald Trump’s trade war with Canada and Mexico brought no shortage of drama to Wall Street.
The S&P 500 Index tumbled 2% shortly after the open Tuesday, wiping out its $3.4 trillion advance since Election Day, Nov. 5. An afternoon rebound briefly erased the damage, but a late bout of selling left the index at its lowest level since Nov. 4, the day before Trump was elected. Meanwhile, yields on 10-year Treasuries swung 11 basis points from trough to peak, the dollar slid and Bitcoin staged a rebound. Traders who had been expecting two Federal Reserve rate cuts this year are now pricing in three, with more than 50% odds the first will come in May.
The dizzying ride provided a preview of the difficulties facing investors, who now must figure out how to price American assets in what essentially amounts to a new world order created by Trump’s tariffs on China, Canada and Mexico. To make matters more challenging, the levies arise as cracks are spreading in the US economy, consumer sentiment is cratering and inflation remains sticky.
“Buckle up because more volatility is coming,” Jay Woods, chief global strategist at Freedom Capital Markets, said by phone. “Traders are selling first and asking questions later, even with today’s technically driven rebound. Stocks are long overdue for this pullback. The real question is has ‘buy the dip’ turned into ‘sell the rip’? That remains to be seen and we’re not out of the woods yet.”
After the regular session ended, Commerce Secretary Howard Lutnick said in an interview on the Fox Business Network that Trump may announce a pathway for tariff relief on Mexican and Canadian goods as soon as Wednesday. The comments sparked a rally in after-hours trading, pushing futures tied to the S&P 500 off their lows.
Wild swings like this are nothing new for the stock market in times of deep stress. The S&P 500 posted two days of 11% rallies in the midst of the 2008 global financial crisis before plunging deeper into a bear market. When the US sovereign rating was downgraded in August 2011, the gauge rose at least 4% twice. And during the pandemic rout in March 2020, it clocked some of the biggest gains in history on the way to a bear market.
Still, the turbulence and precipitous decline from the S&P 500’s Feb. 19 high are a comeuppance for those on Wall Street who bet big on Donald Trump’s election win, trades that powered the equity market higher along with the dollar and Treasury yields. The bet that Trump wouldn’t do anything to disturb the stock market rally has, for now, been lost.
Volatility Is Here
Things could get even more dicey in the days ahead, as the first batch of economic data from February arrives, including a government hiring report on Friday. Those figures will cover the period when worries about entrenched inflation started to take hold. Meanwhile, Trump will address a joint session of Congress on Tuesday night and could stoke further trade tensions.
“There’s no question in the next six months, we’re going to have a lot of volatility and volatility is creeping up quite considerably,” Larry Fink, chief executive officer of BlackRock Inc., said at an RBC Capital Markets conference. “This is going to be a rocky year in 2025 for the markets as we try to get reoriented.”
To be sure, Trump’s policies of tax cuts and deregulation could yet juice an economy that’s shown remarkable resilience in recent months. The market turnaround turnaround on Tuesday was largely driven by dip buying in the same names that have carried the market for years – Nvidia Corp. and Alphabet Inc. chief among them.
To Fink, the wild ride shouldn’t deter long-term investors from diving in.
“If there’s a big dip, good. Good time to buy,” he said. “You’re going to be happy that you’re basically long equities.”
To get there, though, investors may have to show uncommon fortitude, as Wall Street has turned decidedly risk off. Investors have been dumping winners from the two-year stock rally that pushed the S&P 500 up more than 50% from the start of 2023. Aside from Meta Platforms Inc., the Magnificent 7 group of mega-tech stocks has been battered.
Few past winners have taken more of a beating than Elon Musk’s electric vehicle maker Tesla Inc. Its shares are down 45% from their late 2024 high after almost doubling in value between the election and mid-December on bets that Musk would benefit from his close association with Trump.
The selloff has been even more extreme in the speculative corners of the stock market. A basket of the most-shorted stocks is down 22% from its near-term high in January. An index of profitless technology companies slumped 6.3% on Monday, its worst day since December. Bitcoin has been in freefall, even after Trump once again talked up his plan for a strategic crypto reserve on Sunday.
Trouble Below
“The market is overvalued and traders are now waking up to the fact that tariffs are coming, and they don’t want to pay for companies that are trading at multiples of 30- to 40-times forward earnings,” said Max Wasserman, senior portfolio manager at Miramar Capital.
