Daily Commentary

MarketMinder’s View: As always, MarketMinder is nonpartisan, and we don’t take one party’s or politician’s side over any other. We seek solely to determine political events’ potential market ramifications. Following a recent Canada-China trade agreement, US President Donald Trump threatened Ottawa with 100% tariffs if it expanded cooperation with Beijing. Canada’s US trade minister seemingly defused the immediate situation by denying deeper deals were forthcoming, but many analysts see the exchange as opening salvos for US-Mexico-Canada Agreement (USMCA) renegotiation this year. Under the agreement, about 80% of America’s Canadian imports are duty-free. “Most economists surveyed by Bloomberg still anticipate a positive outcome to those talks, but Trump’s broadside injects fresh uncertainty. ... Canada is particularly exposed because exports to the US represent an outsize proportion of its economy. Trump’s sectoral tariffs on autos, steel, aluminum and lumber are badly hurting key industries, but many other goods remain tariff-free if shipped under USMCA. That exemption is at risk as the agreement is subject to a mandatory review this year. Analysts warn that losing it would be devastating for Canada, pushing effective tariffs on US-bound exports well above the 5% to 7% rate currently estimated by most economists.” This is a matter worth monitoring for investors, though take care not to assume any of this hot rhetoric is a given. As the article points out, many US business groups would prefer not to scrap the trade deal, as that would create a lot of fresh uncertainty. Also, tariffs hurt the imposer more than its target, which suggests hardlines taken before trade negotiations likely soften (see last year for more).

MarketMinder’s View: Please note MarketMinder is politically agnostic, favoring no party nor any politician, because bias blinds and can lead to investing mistakes. We focus on political developments’ potential economic and market effects only. The likelihood of another partial government shutdown midnight Friday is “spiking” over congressional disagreements to fund the Department of Homeland Security. For investors, here is the main takeaway: “In any case, with just six funding bills at issue, a stoppage Friday would have more limited economic effects than last fall’s shutdown. There are 12 annual appropriations bills needed to fully fund the US government, and six have already been given presidential approval. The core question, as Henrietta Treyz of Veda Partners put it in a note, ‘is whether all six remaining appropriations bills, which cover approximately 78% of the federal government, or just the Department of Homeland Security will see a funding lapse on Friday. ... The government function most closely watched by markets—economic data—would likely be impacted again but would unfurl differently.” That is because this potential shutdown would affect funding for the Labor Department (which oversees the jobs and CPI reports) but not the Commerce Department (responsible for GDP and consumer spending releases). Now, GDP and consumption data use CPI to calculate inflation adjustments, so there would still be some possible downstream effects. However, as last year’s shutdown already showed, the Commerce Department’s Bureau of Economic Analysis can estimate prices in lieu of actual data—not ideal but far from flying blind. Bigger picture, the economy and markets sailed through such disruptions from 2025’s record-long 43-day shutdown involving twice as many appropriations without any recession or bear market, and we doubt this looming one would be any different.

MarketMinder’s View: Here is some positive, albeit very backward-looking, news: November’s “Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.7% after a downwardly revised 0.3% gain in October, the Commerce Department’s Census Bureau said. Economists polled by Reuters had forecast core capital goods orders would increase 0.3% after a previously reported 0.5% advance in October. The report was delayed by the 43-day shutdown of the federal government. ... Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rebounded 5.3% in November amid a surge in aircraft demand after declining 2.1% in October. Non-defense aircraft and parts orders soared 97.6%.” (As the article names a specific aircraft company behind that, we remind readers MarketMinder doesn’t make individual security recommendations.) Now, besides the data being from nearly two months ago, manufacturing accounts for just around 10% of the economy—so activity here isn’t an economic swing factor. Still, five straight months of rising core capital goods orders highlight how “strength in business investment in equipment and the overall economy has occurred despite President Donald Trump’s sweeping import tariffs.” Today’s (er, November’s) orders are tomorrow’s production, and these data are further evidence reality has been better than expected.