Author: David Berman

Trump, Trump, Trump and Trump. You’d be hard-pressed to find market-related discussion this week that doesn’t put the U.S. President in the centre – whether the discussion touches on tariffs, trade agreements, commodities, currencies, bond yields, economic activity, inflation or … whew!

So, rather than avoid the topic and talk about – what, the cold snap? – we’re veering right into the maw of MAGA. (By the way, I’m investing reporter David Berman. Scott Barlow will soon return.)

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Equities

Wait, stocks are rallying on…what exactly?

With so much economic uncertainty today, thanks to the return of you-know-who to the White House, you might feel the temptation to hide under a rock for the next four years, clinging to cash, gold, tins of beans and a Netflix account.

But that’s not the position taken by Mr. Market: Stocks are rallying at the start of U.S. President Donald Trump’s second term, even as he confounds economists, analysts and chief executive officers with trade threats that may or may not become reality.

The S&P 500 has risen throughout the week and hit all-time highs on Wednesday. The yield on the 10-year U.S. Treasury bond has subsided slightly from recent highs, suggesting that concerns about inflation under a second Trump administration might be easing.

This rally is not just a U.S. thing. The S&P/TSX Composite Index, composed of over 200 companies – many of them exposed to tariffs, upended trade agreements and other Presidential threats and musings – is also doing okay. The index is on a seven-day winning streak.

What’s the attraction here?

It could be that investors are relieved that Mr. Trump did not unveil tariffs against China on Day One of his administration, suggesting that there could be some negotiations in the works – perhaps signaling a similarly pragmatic approach to the United States-Mexico-Canada trade agreement.

“Overall, we believe, just like what happened in 2018, common sense will ultimately prevail and the USMCA will be renegotiated with the result generating a relatively minor impact on Canadian equities,” Brian Belski, chief investment strategist at BMO Capital Markets, said in a note.

Indeed, Mr. Belski argued that Canadian economic activity remains tied to U.S. growth, underpinning what could be a good year for Canadian stocks, even if there is some volatility from trade-related noise.

Global investing

Time to bet on Mexico? Yeah right

Even emerging markets are up in the early stages of Washington’s America First pivot. The iShares MSCI Emerging Markets ETF, an exchange-traded fund that provides one-stop exposure to countries like China, Taiwan, India and Mexico, has risen slightly since Mr. Trump’s inauguration on Monday.

That’s weird, because serious doubts about these sensitive economies are lingering.

“We are pessimistic about the outlook for most emerging market assets in 2025, due to the effects of Donald Trump’s agenda, slowing Chinese activity, subdued commodity prices and domestic challenges,” Giulia Bellicoso, markets economist at Capital Economics, said in a note.

She believes that the decent start to the week probably flows from the sense that Mr. Trump’s initial executive orders weren’t as alarming as feared.

Longer term, though, emerging markets will struggle if Mr. Trump’s policies keep bond yields high, the U.S. dollar strong and financial conditions tight, Ms. Bellicoso said.

A 10 per cent universal tariff and a 60 per cent tariff against Chinese goods will sour investor sentiment further.

And don’t forget about China’s struggle against its own sluggish economic growth, which will likely weigh on other Asian economies. What’s more, lower commodity prices could affect markets in Brazil and South Africa.

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Diversions

Here’s why the cold weather has an upside

This week’s cold snap throughout much of North America has sent me scrambling for my next-level down parka and I am now considering a winter beard. Another coping strategy: cold-weather cocktails.

Replacing gin for bourbon in my weekly negroni was a good start. But I’m now looking at fussier cocktails, like the Habanero Blood Orange Margarita. You can ogle the possibilities at Spruce Eats.

The essentials

Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page.

The Rundown

Philip MacKellar from the Contra Guys reveals his top stock pick for 2025

In an interview with the Globe’s Jennifer Dowty, TD Asset Management’s CIO shares his outlook on stocks, bonds and advice for successful investing

Looking for some downside protection as Trump gets settled in? Gordon Pape suggests these ETFs

Jamie McGeever of Reuters says there are compelling reasons to believe 2025 will be a very good year for bonds

What’s up next

Political winds are changing, but that’s no reason to ignore economic indicators that might give us a better look at how the U.S. and Canadian economies were performing towards the end of 2024 – and might enter 2025.

The weekly report on U.S. initial jobless claims will drop on Thursday morning, followed on Friday by the Purchasers’ Managers Index for manufacturing and services. New home sales for December, also on Friday, will shed some light on the impact of rising Treasury yields, which have driven up mortgage rates.

In Canada, retail sales for November Thursday morning might give us another hint about the Bank of Canada’s next interest rate move ahead of next week’s reading on gross domestic product.

Meanwhile, quarterly financial reports are flooding in. Come for the earnings but stay for what key executives say about trade and tariffs. Standouts over the next week should include Freeport-McMoRan Inc., American Express Co., Boeing Co. and Starbucks Corp.

See our full economic and earnings calendar here (You can bookmark the page – it gets updated weekly)