By coinnews 
00:00 Speaker A
Welcome back to Market Domination sponsored by Tastytrade. We have been on daily tariff watch this earnings season. Let’s round up some of the latest commentary from companies. We’ve seen multiple companies, of course, cutting their full year guidance this week. Procter & Gamble, Pepsi, Kimberly Clark, Colgate Palmolive becoming one of the latest names to lower its outlook for the year due to President Trump’s tariffs. CEO Noel Wallace saying on the earnings call this morning that the impact of tariffs in 2025 will be roughly $200 million. The CFO elaborated further on the impact on the call, saying quote, the incremental impacts are primarily tariffs on raw materials and finished goods coming from China into the US and from the US into China, because, of course, a company like Colgate Palmolive also sells into China. And more companies pulling guidance including Skechers, that shoemaker reporting first quarter earnings yesterday, withdrawing its 2025 guidance due to macroeconomic uncertainty. The Skechers CFO saying on the earnings call, quote, with an effective tariff rate at about 159%, products from China to the US are prohibitively, prohibitively expensive. And then there’s Carter’s, the children’s apparel company also suspending its forward guidance in light of tariffs. The company does still have some exposures from tariffs on China, but it has been over the past several years been making a push to expand its supply chain operations to other countries. The CFO saying on the call, quote, we have now have a broadly diversified production base. Vietnam, Cambodia, Bangladesh, and India represent our largest countries of origin. Uh Lubastini is still with me here, but and that’s just like a sprinkling, a slight sampling. Obviously, everyone is being asked about on the conference calls. You were just, we were just talking about it with David Aptis, a portfolio manager, and you guys were discussing like what is what is the duty of companies? What do you want to hear from companies in terms of how they’re thinking about this?
03:08 Lubastini
Yeah, I think that’s the important question. Well, David and I agree on small caps. I want to deviate from the point where he said, hey, let’s not go too fast to change revisions. Don’t underestimate the resiliency of corporate America. But I think the duty of executives right now is to be transparent and say, there’s complete uncertainty. I mean, how do you have a model that can calculate your tariff impact for a tariff that one day is 20%, the next day is 35%, and maybe three weeks from now could be 0%? Right? So I think I would be of the conviction from the communication standpoint, let’s flush out all the bad news, right? Like how bad could it get? So we’ve seen a couple of companies that give twofold guidance now. Here’s guidance, no tariff impact, tariff impact. I think that’s a responsibility to shareholders. Give them what could be the potential impact. And then in the back half of the year, then you can just adjust expectations. Hey, it wasn’t as bad as we thought because
04:44 Speaker A
It’s better to come out and say that than the opposite.
04:48 Lubastini
I agree. I’d rather give, tell me, give me permission up front to underestimate what you’re doing. Don’t ask for forgiveness later when you said, hey, it was worse than we thought.
05:06 Speaker A
Yes. And, and the sort of phrase I’m hearing a lot recently both from companies and also investors is scenario modeling, right? Like what, kind of the, like the decision tree or all the branches and the different scenarios that could take place and what do you do in each of those scenarios?
05:39 Lubastini
Yeah, it’s risk mitigation but getting back to what David Wagner was talking about. I’m most surprised by that 2026 guidance yet that hasn’t come down yet. The estimates for, for earnings. Look, I believe in the long-term resiliency of these companies. If we get tax cuts or at least keep the tax regime that we have, that that’s going to be a back half of the year catalyst. But just the revisions haven’t changed, and I think it’s more important for the unmagnificent 495, right? They’re, they’re supposed to show about a doubling of the earnings growth rate. If that evaporates, then the whole underpinning of this market broad-based rally evaporates with it because then it’s just back to the mag 7. Do they have the ability to sustain the rally for the market forever and keep being the leader? I don’t think so. I think we’re seeing cracks in that thesis.
06:55 Speaker A
Okay. Well, that’s a little worrying.