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Trump wants Ukraine to provide US with rare Earths
U.S. president Donald Trump said Monday that he wanted Ukraine to provide the United States rare earth minerals in exchange for financial support of the country's efforts to fight Russia. Trump told reporters in the White House that Ukraine is willing. He added that he wanted "equalization" for Washington's support of "close to 300 billion dollars" by Ukraine. Trump stated that "we're telling Ukraine that they have rare earths very valuable." "We are looking to make a deal with Ukraine, where they will secure the rare earths we give them and other things." It wasn't immediately clear whether Trump used the term "rare Earths" to describe all critical minerals, or only rare earths. Rare earths is a grouping of 17 metals, used in the production of magnets for electric cars, mobile phones and other electronic devices. There is no substitute. The U.S. Geological Survey has identified 50 minerals as critical to the economy and defense of the United States, including nickel, lithium, and several types rare earths. The U.S. also has untapped reserves in these and other minerals. There is only one rare earth mine in operation and very limited processing capacity in the U.S., but several companies are developing projects there. China is the largest producer of rare Earths and other essential minerals. Reporting by Trevor Hunnicutt and Ernest Scheyder, both in Washington; editing by Rosalba o'Brien
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Celeres increases forecast for Brazil's soybean crop; harvest delays persist
Celeres, an agribusiness consulting firm, said that Brazil's soybean crop in 2024/25 is expected to hit a record of 174 million metric tonnes. This was a significant increase from the previous forecast of 170.8 million due to favorable weather conditions. Celeres added that higher yields would be the reason for the bumper crop in Brazil's north, northeast and center-west regions. Many agribusiness consultancies expect Brazil to have a record crop this year, and many predict output will exceed 170 millions tons. Celeres has noted that it may be necessary to revise its forecast as harvesting progresses. Analysts said that "data on the delayed soybean harvest will be incorporated in upcoming production estimates with adjustments expected to crop figures in the coming month." StoneX, a consultancy, cut its estimate of the world's leading soybean exporter and producer in 2024/25 by just 0.3% to 170.9 millions tons. StoneX stated that the cut reflects a dry weather risk for Rio Grande do Sul and Parana states. Delay in Harvest Separate data released on Monday by the consultancy AgRural showed that farmers harvested 9% the area planted as of last week, an increase of 5 percentage points compared to the previous week. However, the harvest still lagged behind previous seasons. This may reduce the planting window for second-corn, making it more vulnerable to climate risks. Brazil's second corn is planted in the same fields after soybeans have been harvested. It represents approximately 75% of production nationally in any given year. AgRural reported in a press release that at the same time last season, 16% had been harvested. The second-corn planting was estimated to be 9% in Brazil's central-south, up from the 2.2% planted in the previous weeks but still well below last years 27%. StoneX warned of the dangers of planting second-corn outside the "ideal windows." The firm did raise its forecast for second-corn by 0.2% to 101.7 millions tons, citing an increased planted area. (Reporting and Editing by Louise Heavens, Marguerita Choy and Gabriel Araujo)
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North American Aerospace Union presses Trump to stop tariffs on Canada
On Monday, the United States should stop imposing tariffs on Canada, just as it did with Mexico, said the president of the largest North American union in the aerospace industry, as executives of the industry weighed the effects of new duties on jets and plane parts. U.S. president Donald Trump announced that he would be imposing tariffs of up to 25% on Canadian imports, and 10% on Chinese goods starting Tuesday. Trump originally planned to impose a 25% tariff on Mexico. However, this was postponed after a call Monday with Mexico's President. Brian Bryant said, "I'd think they would do it for Canada," as he is the international president of IAM (International Association of Machinists and Aerospace Workers), an organization that represents planemakers like Boeing. We don't want those jobs to be threatened. "We have so many U.S. jobs that export aerospace products to Canada for the programs they run up there. Bryant suggested that Trump meet with unions like the IAM in order to understand workers' concerns. He said that some IAM members who voted for Trump probably didn't realize "that their jobs would be affected by what he could do with tariffs." Tariffs will increase the complexity of plane-making and cost, as a tight supply network limits firms' ability find alternatives. According to government data from 2023, Canada exported C$12.8 Billion ($8.78 Billion) in aerospace and defense products to the U.S. Bombardier's shares fell as much as 13 percent before settling at around 2%. In a press release, the Canadian business jet manufacturer said it would use the next few days to evaluate multiple scenarios in order to avoid any negative consequences. Trump's tendency to change his mind quickly and the