Cover:
-President Donald Trump is aiming to revive the US manufacturing industry, which currently employs half of all cars sold in the country. The current setup uses low-cost foreign manufacturing to produce lower-value parts, while building higher-end components at home. The US has also attracted foreign car manufacturers, such as Toyota Motor, Honda Motor, and Hyundai Motor, which directly employ 67,000 manufacturing workers and support nearly half-million jobs. Trump is proposing a 25% penalty on imported cars and parts, along with reciprocal tariffs and Section 232 levies on steel and aluminum. The White House has cited the desire to boost American manufacturing and protect economic security as reasons for the tariffs. After lobbying, the president modified the parts tariffs, giving the industry two years to move supply chains back home. However, similar penalties on car parts could cause more damage, as General Motors generated almost $160B selling cars in North America in 2024.
Interview:
-Greg Case, CEO of the risk management and insurance broker AON, identifies four megatrends influencing the business world: trade, technology, weather, and workforce. These trends create client demand and help clients deal with challenges. The fifth trend, which involves all of these factors, is the most worrisome, according to Case. The combination of two or more of these factors is increasingly significant. AON, a Chicago-based company, was formed in 1982 by the merger of Ryan Insurance Group and Combined Insurance Company of America. The company, which has roots in Chicago, was founded by insurance giants Pat Ryan and W. Clement Stone, who were both benefactors of Northwestern University and had a stake in the Chicago Bears. Case's company has been in operation since 2005.
Tech Trader:
-Taiwan Semiconductor Manufacturing (TSM) has allocated $10B to address the impact of the rapid changes in the US-Taiwan currency exchange rate, marking its third move in the past 13 months. The company collects US dollars from customers like Apple and Nvidia, but reports its financials in its domestic New Taiwan Dollar. For years, a favorable conversion rate helped the company, collecting the strong currency and reporting its financials every quarter in the weaker one. However, due to shifting US policy, the dollar has weakened, affecting Taiwan Semi's margin-enhancing currency trade. The company stated that every one percent depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in its operating margin.
The Trader:
-Circle Internet Group, a stablecoin company, experienced a significant surge in its first day of trading, with shares up nearly 600% from their offering price. The company raised over $1B in its offering and has a market valuation of $50B. This first-month performance is unprecedented, as billion-dollar IPOs do not typically behave like this in the first month of trading. CoreWeave, an artificial-intelligence tech company, had a tepid debut after reducing its offering price and trimming the number of shares it was selling. However, the stock has since quadrupled from its IPO price. Investaaplors should not get caught up in the hype, as IPOs often pull back after strong debuts once insiders and early backers can sell shares after lockup periods expire, typically six months from the IPO date. Early returns for IPOs are often driven by momentum, fear of missing out, and speculative interest from retail traders.
-Constellation Brands, a beverage company that owns the Corona and Modelo beer brands, Schrader, Ruffino, and Kim Crawford wineries, and several spirits makers, has seen its shares tumble over 25% this year due to changing consumer tastes. However, Warren Buffett, Berkshire Hathaway, and other top institutions have bought the dip. Berkshire Hathaway bought about 5.6M shares of Constellation in the fourth quarter of 2024 and more than doubled its stake to 12M shares in the first quarter, making it the third-largest shareholder. The company's valuation has become so cheap that much of the pessimism may already be reflected in the price. Shares trade for only 12 times earnings estimates for the next fiscal year, a 10-year low and well below the average price/earnings ratio of around 20. Evercore ISI analyst Robert Ottenstein argues that the expected growth for the Modelo and Pacifico beer brands should lead to annual sales gains of about 2.4% for Constellation over the next few years, providing a path for the stock to regain its footing and eventually move higher.