Investors have been steadily building positions in sectors that are relatively shielded from economic weakness or trade tensions, such as health care, consumer staples and financials. Meanwhile, industries that have steep valuations, substantial exposure to the global supply chain or are reliant on a confident consumer have been struggling. The technology and consumer discretionary sectors are by far the worst performers in the S&P 500 this year and the only two in the red.
The S&P 500 has been underperfoming its global peers this year, with equity indexes in China, Europe, Canada and Mexico all racing ahead. This has coincided with a steep decline in investor sentiment. Equity positioning slid sharply in the week ended Feb. 28, falling back down to near neutral and wiping out the post-election bump, according to Deutsche Bank strategist Parag Thatte.
Meanwhile, data is showing an increasingly fragile US economy. The Institute for Supply Management reported on Monday that American factory activity last month edged closer to stagnation as orders and employment contracted.
All together, market pros have been closely watching if stocks indeed wiped off all of their post-election gains, a move that some say could be key, as Trump tends to use the performance of equities as one of the scorecards of his own achievements.
The Election Day level is key to traders because if the S&P sinks below that, investors who are “currently long risk would very much expect and need some verbal support for markets from policymakers,” strategists at Bank of America led by Michael Hartnett told clients in a note in late February. Now it’s up to Trump to respond.
—With assistance from Alexandra Semenova.
Opinion: Trump's reliance on tariffs shows Canadians have outsmarted Americans
Klassen: Tariffs are the woke of economics
United States President Donald Trump believes his country’s trade deficit with Canada confirms that Canadians have somehow unfairly taken advantage of Americans. Apparently, Canadians have been smarter and out-traded our American counterparts. As a result, Trump feels that tariffs are imperative to level the playing field for American ignorance.
In the past 50 years, U.S. government support of its agriculture sector has been unmatched and towered over other countries when accounting for all the subsidies, direct price supports and export enhancement. Don’t argue with a fool lest he seem wise in his own conceit, as my dad used to say.
I worked in the Canadian grain industry for 30 years and it is based on international trade. I was chairman of the Canadian Grain and Oilseed Exporters Association for four years from 2017 to 2021. I’ve travelled to 36 countries on all continents. I’ve observed the implications of tariffs to the full extent. The U.S. tariffs on Canadian goods and services, resources and commodities will not end well for Americans. Tariffs are the woke of economics.
Throughout my travels, trading nations are the most prosperous nations. A simple Google search tells us that Canada has 15 trade agreements in force with 51 different countries. The U.S., on the other hand, has only 14 free trade agreements with 20 countries. Canada is a trading nation.
In my experience in the cattle industry and grain and oilseed sectors, Canadians are very professional in trade relations and have the highest respect from nations around the world. Countries would rather trade with Canada than the U.S.
Simple economics on comparative advantage stresses the importance of trade for a nation. Trading raises the standard of living and puts resources to use in the most efficient manner. More importantly, for the U.S. economic powerhouse, energy, electricity and resources are needed to run the machine at full capacity. Having these products at the lowest cost ensures not only higher profitability, but also enhances economic output. Tariffs reverse these efficiencies.
Certain products that the U.S. imports have inelastic demand. Take beef and cattle. Energy demand is also somewhat inelastic. A small change in supply has a large influence on the price. People heat their homes regardless of the price. Trust me, I live in Winnipeg.
For commodities with inelastic demand, such as beef and energy, the U.S. consumer will shoulder the bulk of the cost of the tariff. If the demand curve is equal to the slope of the supply curve, the burden of tariffs is equally shared by the exporter and importing nation. If the demand curve is elastic or flat, the bulk of the burden is absorbed by the exporter. This is simple macroeconomics 101.
I was in Hong Kong in February 2007 when spring wheat prices were at historical highs visiting a flour miller. Wheat futures on the Minneapolis Grain Exchange reached more than US$20 per bushel. The flour mill was using Canadian hard red spring wheat, but it was purchased seven years earlier at lower prices.
The flour miller stated, “Jerry, we will buy wheat from you/Canada in two years. Don’t be like the arrogant Americans trying to sell us wheat at historical highs.” The Chinese gentleman said, “I knew more about trading at five years old than Americans trying to sell me wheat with their Ivy League educations.”
Russia was a net importer of wheat when I started in the grain trade. In the early 1970s, the Soviet Union bought large volumes of wheat from the U.S. and other major exporters, including Canada. The U.S. sold large volumes of wheat on credit at subsidized prices. This caused food inflation in the U.S. It’s referred to as the Great Grain Robbery.