tariffs' duration are unclear, making planning for scenarios like this more difficult. Boeing, the U.S.'s largest exporter, has been trying to increase plane production after a lower output in 2024. A trade war could harm this sprawling supply chain. Boeing's inventory is $87.5 billion and parts of aircraft are exempted from tariffs due to a 1979 agreement that includes the U.S., Canada and other countries. However, it is unclear if this agreement will prevent Trump from imposing new tariffs. Canada has launched a second round in three weeks of retaliatory duties on aerospace products, planemaking materials and steel and aluminum. Analysts said that companies who buy aluminum from Canada for the production of sheets, plates, or extrusions used in seat racks will have to pass costs on to planemakers. Boeing, Airbus, the European rival that also manufactures jets in Canada, as well as the United States and Honeywell, suppliers, declined to comment. Frederic Loiselle is a cofounder of Montreal's private equity firm Thrust Capital Partners that specializes in small aeronautical firms. "Price increases are likely to be the result," he said. "There are no resources to call upon and, if the solution was simple to implement, then the industry would already have resolved its supply chain problems." Loiselle stated that some of Thrust’s companies were buying aluminum parts before Trump's weekend announcements. Richard Aboulafia, an aerospace analyst in the United States, warned that tariffs would have a negative impact on the business jet industry. Pratt & Whitney Canada, a subsidiary of RTX, produces engines for certain business jets from Gulfstream Aerospace (General Dynamics) and Textron. Dak Hardwick is the vice president for international affairs of the U.S. Aerospace Industries Association. He said that tariffs against Canada and Mexico may change the trajectory which has led the U.S. to be a leading aerospace exporter.
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US gold magnet: Banks fly bullion to US from Asia-focused hubs in order to benefit from premium
Gold is being flown into the United States by global bullion banks from Asian trading hubs, such as Dubai and Hong Kong. They are doing this to take advantage of the high premium on U.S. futures gold prices over the spot price. Gold is traditionally transported eastward by bullion banks from the West in order to satisfy the demand of China and India. These two countries are the largest consumers worldwide, representing almost half the global consumption. In recent months, the fear of U.S. tariffs on imports by President Donald Trump drove Comex futures prices above spot prices. This created a lucrative arbitrage. A Singapore-based dealer for a major bullion bank said, "Gold prices have skyrocketed, and demand in Asia has virtually disappeared." Gold spot prices reached a new record on Monday. He said: "A sweet opportunity in the U.S. has arisen, and almost every bank is grabbing it -- moving the gold to Comex delivery in order to cash in on arbitrage." COMEX gold inventory The price of gold has risen by almost 80% in the last few months, or more than 38 billion dollars at current prices. Supplies are coming from London and Switzerland, as well as Asia. The premium of Comex futures prices over spot price widened to around $40 on Monday. This compares with discounts up to $15 in India, and one as low as $1 in China. A Mumbai-based dealer said that the cost of shipping gold from Asian hubs into the U.S. was a fraction when compared to current Comex premiums. He said that a leading bullion firm even transported gold from a duty-free zone of India to the U.S. Normal situations: Many banks import gold to India and store it in customs free zones. They only pay import taxes after they realize the demand. The cargo can be moved overseas without having to pay taxes. A bullion dealer in Dubai said that as retail demand on Asian markets was slowed by high prices bullion banks even began sourcing gold in Dubai from refiners, which is usually a major India supply hub. This helped them meet their demand for the U.S. He said that the U.S. was like a magnet for gold, attracting it from around the globe. (Reporting and editing by Veronica Brown, David Evans and Veronica Brown; Additional reporting and editing by Polina Deitt and Ashitha Shivprasad)
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Anglo CEO focuses on value while working on De Beers spinoff
Anglo American CEO Duncan Wanblad stated on Monday that the company is working hard to maximize its value in case a new M&A bidder comes along. He also expects significant progress on a much-anticipated spin-off of De Beers' diamond business this year. Anglo American, a London-listed company, rejected a hostile bid of $49 billion from BHP in May. BHP was focusing on Anglo’s copper assets. Anglo has since streamlined its operations by selling coal assets and agreeing on the separation of its platinum business. It still needs to find partners for the UK fertiliser project, which requires massive amounts of funding to get it to commercial production. A weak diamond demand could make it a good idea to spin off De Beers. Anglo stated in May that it would take 18 to two years for the spin-off of this unit. Analysts have said that timeline is too ambitious. Wanblad said, however, that plans to divest De Beers would "substantially be completed" by the year 2025. He said this on the sidelines the Indaba Mining Conference in Cape Town. Botswana has offered to increase its 15% stake. Wanblad