TARIFF THREATS
President-elect Donald Trump has recently revealed his plans to impose substantial tariffs on Canada, Mexico, and China as part of his economic agenda, with the goal of addressing drug-related issues and border security concerns. These proposed tariffs have the potential to escalate trade tensions and disrupt global supply chains, possibly conflicting with established trade agreements such as the U.S.-Mexico-Canada Agreement. Trump’s announcement has already triggered market reactions, leading to a strengthening of the dollar and causing fluctuations in global markets. In addition, it is worth noting that this shift in U.S. trade policy could have far-reaching implications, particularly for industries that rely on Mexico for low-cost production aimed at the U.S. market. The aggressive tariff threats from Trump could serve as a catalyst for early renegotiation of existing trade agreements, raising concerns about the stability of international trade relations.
MARKET CORRECTION
Bitcoin prices have experienced a significant drop as the cryptocurrency failed to surpass the $100,000 mark. Despite the recent period of speculative fervor, which was triggered by Trump’s favorable stance towards cryptocurrency, Bitcoin is currently trading just above the $92,000 mark as of 8:00 AM CST. It is believed that Trump’s announcement of his plans of implementing additional tariffs had an impact on Bitcoin prices as this latest announcement led to about of risk aversion among investors. Nevertheless, it is worth remarking that market analysts view this pullback as a necessary correction rather than a shift towards a downward trend. Moreover, there is still optimism regarding the future of the crypto market, with Trump’s promises to support the industry driving significant investments into Bitcoin exchange-traded funds.
BETTING AGAINST
Despite the optimism surrounding the upward trend of Bitcoin’s value, it has been announced that investors are showing a growing inclination to bet against the surging value of Bitcoin as funds like the ProShares UltraShort Bitcoin ETF, which provide a way to profit from a potential decline in Bitcoin’s price, have experienced a significant rise. In fact, ProShares UltraShort Bitcoin ETF has experienced its highest daily inflow of $18.8 million since its launch in April. Additionally, investors have been flocking to the ProShares Short Bitcoin ETF, with around $23 million pouring in over the past two trading sessions. This surge in bets against Bitcoin coincides with the recent pullback in the cryptocurrency’s value, which has dropped by approximately 7% in the last three days. In addition, there has been a significant outflow of $438 million from 12 Bitcoin spot ETFs.
RISE DESPITE UNCERTAINTY
In other news, iron ore prices have surged this week as Chinese steel mills ramp up production despite a sluggish demand outlook attributed to ongoing challenges in the country’s property sector. The increase in crude steel output in November, which is at its highest level for this time of year since 2020, has driven a 2.5% rise in iron ore futures. The low inventory levels in Chinese steel mills following production cuts earlier in the year have led to this production uptick, supported by improving profit margins for the mills. Moreover, as winter typically marks a slowdown in construction activity in China, resulting in softer prices, weaker margins, and higher stockpiles, the recent uptick in iron ore prices may provide some temporary relief amidst broader market challenges. However, it is still important to highlight that the iron ore market has faced significant declines throughout the year due to the continued struggles in China’s housing market, despite hopes for potential government stimulus measures in the future.
FORECAST LOWERED
The major consumer electronics retailer, Best Buy, has lowered its full-year sales forecast and fell short of revenue expectations as despite early holiday shopping and the release of new iPhones and AI laptops, sales did not see a significant increase. The company now predicts revenue for the year to be between $41.1 billion and $41.5 billion, with comparable sales expected to decline by 2.5% to 3.5%. This decline was attributed to various factors including macroeconomic uncertainty, customer preference for deals, and distractions around the recent election. Furthermore, although the retailer reported a rise in net income, it also experienced a decrease in net sales compared to the same period last year. Moreover, as for the near future, Best Buy hopes for a turnaround in sales with the release of new devices and increasing industry stabilization.
