by David Chapman
GoldSeek
DeepSeek, tariffs, seizure of the Treasury payments system. There was more. Week two of the Trump presidency brought more chaos. The two most significant are the entry of DeepSeek, a Chinese AI company, as a competitor of the U.S. AI companies, particularly Nvidia. Nvidia set a record this past week on Jan 27 when it set a record for loss of market cap for a company in one day. The week appeared to recover until Friday and tariffs were introduced on Canada, Mexico, and China setting in motion a trade war where everyone is a loser. Retaliatory tariffs were quickly announced by Canada and China while Mexico will be right behind. As history has shown with the trade wars of the 1930’s there are no winners. Trade wars were a major contributor to the Great Depression turning a recession into a depression.
This past week was interest rate decision time and there were no surprises as Canada cut rates by 25 bp while the U.S. stood pat primarily due to resurging inflation. Consumer confidence is already faltering and the expectation is that it will falter further. The impact of the trade wars probably will take a bit of time to work their way through the economy. But expect higher prices for many products.