Stocks closed lower yesterday, but off their worst levels of the day, and not before trading higher for a bit in the late afternoon.

News that Canadian Premier Doug Ford was set to add a 25% surcharge on electricity to the U.S. (MI, MN and NY) weighed on stocks early. His flippant comment that he would "not hesitate to shut the electricity off completely" inflamed the administration.

In response, President Trump said he would impose an additional 25% tariff (50% total), on all steel and aluminum coming from Canada.

That sank stocks further, until Canada finally backtracked, saying they would not go ahead with the 25% surcharge.

Shortly thereafter, President Trump rescinded the additional tariffs that were to go on in response.

Commerce Secretary Howard Lutnick and Mr. Ford discussed the matter and issued a joint statement saying they would officially meet in Washington on Thursday. On the agenda will be a renewed USMCA, and the reciprocal tariffs that are due on April 2.

Stocks traded higher on the news. But fell back in the red by the close.

The market also cheered reports that Ukraine had agreed to a 30-day ceasefire with Russia, if Russia agrees as well. That came on the heels of U.S. Secretary of State Marco Rubio and National Security Advisor Mike Waltz meeting with Ukrainian representatives in Saudi Arabia.

After the close, it was reported that the U.S. House of Representatives passed their Continuing Resolution on the budget, which now goes to the Senate for a vote. The deadline for passage is Friday, March 14th, at midnight to avoid a government shutdown.

A busy day of news to be sure.

We'll see what other breaking news is in store for us today.

In the meantime, the market will turn its attention to this morning's Consumer Price Index (CPI ? retail inflation) report. The last CPI report saw inflation ticking up. The consensus for this one is for a downtick. The headline number is expected to come in at 0.3% m/m vs. last month's 0.5% pace. The y/y rate is expected to ease to 2.9% vs. last month's 3.0%. The core rate (ex-food & energy) is slated to come in at 0.3% m/m vs. last month's 0.4%, while the y/y rate is expected to come in at 3.2% vs. last month's 3.3%.

Is so, that would be the second inflation report in as many weeks that finally shows inflation starting to head back down again. (Last week's Personal Consumption Expenditures (PCE) index was the other one.)

It would also underscore Fed Chair Jerome Powell's comments last week when he said he expected that inflation would be heading back down to 2%.

Although, I wouldn't expect one or even a couple of better-than-expected inflation reports to get the Fed to immediately cuts rates. That definitely factors into it. But Mr. Powell said the Fed was waiting for more clarity on the administration's policies, specifically on "trade, immigration, fiscal policy and regulation." And until then, the Fed did "not need to be in a hurry" on interest rates.

Nonetheless, all eyes will be on this morning's CPI report.

It's been a tough 3-4 weeks. We'll see if the market can begin to turn things around.

See you tomorrow,