1440 for 2/4/25 in News stories

Uncertainty at USAID

Secretary of State Marco Rubio was named acting director of the US Agency for International Development yesterday, stepping in as the organization faced increasing calls for its closure by the Elon Musk-led Department of Government Efficiency.

The roughly $40B-per-year agency oversees the vast majority of US foreign aid, funding efforts ranging from economic development to humanitarian assistance. The organization, authorized and funded by Congress each year, was created in 1961 as a means to consolidate foreign aid under one roof. As of yesterday afternoon, reports suggested USAID would be folded into the State Department with an unspecified reduction in workforce while retaining its humanitarian mission.

Analysts say the move could face legal obstacles—while USAID has reporting and budgetary ties to the State Department, it was established by Congress and, therefore, may require an act of Congress to dissolve.

The move follows a weekend standoff between Musk aides and agency personnel, who claimed DOGE staff did not have appropriate clearance to access classified documents.

… and a Tariffs Whiplash

President Donald Trump’s 25% tariffs on goods imported from Mexico and Canada are now paused for at least 30 days after the commander in chief struck last-minute border security deals with both countries. The tariffs—initially set to take effect today—would have ignited a North American trade war, with consequences potentially passed on to consumers.

Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau agreed to send approximately 10,000 troops each to their respective borders with the US as part of efforts to curb the flow of illicit drugs (see data) and illegal immigration. Trudeau also said he would carry out a previously announced $1.3B border plan, appoint a “fentanyl czar,” and launch a joint strike force to tackle organized crime, fentanyl trafficking, and money laundering. Negotiations between the US and its neighbors are expected to continue.

A 10% tariff on Chinese imports will still take effect today. Mexico, Canada, and China accounted for 42% of total US imports last year, or about $1T in goods.

Quakes Shake Santorini

More than 200 earthquakes have rattled the Greek island of Santorini since Friday, with tremors occurring every few minutes and reaching a magnitude of up to 4.9. Experts say the quakes are not linked to Santorini’s dormant volcano but to tectonic plate movements and could signal a larger impending event.

Santorini, part of the Hellenic Volcanic Arc, is in one of Europe’s most seismically active regions. The island, home to 20,000 residents and drawing roughly 3.4 million tourists annually, experienced a massive volcanic eruption around 3,600 years ago that formed its famous crescent-shaped caldera. The last major earthquake in the area struck in 1956 with a magnitude of 7.5, triggering a tsunami about 80 feet high.

Experts predict the seismic activity could continue for weeks. Authorities have closed schools on Santorini and nearby Aegean islands, deployed emergency crews, and added extra flights to accommodate increased departures.

Stock market today:
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S&P 500, Nasdaq sink, Dow claws back as Mexico gets Trump tariff reprieve

US stocks fell on Monday in reaction to the Trump administration’s scheduled tariff rollout against Canada and China, though the major averages pared heavier losses after President Donald Trump said the US would delay duties on Mexican imports by a month.

The tech-heavy Nasdaq Composite (^IXIC) closed down 1.2%, recouping a chunk of its earlier losses. Meanwhile, the S&P 500 (^GSPC) fell roughly 0.7%, and the Dow Jones Industrial Average (^DJI) fell 0.3%.

Consumer discretionary (XLY) stocks, which includes automakers, were hit over fears of tariff impacts. Tech (XLK) also lagged as shares of AI chip giant Nvidia (NVDA), iPhone maker Apple (AAPL) and EV manufacturer Tesla (TSLA) all fell over 2.5%.

The tariffs, initially set to take effect on Tuesday, include 25% duties on Canada and Mexico, and 10% on China. Energy imports from Canada will carry a lower 10% duty.

Following a Monday morning call with Mexico’s president Claudia Sheinbaum, Trump announced tariffs against Mexico would be delayed by a month after Sheinbaum agreed to send soldiers to the countries’ border to stop the flow of fentanyl and illegal migrants into the US.

Investors were hoping a similar deal would be announced at the 11th hour as President Trump and Prime Minister Justin Trudeau held a phone call on Monday afternoon.

Trump’s tariff announcement over the weekend initially sparked retaliatory statements, as Trudeau said his country will place 25% counter-tariffs on around $107 billion in American-made products.

The US dollar index (DX-Y.NYB, DX=F) took a leg lower, having earlier surged to trade near its highest levels in two years. On the oil front, West Texas Intermediate futures (CL=F) pared gains after jumping well over 2%.