This is a “headline-driven market.”
The US stock market extended its selling on March 11 after President Donald Trump attacked Canada with more tariffs.
Treasury securities remained stable amid the latest decline, with benchmark 10-year yields changing at 4.22%.
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Trump has confirmed that he has ordered the administration to increase the tariffs on Canada’s steel and aluminum by an additional 25%, effectively increasing the total tax to 50%.
The new scale will come into effect on March 12th.
The decision comes after Ontario Premier Doug Ford implemented a 25% tax on electricity exports to the United States, according to the president. Canada’s most populous state of Ontario ships electricity to Michigan, Minnesota and New York.
Ford quickly declares a national emergency regarding electricity “in the areas where it was blackmailed.”
“This allows the US to do what it has to do to mitigate this abusive threat from Canada quickly,” Trump said on his social media platform.
Trump has also urged Canada to drop its “severe, long-standing tariffs,” including import duties on US dairy products and cars manufactured north of the border.
The president repeated his appeal to Canada to become the 51st province. “This will completely disappear all the tariffs and everything else,” he said.
“Canadians’ taxes will be cut very dramatically. They will be safer, militarily, otherwise the north border issue will be no longer, and the largest and most powerful nation in the world will be bigger and stronger than ever. And Canada will be a big part of that.”
“I apologize to the American people for President Trump’s decision to attack an attack on our country, our families and our jobs. That’s unacceptable,” Ford said.
Executives say the use of the president’s tariffs is a mechanism to readjust what they say, a mechanism that will cause a serious trade deficit in the United States, promote corporate transitions and the ability to manufacture the ability to return to the country. They also said it was a federal revenue generator.
“Headline-driven market”
Financial markets are shaking from the new administration’s tariff plans that have fueled concerns that the US economy would fall into a recession.
Market conditions are changing rapidly, and conversations continue to evolve, according to Gina Volbin, president of Volbin Wealth Management Group. “The market is bipolar,” Volvin told the Epoch Times in a memo sent by email.
A few months ago, Volvin said market watchers had discussed the need for the Federal Reserve to raise interest rates to cool the hot economy. Today, investors are worried about the economy getting a contract and are forcing the US Central Bank to impose emergency fee cuts.
“This is a headline-driven market and can change in an hour,” Volvin said. “Sit down tight, buckle up. We’ve finally made the long-awaited fix and long-term investors will be rewarded again.”
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, reflects this sentiment and calls it a “very unstable market.”
Tentarelli said the benchmark average could “situate a sharp reversal” with a positive news catalyst while the stock market drowns in the sea of red ink.
White House officials have downplayed market turmoil and call it a “divergence” between stocks and business activities.
“I would like to emphasize that there is a strong difference between the animal spirit of the stock market and what we actually see. The latter clearly makes more sense than the former about what is being prepared for the economy in the medium to long term,” a White House official said in a statement.
“There’s a transition period because what we’re doing is so big,” Trump said. “We bring wealth back to America. That’s a big deal. And there’s always a period… it takes a little time.”
Commerce Secretary Howard Lutnick dismissed the fear of the recession, saying NBC’s “there is no recession in America in the media.”
“I never wagered on a recession,” he said.
Meanwhile, Wall Street strategists who lower US stock recommendations have begun mounts.
Citi analysts, for example, have reduced their U.S. stock outlook from “overweight” to “neutral.”
“Broadly speaking, the outperformance of US stocks could return when the AI story takes over again, but we hope that in the coming months, US growth momentum will fall (the rest of the world),” the bank said in a memo.
Data digestion
Investors also digested two important data.
“There’s a lot of uncertainty and rising for Main Street and many reasons,” he said in a statement.
This week’s main event is the February Consumer Price Index (CPI) report. Annual inflation is projected to decrease by 2.9% from 3.0% in the previous month. Core inflation, which omits volatile energy and food ingredients, is expected to slip from 3.3% to 3.2%.
“As measured by the Consumer Price Index, there has been little progress in inflation. As I was in middle age last year, there is concern that tariffs could add another tier of price increases.”
“CPI will remain a closely monitored economic release for the coming months.”
Reuters contributed to this report.
