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The tariff news, it just keeps on coming here. Trump says Mexico, Canada, and new China tariffs take effect March fourth. That's coming up soon. Let's get the latest. Brendan Mary, global trade editor for Bloomberg News, joins us. Right now. Brendan, you know, it's tough to keep track here, but it appears that these tariffs are going to take place and maybe use some incremental ones on China.
What's the latest.
Yeah, So Trump tried to clear up any confusion there was about whether the Canada and Mexico tariffs of twenty five percent we're going to take place on Tuesday, and he said they indeed will.
And he added a bit of a surprise.
He said, oh, and I'm also going to add ten percent tariffs to Chinese imports, which he's already He already imposed ten percent tariffs on China. So this is another ten percent and that will also take effect on Tuesday. So we're looking at the three largest US trading partners. About forty percent of US merchandise trade is done with these three countries totally, something like two trillion dollars a year.
So he's turning the.
Screws on China in particular and trying to drive a deal. It sounds like before before midnight Monday into Tuesday with Canada.
Mexico, what's the off ramp.
Then the off ramp is Canada and Mexico scrambling to show him that he's doing that. They're doing what he would like them to do on fentanyl trafficking and uh, in illegal migration. Uh, they have already done a number of things. So the question is, you know what exactly are the goal the goal the goals uh that they could they could reach uh and as you know, and are those even attainable you know, in the next you know, four days now?
So all right, Brendan dumb question of the day. How do tariffs work?
Like?
Who puts the tariff on which party? How quickly does it happen? Can you just explain the mechanics here?
Yeah, it's it's a it's a pretty quick UH switch that you know, the directive comes from the President, it goes into the Federal Register, UH, it is transmitted to the Customs and Border UH agency, and they, you know, they plug it into their computer system and and and and that that system that that importers and exporters are are connected to UH customs agents and and you know
the intermediaries of trade. That suddenly appears on there, you know, on their on their computer screen is it's another ten percent in the case of China, come come Tuesday. So it's it all can happen pretty quickly. You know, at the moment, these are just threats. The only tariffs that are in effect since Trump was inaugurated on January twentieth, our ten percent on China. But there are a half dozen or so others, including tariffs on the European Union, that that he's threatened.
To put in place over the next five five or six weeks.
So now what like if I'm an economist and I'm looking at my models, like what am I plugging in now to know like what growth is going to be, what inflation is going to be, what personal consumption is going to be?
Yeah, you know, Bloomberg Economics have have have done a lot of number crunching in this area and and they do show that these the tariffs will have an impact on on on.
Growth, on inflation.
Uh.
The the the freshest number we have was that that the the tariffs on the European Union that he's threatening will will cut their GDP by one point five percent. Now, one point five percent sounds like a small number, but we're talking, you know, to an economy and the multiple trillions of dollars, so it's a it's a lot of money. Uh, businesses pay it and then businesses passed those costs on to consumers. So uh, it will it will. H The goal from the Trump administration is to is to drive
production to the US. But in the meantime, somebody's got to pay. Somebody's got to pay these tariffs. And uh and until those jobs are created as Trump hopes they are, uh, it's it will have an upward There will be upward pressure on prices, uh, for the for the products that he is targeting.
Brandon, what do we know about from these countries China, Canada, Mexico in terms of retaliation and what is their policy or what are they saying these days?
They're all doing something slightly different.
Canada has said will hit you will hit one hundred and seven billion dollars worth of your products with with the same tariff that you're you're going to put on on twenty five percent. Mexico has has not been that specific, but they will. They will also they pledge that they will.
They won't.
They won't just take it that they that they will retaliate as well. China is a more interesting case. They have been very reserved in what they have targeted, but they've been sort of strategic. They they they launched an antitrust investigation into Google's operations in China. The total amount of tariffs that they have goods that they're that they've retaliated against is only fourteen billion or so so that
they have. But but what they're what they're showing the US is we can we can target not just your goods but also your your big tech companies. So they're you know, they're playing they're they're they're seeing Donald Trump's uh, you know, the pressure putting on there and they're responding in a way. So far that's been reserved, but that can hit hard, you know, biking that company like goop.
