Tips to hedge against tariff volatility

Summary

Highlights

• Peter Harrell emphasizes the targeted nature of the Trump administration's tariffs, urging caution until the final announcement. 📢
• Fernando Valet remains bullish on copper, expecting price acceleration driven by stimulus efforts from China and Europe. 🔋
• Greg Miglori advises consumers on navigating potential car price increases due to upcoming tariffs, proposing quick actions. 🚗
• Harrell discusses the impacts of tariffs on U.S. manufacturing and globalization, noting possible cost increases in industries. 🌐
• Valet points out the strong demand for copper amidst geopolitical tensions and economic shifts, influencing metal prices. 💰
• Miglori highlights the complexity of auto markets with mixed impacts on different manufacturers and consumer price hikes. 🚙

Key Takeaways

• Tariffs under the Trump administration are shifting towards a more targeted approach—expect a rollercoaster of market reactions! 🎢
• Investors and companies should brace for potential earnings hits from increased tariff costs, especially in industries reliant on imports. 💸
• The copper market is bullish, riding the wave of potential tariffs and global economic stimuli—keep an eye on these metal marvels! 🔍
• Auto companies and consumers need to buckle up for potential price hikes due to impending car tariffs—strategize your next buy! 🚗
• With global trade dynamics in flux, it's crucial to stay informed and agile in investment strategies to weather tariff volatility. 📈

Overview

Chapters

• 00:00 - 01:00: Introduction and Market Overview The chapter titled 'Introduction and Market Overview' discusses the challenges faced in the first quarter, marked by market uncertainty and volatility due to the announcement of targeted auto tariffs effective April 2nd. It includes strategies for investors to hedge against market swings. Peter Harrell from the Carnegie Endowment for International Peace provides insights into the implications of the new tariff plan. The chapter ends with a note on US stock futures gaining in anticipation of the Trump administration's tariff announcements.
• 01:00 - 07:00: Discussion with Peter Harrell on Tariffs The chapter discusses the market's reaction to the president's threats of tariffs, which have caused anxiety and volatility on Wall Street. Bloomberg and the Wall Street Journal report a sign of relief for the markets, indicating a potential easing of tensions. Peter Harrell, a non-resident fellow at the Carnegie, joins the discussion to explore the possible outcomes of the tariff threats and their impact on the economy.
• 07:00 - 14:00: Copper Prices and Tariff Impact with Fernando Valet The chapter features Fernando Valet, a former senior director for international economics and competitiveness at the National Security Council during the Biden administration. The discussion revolves around how the Trump administration's tariffs were applied, suggesting they might have been more targeted than previously perceived. The implications of these tariffs on CEOs and businesses are also considered, particularly regarding international competitiveness and economic strategy.
• 14:00 - 17:00: Potential Ceasefire Impact on Oil Prices The chapter discusses the potential impact of a ceasefire on oil prices, contextualized within the broader dynamics of the Trump administration's approach to tariffs. It highlights the uncertainty in policy communication until official announcements are made, noting an observed shift in tone from administration officials. The chapter underscores that definitive outcomes will not be clear until specific dates, like April 2nd, when formal decisions are expected.
• 17:00 - 19:00: Impact of Auto Tariffs with Greg Miglori The chapter discusses the potential impact of auto tariffs, featuring insights from Greg Miglori. It highlights that while there is a significant plan for imposing tariffs, the extent might not be as broad as initially expected. The administration appears to be considering a narrower focus for these tariffs as opposed to what was discussed weeks earlier. However, it still represents a considerable range of tariffs.
• 19:00 - 26:00: Effects on Consumers and Auto Industry In this chapter, the focus is on the potential effects of reciprocal tariffs on consumers and the auto industry. A significant transition is noted in the administration's approach to international trade policies, specifically targeting America's largest trading partners. Countries like Vietnam and certain European nations are mentioned as key targets for these tariffs. The chapter may delve into the implications of these tariffs on the U.S. economy, especially in terms of consumer costs and the automotive sector's response.
• 26:00 - 29:00: Impact on Tesla and Conclusion The chapter discusses the impact on Tesla with regard to trade partnerships and tariff rates. There is talk of a potential decrease in expected rate percentages, possibly lower than the previously speculated 25-30%. Additionally, it is noted that although reciprocal tariffs are in place, there will likely be no additional sectoral tariffs added at the moment.

