In this week’s Investor’s Daily our authors covered the key topics of the week.
There is only one word obsessing the entire market: “tariffs”.
Right now, the market hates the idea of tariffs.
In the lead-up to what US President Donald Trump called “Liberation Day”, it almost felt as though the market thought the tariff plan wouldn’t go ahead.
After all, since inauguration in January, Trump has threatened tariffs, then backtracked… threatened them again… backtracked… and so on.
That all seemed to feed into the idea that perhaps Trump was bluffing.
Except, he wasn’t.
And the fate of certain stocks told the tale of what the market thought about those tariffs.
Tesla (TSLA) fell 5.5%. Nike (NKE) was down 14%.
Amazon (AMZN) lost 9%. And Dell Technologies (DELL) slumped 19%.
Ouch!
Locally, Shell (SHEL) was down nearly 7% from its recent high. Rolls-Royce (RR) was down 6%. And UK-domiciled, but US-listed microchip specialist, Arm Holdings (ARM) lost 9.6% on the back of the tariffs story.
So, are tariffs really all that bad?
That’s too big a question to answer in this Sunday issue of Investor’s Daily. But it is a topic we’ll follow closely in the weeks and months ahead.
But to summarise, it’s important to remember that the notion of tariffs isn’t new. It’s just that most of the time, governments dress them up as part of so-called free trade agreements.
Or they’ll provide domestic companies with direct subsidies, which is really just a tariff through subtraction rather than addition.
(By that we mean, instead of forcing a higher price on imported goods or services, the government will provide cash payments or tax benefits to the homegrown business. In terms of the effect it has on price competition, there isn’t much difference.)
The European Union is one big tariffs enterprise. It discourages competition from abroad by imposing tariffs on certain goods. Last year, the EU imposed a 100% tariff on Chinese electric vehicles.
Of course, Trump’s tariff plan is different to the extent that it puts a tariff on everything, not just selected goods and services.
The question is whether that will make a difference… and whether the world’s economy really will suffer a full-blown recession, or if this could result in the single biggest economic growth spurt in living memory.
Stay tuned for more in the weeks ahead.
Links to last week’s essays below.
Hope you’re having a great weekend.
Cheers,
Kris Sayce
Publisher, Southbank Investment Research
What you missed this week…
A US recession has begun
It’s becoming apparent that President Trump’s initial economic policy set, including tariffs and trade policies, are likely to push the US economy into recession. If it isn’t already in one. I’ve been making the case for a US recession for some time. Today, I take an updated look at the data. Read more here…
Begun, the trade wars have
It’s getting real now. President Trump was spoiling for a fight and now he’s got not just one, but several. Tariffs are being introduced or, where they already were, are going up. There is retaliation planned all around. No country or industry is going to be spared. And since most business today is global, the cost of doing business is going up – everywhere. Read more here…
Watch as an AI Scientist who worked on IBM’s Deep Blue…
Performs a LIVE DEMO of Elon Musk’s New AI Application.
An AI that can see… hear… and even THINK for itself.
Elon himself says the technology behind it is “able to do everything – BAR NOTHING”.
The best part?
It could be about to create a windfall for investors in the little-known company that Elon’s AI Application cannot live without.
Click here to see it with your own eyes.
Capital at risk.
Oh, what might have been!
Trade-offs are a fact of life. For everything we do, we forgo something else we could have done instead. From the simple things, such as what we buy – or don’t buy – at the shops, to life’s big decisions, such as whether to go into debt to fund university, or go straight into the jobs market instead, trade-offs are everywhere. Read more here…
I’m sorry if you’re in advertising and marketing…
OpenAI just released a massive update to the capabilities of ChatGPT. And it’s already causing utter chaos in the marketing and advertising industry. While most people are putting the new updates to work on (weirdly) making every image they can think of look like a Studio Ghibli cartoon, there’s a very more impactful and serious consideration to take on board. Read more here…
