Tuesday 01/04/25

US stocks post worst quarter since 2022 as tariff worries swirl (Financial Times, George Steer, Emily Herbert, Ian Smith, William Sandlund and Arjun Neil Alim) highlights just how nervous investors are about Trump’s tariffs and their effects ahead of tomorrow’s big announcement that he dubs “Liberation Day”. Tomorrow will be the day that he unveils new tariffs on imports that will overlay the ones he’s already put in place. US stocks had their worst quarter since Q3 of 2022 thanks to investor worries about the limiting effect the broad-based tariffs will have on economic growth. Markets tremble as Donald Trump’s tariff ‘liberation day’ looms (The Times, Jessica Newman) looks more at European markets and observes that gold, which is seen as a safe haven asset in uncertain times, hit a new record of $3,122.80 an ounce. BlackRock’s chief exec, Larry Fink, said in an annual letter to investors that clients “are more anxious about the economy than at any time in recent memory. I understand why.” Stagflation, where economic growth slows and earnings fall while inflation rises, is a very real possibility at this juncture. Everyone’s waiting now for more detail on the tariffs that Trump will impose and then the inevitable retaliatory actions from affected countries. Trump has promised tariff ‘liberation day’. Americans aren’t so sure (Financial Times, James Politi and Alex Rogers) suggests that even Trump supporters are worried about how this massive “rebalancing” of trade/move towards American protectionism is going to affect them. A CBS news poll released on the weekend showed that 55% of Americans think Trump is over-focusing on putting tariffs on foreign goods while his approval rating on the economy stands at 48%. That being said, union leaders are welcoming the tariffs. * SO WHAT?  * For now, Trump is betting that his tariff bonanza will project strength outside America and garner him more popularity within. If it all goes wrong, Democrats will be able to fight back and I’m sure that Trump is already lining up people to blame. But it might work – I doubt it, but you never know…

Amid all the drama, Elon Musk’s SpaceX pleads with Trump for tariff exemptions (Daily Telegraph, James Titcomb) shows that SpaceX is pushing for an exemption on imports from China for two pieces of Chinese-made manufacturing equipment that are used to make broadband terminals. SpaceX says that they can’t procure the equipment in the US. They sound pretty integral as they “support production of over 90,000 units a week”. The exemption can take 30 days to get approval – and even if it was approved, it would only be in force until the end of May.

Elsewhere, Consulting firms offer concessions in Trump spending clampdown (Financial Times, Stephen Foley and Joe Miller) highlights efforts by consulting firms to do all sorts of things to cut their bills in response to Trump’s crackdown on public sector spending. The deadline for companies to supply the government with money-saving proposals was reached last night and they offered a mixture of immediate cost reduction whilst also suggesting ideas on how to improve government procurement. It’ll be interesting to see how much money this saves!

Meanwhile, Trump administration to review $9bn in federal grants to Harvard (Financial Times, Andrew Jack) reflects Trump’s ongoing attack on academic institutions, this time on alleged antisemitism at Harvard Uni. This could result in a freezing of $9bn in federal funding. Trump and chums have been attacking educational establishments for pushing a “woke” agenda and have been threatening investigations and potential taxes on university endowments. American academics seek exile as Trump attacks universities (Financial Times, Andrew Jack) shows that some academics have seen enough of this and are leaving the country to take up positions elsewhere.

Chance of US recession put at 35% by Goldman Sachs (The Times, Jack Barnett) highlights the investment bank adjusting its forecasts. It had previously given the US a 20% chance of falling into recession this year. This is quite punchy considering that it is making this change before tomorrow’s announcement. If it were me, I’d tell everyone I was going to revise my forecasts and then announce them after “Liberation Day” but maybe this way means that Goldman’s forecasts are kept uppermost in the minds of investors by getting them in early…

In other world news, Argentina’s poverty rate falls as Javier Milei tames inflation (Financial Times, Ciara Nugent) shows that the percentage of Argentina’s population living in poverty dropped considerably in H2 last year, according to the country’s national statistics agency. This is definitely a win for President Milei who continues to fight high inflation. The poverty rate dropped to 38% in H2 last year – the lowest rate since 2022 – versus the 53% it was at in H1 last year. Well it seems that he’s going in the right direction – Argentina’s economy came out of recession in Q3 of 2024 and the IMF reckons its economy will grow by 5% in 2025.

