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GDPNow forecast for first quarter nosedives into negative territory
The GDPNow model from the Federal ReserveBank of Atlanta updated on February 28 showed real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 plunging to a negative 1.5% rate. That’s down from a forecast of a positive 2.3% growth rate in the February 19 update.
Either maximum pressure on China or a guarantee of big retaliation
Interesting timing. President Donald Trump has announced a second round of 10% tariffs on Beijing’s exports to the United States will go into effect on March 4. That’s just one day before President Xi Jinping heads into the party’s biggest political meeting of this year, the National People’s Congress, where his lieutenants will unveil their economic blueprint for 2025. While the tariffs are unlikely to sway the growth target or fiscal policy for the year, which have been set for months, they could lead to an escalation of rhetoric as President Xi demonstrates his resolve to stand up to the United States. And an acceleration of retaliation by China.
Mexico could buy its way out of higher tariffs–by joining the Trump trade war on China
U.S. Treasury Secretary Scott Bessent said Mexico has proposed matching Washington’s tariffs on China and urged Canada to do the same. A new additional 10% tariff on Chinese exports to the United States is scheduled to go into effect on March 4. It’s possible, Bessent said on Bloomberg TV, that Mexico could avoid higher tariffs on exports to the United States scheduled to go into effect on March 4 if it imposed a 10% additional tariff on Chinese goods to match the proposed U.S. increase. Bessent suggested that Canada should make a similar offer.
Analysts cut earnings estimates more than usual for next quarter
Analysts have lowered EPS estimates more than normal for Standard & Poor’s 500 companies for the first quarter, FactSet reported today. During the months of January and February, analysts lowered EPS estimates by a larger margin than average. The bottom-up EPS estimate for the first quarter decreased by 3.5% (to $60.66 from $62.89) from December 31 to February 27. Companies will begin to report first quarter earnings, which for most companies ends on March 31, in April. Analysts almost always cut their earnings estimates during the first two months of a quarter. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.6%. So it’s not the analysts are cutting estimates for the quarter ahead now that’s unusual. But instead it’s the larger than usual size of the cuts.
The more the market thought about Nvidia earnings, the more unhappy it got–is the market right?
Last night, in after hours trading, shares of Nvidia (NVDA), which had closed up 3.67% in the regular session, traded down a twitch, slipping by 0.04%. Today, Thursday, February 27, the shares started off in decent shape but then sold off all afternoon, closing down 8.48%. What was so disappointing about Nvidia’s results? And what should you do about this drop?
Trump clarifies tariff dates, but the market is still betting on another delay
After sowing confusion with remarks at Wednesday’s cabinet meeting that seemed to postpone new, higher tariffs on goods from Canada, Mexico, and China to April, today President Donald Trump said 25% tariffs on Canada and Mexico are on track to go into place on March 4, and said he would impose an additional 10% tax on Chinese imports.
Copper looks like new Trump tariff target
President Donald Trump has ordered an investigation of copper imports in what is a first step toward potential tariffs on the metal. The move launches a process that Trump previously used to put tariffs on steel and aluminium, opening a new front in his trade war. We’re at the early stages in this effort but I think a copper tariff play is a reasonable buy right now–especially since coopper demand and copper prices are forecast to climb tariffs or no tariffs. The biggest winner would be Freeport-McMoRan (FCX), the largest producer of copper in the United States. I’ll adding shares of Freeport my Jubak Picks portfolio tomorrow, Thursday, February 27.
The GLP-1 game isn’t over until the courts sing
Compounding pharmacies aren’t giving up their ability to create cheaper knockoff versions of Eli Lilly (LLY) and Novo Nordisk’s (NVO) GLP-1 weight loss drugs without a fight. On Friday the u.s. food and Drug Administration found that the shortage for Novo’s blockbuster GLP-1 treatments Ozempic, approved for diabetes, and Wegovy, approved for obesity, was over and that compounders would have to stop producing them in the next 60 to 90 days. Today,the Outsourcing Facilities Association (OFA) and Texas-based FarmaKeio Superior Custom Compounding filed a lawsuit in U.S. District Court in Fort Worth, Texas
QQQ, which tracks NASDAQ tech stocks, closes below 50-day MA–2 days before NVDA earnings
The Invesco QQQ ETF (QQQ), which tracks the tech-heavy Nasdaq 100 index (NDX), closed below its 50-day moving average on Monday for the first time in just over three weeks. The ETF was down another 0.83% as of 3:30 p.m. New York time on Tuesday.
More bad news in another consumer sentiment survey
The Conference Board’s measure of consumer confidence fell this month by the most since August 2021. The Conference Board’s index fell 7 points in February to 98.3, marking the third straight decline, data released Tuesday showed. The figure was below all estimates in a Bloomberg survey of economists. A measure of expectations for the next six months also fell by the most in three-and-a-half years, while a gauge of present conditions declined more modestly.
Microsoft cancels some AI data center leases
In a week when Nvidia’s upcoming earnings report has all eyes on AI stocks, Microsoft (MSFT) has canceled some leases for U.S. data center capacity, according to TD Cowen.
OpenAI’s biggest backer has voided leases in the US totaling “a couple of hundred megawatts” of capacity—the equivalent of roughly two data centers.
Lots of tariff talk but not much clarity
President Donald Trump said tariffs scheduled to hit Canada and Mexico next month were “on time” and “moving along very rapidly” following an initial delay. But following the remarks, a U.S. official, who spoke to Bloomberg on the condition of anonymity, said the fate of the special 25% levy on Canada and Mexico was still to be determined.
Will Apple be able to dodge Trump’s China tariffs again with promise of $500 billion U.S. investment?
In the first Trump Administration Apple (AAPL) avoided tariffs on its smartphones and on its Apple Watch made in China. This time around Apple may avoid the administration’s tariffs again, but the cost is a promise to spend $500 billion and hire 20,000 people in the United States over the next four years, and open a factory in Texas to make the machines that power the company’s push into artificial intelligence.
Is the healthcare sector now uninvestable?
I have to add Robert F Kennedy Jr’s confirmation to the growing evidence that this Congress will act to rubber-stamp anything coming out of the White House. And now I’m trying to decide exactly how much chaos the new Secretary of Health and Human Services will unleash on healthcare stocks. My preliminary answer is A LOT. and that the effects of Kennedy’s tenure as head of the Department–added to the capricious decision-making of President Donald Trump and “break-things” czar Elon Musk–are just about impossible to predict. Which leaves investors with a nearly impossible challenge of assessing how much risk there is in any stock or ETF position in the sector. When you are unable to quantify risk, selling–at least some selling–is the best strategic choice for an investor. And that’s why in this post I’m going to give you my run down on what I would sell in the sector now and what I would hold onto until we see exactly how chaotic the chaos will be.
There’s more money in crypto, so the hacks are getting bigger
Crypto exchange Bybit has said it has lost almost $1.5 billion worth of tokens. A hacker took control of one of Bybit’s offline Ethereum wallets, Chief Executive Officer Ben Zhou announced in a social media post Friday, and an estimated $1.46 billion in assets flowed out to, well, somewhere else.
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