Here are five things you need to know this morning:
Auto sector pushes back: There isn’t a part of the economy that would not be impacted by the incoming U.S. president’s plan to slap tariffs on all imports from Canada and Mexico, but it’s hard to picture a sector that would feel it more than the automotive industry. Decades of interdependence have made the automotive supply chain among the most complex in the world, with parts and vehicles made in North America crossing international borders roughly eight times, on average, before being completed. Shares in U.S. automakers including Ford, GM and Chrysler-owner Stellantis all sold off on Tuesday, with GM in particular having its worst one-day drop since 2020. It’s hard to come up with a precise economic impact for a plan that so far essentially consists of “tariffs on everything” but Wolfe Research estimates a blanket tariff on components and finished vehicles would add as much as US$3,000 to the price of a new car. For something that already costs almost $50,000, that’s a bitter pill for car buyers to swallow.
Arabica price hits highest point since 1977: Coffee drinkers should expect to pay more for their morning pick-me-up as the wholesale price of the premium arabica coffee bean has risen to its highest level in almost 50 years on supply concerns. A severe drought in Brazil, the biggest producer of coffee in the world, has prompted concerns about the supply of arabica, which is the premium coffee bean compared to its cheaper but hardier alternative robusta. Vietnam, another major supplier, was hit by dryness during the growing period and then heavy rains during the harvest window, both of which hurt supply. A pound of arabica beans were changing hands at US$3.17 a pound on the New York commodities market this morning. That’s higher than previous spikes earlier in the pandemic above $2.50, and the recent high of $3.10 set in a previous spike in 2010.
Health Canada approves Wegovy for heart diseases: It’s been available in Canada for other reasons since 2021but Health Canada has formally approved Novo Nordisk’s weight loss drug Wegovy to reduce the risk of nonfatal heart attack or myocardial infarction in some adults, the Danish company announced today. The drug is already available in Canada under prescription to help with obesity, but the move makes the drug the first approved treatment in Canada to treat both obesity and other heart-risk related conditions, Novo says. Novo’s U.S. listed ADRs gained about 1.5 per cent in New York on Tuesday.
Brookfield abandons Grifols takeover plan amid valuation dispute: Brookfield is set to walk away from months-long talks about buying out Spanish drug firm Grifols after it couldn’t agree with the company’s board on a fair valuation. The namesake family that founded the company said it won’t support any new bid to take over the company. Brookfield has the support of the family that owns about a third of the company, but the board does not like Brookfield’s offer. Shares have been rallying on news of a buyout plan, but Brookfield’s offer of US$6.8 billion was less than the high-water mark of the run-up. Grifols shares lost about 13 per cent of their value on Tuesday on news that the Brookfield offer was falling apart.
U.S. GDP data shows economy expanding at healthy clip: The latest read on the U.S. economy this morning shows the country’s gross domestic product expanding at a 2.8 per cent annual pace in the third quarter. Most impressively, consumer spending is advancing at a 3.5 per cent pace, which is the fastest pace clocked this year.