stated that Botswana had expressed a desire to raise its stake, and also indicated they would do this on commercial terms. However, he declined to specify how large a stake Botswana desired. Anglo may find that it is even more aggressively pursued by De Beers for its copper assets, which are long-lasting and vital for the transition towards greener energy. Copper is also needed for data centres, as artificial intelligence requires them. Takeovers can be a quick way to increase profits for both the company being targeted and its shareholders. The latter have the final word in any deal. Wanblad stated that "consolidating the industry per se is not a good idea for the global population because it results in less work being done." He continued, "My job is to get the best value from this company for shareholders and that's exactly what I do." "If this company is valued at its full value and someone makes a premium offer to buy it, that's fantastic." Reporting by Felix Njini and Clara Denina, Editing by Veronica Brown & Barbara Lewis
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How Trump's tariffs impact on corporate profits and inflation
Analysts said that the tariffs imposed by Donald Trump on Canada, Mexico, and China could have a significant impact on corporate profits and the direction of inflation, economic development, and stock market performance. Mexico-exposed stocks recovered some of their losses after Trump agreed that he would delay the new tariffs for Mexico by one month. However, investors are still evaluating the impact of the tariffs. COMPANIES AND PROFITS Goldman Sachs estimates that the announcements will reduce their S&P 500 earnings-per-share (EPS) predictions by approximately 2% to 3 %. The company said that every five percentage points increase in U.S. Tariff rates could reduce the EPS between 1% and 2%. Barclays analysts warned that tariffs on Canada, Mexico, and China would have a negative impact on the S&P 500 if they were fully implemented. The materials and discretionary sectors are most at risk. Citigroup stated before the announcement that a small shock to import prices in a narrow scenario would likely result in a reduction of 50 basis points in S&P's gross margin. However, broader tariffs may see margins decline by 250 basis points. BlackRock warns that exporters' profit margins could be affected if high inflation rates cause interest rates to rise and a dollar surge reaches its peak in 2022. AUTOMAKERS According to Daniel Roeska of Bernstein, the U.S. automobile industry could be facing an extra cost of $40 billion per year, or an increase of 7% on average for each car. Goldman Sachs estimated that Canada and Mexico accounted for almost one-fifth the value of U.S. automobile consumption and production before the tariffs. RBC analysts wrote in a Jan. 28 note that the surcharges on Mexican imports may prove to be a problem to General Motors and could lead to a shift of production to the U.S. Stifel, following Saturday's announcement, said that Volkswagen and Stellantis are the two most vulnerable European automakers. The impact could be as high as 8 billion euros (8.25 billion dollars) on Volkswagen's revenue and 16 billion euro for Stellantis'. Stifel said that the impact of the measures taken by companies could be significantly lower. Steelmakers J.P. Morgan has said that European steelmakers whose U.S. supply chains are integrated with Mexico and Canada, as well as Europe, will be directly affected. Analysts point out that ArcelorMittal and its Finnish counterpart Outokumpu are exposed to Mexican steel and Canadian steel. Acerinox, on the other hand, has a high U.S. production. J.P. Morgan analysts stated in a note dated Feb. 3, that 70% of U.S. aluminium imports come from Canada. SPIRITS: Beverages, spirits, like mezcal and tequila make up almost 12 billion dollars in U.S. trade. Analysts at J.P. Morgan said that the tariffs announced on February 1 will have a major impact on Diageo and Campari. J.P. Morgan reported that AB Inbev, Heineken, and Remy Cointreau have the greatest EBIT exposure in the two markets. Carlsberg and Remy Cointreau have the most EBIT exposure in China. J.P. Morgan estimates that around 85% of the consolidated sales of Corona Beer maker Constellation Brands come from imported Mexican beer. Piper Sandler estimates that tariffs could have a negative impact on Constellation's fiscal 2026 earnings by $3.75 to $3.75 a share if they last the full fiscal year. OTHERS BofA Global Research stated on January 29 that tariffs against Mexico could harm appliance distributors like Whirlpool. Masco and Fortune Brands, both construction products companies, have a certain exposure to China. BofA stated that they have multiple suppliers for many of their products, and price increases could help them overcome some of the tariff obstacles. Builders FirstSource may benefit from tariffs on Canadian imports of lumber in the short term, but this would be offset by a decrease in homebuilding starts. INFLATION- Barclays' strategists say that the tariffs may lift the Fed’s preferred inflation indicator, the personal consumption expenditures index, by 35-40 basis point on an annual basis, over a 12-month period. Goldman Sachs estimated that tariffs would increase the U.S. PCE index by 0.9% if they were implemented. This is excluding volatile products such as energy and food.
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Holcim CEO: Holcim will not be affected by U.S. Tariffs and is optimistic about the construction market.