Features:
-Nike's stock is on track to close out its best month in over two decades, charging higher on hopes that new CEO Elliott Hill's turnaround plan will make the sportswear giant a winner again. HSBC analyst Erwan Rambourg upgraded the stock and increased his price target to $80, his first Buy rating on Nike in 3½ years. Nike is taking drastic steps to improve the business under Hill, including heavily discounting products, investing in sports-focused innovation and marketing, and fixing relationships with wholesale partners that were severed under previous CEO John Donahoe. Under Hill, the company has also shaken up its management team, with the sector's "most comprehensive" senior management changes in decades. The new initiatives weighed on fiscal-fourth-quarter results, with earnings per share contracting by more than 80% year over year to 14 cents and sales falling 12% to $11.1B. Executives assured investors that the May quarter would reflect the biggest financial impact from the turnaround efforts.
-Holtec International, a key player in the nuclear industry, is set to go public within several months, according to CEO Krishna Singh. This would be the largest nuclear-energy offering in years, offering investors a pure-play way to buy into the industry. Holtec already generates substantial revenue from activities like decommissioning nuclear plants and handling nuclear waste, and could be worth over $10B. The company is also restoring a decommissioned nuclear plant at the Palisades Nuclear Plant in Michigan, which was shut down in 2022 for financial reasons. Holtec plans to place another two small modular reactors at the Michigan site, although it has not yet received federal or state approval. Holtec, founded in 1986, has made money by decommissioning existing nuclear plants and building containment units for spent fuel sold worldwide. Its annual profits are estimated to be over $500M. Singh plans to sell about 20% of the company's equity to investors in January, although his consultants predict April. He is currently discussing with consultants if the company's books are up to snuff for a public company.
Europe:
-Apple has made significant changes to its terms of service in the European Union (EU) in response to a 500M euro fine for noncompliance with the EU's Digital Markets Act. The changes are intended to avoid daily files of around €50 million, or 5% of Apple's average daily revenue. Apple has until Friday to make these changes, and the European Commission will poll users and developers like Spotify to decide if they meet the DMA's stringent requirements. Apple's new proposal offers developers a new set of choices and additional operational requirements if they opt out of Apple's distribution model. Apple is offering a 30-minute support session to help developers understand the best option for them. The changes add layers of complexity to App Store commissions, with Apple taking a mix of 2%, 3%, 5%, 10%, and 13% fees depending on the choices developers make.
Emerging Markets:
-no update
Commodities:
-Platinum has gained over half its original value since the end of 2024, reaching levels not seen since August 2014, nearly 11 years ago. Gold has also seen a quarter increase, while silver has gained 22%. However, there is a mismatch between the supply of platinum and demand, with the majority of the world's supply coming from mines in South Africa, which produced 12% less platinum in the first quarter than they did a year earlier. The supply of platinum recycled from scrapped cars has declined from 2022 levels. Demand is increasing from China, the world's biggest platinum consumer, with Shuibei, China's wholesale platinum hub, adding 10 new platinum-jewelry showrooms so far in 2025. Higher prices for gold are shifting customers to the white metal.
Investors can buy the abrdn Physical Platinum Shares exchange-traded fund, the most liquid platinum fund with $1.56B in assets, or platinum bars and coins. However, they should consider the risks before jumping in, as platinum's price could already reflect all bullish factors, leaving no more room for gains. Prices have climbed 54% for the year, with much of the gains (32%) taking place over the past month. Platinum is currently more than 30% above its 50-day moving average, with the only other time it rallied so far above trend was in February 2008, when it slid 40% from March to August 2008.
Streetwise:
-Nathan's Famous stock has seen a 68% increase in value over the past year, it’s a surprising result. But the restaurant industry has, in fact, seen surprising returns. EATZ, an exchange-traded fund tracking 25 names, has made 23% over the past year, beating the S&P 500 index by 10 points. The restaurant industry is also experiencing growth in dining returns, an aspect perhaps reflected by the ar doubling of revenue at Eli Lilly, maker of the anti-obesity drug Zepbound.. Nathan's Famous is a small company that distributes branded foods outside of its restaurants, with modest operating results and speculation about a buyer taking the company private. Brinker International, which owns Chili's, has also seen a 190% increase in share prices. New management has trimmed the menu to make kitchens more efficient, and the biggest hit has been a new menu of combo meals starting at $11, including burgers that taste like better, beefier versions of McDonald's top sellers. McDonald's shares have only done half as well as the market, returning 8%, while Brinker stock is up 190%.