In Europe, Marine Le Pen banned from standing for office for 5 years (Financial Times, Leila Abboud, Adrienne Klasa, Ian Johnston and Guy Chazan) highlights a major development in France – that the far-right leader will be prohibited from standing for office for five years with immediate effect and be fined €100,000, thanks to getting a conviction for embezzling EU funds. Le Pen plans to appeal. Her ability to run in the 2027 election hangs in the balance. A bombshell judgment on Marine Le Pen (Financial Times, the Editorial Board) points out that the punishment meted out to Le Pen was the most severe punishment possible. The judgment was criticised by far-right leaders across Europe, with Trump also throwing his support behind her. * SO WHAT? * Will Le Pen take heed of lessons learned from the Trump playbook, I wonder? You know, accuse everyone of fake news, refuse to acknowledge the result and portray herself as the victim until she get what she wants. I think this could be kill or cure for the centrists as it could give them time to regroup and become less of a shambles. On the other hand, this could serve as a rallying cry and galvanise enough support for Rassemblement National to win the next presidential election…

In ‘Awful April’: bill rises Britons face, from council tax to energy and cars (The Guardian, Mabel Banfield-Nwachi) we see that UK consumers are bracing themselves for higher bills for council tax (+4.99% – or more, depending where you are), energy (if you’re on a variable tariff linked to the energy price cap), water (up by 10% per month on average, depending on the water company), car tax (an extra £5 a year, plus EVs will no longer be exempt), stamps (first class will cost £1.70 😱 while second will cost 87p), TV licence (up by £5) and broadband and mobile (on average, £21.99 extra per year). On the other hand, the national minimum wage will be rising by 77p an hour to £12.21 per hour, the state pension will rise by 4.1% and some benefits will increase.

UK savers could have up to £110,000 protected by banks (The Times, George Nixon) is good news for those who like to have cash sloshing around in their bank accounts because the level of protection for savers if their bank or building society fails could increase from £85,000 to £110,000 under new proposals from the Bank of England. The Financial Services Compensation Scheme protection limit could increase by 29% to reflect inflation over the last eight years. * SO WHAT? * This is good to know for if you think banks might fail – and if you have enough money to be at all worried about whether you’ll lose it 😁.

Then in Mortgage approvals dip despite cut in interest rates (The Times, Jack Barnett) we see that the number of mortgage approvals fell by more than the market was expecting in February despite the Bank of England cutting interest rates. * SO WHAT? * After the frenzy of people

trying to beat the stamp duty deadline I would have thought that the market will settle down for a bit as households digest higher household bills and see the lay of the land after Trump’s tariffs.

In retail news, Shop prices fall as retailers try to stoke demand (The Times, Jack Barnett) cites the latest figures from the BRC and NielsenIQ which show that shop prices dropped in March thanks to clothing and footwear retailers discounting in order to stimulate demand. * SO WHAT? * This could be an indicator of what’s going to happen with inflation – so we’ll have to see the next ONS release. In February, inflation fell by more than expected – so maybe March will continue the trend!