All right, Brendan, we really appreciate it. Thank you so very much. Brendan Murray, Bloomer Global Trade Editor, joining us on Trump tariffs coming into effect next week on Canada, Mexico, additional ten percent on China as well.
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Let's get right to the Nvidia news, and nobody better to do that with than Gene Monster, managing partner co founder at Loop Ventures. Gene Suck's kind of been up and down today, it's investors trying to get a handle on it. What's your takeaway from the Nvidia news yesterday?
Well, the results were good but not great. And specifically is the margin guidance at seventy one percent versus the three to seventy two and there weren't whispers that they were going to lower margins. I think that really stood out to me. The upside on revenue of a million a billion compares to the expectations of like a billion and a half to two billion, and so I think that these were good in the sense they did raise on revenue, but not great. This definitely wasn't an Nvidia
like quarter. And I would say that if you put everything in the context and my senses, the stock probably trades lower today. I think that it probably should be down something like five percent ultimately, because effectively what they're doing is pushing the ramp to the back half of the year, especially on margins. That's when the margins they said to kind of go to seventy five percent. And I would add one other piece to this is going
into the print. I believe that the most important point was related to commentary about how sold out they were on Blackwell. This is a metric that they typically give, and last quarter they said they were sold out for basically three quarters of this year. They were radio silent on the topic. They surprisingly didn't get asked a question
on it. But I think that Jensen's comments about the need for compute being one hundred to one million I double checked that on the transcript, one hundred to one million times more compute needed for reasoning and physical AI and robotics AI that increase in compute. I think gave investors some optimism that well, this year might not be the year that twenty twenty six is going to grow faster than what people think, and so set a different way is that the results and guidance don't give a
ton of optimism. But if you look at where this ultimately could go, if you take what Jensen is saying and divided by ten, that means they're still going to comfortably beat the numbers next year.
Okay, there's a lot of unpack with that. So let's go back to gross margins for a second. Based on their call that gross margins will hit seventy five percent in the back half of the year, when do we think they're to bottom?
So they got answered the guess that question on the call and they kind of sidestep it. But if you read between the lines, they probably go lower again in the July quarter. So there's an April quarter that we're in right now than they go to the July quarter. My guess is they probably bottom then at around seventy percent, So effectively, going from seventy to seventy five over six months,
it's a pretty big jump. At the time of the call, the stock was up two and a half percent and excuse me, about two percent in after hours when they came to the last question on the call, which was related to that ramp in margins and how realistic is that if we have more export controls and the answer was, we don't know how export controls are going to impact our business. And immediately the stock went from up call it two percent to down a half a percent, So
we saw basically two percent move in it. And so I think that speaks to investors saying like, that's that's a risk here, is like, are we really going to get to that margin ramp in your setup here? You talked about the seventy three percent margins for a tech company for a hardware company. I think at the end of the day, they're still remarkable. But for these stocks to keep working, you need to have margins at a
minimum stable and growing. And I just want to put one final thought on this, Alex is that ultimately I think margins will get back to that seventy five percent. I don't know if it's going to be in Q four early next year, but if the ramp is what I think it's going to be for next year, I think we're going to get back to some go go days.
Nvidia Gene, the driver for this stock tremendous performance over the past two years, has been beaten and raised by a certain order of magnitude. If for no other reason than the law of large numbers, that order of magnitude likely will be lower. Can this stock continue to work with just the law of large numbers not giving you that two three four billion dollar bet and raise every quarter.
