Launch Pad

The TSX sank -3.3% on Friday, its sharpest one-day drop since April, bringing the index down -3.7% last week, though it still posted a small gain for January. Losses were concentrated in mining and materials after gold slid below $5,000 and silver and copper weakened, as a stronger USD added pressure following Trump’s nomination of Kevin Warsh as the next Fed chair. The gold sector dropped nearly -12%, and the broader materials index dropped more than -10%. Strategists described the move as an overdue correction rather than a structural shift, noting that currency strength and commodity weakness tend to magnify losses in a resource-heavy index like the TSX. Equity declines were confined mostly to Canada last week, with U.S. stocks finishing the week higher and the VIX remaining below its one-year average, suggesting geopolitical tensions is showing up more in gold, oil, and FX rather than in U.S. stocks. 

Trying to get on his good side? Mark Carney liked Trump’s decision to nominate Kevin Warsh as the next leader of the Fed, calling him a fantastic choice at a critical time for the global economy. Carney has known Warsh for years and worked alongside him when he ran the BoC and Warsh served on the Fed’s board, expressing confidence in his leadership and credibility. The nomination follows escalating tensions between Trump and outgoing chair Jerome Powell, as the president has pushed for lower interest rates and criticized the Fed’s independence. BoC Governor Tiff Macklem emphasized that an independent Fed is vital for financial stability in Canada and globally, given the outsized influence of U.S. monetary policy and the dollar. Although Warsh has traditionally been viewed as an inflation hawk who favours tighter policy, his recent comments supporting lower rates leave some uncertainty about how closely his approach will align with Trump’s demands preferences. 

Chinese automakers are gaining ground in Europe, now accounting for nearly 1in 10 total passenger car sales and about 16% of the EV market, more than doubling their share from a year ago. This comes as brands like BYD, MG, Chery, and Leapmotor leverage lower prices, strong battery technology, and aggressively expand to outcompete traditional European, American, and South Korean rivals. This can be seen especially in price-sensitive markets like Spain, Italy, Greece, and the UK. Growth has also been helped by new local production partnerships and factories that blunt the impact of tariffs, while European manufacturers, already pressured by weaker demand in China and trade barriers in the U.S., face losing market share. It’s clear now that consumers are prioritizing affordability over brand loyalty, leaving China’s well positioned to expand in Europe, with Canada also seen as the new frontier. 

An economy pulling in two directions. The U.S. economy continues to become more “K-shaped, with higher-income U.S. households benefitting from rising stock and home values and spending freely on travel and premium goods, while lower-income households struggle with inflation and limited real income gains. Wealth inequality has widened to decades-high levels, leaving spending growth concentrated among top earners and making overall growth more reliant on a narrow consumer base. Canada is showing a similar pattern as income and wealth gaps widening in Q3. Strong equity markets disproportionately boosted higher-earning households while lower-income Canadians fell further behind. Stats Canada reported that the disposable income share gap between the top 40% and bottom 40% rose to 47.5%, up from 46.3% a year earlier, with the bottom 20% the only group to see incomes decline. 

Bitcoin fell over the weekend, dropping about -6.5% to around $78,700 and hitting its lowest level since November, as investors pulled back from riskier assets amid a recovery in the USD. The selloff was accelerated after Kevin Warsh was tapped to lead the Fed, raising concerns he may shrink the Fed’s balance sheet and reduce cash flowing through financial markets, a shift that could weigh on speculative trades like crypto. Analysts noted that digital assets had previously benefited from ample liquidity, and fears of a more restrictive policy stance are now weighing on crypto investors. 

We got a pre-show to the Super Bowl halftime show… sort of. Bad Bunny had a big night at the Grammys, taking home Album of the Year and becoming the first Spanish-language album ever to win the top prize. Trevor Noah, who confirmed it will be his final year as host, leaned into the moment and jokingly tried to coax Bad Bunny into “singing” a few lines from his seat, despite his contractual obligation not to perform ahead of this Sunday’s Super Bowl halftime show. Another first came courtesy of Golden from the animated film KPop Demon Hunters, which won Best Song for Visual Media, becoming the first K-pop song to take home a Grammy after a year of inescapable sing-alongs. Between that playful exchange, a few emotional acceptance speeches (Olivia Dean comes to mind), and some interesting fashion choices, the night felt just polished enough, even if there were some chaotic moments at times, a reminder of the unpredictability of live TV. 

Oil prices are down nearly –5% after OPEC+ agreed to keep oil production unchanged for the time being, extending its three-month supply freeze even as crude prices rose on geopolitical tensions tied to Iran. The group’s key members, including Saudi Arabia and Russia, chose to wait for clearer evidence of real supply disruptions rather than react to political threats or short-term price spikes. Decisions about output for the second quarter were postponed until the next meeting, leaving markets uncertain about future policy. While members still have roughly 1.2 mln bpd of capacity they could restore, forecasts point to a potential global oil surplus as non-OPEC producers ramp up supply and demand growth cools. For now, the alliance is prioritizing stability, trying to support prices and revenues while avoiding the risk of oversupplying the market.