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Tariffs Crush Profits

Axios Markets by Emily Peck One reason CEOs are so keen on becoming Donald Trump’s new besties: The incoming president could make their profits go poof. Why it matters: The president-elect’s proposed tariffs are so high they could entirely wipe out the annual profits of some large companies, per an analysis from consulting firm PWC. Of course, companies won’t sit idly by and let that happen — those costs will likely be passed along to American consumers. Catch up fast: Trump said last month on Truth Social he’d put 25% tariffs on all goods coming from Canada and Mexico — the two largest U.S. trading partners — as soon as he takes office. That’s on top of tariffs of 60% or more on goods from China, and 10% to 20% tariffs on imports from the rest of the world. Zoom out: These measures could increase the amount of money businesses pay in tariffs by more than 400%, per a data analysis that PWC conducts for clients using company-specific data from U.S. Customs. Zoom in: The modeling looks at worst-case scenarios. When Trump says all goods will be tariffed, companies take that seriously, says Chris Desmond, a PWC principal for customs and international trade. Behind the scenes, the Trump team is telling corporate consultants that there’s no budging the president-elect on his tariff stance, the Wall Street Journal reported. PWC’s model finds tariff increases are often larger than an importer’s annual profits across a range of industries including autos, retailers, communications equipment-makers, and companies that import fruits and vegetables. That’s leading companies to question if they can change their supply chain strategies to adjust or pass costs to consumers, Desmond says. Reality check: It’s certainly possible some firms that import goods may absorb these costs and accept lower profit margins, but many have already said they will pass the increased costs through. Flashback: Not only do companies pass through tariff costs to consumers, sometimes they take the opportunity to raise prices on other goods, too. After the 2018 tariffs on washing machines hit, the price of dryers — which weren’t tariffed — went up too, per research published in the American Economic Review in 2020. The bottom line: Lots of uncertainty out there, but it’s a safe bet that companies won’t just sit by and let their profits disappear. submitted by /u/FXgram_ [link] [comments]

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El Salvador to Restrict Bitcoin Use in Exchange for IMF Loan: El Salvador has struck a deal with the International Monetary Fund, securing an initial loan of $1.4 billion. As part of the agreement, the country will repeal the mandate requiring businesses to accept Bitcoin as payment.

Since 2021, Bitcoin has been recognized as legal tender in El Salvador alongside the US dollar. Additionally, the government has been purchasing one Bitcoin daily, accumulating 5,968 BTC (~$609 million) in its official state wallet. According to the IMF, Bitcoin-related activities in the public sector, including purchases and transactions, will be restricted. However, specific details of these restrictions remain unclear, and the government continues its daily Bitcoin purchases. The IMF will also require El Salvadoran citizens to pay taxes exclusively in US dollars and will gradually phase out the government’s involvement with Chivo, the state-run Bitcoin wallet. “Transparency, regulation, and oversight of digital assets will be strengthened to ensure financial stability, consumer and investor protection, and financial integrity,” the IMF stated. Other objectives of the IMF agreement include tax reforms aimed at reducing national debt and enhancing budget transparency and efficiency. submitted by /u/XGramatik [link] [comments]

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📊🤓🤔EUR/USD Let’s go🔥 After the FOMC meeting, EURUSD fell sharply, forming an FVG. The price bounced off support, and CCI and RSI came out of oversold, which makes it possible to consider a small bounce.

📊🤓🤔EUR/USD Let’s go🔥 After the FOMC meeting, EURUSD fell sharply, forming an FVG. The price bounced off support, and CCI and RSI came out of oversold, which makes it possible to consider a small bounce. submitted by /u/Yuriy_UK [link] [comments]

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Yemeni Houthis Decided to Visit Hell Before Christmas. Last night, the Houthis fired another ballistic missile at Israel, triggering several waves of Israeli Air Force strikes in response. These militants seem intent on regressing not just to the Stone Age but far beyond.

At 03:36, sirens sounded in central Israel as the Arrow missile defense system intercepted a rocket launched by Yemeni Houthi fighters. There were no casualties, but significant damage was reported. By morning, it became clear that Israel had responded to recent Houthi attacks with a series of bombings targeting critical sites in Yemen’s ports and its capital, Sana’a, which has been under the control of the pro-Iranian “Ansarullah” (Houthis) group since 2015. The first wave of airstrikes began at 03:15, targeting the ports of Hodeidah, Ras Isa, and Al-Salif. Israeli jets destroyed all tugboats used to guide ships into the ports. This cripples the unloading of various vessels, including tankers, and severely disrupts Iran’s arms smuggling logistics. The strikes, carried out 1,700 km away from Israel, required mid-air refueling and involved 14 fighter jets, all of which returned safely. At 04:30, a second wave of strikes hit Sana’a, targeting fuel and oil reservoirs as well as a power station. The Houthis remain the last members of the Shiite “Axis of Resistance” who have yet to pay a high enough price to reconsider their aggressive plans. submitted by /u/XGramatik [link] [comments]

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SUMMARY OF FED DECISION (12/18/24):

Fed cuts rates by 25 bps for a total of 100 bps in 2024. Cleveland Fed President Beth Hammack dissented. Fed median forecasts shows 2 cuts in 2025 for 50 bps. Fed revises end of 2025 inflation projection from 2.1% up to 2.5%. Fed sees unemployment at 4.3% at end of 2025. One Fed official sees no rate cuts in 2025. The battle against inflation continues in 2025. submitted by /u/XGramatik [link] [comments]

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In this market, listening to alternative views is crucial. Former BitMEX CEO Arthur Hayes notes: “Crypto investors have high hopes for Trump’s swift changes, but the reality is he lacks politically viable solutions for rapid results.”

The crypto market may face a massive sell-off around Donald Trump’s inauguration, says former BitMEX CEO Arthur Hayes. His prediction stems from the belief that the U.S. president-elect won’t be able to quickly deliver on his promises, leading disillusioned crypto investors to sell off their assets. “There’s a significant gap between crypto investors’ high expectations of how fast Trump can enact change and the reality that he lacks politically viable solutions to achieve such swift results,” Hayes stated. However, Hayes revealed he plans to buy Bitcoin during price dips, maintaining a positive outlook on its future. He predicts that after the “alarming downturn” near Trump’s inauguration, a “phase of acceleration and a bull market boom in crypto” will follow. Hayes also expressed skepticism about the creation of a Bitcoin reserve in the U.S., suggesting that politicians would rather use newly printed dollars for “gifts to the public” to secure their reelection. submitted by /u/XGramatik [link] [comments]

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TKL: The US stock market is now worth a record $64 trillion, making it larger than all other global equity markets combined.

The market capitalization of the US equity market has doubled over the last 4 years. Over the same time period, the value of all other stock markets has increased by ~$10 trillion or a mere 19%. Furthermore, over the last 10 years, US markets have added $40 trillion in value, doubling the return seen in all other markets combined. As a result, the US now reflects a record 74% of the MSCI World Index, even surpassing the 1970s high. The US market is MASSIVE. submitted by /u/XGramatik [link] [comments]

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