I think it can. And just to put in perspective, we've gone from a twenty billion dollar business a few years ago. It's going to be about a two hundred billion dollar business this year. But there's still our companies apples a four hundred million dollar business. I mean, you can still continue to grow from that, and it doesn't need to have that breathtaking growth. And I would come back to the central question here. It's not about twenty
twenty five. It's the twenty three percent growth in calendar twenty six, And do you think that the number is going to be higher or lower than that? And ultimately I think the number is going to be higher. I think we're going to get back to a point where we, despite the law of large numbers, we get to some of those improving, those improving upsize and beats, and it just comes down to what I think is a large TAM and what I still believe is a competitive advantage
that GPUs have over custom silicon. And we'll see how that plays out. But that's essentially the debate that's going on right now is just how much compute you need and how defensible is in video. I think there's a boatload of compute, much more than we realize it's going to be needed. And I think in videa's in a great position related to that. We're gonna have to wait to get to those results, but I think anticipation of that it's going to be positive for the stock at some point this.
Year, gotcha. So it's basically like the story is still intact. This is now just a timing issue and a little bit of a macro issue when it comes to tarups Am I reading you right?
Yeah, that's going to be the debate. That's the bowl caase that's the side that I'm on. I still think we're early in AI and I think in video is going to benefit. The bearcase is that we're seeing law of large numbers less beats, and you're going to have a compress multiple in that situation. But the central question again comes down bears their bulls. Do you think they're going to beat the numbers next year?
Yeah?
That's been the tech call for you know, such a long time, for a lot of different names, and Gene has been there doing this stuff for a long time and he's got the perspective. So we really appreciate getting
a few minutes at Gene Monster's time, folks. Again, he was there for you know, the birth of the Internet literally and calling it from an investment perspective, helping people understand what this whole internet thing is, and he's doing the same thing here for us and for a lot of his clients as it relates to AI.
We appreciate that.
Genemunster, managing partner co founder at Loop Ventures out there in that tech hub of Minneapolis. Oh Yeshoda, here you.
Go, There you go.
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So then let's get to the markets and kind of what do you do when we have a continued tariff threat. It feels like we are counting down by days until we get that twenty five percent tariff on goods from Canada and Mexico in additional ten percent and Chinese goods markets mixed Nastak still off by four tens to one percent. We cannot seem to keep the rebound that we see in the future's market. Well. Joining us now for more on how to handle it is Frank Makram. He is
head of Macro Trading over at Buffalo by You. He joins us on the markets. Frank, you've been in this market for a long time. How do you protect yourself right now?
Listen, it's it's it's an exercise that requires kind of short term protection that long term action here in the short term obviously, if you're worried about you know, the vicissitudes of having headlines after headlines around, you know, the policy agenda coming from the administration, then I think you've got to You've got several instruments that you can use, whether it's in an equities market, you've got to got
short term options. Even though the this is kind of up up to eighteen nineteen close to twenty is still relatively you know, fairly priced in my opinion, based on the level of uncertainty that we've still seen in the marketplace. But if you if you're you know, willing to kind of ride it out, I think we're probably going to
be in the choppy range here for a while. And if you're medium to long term view as that, you know, we we we're looking to probably see a bit of a correction here in the markets, and I think, you know, downside protection looks really really cheap in my opinion. You know, we're we're in a situation where it's really hard for equities to really get to escape velocity to the upside given all the uncertainty. Given word about euations are I'm not saying, you know, you want to be bearished, but
it's just the key word is of vulnerability. Market is super vulnerable when you're when you're trading out these kinds of evaluations and you've got this uncertainty and you've got you know, the deep seek thing is nothing to scuff scuff at. I think you know, we see the video earnings yesterday that are failing to kind of lift the market up. That says a lot about the momentum.
But on the flip side, I would have said I kind of went into yesterday frank saying I thought the risk of the market within video was everybody's been asking for or saying, why don't we get a real correction, you know, seven, eight, ten, twelve percent correction, And if a video really disappointed last night, maybe that would have been a capaist. Their numbers were kind of good enough just to kind of keep everybody kind of happy.
I guess no, for sure, I think the numbers were I think, all things considered, kind of middle of the road, and you know, it allows us to remain kind of steady here. But this vulnerability, to me isn't gone right. I mean, we've seeing some more terrorists headlines today. There's a sense that the market is seeing a bit of sort of terrorists fatigue here a little bit, yeah, little.
