TACO, again

“After you have survived a few crises,” this pathetic blog said two days ago, “you learn. They pass. Always.”

And, lo, it passed. We got TACO Wednesday. In the morning Trump insulted everyone he could think of (including Canada and Mark Carney) during his rambling, dead-eyed speech in Davos. In the afternoon he chickened out again.

No invasion of Greenland. No sweeping tariffs on those who oppose US imperialism. And a vague deal with NATO is providing an offramp. It seems the US will get some little bits of the frozen island while it stays Danish territory.

All of this – more military presence, defence systems, commercial development, long-term economic stability – America could have had under its existing 1951 treaty with Denmark. But Trump had to turn it into a crisis that ripped NATO, threatened yet another trade war and creamed the financial markets. Oh yeah, and reinforced what Carney got a standing ovation for saying: you can no longer trust these guys. The American president is a predator.

Well, Mr. Market swooned on Tuesday because of tariffs. Values roared back on the TACO trade. Here’’s something else this blog said earlier this week:

“Hopefully 2025 did not entice you to overweight stocks in your TFSA or retirement plan, to eschew a cash holding or not stay diversified in a few REITs, bonds or preferreds. Don’t let the current trade threats make you sell off international equities. Don’t allow the goon brownshirts of ICE in Minneapolis to sour you on American assets. And Canada looks better by the week as we build out the place and find stable new customers – even if they’re Commies.”

The world is a more tentative place than it was a year ago, without doubt. The American president has upended the global order, established supply chains, and the progression of world free trade while normalizing everything from racism (“Somalis are garbage”) to fat-shaming (“Quiet, Piggy”). But he has also cut corporate taxes, deregulated and turned back expensive efforts to mitigate climate change. His bold promotion of US corporations helped push ahead earnings and share prices.

Concurrently the AI eruption has been taking place, causing investors to lose their minds with FOMO and pumping trillions into America-based infrastructure. So while Trump’s approval rating continues to slump, markets have hit record high after record high. While the US$ sheds value in a major way, the impact of tariffs is moderated and other asset values (like precious metals) climbed.

It’s complicated now. Trump will soon have more influence over the Fed and interest rates, for example. Will the Bank of Canada be able to resist? And you can bet that a drop in the cost of carrying corporate debt will fuel the equity markets further – even as it threatens inflation. Underlying all this is the fact midterm elections (November) may upend political power in the States, but may actually cause Trump to become more radical.

Yeah, complicated. And in Canada we’re reaching out to China, building big stuff, standing up to the American bully in trade talks, spending oodles on defence, dealing with separatist wackos in Quebec and Alberta and trying to get the kiddos into houses before they hit middle-age.

The only real conclusion of the week so far – like all of 2025 – is you are better off staying invested. There’s a reason a 60/40 asset mix (growth stuff/safer stuff) works so well in times of change and volatility. You may miss outsized gains, but you also avoid stressful losses. The goal for most people is to have a consistent, long-term rate of return so you can afford the big stuff in like – marriage & kids, real estate, education costs, alimony, retirement and the dogs.

Being blown off course by current events (like Greenland etc.) is folly. You can’t time financial markets that palpitate 24/7 and react to events you only hear about much later. Forget that. Stay invested. Fill your RRSP in the next four weeks. Stuff your TFSA for 2026. If you don’t have a house (or an adult kid without one) then take advantage of the crazy FHSA. Obviously open an RESP for your infant and collect the free money. If you’re in retirement, manage that RRIF properly and take advantage of income-splitting strategies with your squeeze.

Remember what Carney said to the rich and powerful (who did not need to hear it). Take control. Don’t be anyone’s vassal. Either you’re at the table, or you are on the menu.

We can do this.

About the picture: “Hi Garth thank you for you blog,” writes Greg on Bowen Island in BC. “I read it everyday and have followed you forever. Since 2006 I think  it’s nice to have  a PM who seems intelligent. All the best anyway here’s my dog Skoki just chilling on bc ferries. Cheers!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/01/22/taco-again/