Trade headlines are causing more headaches on Wall Street, with stocks giving back ground after a surge on Monday. Gold and silver are flattish after a big recent rally, while crude oil is trading lower. Treasuries and the dollar are stable.
Tit-for-tat trade and tariff moves in China and the US are keeping investors on edge. President Trump tried to lower the temperature over the weekend, prompting markets to rally yesterday. But then China said overnight that it would sanction units of South Korean shipping giant Hanwha Ocean. The move is noteworthy because Hanwha had been cultivating ties with the US...and it could lead to some kind of US retaliation.
JPM, GS, GM (YTD % Change)
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We may not be getting much economic data with the government still shut down. But we ARE getting a ton of earnings news from Corporate America. JP Morgan Chase & Co. (JPM) trounced estimates thanks to a surge in investment banking and trading fees, even as the bank set aside more money to cover credit-related costs. Goldman Sachs Group Inc. (GS) also reported record third-quarter revenue thanks to strong performance in its investment banking and asset and wealth management divisions.
On the flip side, General Motors Co. (GM) is booking a $1.6 billion charge because of slumping demand for Electric Vehicles (EVs). The federal government is backing off subsidizing and encouraging EV sales and manufacturing, leading to an industrywide slump. GM has already said it will pay up to $5 billion in tariff-related costs over the course of 2025.
Meanwhile, the “Great Debasement Trade” shows no sign of letting up. Gold surged to almost $4,200 an ounce in the last 24 hours, while silver traded to its highest nominal price in history. Behind the move is a global recognition that government bonds (including US Treasuries) simply aren’t true “safe havens” anymore. Exploding deficits, deteriorating fiscal health, demographics, and other forces are leading private investors and central bank to move more money into gold versus bonds.
