By coinnews 
00:00 Maddie
Futures are plunging on fears of a global trade war as President Trump announces sweeping new tariffs, announcing 10% tariffs on nearly all goods coming into the US and additional duties for nations. The administration is considering to be the worst offenders on trade here with us now. Yahoo finances, Josh Shafer, and our executive editor, Brian Sozzi, Josh. Let’s start with you. I can’t find a positive note to save my life this morning. What are you hearing in terms of the economic outlook?
00:28 Josh Shafer
I agree with you. Maddie, there’s not a lot of positivity out there, right? So I think high level important understand essentially what economists are saying about the tariffs. The high-level take would be it would push inflation up. It would slow economic growth, the combination of those two things and specifically how much it would slow economic growth. Economists are arguing recession risks are rising. I think you’re seeing that perhaps being priced in to the stock market right now. And you take a look at equity futures, and you see S&P 500 futures down about 3%. So again, mechanically sort of how that works, consumers would have less purchasing power. That’s going to one hurt their income as businesses make less money. Two, it’s going to hurt their eventual spending. Maybe that leads to a close to a recession, if not a recession later this year, then you spin that over to the equity market. We have a lot of our bulls over the last year now saying, I’m thinking a little bit more about my bear case, right? So you have Evercore, ISI, RBC Capital Markets, and City, all still of S&P 500 targets north of 6,000 on the S&P 500. All of them saying my bull case does not look nearly as strong now. I’m starting to think about the bear case and sort of laying out what that could look like. I’ll highlight one from Evercore ISI, Julian Emmanuel. He said retaliatory tariffs will open further near-term downside for stocks, potentially testing the 200-week moving average of the S&P 500 at 4,677. So again, overall, just a little bit of a bleak outlook. So, I don’t know if you had any more light. Hold on a second. We’re all talking very calmly about this is absolutely bonkers. Let’s just take a moment, right? This is far worse than any of the market participants. We’ve been speaking with had expected. Peter Bookvar, who’s a strategist I follow, sent out a daily email this morning said this current approach is going to literally freeze global trade. He also said the belief that a trade deficit is bad is completely flawed. That’s how they calculated these things. They just looked at the trade deficit between the US and all these other countries in goods specifically, not even in services, which is something that we export much more of. And they cut it in half. And that’s the tariff.
03:26 Brian Sozzi
Well, that’s why you have the team at Red Mac calling this obliteration day. And I know they’re being trying to make light of it, but to your point, this is a full-on disaster. Uh you look at, I, I know I was supposed to mention a quote here, uh, for my contact, Peter Williams, he’s calling this a shock to growth. There’s a lot of uncertainty saying, uh, we resolved some of that uncertainty, but the outlook is even worse. Peter, uh, pulling no punches in his comments, uh, this morning. But, you know, I really want to lock in on what Julie just said on this being really, really bad and why you’re seeing some of these sell offs. These major sell offs in retailers, Nike, Walmart, Amazon. I know everybody wants to talk about cloud services. That stock’s selling off. This is horrible because prices are going to go up likely significantly in the wake of these tariffs. Why? Because you look at Nike, 44% of its sourcing comes from Vietnam, 11% China. Put those two numbers together. I can still do some math in real time. That’s 55% of its business. They’re relying on these two countries to get products, and they have been for decades. Essentially you and I, Josh, talked about this late last night when we were both here, uh, at HQ. This fundamentally changes the investment decision on Nike because it uproots the complete business model for this company that they’ve made money for decades off of.
05:06 Maddie
And by the way, they had already uprooted it. The reason that they get 44% of that from Vietnam is because before it was even more exposed to China. And when they had the first round of tariffs, they then like many other retailers and footwear companies resort, move Apple, you’re not hiding on Vietnam. And that’s the other vibe. You know, you go into these platforms, you see the stock research and these strategists, you watch this stuff, Josh, too. There’s nowhere to hide. That’s the other thing. A lot of people, this is hiding. I just want to quickly mention that Deutsche Bank is talking about the US dollar, saying the safe haven properties of the dollar are being eroded. We have gold coming off of its highs. We have Walmart down today because of their China exposure. Where do you hide in this market? Even as the 10 year yield is coming down. See, you go to a, you look for a safe, uh, safe haven real quick, Proctor and Gamble, they make Tide. Well, they have a huge operation in China that makes diapers. That business not could have impact. Hell, yeah, it is. So is it a safe haven play? Probably not anymore.
07:11 Josh Shafer
Well, and the other thing we haven’t even brought up here, we don’t know how the other countries are going to respond yet, right? And that’s the big thing that I think people are circling when you talk about a place to hide and okay, stocks are down three, 4% at the major index level, individual names down 10%. Where do I go shopping? No one wants to go shopping right now on these names because it might just get worse, right? How do these countries actually retaliate? Are there discussions over the next week before most of the large tariffs are put in place? Is it unwound? That’s just a looming question right now that no one knows the answer to. So I’m not sure you’re going to see a lot of dip buying like you’ve seen in a lot of these sell offs.
07:59 Maddie
Right. And one other thing I want to say is that, you know, a lot of market participants have said they’ve been upset about the sequencing that tariffs are coming first. But a lot of people still say, well, we still expect the deregulation. We still expect tax cuts to be coming. And you have to wonder if all of those calculuses are also going to be fundamentally rewritten. I mean, JD Vance, the vice president this morning in an interview with Fox News saying tax cuts won’t be a way to offset tariffs.
08:33 Brian Sozzi
Well, that’s a pretty scary thing to say. And that’s the problem here, guys, because you can’t chart a path out of this. It’s unclear when these tariffs lift. It’s unclear how the these, uh, tariffs will impact corporate profits in the fourth quarter of this year. So if you can’t see your way through the fog, I mean, how do you invest? And that’s why I’m seeing some analysts on the street saying some of these names in apparel, for example, are uninvestable. You just don’t buy these names. And if you own them, get the hell out. I mean, I mean, we’re not trying to sew panic here, but this is a major, uh, change in the narrative on how you approach investing.
09:28 Maddie
Long term, the gravitational pull is still upward in the stock market for those people worried about their 401Ks this morning. I think that’s probably important to note, depends on the timeframe.
09:40 Brian Sozzi
Historically, it has been.
09:42 Maddie
Historically, it has been. All right, Brian Sozzi, Josh Shafer, thank you so much.
09:49 Josh Shafer
Yeah, thank you.