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🌎 Trump’s Tariff Talk Shakes Markets

+ The Federal Reserve isn’t rushing to slash rates

November 26, 2024

Good afternoon! Warren Buffett is back at it, giving away another $1.1 billion in Berkshire Hathaway stock as part of his Thanksgiving tradition. He also revealed plans to ensure the rest of his $147 billion fortune is distributed within 10 years of his passing, with successors lined up in case his kids don’t outlast him. True to form, Buffett reiterated his philosophy: wealth should empower, not enable idleness.

Even after donating billions, the 94-year-old still holds over 206,000 Class A shares, controlling 30% of Berkshire Hathaway’s voting power. Buffett’s secret? Compound growth and a frugal lifestyle. No yachts or mansions here—just decades of smart investments and a commitment to keeping his fortune working long after he’s gone.

MARKETS

*Stock data as of market close*

  • Stocks brushed off tariff threats Tuesday, with the S&P 500 and Nasdaq climbing 0.6% to fresh records. The Dow shook off early losses, rising 0.28% to secure another all-time high. Investors seemed unfazed by President-elect Trump’s proposed tariffs on Mexico, Canada, and China, choosing to focus on market momentum instead.

  • The Fed minutes also kept traders busy, revealing plans for gradual rate cuts if inflation progress stalls. Treasury yields ticked up on the news, but markets stayed in rally mode as investors took a “wait-and-see” approach to Trump’s trade warnings.

STOCKS
Winners & Losers

What’s up 📈

  • Semtech surged 18.10% after the semiconductor stock posted stronger-than-expected earnings and optimistic guidance for the coming quarters. ($SMTC)

  • J.M. Smucker rose 5.69% following a beat-and-raise quarter, with the company reporting robust sales growth across key product categories. ($SJM)

  • Novo Nordisk and Eli Lilly climbed 1.50% and 4.55%, respectively, after the Biden administration introduced new Medicare and Medicaid rules to cover weight loss treatments. ($NVO, $LLY)

  • Walmart gained 2.02% as a report indicated high-end customers are shifting away from Target and toward the low-cost retailer. ($WMT)

What’s down 📉

  • Kohl’s plummeted 17.01% after cutting its sales outlook and announcing the CEO’s upcoming retirement. ($KSS)

  • MicroStrategy slid 12.33% as Bitcoin retreated toward $90,000, reversing some of its postelection rally. ($MSTR)

  • General Motors dropped 8.99%, impacted by the same proposed tariffs, which add uncertainty to the automaker's operations in North America. ($GM)

  • Zoom Communications fell 6.31% despite beating earnings estimates, as its fiscal outlook failed to meet investor expectations. ($ZM)

  • Stellantis fell 5.68% after President-elect Trump announced plans to impose 25% tariffs on imports from Mexico and Canada, prompting the automaker to reconsider its expansion plans in Mexico. ($STLA)

  • Abercrombie & Fitch slid 5.10%, as strong holiday sales projections and an earnings beat weren’t enough to satisfy investors. ($ANF)

  • Best Buy dropped 4.89% after slashing its full-year guidance and reporting weaker-than-expected revenue. ($BBY)

  • Amgen declined 4.76% as its experimental weight loss drug delivered results at the low end of investor expectations. ($AMGN)

TRADE
Trump’s Tariff Talk Shakes Markets

President-elect Donald Trump isn’t wasting time stirring the pot. On Monday, Trump announced plans to impose sweeping tariffs: 25% on all goods from Mexico and Canada and an additional 10% on Chinese imports. The announcement sent shockwaves through global markets, rattling investors and drawing sharp criticism from trading partners.

Mexico’s peso and Canada’s dollar took immediate hits, while the U.S. dollar gained. Auto manufacturers reliant on cross-border supply chains—like General Motors and Ford—saw shares tumble, while Walmart and Costco, less dependent on foreign goods, stayed resilient. Economists warn these tariffs could drive up consumer prices and reignite inflation, cutting household purchasing power.