You definitely seen that being reflected in the bond market, where you know, initially you saw bonds, you know, so selling off pretty aggressively with tens, you know, testing again three sixty three seven year almost.
But now we're back to three twenty five, three thirty.
Level, and you know it just kind of goes to show that the you know, the convexity for bonds remains kind of to the downside and on yields given I think one the fact that you know, I think growth is you know, growless what we say, you know, terras. There's an inflation risk there, but it's inflation expectations more
so than anything else. But growth is a is a presently observable data you can see, right, and the economic indicators have been kind of rolling over economy surprises are coming off, and you have also had an administration that's been adamant in terms of trying to bring yields down. So whenever you're seeing you know, kind of growth data looking like it's softening a little bit, I think yields
are are going to come off pretty substantially. And I think one of the things also that I've I've looked at over the last you know, a couple of weeks here is how gold as kind of been looks like it's you know, pausing a little bit, and what's happening there because I think a lot of the safe haven flows have been going into gold because obviously, you know, treasuries have been kind of not very desirable at this
morning time. But now that treasury has seen a bit again, you know, gold is kind of you know, being kind of left often not more necessarily, but you know you're seeing some some profit taking happening with obviously crypto also coming off, So that's also something I'm keeping an eye on as as it pertains to the relationship between gold and treasuries.
What about oil? So used to work at gun Bore, which is an oil training firm. This is a few years ago. Yeah, but when you look at where we are in oil right now, what are the good trades? Like, what range are we in? What are you looking at?
Listen for it? Right?
I mean if you think about you know, since the beginning of year, what's what's been the biggest theme for to me, it's been everybody's focused on on policy agenda and all the terriff rhetoric. That's that's that's fine. But to me, what's been on wavering from Washington, it's been that they're pretty adamant on making sure that energy prices stay in check. You know, they ran on you know, fighting inflation. I don't think they're going to let that happen.
So, you know, I feel like you know, there is a.
Sort of call option from this administration on oil spiking, especially with Saudi's having so much spare capacity, and frankly speaking, I feel like at least based on the rhetoric, they've been pretty de escalatory from a geopolitical standpoint. So it's it's hard really so that the right tail to oil prices now to me is a lot betterer. Yeah, right, but trading in from the downside and Trump be sure, there's why we.
Got the Venezuela headlines yesterday. Like oil didn't didn't do.
Any epecially didn't go anything. I think right now, we've seen a bit of a bounce today. Last time I checked this morning, we're up like a dollar or something or twenty out thirty. Yeah, that's just coming off of kind of over soul levels and the market is really really light in the positioning standpoint if you look at the open interest in the future's market, especially on WTI back to you know, like you know, eighteen months low here, and that's just kind of leaving the market vulnerable to
maybe a little bit of a short squeeze. But that is not really a sustainable rally, right, And what's what's really driving the old market these days is that you have very little positioning from you know, sort of manage money, so you have a lot of fast money type CTAs players that are in the market are whipping the market around and it just makes it vulnerable to test technical levels a lot faster than we think because the the sort of thematic participation into the way market really hasn't
been there. I mean, we've seen a lot of themes with gold, we've seen a lot of themes even with copper and the AI story, but by really hasn't had that strong of a theme. If anything, it's like, well, how low does you know the Trump administration one wants to see oil prices going, and what's the level that's going to make a bigger way comfortable in terms of
you know, break events. Right, So it's it's a market to me that that's still kind of verish, but you just got to be watchful of the fact that it's it's there's very little liquidity in the market because i mentioned manage money really isn't there, So you can see these random spikes that are just short squeezes that could you know, go a lot farther than you think. Sometimes you think it'll be two dollars, it can be five,
so you have to respect those. But but I still think it's a market that doub wants to go over.
All right, You got a great deep voice that this whole investing thing doesn't work.
You got a career in radio. I'm telling here right now.
Frank Macain, thank you, he said, of macrotrading a buffalo by you, which, by the way, is a whole nother discussion where that name comes from. But we'll talk about that at another time. So Frank, thanks very much for joining us here.
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Yeah