Holcim, a Swiss supplier of building materials to the United States, does not anticipate any negative impact from President Donald Trump's new tariffs. Instead, it hopes to benefit from an increase in infrastructure spending by the U.S. Gutovic said in an interview that the cement maker will increase capital expenditures and acquisitions in order to take advantage of the infrastructure spending trends and reshoring in the United States. This is its largest market. When asked what effect tariffs would have on Holcim, Gutovic replied: "I don't see any impact because our business is local (in the U.S .),". How will this affect us, since we produce locally and source the spare parts, equipment locally? "I don't see it." Gutovic, Holcim's CEO since May, said that the company will list its North American operations in the first half 2025. According to Holcim, the spin-off could be the largest transaction in global construction this year. It could also give Holcim North America a market value of $30 billion. Gutovic stated, "I do not see any difficulties from the point of listing." "We're committed to making this happen by H1." Holcim plans to expand its business in the United States through organic growth and acquisitions this year, according to him. Gutovic said that there is a huge demand for bridges, tunnels, and roads to be refurbished. Last year, we saw a good deal of momentum in the reshoring...and this was from data centres to factory." He added, "And it goes on." The best is yet ahead. Last week, Holcim's German competitor Heidelberg Materials pledged to do many more deals in the U.S. during this year. They also identified that country as a major growth driver. Holcim has acquired 35 companies in North America in 2018 and expanded its footprint by building new factories in Indiana, Utah and Utah. The company's North American workforce increased by 50% between 2020 and 2023, to around 16,000 employees. It aims to achieve annual sales of around $20 billion by 2030 - up from $11 billion annually in 2023. Gutovic stated that "we are investing both in M&A as well as organic growth." We need to consider both sides. "We have the firepower to handle both." Reporting by John Revill, Editing by Susan Fenton
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FEATURE-As climate costs rise, U.S. communities turn to the courts
Eleven U.S. States, as well as dozens of counties and cities file lawsuits Climate action lawsuits demand payment Supreme Court declines to review a key case By Carey L Biron The U.S. Supreme Court now has given tacit approval to legal efforts that allow local officials to use public nuisance laws or consumer protection laws to ask major oil and gas companies for funds to cover climate change related losses and upgrades. Richard Wiles of the Center for Climate Integrity said that "the Supreme Court's ruling creates a path for communities and state to seek climate justice in state courts." The Center for Climate Integrity has supported such local options. We expect more state and local governments to go to court as a result of the Los Angeles fire and climate damage affecting communities all over the country. The Jan. 13 decision, which comes just days before President Trump returns to the White House offers a new avenue for local climate action in a time where federal attention on the issue has changed rapidly. Trump declared an "energy crisis" as one of his first acts. This could have allowed him to bypass certain environmental regulations, and accelerate approvals for oil production. The court's decision was in response to a suit filed by officials from Honolulu in Hawaii. They claimed that oil companies knew about climate impacts but hid them for decades. This is now causing local governments problems such as flooding, erosion, and water system concerns. The Supreme Court refused to stop the process that had been started by a lower court. This disappointed oil industry groups. In an email, Ryan Meyers, the general counsel of an industry group called American Petroleum Institute said that this coordinated campaign was a waste of taxpayers' resources and a distraction away from important issues. The court system should not be involved in climate policy debates. In addition to Honolulu's lawsuit, 11 states as well as dozens of counties and cities have filed suits either seeking damages for the adaptation efforts they have undertaken or claiming that the oil industry has deceived consumers about its products and their effects on climate changes. As a result of this, our residents are facing the devastating effects of increasing storms and flooding, as well as rising costs for protecting our city's infrastructure. Hoboken has filed a lawsuit for "climate accountability", which was added last year to a similar suit by the state. 'GAME CHANGER' Locally led accountability suits have been made possible by scientific advancements that, according to their supporters, provide insight into the cause of a specific weather event - including its source - as well as whether climate change was responsible. This "attribution" science is "a game changer for climate change", said Delta Merner. She leads the Science Hub for Climate Litigation, an organization of think tanks, at the Union of Concerned Scientists. She said that advances in the last five years have helped researchers better understand how climate change is affecting human health, ecosystems, crop yields, and more. Merner stated that the lawsuits were a powerful tool to help local communities. The new suits are seeking a precedent which could transform how corporate responsibility is addressed for climate change. Merner stated that "these cases show the direct harm felt by local communities." We're