Trade Tensions Heat Up

Trump framed the tariffs as a crackdown on illegal immigration and drug trafficking, accusing Mexico and Canada of enabling the flow of fentanyl and migrants into the U.S. The move also targets China for failing to curb fentanyl precursor shipments. But critics argue the strategy could backfire, raising costs for U.S. businesses and households while inviting retaliatory tariffs.

The fallout extends beyond trade. Trump’s approach disrupts the USMCA, a trade deal he championed during his first term, and risks undoing years of economic integration between the three nations. Canadian Prime Minister Justin Trudeau has already reached out to Trump, highlighting Canada’s efforts to combat fentanyl trafficking and underscoring the interdependence of their economies.

From Rhetoric to Reality

While Trump’s tariff threats are rattling markets, they’re far from finalized. Analysts suggest the president-elect may be using them as leverage for future negotiations. Historically, Trump’s tariff announcements have often softened during policy implementation.

Still, the potential economic fallout is significant. A 25% tariff on Canadian energy, for instance, could spike U.S. energy prices, while auto tariffs threaten North America’s deeply intertwined manufacturing sector. Investors will be watching closely as Trump’s trade policies take shape, with global markets bracing for the next chapter of tariff drama.

NEWS
Market Movements

ECONOMY
Fed: Slow and Steady Wins the Rate Cut Race

The Federal Reserve isn’t rushing to slash rates. Minutes from the November meeting reveal a collective preference for a cautious, gradual approach to future cuts. Officials voted unanimously to lower rates to 4.5%-4.75% earlier this month, but they’re eyeing the road ahead carefully, given the delicate balance between inflation control and economic stability.

Inflation is cooling—albeit slowly—and the labor market remains solid. Policymakers emphasized the importance of moving gradually toward a “neutral” rate, the elusive sweet spot that neither stokes nor restrains growth. While inflation has eased significantly from its peak, Fed officials noted that housing costs remain sticky, even as rents show signs of slowing.

The Balancing Act

The Fed’s next move could be a tough call. On one hand, inflation progress gives them room to ease rates. On the other, uncertainties around President-elect Trump’s tariff threats and the neutral rate complicate the picture. Officials even discussed hitting pause on cuts if inflation proves more stubborn or accelerating them if the economy starts wobbling.

But for now, the consensus is clear: don’t rock the boat. The Fed wants to avoid undoing recent progress on inflation while ensuring rate cuts don’t inadvertently reignite asset bubbles or overheating.

Markets Play the Waiting Game

Investors aren’t exactly throwing confetti over December rate cut odds. The likelihood of another reduction has dipped below 60%, as concerns over inflation and Trump’s economic agenda weigh on expectations. Markets are taking cues from a labor market that remains sturdy, with minimal layoffs, and a steady economy that keeps chugging along.

Bottom line? The Fed’s strategy seems to be a slow, measured path forward—gradually easing rates while keeping a close watch on inflation’s next move. It’s the monetary policy equivalent of “don’t mess this up.” For the economy’s sake, let’s hope they stick the landing.

Calendar
On The Horizon

Tomorrow

With Wall Street gearing up for the holidays, the earnings calendar is quiet tomorrow, but economic data isn’t taking a break. Wednesday brings a trio of key updates to keep an eye on before the turkey hits the table:

First up is the weekly jobless claims report, arriving a day early. Last week’s claims hit a seven-month low, and with seasonal hiring in full swing, economists expect that trend to continue as we head into the busiest shopping season of the year.

Next, we’ll get a revised look at last quarter’s GDP. While it’s not the final number, this update gives a clearer snapshot of how the economy is faring. And rounding things out is the Personal Consumption Expenditures Index (PCE)—the Fed’s go-to inflation gauge. Core PCE, which skips volatile food and energy prices, is expected to show a slight uptick but should confirm that inflation is steadily cooling.

NEWS
The Daily Rundown

RESOURCES
The Federal Reserve Resource

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