There was a sharp increase last Friday. We were up by about 1% that day, then the news of Trump's tariffs came. Actually, there was no new news, I should say the market woke up to the news. Because the market believed that the tariffs could be postponed a bit with a news from Reuters. The White House denied that news from Reuters. The stock market started to fall, and all hell broke loose on social media over the weekend about what these tariffs would bring. That also demoralized the stock market.
Trump imposed tariffs on Canada, Mexico and China. This was an election promise anyway, so there is nothing surprising. But many analysts, including me, thought that Trump would hold this promise as a bargaining tool, like a sword of Damocles over Canada, Mexico and China, but would not immediately impose tariffs. Frankly, the entire stock market was wrong there, or the entire stock market accepted that it was wrong on Friday, and Trump, including me, entered much more harshly than we expected. Of course, there is a possibility of change here. Because Trump said he would meet with the prime ministers of Canada and Mexico regarding customs tariffs and the implementation of customs tariffs will start on February 4th. He left such a normal working day as a gap. Maybe there will be some negotiations there again but in any case the stock exchanges did not like it at all.
The dollar index increased by around 1% in particular. There are currently declines in all global stock exchanges. The Canadian dollar is taking a serious beating and has fallen to its lowest point against the US dollar since 2003. And of course, cryptocurrencies, they also fell hard. The decline in Ethereum in particular was incredible, it fell to 2100. Bitcoin found support at 91000 - 92000 and went up a little again. But they were also negatively affected. Because crypto is such an asset, if there is a risk in the market, money first leaves crypto. The fact that crypto can be traded especially on weekends is also a factor in this regard. Because people have money left in the stock exchange but they are at least trying to escape from crypto. The effect of customs tariffs basically means that costs will increase in America. Because let's say you have a product that you buy from Canada. As of Tuesday, there is a 25% tax on it. Of course, you may be able to find this product somewhere else in the world, but it takes a long time to make such agreements. Establishing such supply chains will take a long time. That's why all supply chains suddenly break down.
When we look at America, there is a lot of trade with Mexico, especially on the automobile side. There is a lot of trade with Canada on the raw material side. There is a customs duty of around 10% on oil. There is also a customs duty of 10% on China. We don't know how China and Mexico will respond yet. Canada gave a harsh response and said they will increase the taxes by 25%. The markets were very concerned about whether this would cause a contraction in the American economy. For example, Goldman Sachs says that the profitability of companies will decrease due to this. They say that we expect a further decrease of around 5% in the stock markets. RBC Capital says that the decrease could go up to 10%. The markets are currently under the severe impact of this. There is also an increase in oil prices, they increased by 6.2% in gasoline futures in New York. West Texas intermediate WTI oil gained around 2%. In other words, a great deal of panic has taken over the markets because the world's largest consumer market says that from now on, if you are going to sell me goods, you can sell them with higher customs duties. In America, the citizens will most likely pay these customs duties again, or the companies importing those goods will first pay that tax and then pass it on to the citizens.
On the other hand, there is also a positive aspect developing in America right now. The Dodge team, namely the cost reduction team led by Elon Musk, is working much faster than expected. They are even pushing the laws a little bit, to be honest, but they say that they have started saving nearly 2 billion dollars a day in the federal budget. They have stopped many payments, are laying off many people, and these are quite controversial practices. For example, Elon Musk's authority here is quite controversial. It is said that Elon Musk has the authority to interfere with treasury payments. What kind of authority is this, they ask, etc. There's a lot of debate, but it's positive for that side because if Elon Musk can really cut spending, America's borrowing needs will decrease.
We also know that Trump wants to lower taxes. He wants to raise tariffs but he wants to reduce income taxes. But there is a ton of uncertainty. With all this uncertainty, the stock market is moving towards a downward trend. Moreover, we are starting a super complicated week. First of all, Trump has a meeting with the prime ministers of Canada and Mexico. What will come out of them, will there be some improvements, there is no possibility of the tariffs being reset. Because America is not just trying to collect taxes with tariffs here, it is trying to change the industrial structure of the country. So I don't think it will be reset, but there may be some discounts, some exceptions, and the terms may be extended. The market is curious about that, but there is also a lot of data and balance sheet flow this week. For example, the US January ISM manufacturing index will be on Monday. As you know, it is very important, we will see whether America is likely to enter a recession here. Of course, this is data before the tariffs. So it can be considered as past data, but the ISM has been below 50 for a long time there. If it is below 50, it means that there is a contraction in the production side of the economy. Maybe that will compensate.
After the close on Monday, Palantir's balance sheet is coming. A very important balance sheet, Palantir was the stock that made us the most money in 2024. It didn't start 2025 badly either. Of course, this wave of artificial intelligence is affecting them. On Tuesday, the US Treasury Department will announce its Bond and Bill auction plans. In the meantime, the market is very important. Because the Treasury Secretary has changed. The previous Treasury Secretary was focusing on shorter-term bonds. I wonder how the new minister will change this. Jolts data is coming in America on Tuesday. In other words, the number of new job postings is expected to be around 8 million. I am eagerly waiting for that and there are important balance sheets on Tuesday. PayPal's balance sheet is coming before the markets open, a stock I am an investor in. Alphabet and Spotify are coming after the market closes. Also, AMD stock, which I am an investor in and have given great importance to this year.
On Wednesday, the ISM service sector index is coming in the USA. America was already in good shape in the service sector. We will see how things are going there. Similar data will be announced in China. It is necessary to follow the Chinese economy closely and on the other hand, very important balance sheets such as Disney, Ford, Uber, Microstrategy, Costco, Novo Nordisk, Toyota will come. Of these, Microstrategy is especially awaited with great curiosity by the crypto world. Novo Nordisk is important in terms of the course of these weight loss drugs. Ford is taking a big beating on the stock market as of Monday. Because Ford is a company that produces a lot in Mexico. I wonder what its balance sheet will tell us. Uber is an important balance sheet. Uber is one of the most discussed stocks because how it will be affected by autonomous driving. I am currently an investor in Uber, I think this whole autonomous driving issue can benefit it. But again, there is a very controversial balance sheet and statements after the balance sheet.
On Thursday, the Bank of England and the Central Bank of Mexico will most likely make new interest rate cuts and the balance sheets of Amazon, Roblox and Eli Lilly are coming that day. Amazon's balance sheet in particular is a very important balance sheet. Both how retail is going in America, how much money they spend on artificial intelligence, how much money they will spend on Nvidia, because Amazon is also developing its own chips. Whether there is a recession or not, Amazon is a very important catalyst in all these issues, we will see its balance sheet. Apart from that, Roblox and Eli Lilly are also coming. Eli Lilly is again a critical company in these weight loss pills.
The US January employment report is also being released on Friday, the most important data. You may remember that it was incredibly high last month and the markets were very surprised. An increase in employment of 170,000 is expected. But believe me, I don't even take it seriously anymore because I am constantly wrong about this, but it is important data. Canada's labor market data will be shared on the same day. Things are probably quite bad in Canada for the future. Because Canada exports a very large portion of its products to America. 40% of its total gross national product depends on trade with the USA. Therefore, the USA has a very big impact on Canada. I think that if there is no resolution of these tariffs, Canada will probably start printing money, and as I said, the US Treasury Secretary is fully on duty as of this week. There are new bond issues. What kind of policies they will follow there are also issues that will be closely monitored. In other words, it is an incredibly busy agenda. I am still long, I do not easily make changes to my positions. I am following the developments in the market, let me just give you a hint.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
