- Energized
- Posts
- ⚡Tariffs on Hold
Markets were closed yesterday, but that didn't mean nothing was happening. Trump wasted no time signing executive orders on his first day freezing all government hiring and leaving, once again, the Paris Accord.
'Drill baby drill' is in the air and energy issues will be on his desk in the first days.
In an unusual twist, Houston is expected to get 4-6 inches of snow overnight. There are reportedly zero snow plows in town and businesses are being encouraged to close for the day today. We'll see if this affects trading volumes.
~Doug
What's in this issue:
Energy Market Recap
Tariffs on Hold
Headlines
| Crude Oil (Feb) | $77.88 | -0.80 | -1.02% |
| Natural Gas (Feb) | $3.948 | -0.310 | -7.28% |
| Copper (March) | $4.3685 | -0.0725 | -1.63% |
| S&P 500 | 5,996.66 | +59.32 | +1.00% |
| Dollar Index (DXY) | 109.41 | +0.45 | +0.41% |
Energy Markets
🛢️Oil prices were down about $1 or 1.3% at the time of this writing as hard talk on tariffs was absent from the agenda in the first days. This has eased some fears of supply disruptions from Canada - the largest source of US oil imports - in particular.
Equity futures are higher and the dollar index has eased as markets interpreted the inauguration speech as more benign on the tariff front than anticipated.
🔥Natural gas prices were lower by 3.6% at the time of writing, continuing last week's late move lower. The current arctic weather has been priced in. We'll have to wait to see what's next.
Reminder: Due to the MLK holiday, the EIA will release both crude and nat gas inventory data on Thursday.
Tariffs on Hold
There is some sigh of relief that tariffs weren't on the president's desk on day one. However, that just means we'll all be reading the tea leaves on every speech, headline, press release, and tweet as to what they may entail.
According to the WSJ:
"Trump isn’t expected to implement new tariffs on Monday, but he plans to issue a memo directing federal agencies to evaluate trade policies and economic relationships with China and North American neighbors."
The reality on tariff that is taking shape is that there will be a more targeted implementation, and that requires research and debate (and lobbying, lots of lobbying).
Taylor Nugent, a senior markets economist at National Australia Bank, puts it this way:
"It doesn't mean tariffs won't be imposed, but it has been taken as an indication towards gradualism and against universality,"
Much like Biden's sanctions were able to drive oil higher out of the blue, news on tariffs will have the same affect. Stay tuned...
+Why has Donald Trump held fire on tariffs? - Economist
Headlines
"China’s economy managed this feat despite an ongoing property slump, dismal consumer morale and demographic decline: the population shrank by almost 1.4m last year."
"drilling bans are rooted in a 72-year-old federal law that explicitly empowers presidents to withdraw US waters from oil and gas leasing without explicitly authorizing revocations, effectively making the tool a one-way ratchet for marine conservation"