localizing a climate approach that translates well to global issues. It helps us understand the costs of climate changes on local communities. The legal strategy is still complex. A state judge dismissed a New York City lawsuit claiming that major oil companies misled residents about climate change. This was just days after the Supreme Court ruling. A Maryland circuit judge dismissed a Baltimore case similar to this one last year. Mark Miller, senior attorney at the Pacific Legal Foundation who filed a brief before the Supreme Court on the Honolulu Case, said that "Lawsuits such as this increase energy costs for Americans, when the majority of reasonable Americans are aware of the ongoing national power grid crises." According to him and others, the issues in question are not the province of local authorities but rather the federal government. "The energy grid crises, and whether local or state governments can worsen that crisis through lawsuits such as this one, or if this is a federal policy-area reserved for the federal government... rises to a level of national importance." 'LEGAL DUTIES TO PROTECT Many local officials believe that the financial and other costs of climate changes are high, and will only get worse. A heat wave in 2021 in the Pacific Northwest led to hundreds of deaths, both in Oregon and Washington. Multnomah County officials, including Portland, declared a climate crisis. Roger Worthington, an lawyer with Worthington & Caron, said: "This heat dome incident caused death and injury. It stretched county resources and had a huge impact on productivity, infrastructure, and productivity. Basically, electrical wires melted." Worthington has now led a lawsuit for the county, accusing oil companies, industry groups and consultancies, as well as a local gas company, of being responsible for the heat wave. Worthington stated that "Multnomah County is legally obligated to protect the people of its county and their property." The lawsuit seeks civil damages of $50,000,000 plus future damages of $1.5 billion, as well as an estimated $50 billion for upgrading infrastructure and health services. Worthington stated that the county views the case as one of fairness.
Morning Bid America-Markets are frightened by the 'Tariff Man.'
Alun John is the EMEA Breaking News Correspondent for Finance and Markets. He gives us a look at what's ahead on U.S. markets and the global market. Investors fled stocks in Europe and Asia on Monday and rushed into dollars as they tried to deal with the effects of President Donald Trump's decision to impose tariffs that were higher than expected against top U.S. trade partners.
Trump, in three executive orders, imposed tariffs of 25% on Mexican imports, most Canadian imports, and 10% on Chinese goods, beginning Tuesday.
In the European morning, U.S. S&P futures fell by 1.7% while Nasdaq was down 2.2%. The reaction on currency markets was more pronounced.
The dollar is the main currency against which everything gets sold, including the Canadian dollar and euro.
The Canadian dollar has depreciated by as much as C$1.4792, its lowest level in more than 20 years. Meanwhile, the peso has fallen over 2%.
Why the reaction? Investors knew that Trump, self-proclaimed "tariffman", was in favor of tariffs.
In retrospect, it's a partial reversal from some misguided optimism that Trump would focus on other issues during the first months of his presidency because he didn't mention tariffs at his Jan. 20, 2017 inauguration remarks.
On the back of this, the dollar has seen a slight weakening over the last few weeks. This reversal, however, has been reversed.
The other major reason for the reaction is the fact that the tariffs are larger than expected.
George Sarevlos said that the announcements are at the "most hawkish" end of the spectrum. He added that the tariffs will cause a major shock to the global trade policy if they go ahead.
He said: "We are seeing immediate recessionary effects for some economies and a negative impact on the global economy."
Tariffs are higher than those that were imposed by the Trump administration during its first term, from 2017 to 2021.
Barclays analysts has done some sums.
In Trump's first administration, the tariffs were imposed on 380 billion dollars of imports, with a focus on China. "The tariffs Trump proposed this weekend would cover $1.4 trillion in imports, focusing mainly on Canada & Mexico," they stated.
The tariffs during Trump's first tenure were phased over several years. The new tariffs will be implemented at once.
The most dramatic declines in auto stocks have been seen in Asia and Europe. Some have moved some production to Mexico in order to gain easy access to the U.S.
Investors were also optimistic in January, believing that a significant market decline would cause Trump to reconsider his position.
Trump said that the tariffs could cause Americans "short-term" pain.
The next step is unclear. Optimists point to Trump's promise to speak with the leaders of Canada, Mexico, and other countries to determine if there are any possibilities for negotiations. But for now, optimism seems to be limited.
Trump told reporters that he did not expect any dramatic events when he returned from Florida to Washington. "They owe a lot of us money, and I am sure they will pay."
Pessimists can point to many things, especially in the European Union which is preparing for tariffs. Trump accused the EU of not purchasing enough U.S. products on Sunday, calling it "an atrocity" what the bloc has done.
The following key developments should help to provide direction for the U.S. market later on Monday.
Tariff News and Negotiations
* US earnings: Tyson Foods and Cabot
Bostic, Fed's Bostic, speaks about the economy
(source: Reuters)