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Tariff tennis

10 April , 08:54 am

Market scorecard

Well, we said he'd cave, and he did. Trump conceded defeat and announced a 90-day delay in his dumbass tariff plan, triggering the biggest Wall Street rally since 2008. Punitive tariffs remain in place on China. Come on, this is no way to run a country. Businesses can't operate properly under these conditions.

After four bruising days, buyers piled back in with full force, lifting nearly every stock on the board. It was relief, euphoria, and FOMO all rolled into one. This is why we tell our clients to stay fully invested at all times.

In company news, Amazon is quietly shifting gears, cancelling orders from China and other Asian suppliers. Amazon would be on the hook for the 125% tax on all goods that arrive, which the company either needs to pass onto consumers or suck up themselves. Elsewhere, Airbus is flying slightly ahead of Boeing, delivering 136 jets in the first quarter.

At the close, the JSE All-share was down 2.07%, but the S&P 500 rose 9.52%, and the Nasdaq was an astonishing 12.16% higher. Monumental!

Our 10c worth

One thing, from Paul

The American Dialect Society's word of the year in 2022 was FAFO. That's an acronym for "eff around and find out."

Well, that applies to the Trump administration this week. The market had collapsed due to their bizarre tariff proposals, and US Treasury bond rates kept climbing. Instead of taking the knee, the Chinese and the Europeans called his bluff. Global logistics networks were gumming up and companies were withdrawing their forward guidance. Business luminaries like Jamie Dimon were forecasting a recession.

Trump was isolated. Everyone other than a few MAGA diehards were increasingly anxious about a looming economic disaster. Anger was rising as US-based investors, including GOP voters, checked their investment portfolios.

What will happen next? Do we have to go through this circus again in 90 days from now? We shall see.

Byron's beats

Sometimes one needs to take a step back and laugh at the world around you, it will help you to stay sane. Looking at amusing memes about current events makes me feel a lot better. Remember, you are not the only one feeling the heat, whether it's your share portfolio, your business or your job.

Here are some of my recent favourites. This is probably my best of the lot, an AI-generated video of Americans working in sweat shops with Chinese music in the background.

Someone got very creative here, depicting all the world leaders on a runway, showing off their proposed tariffs, Cyril wearing a lion skin is classic.

Here's another cracker from the king of finance memes, Litquidity. It compares Liberation Day to scenes from the D-Day beaches in the movie Saving Private Ryan. Tom Hanks is the boomer investor who has lived through all previous market corrections.

Michael's musings

When elephants fight, it's the grass that suffers. The tit-for-tat exchange of tariffs between the US and China is escalating quickly. Yesterday, China announced a 50% retaliatory tariff on US imports; this is in response to the US's retaliatory tariffs on China's first retaliatory tariff. Still keeping up?

US futures were pointing towards a green open yesterday, and then the news from China broke. They turned red and the price of oil promptly fell 6%; telling you that the market thinks global trade will slow significantly if things continue as they are.

The US has implemented a cumulative 104% tax on Chinese imports (upped to 125% last night), and China is taxing US imports at 84%. There are no winners in a trade war. Thousands of US consumers are waking up this morning and finding out that their Temu order, which just arrived at customs, now costs 125% more than expected.

In this game of trade war chicken, I think China has the upper hand. Even though it will hurt, China will be able to stare down escalating tariffs much easier than the US.

A key advantage for China is that President Xi Jinping doesn't have to worry about being re-elected. For the Republican party, mid-term elections are next year, and the most significant issue for US voters is the state of the US economy. China is arguably in a better financial position too. Their debt-to-GDP ratio is 85%, versus the US at 123%.

Something had to give, and it did last night. Thankfully, this pause in tariffs probably arrived soon enough that there won't be irreversible damage done to the global economy.

Bright's banter

Wall Street Journal reporter Evan Gershkovich was freed after 16 months in a Russian prison, but the drama continues, this time in publishing. The WSJ has poured time and money into a documentary and book based on his ordeal, led by reporters Joe Parkinson and Drew Hinshaw.

Unfortunately, Gershkovich isn't participating or cooperating, he's working on his own film and memoir, backed by Amazon MGM and set for 2026, with his mom writing her own book too. Go Amazon!

Now there are tensions about overlapping projects. Gershkovich has only written one article since his release and is reportedly not on the best terms with the Journal, despite technically sharing a byline with Parkinson and Hinshaw in that lone piece. The scoop of the year has turned into a messy intellectual property standoff.

Signing off

Asian markets bounced hard this morning, logging their biggest gain in over two years after Trump hit the brakes. That said, the trade war between the US and China is still active. Perhaps investors are assuming that will go away too? For now we remain spectators in a global game of tariff tennis.

In local company news, ARM has decided it's time for fresh leadership at its platinum division, showing Thando Mkatshana the door after eight years in the hot seat. The unit's been under pressure, and this change is likely a move to try and turn things around.

The Rand improved to R19.30 to the US Dollar overnight, down from almost $/R20 yesterday afternoon.

US equity futures have cooled in pre-market trade. Let's all take a deep breath. JP Morgan will have first quarter results out tomorrow.

All the best.