I thought I’d include Retailer in turmoil after Paul Marchant, ‘Mr Primark’, is ousted (The Times, Isabella Fish) because it’s in all the papers today. Basically, the boss of Primark, Paul Marchant, had to step down due to allegations of inappropriate behaviour. Given that he’s been there for 16 years and is credited for its success, this will leave the owner Associated British Foods, in a quandary. * SO WHAT? * This sounds pretty disastrous. Will it go the same way as Ted Baker?? Founder Ray Kelvin was ousted because of inappropriate behaviour and the company that he founded went down the toilet. At least in Primark’s case, there is a parent company and management team that can step in to minimise the damage. Still, the clock’s ticking and they will need to find the right person. Maybe the new person will be the one to bring in online shopping???

It seems like there’s a lot of tech fund raising going on at the moment! OpenAI secures $300bn valuation after $40bn SoftBank-led funding round (Financial Times, Cristina Criddle) shows that the ChatGPT maker has managed to raise an additional $40bn in new funding from SoftBank along with Microsoft, Coatue Management, Altimeter Capital and Thrive Capital at its latest round. This now gives the company an implied $300bn valuation and means that if it was listed today, it would be the 27th biggest company on the S&P 500! That would make it bigger than Chevron but smaller than Coca-Cola! The company also announced a launch in the coming months of an improved AI model as rivals continue to make advances and close the gap with OpenAI.

TSMC buys time with $100bn US investment pledge (Financial Times, Kathrin Hille) comments on TSMC’s announcement a month ago that it would commit $100bn to its US business. This has

bought the company time although Trump’s insistence that this will mean TSMC will produce more in the US while TSMC itself hasn’t mentioned any details about how and when it will spend this money suggests that there may be a gap in expectations. For now, though, it appears to be in the clear…

Then in Google DeepMind’s drug discovery spin-off Isomorphic Labs raises $600mn (Financial Times, Melissa Heikkila) we see that Isomorphic Labs has managed to raise a hefty chunk of money at its first external funding round as investors bet on it “solving” disease. * SO WHAT? * Isomorphic Labs was spun out of DeepMind in 2021 and has, since then, partnered up with some big pharmaceutical companies including Novartis and Ely Lilly, who want to slash costs and accelerate drug development. The aim is for the company to have drugs designed by AI in clinical trials by the end of the year! The money should help to propel things to that goal…

In a quick scoot around some of today’s other interesting stories, Rocket to buy Mr Cooper in $9.4bn deal to create US mortgage giant (Financial Times, Zehra Munir and Oliver Barnes) highlights the all-share transaction for Rocket Companies, one of America’s biggest mortgage lenders, to buy loan servicing giant Mr Cooper. The combined entity will have a loan book worth $2.1tn across 10m clients – the equivalent of one in every six US mortgages. It’s the second acquisition that Rocket has made over the past month, when it bought real estate listing website Redfin for $1.75bn. * SO WHAT? * Non-bank mortgage lenders have been going through a period of consolidation as bigger players have hoovered up the smaller ones who have been less able to navigate the higher interest rate environment. The deal is expected to close in Q4 of 2025.

Drugmakers suffer £8bn hit after RFK ousts America’s top vaccine official (Daily Telegraph, Hannah Boland) highlights the reaction to US Health Secretary Robert F Kennedy’s decision to

oust Dr Peter Marks from the FDA as investors sold down their exposure to companies including Moderna, Pfizer and GSK. Kennedy is a known anti-vaxxer and was accused by Marks in his resignation letter of pursuing “subservient confirmation of his misinformation and lies”. Who’ll be next in the hot seat?!?

Then in Aston Martin: F1 boss Lawrence Stroll reveals £125m boost (The Times, Robert Lea) we see that the ailing sportscar manufacturer just got a nice cash boost to shore up its tricky finances. * SO WHAT? * Lawrence Stroll and his mates (via the Yew Tree Consortium) now have a stake of 33% in Aston Martin Lagonda, up from 28% previously. Stroll keeps banging on about major upside to the value of the company but thus far it looks like it has been one hell of a money pit.

Have you ever wondered how much a Premiership footballer has to pay for insurance on a flash car😎🚘?? I hadn’t either – but then I saw this 😁. Not all that surprising really!