This was before my time, but an old-time trader once told me he was out for drinks with the Russians that had come to Canada. Upon their departure, they said they were going to hang the Americans and buy some wheat. The Canadian asked where they were going to get the rope to hang them. Don’t worry, the Russian said, “They’ll sell us the rope to hang them with the wheat.”
Wheat prices rose to historical highs (at the time), as the Russians cornered the world wheat market, and U.S. food prices sharply rose.
Something similar may be happening today. U.S. inflation will be back up to 10 per cent and the U.S. will be heading into a recession. Donald Trump, let me say these words to you: I and most Canadians would rather freeze to death than become an American or become the 51st state. I would rather spend 1,000 years in hell than become an American. You can put the tariffs in place, but Americans will be the ones to suffer the most.
Most American imports from Canada have inelastic demand. In grade school, we learned that America has tried to take over Canada three times throughout history and failed every time. Canadian unity will be strengthened like we’ve never seen before.
Trump, you are ruining a relationship with your best friend and ally. Where is the Ronald Reagan mindset or Milton Friedman when you need them?
Jerry Klassen has been a commodity trader for 30 years. From 2010 to 2019, he was chief executive of Canadian operations for Swiss-based GAP SA Grains & Produits Ltd. He was chair of the Grain and Oilseed Exporters Association for four years from 2017 to 2021.
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“We’re insulted"| Canadian Foreign Minister on US tariffs and talk of the "51st State"
BBC Newsnight Trudeau urged to have King Charles rebuke Trump
Canadians upset with U.S. President Donald Trump’s repeated references to Canada as the “51st state” are urging Prime Minister Justin Trudeau to request a statement from King Charles III.
Canadians upset with U.S. President Donald Trump’s repeated references to Canada as the “51st state” are urging Prime Minister Justin Trudeau to request a statement from King Charles III.
Over the weekend, Trudeau flew to the United Kingdom, meeting with Prime Minister Keir Starmer and holding an audience with the King.
The call for King Charles to make a public gesture of support on behalf of Canada comes after Sir Keir refused to condemn Trump’s 51st state comments in a visit to Washington D.C.
“You mentioned Canada, I think you’re trying to find a divide between us that doesn’t exist. We’re the closest of nations and we had very good discussions today, but we didn’t discuss Canada,” said Starmer, drawing the ire of many Canadians.
Some supporters of the monarchy have called on the King to make a unilateral condemnation of Trump’s comments.
However, other commentators have pointed out that the King does not involve himself with current affairs and does not act without the express approval of the elected government.
Canada’s standing as a constitutional monarchy means that the King does not act without the advice of his executive council, though continues to champion the commonly held values of the given realm.
Former Premier of Alberta Jason Kenney made this point on X, telling Canadians that Trudeau must advise King Charles to comment on the matter if they would like to see King comment on the matter.
“For Canadians disappointed that King Charles has not commented on President Trump’s threats to annex Canada: in his capacity as King of Canada, he can only act on the advice of his Canadian first minister, i.e. Justin Trudeau,” said Kenney.
“I wish our Prime Minister would, in fact, give that advice… But don’t blame King Charles for not speaking to this in the absence of formal advice from the elected government.”
In a comment to True North, President of the Monarchist League of Canada Robert Finch said that Trudeau ought to advise the King to defend Canada’s sovereignty in a statement.
“The King should not comment publicly without advice. The whole point of a constitutional monarch is to limit the monarch so he doesn’t speak independently of the government,” said Finch.
Finch believes that Trudeau should advise King Charles to refute Trump’s assertions against Canada’s sovereignty and that such condemnation could be delivered creatively.
“I do think it’s important for the Crown to be seen as standing up for Canada,” said Finch.
“It could very well be a carefully worded statement. Or it could be some action that drives home the message perhaps subtly. Or, maybe it’s behind the scenes manoeuvring. I think there’s lots of room for some creativity here.”
Since winning the 2024 presidential election, Trump has time and again suggested that Canada become America’s 51st state.
It was first reported that Trump made such a comment at a dinner he had with Trudeau on American Thanksgiving at the president’s Mar-a-Lago estate.
Trump continued to repeat his desire to make Canada the 51st American state in the lead up to and after his inauguration, arguing that if the Canadian economy is unsustainable without having trade surplus with the United States, Canada should be annexed.
The Prime Minister’s Office did not respond to True North’s request for comment.
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