Breakfast | Bitcoin falls below $91,000, Trump's tariff threats cause a sharp decline in automotive stocks

Market Overview

The ceasefire agreement in the Middle East has reduced geopolitical risks, with the Dow Jones opening lower but continuing to reach new highs, and the S&P 500 rising for four consecutive days to set a new record; small-cap indices halted a six-day rally, falling away from record highs. Chip stocks fell over 1%, but NVIDIA rebounded by 0.7%. Weight loss drug Amgen once dropped over 12%. Dell, which reported revenue below expectations, fell 10% in after-hours trading. Chinese concept stocks retreated, with Nio dropping 7.7% after being downgraded by Goldman Sachs.

Trump's tariff threats have impacted the automotive sector, causing significant declines, with General Motors falling nearly 9%; the Canadian dollar hit a four-and-a-half-year low, and the Mexican peso dropped nearly 3% intraday to a two-year low; the offshore yuan fell over 200 points to breach 7.27, later halving its losses and rising back above 7.26.

The dollar rebounded; Bitcoin fell over $4,000, dropping below the $91,000 mark. After the release of the Federal Reserve's minutes, the two-year U.S. Treasury yield turned lower intraday. Crude oil rose nearly 2% before turning down; gold hit a one-week low before rebounding.

Trump's Tariff Threats Impact Automotive Stocks, General Motors Falls Nearly 9%

On the 25th local time, U.S. President-elect Trump stated that he would impose a 25% tariff on all products entering the U.S. from Mexico and Canada.

Additionally, Trump announced an extra 10% tariff on Chinese goods. In an interview last year, Trump suggested a blanket 10% tariff on all imported goods.

Following Trump's latest tariff threats, multiple global financial markets experienced turbulence. The foreign exchange market reacted quickly, with emerging market currencies, the Canadian dollar and the Mexican peso, both plummeting against the U.S. dollar. European and Asian stock indices fell, and U.S. automotive stocks suffered significant losses.

After the U.S. stock market opened, automotive stocks broadly declined, with General Motors dropping nearly 8.8% at one point, marking the largest intraday drop since June 2022, while Ford fell over 3% in early trading. Solar stocks were also hit, with Array dropping over 5% at midday, Canadian Solar falling over 4%, and Sunrun dropping over 4% at one point.

Bernstein analysts indicated that Stellantis, Volkswagen, Ford, and General Motors would face risks from increased tariffs in Canada and Mexico. According to a research report dated November 26, about 40% of Stellantis and Volkswagen's vehicles sold in the U.S. are imported, while General Motors imports about 30%, and Ford has 25% imports.

There are existing trade agreements between the U.S., Canada, and Mexico, but additional tariffs could increase production costs and potentially raise car prices.

General Motors has one of its four large light truck production plants in Mexico, with most products sold in the U.S., and it also produces electric vehicles at its Mexican plants.

Federal Reserve Minutes: "Gradual Rate Cuts" Underway, End of Easing Difficult to Determine

On Tuesday, November 26, the Federal Reserve released the minutes from its monetary policy meeting earlier this month on its official website. The minutes indicated that if economic data aligns with expectations, gradual rate cuts may be appropriate.

As early as November 7, the Federal Reserve announced a 25 basis point reduction in the target range for the federal funds rate, lowering it from 4.75%-5% to 4.5%-4.75%. This marked the second rate cut since a 50 basis point reduction in September, signaling that U.S. monetary policy has entered a period of easing The minutes stated that when discussing the outlook for monetary policy, participants expected that if the data aligns with expectations overall—inflation remains close to 2%, and the economy is still near maximum employment—then over time, "a gradual shift to a more neutral policy stance may be appropriate."

Bitcoin briefly falls below $91,000, MSTR drops 12%

After hitting resistance at $100,000, short sellers in Bitcoin "frenziedly" poured into inverse short ETFs, causing Bitcoin to drop over $4,000 during trading on Tuesday, falling below the $91,000 mark.

The ProShares UltraShort Bitcoin exchange-traded fund (SBIT) aims to provide twice the inverse daily investment return of Bitcoin. On Monday, the fund saw a net inflow of $18.8 million, marking the highest level since its launch in April.

According to Bloomberg data, the inflow of funds shorting Bitcoin corresponds to an outflow of $438 million from a group of 12 spot ETFs that directly invest in Bitcoin, which is the third-largest outflow since January. This phenomenon indicates that investors are beginning to adopt a cautious stance on the future trajectory of Bitcoin.

Nick Forster, founder of the cryptocurrency trading platform Derive.xyz, stated, "Traders are hedging against potential downside risks; however, such pullbacks are not uncommon in a bull market."

Dell's profits exceed expectations, optimistic about AI business, but revenue and guidance fall short, stock drops 10% after hours

On Tuesday after the U.S. stock market closed, Dell Technologies released its Q3 earnings report for the period ending November 1. Although the company's Q3 profits exceeded expectations and it provided optimistic comments related to growth in artificial intelligence (AI) sales, the revenue for the quarter fell short of expectations due to a stagnation in the recovery momentum of the personal computer market, and the revenue and profit outlook for the next quarter also fell short of expectations, leading to a 10% drop in Dell's stock after hours.

Revenue: Overall net revenue for Q3 grew 10% to $24.37 billion, below analysts' expectations of $24.59 billion.

Operating profit: Adjusted operating profit for Q3 was $2.2 billion, while analysts expected $2.16 billion.

Eli Lilly rises over 4%, U.S. plans to include weight loss drugs in medical assistance

On Tuesday, shares of Novo Nordisk and Eli Lilly rose due to the Biden administration's plan to include weight loss drugs in Medicare and assistance programs.

However, Amgen's stock fell 4.76% because, despite Amgen's MariTide weight loss drug having higher side effects, it failed to outperform Eli Lilly's blockbuster drug Zepbound, and the trial results fell short of Wall Street's high expectations for MariTide. Before the data was released, some analysts even hoped for a 25% weight loss.

In a year-long trial, Amgen's MariTide weight loss drug helped non-diabetic patients lose up to 20%, comparable to the maximum dosage effect of Eli Lilly's Zepbound. However, it had greater side effects, with about 11% of patients dropping out of the trial due to side effects, higher than Eli Lilly's 7%