#5things: Before the Bell

Trump trade unleashed

I’m not so narcissistic to self-talk on such a huge market moving day. But, I’m also not on TV because I am a humble person. Yesterday I announced I was leaving BNN Bloomberg after nearly 15 years. I will have more words later, but I just wanted to say how touched I am by every single person who wrote in to wish me well. Like, so touched that I asked my husband if I should just change my mind and stay. He suggested it was probably not a good idea to say “just kidding” after the announcement was made. Never fret, even after I leave Friday, I will still write the newsletter. So, let’s get on with it.

Trump trade: Donald Trump will become the 47^th President of the United States of America and increasingly it looks like Republicans could get full control of the government. Let’s talk winners and losers in the markets. The stock market is overjoyed. Futures are ripping higher. The Dow is surging by more than 1,000 points with names like United Health and Goldman Sachs up 7% in the pre-market. Tesla is popping even as green energy stocks are getting crushed right now. Tesla is surging even though Trump may be negative for EVs in general by pulling subsidies. Tesla’s business model could endure that opines Dan Ives at Wedbush. Ives says a Trump victory could add $40-50 to Tesla’s stock and catapult it to $1 trillion market cap (currently ~$800 billion.) Green energy stocks from Sunrun and First Solar to Plug Power and Canadian Solar are getting crushed here. Bitcoin surged to a record high and crypto exposed equities are rallying. Trump Media is up 37% right now.  Amidst all this high-fiving by equity investors, the bond market is melting down. The yield on a US 10-year is up by 17 basis points and is hitting a 3-month high. Can the equity rally go hand-in-hand with such a sharp sell-off? Over to you, Federal Reserve.

Trump and trade: Along with a Trump victory and possible red sweep comes the potential for protectionism and tariffs. Countries who could be at the other end of those tariffs are seeing weakness in their currencies this morning. The Mexican peso is down sharply, hitting the lowest level since August 2022. The Chinese yuan is weakening by the most in two years.

Attached at the hip: The Canadian dollar is also getting hit. It is trading near a four-year low.  A strong US in theory means a strong Canadian economy, but lately that hasn’t been the case. Now there is the spectre of new tariffs and uncertainty about the NAFTA 2.0 review in 2026. This also raises questions about politics here. One of the stunning upsets for the Democrats came from a little county in Texas. Republicans took Starr County, which has been blue since 1892. In Canada, the Liberals have lost a few “safe” seats in special elections this year and the polls have Conservatives in the lead.  

You’re fired: It is widely expected that the current chair of the FTC, Lina Khan, will be replaced by Trump. The FTC has been aggressive under Biden, killing many multibillion-dollar deals and going after big tech. Recently, the FTC blocked the deal between luxury retailers Tapestry and Capri. Both stocks are higher in the pre-market. There were some concerns that Kroger’s deal to buy Albertsons could be vulnerable. We could see accelerated deal activity under a more friendly regulatory regime and fewer fingers lost in what has been a wild merger arbitrage year.

Other stuff: If today wasn’t busy enough there are also 37 companies reporting today on the TSX and a bunch from last night. Here are a few I think will move today. Cineplex swung to a loss in the quarter due to higher operating costs even though sales came in a little better than expected. Stella Jones, the maker of railway ties and utility poles, may come under pressure as the quarter was weaker and the outlook disappointed. ATS might also be down as their results missed and the outlook was weaker. In the US, Super Micro continues to be a basket case (down 20%) as its sales forecast was disappointing on the back of accounting issues and no timeline on when it will file financial results.