Tips to hedge against tariff volatility Transcription

• 00:00 - 00:30 q1 has been riddled with market uncertainty and volatility especially with the announcement of a more targeted auto tariff approach set to take effect on April 2nd We break down how investors can hedge against market swings First up Peter Harrell non-resident fellow at the Carnegie Endowment for International Peace joins us to discuss the implications of the new tariff plan US stock futures pushing higher today on reports that the Trump administration's coming wave of tariffs will be more
• 00:30 - 01:00 targeted than the barrage that the president has occasionally threatened According to reporting from Bloomberg and the Wall Street Journal it's a sign of relief for markets grippled by anxiety gripped by this anxiety crippled in some cases and you can merge the two words together if you'd like to like I did But ultimately that anxiety has knocked around Wall Street because of the threat of an all-out tariff war Joining us now to discuss how this will all play out we've got Peter Harrell who is a non-resident fellow at the Carnegie
• 01:00 - 01:30 Endowment for the International Peace He previously served as senior director for international economics and competitiveness in the National Security Council during the Biden administration Great to have you here with us this morning So this is what we had been discussing and the mindset around the Trump administration potentially being more targeted than just wide ranging and sweeping tariffs How should we be thinking about this now going forward and for what CEOs have been trying to do and making sure that they're clear of
• 01:30 - 02:00 some of the tariffs that are coming forward Well thanks for having me on uh this morning You know I keep two things in mind when I think about the Trump administration and tariffs You know first being as we've seen over the last two months nothing's final till the president says it's final So we're clearly seeing a shift in tone out of administration officials speaking to the press out of administration officials you talk to privately but I do think we have to keep in mind nothing's going to be final until April 2nd when the
• 02:00 - 02:30 president actually rolls it out With that big caveat we do see some evidence uh that at least the cabinet at least the senior members of the administration around the president are now planning for a somewhat narrower set of tariffs on April 2nd uh than we had been hearing about a couple of weeks ago Though it's important to understand that this is still a quite broad set of tariffs just not as kind of spectacularly broad uh as
• 02:30 - 03:00 it could have been uh a couple of couple of weeks ago I think we see two big changes again in terms of the messaging coming out of the administration So the the first thing is they're they're talking about imposing these quote unquote reciprocal tariffs only on a subset of America's trading partners Now these are going to be America's biggest trading partners You know they're talking about doing it on you know countries like Vietnam on some of the European uh countries that are are our biggest trading partners So while it
• 03:00 - 03:30 will be a subset of our trading partners it will be a large share of trade The other thing two important things are talking about is it looks like the you know potential rate might be a little bit lower uh than the sort of 25 30% some of us had been thinking uh a couple of weeks ago So we might be seeing a a somewhat uh lower uh rate And then they're making clear that they will not at least for now probably be stacking sectoral tariffs on top of these reciprocal tariffs And just to briefly
• 03:30 - 04:00 give a sense of what that means If you have stacked tariffs and you have a 25% metal tariff and a 20% reciprocal tariff that's actually a 45% tariff And they're now talking about putting that on hold But but still expecting some big announcements on April too Who is behind these headlines that we're getting on tariff changes from the White House Peter and I ask because I think it's important for investors to know whether President Trump actually does care what the market's doing and therefore is walking back his tariff policies behind
• 04:00 - 04:30 closed doors or if this is just the economic side of the White House trying to appease the market and this is kind of much a do about nothing I think this is the big question I mean just in the last couple of days we've definitely seen National Economic Council Director Hasset We've seen Treasury Secretary Bessant all talk about the narrower scope We've also seen some information uh that I think has been attributed to Secretary Lutnik over at Commerce who of course has been a major hawk within the administration So we're definitely seeing this out of multiple points in
• 04:30 - 05:00 the cabinet That said I think you are making exactly the right point We don't know that this is going to be narrower until we actually see what the president says And I use the the the Canada Mexico tariffs as an example where some of the economic side of the house had not wanted 25% tariffs on Canada and Mexico Trump brought them into force There was a bad market reaction They then pulled back So uh I think the market is resonating but whether it has really gotten through to the president himself
• 05:00 - 05:30 I think remains a bit TBD How much do you think globalization is is baked into so many companies valuations and growth as it specifically relates as well to the US growth in itself as we think about how these companies contribute to GDP that's a larger consideration if we're now cutting off some of those larger globalization efforts of the past Yeah So so clearly you know the president campaigned on an anti-globalization agenda and on as he
• 05:30 - 06:00 puts it America first agenda So it's not surprising to see this playing out That said I do think you know as you say when we look at these sweeping tariffs there are ways in which these sweeping tariffs actually undermine efforts to rebuild American manufacturing You know if you have 15 20% tariffs on auto parts that then are going into autos that are being assembled in the United States that's actually increasing the cost of building
• 06:00 - 06:30 autos here in the US Another example that I think the administration is going to have to grapple with You know the tools to make uh computer chips semiconductor manufacturing tools a lot of them are made in Europe and in Japan Uh and they cost like a hundred million dollars a piece And so if you put a 20 25% tariff on that you're actually going to increase the cost of making computer chips uh here in the United States I think they really need to grapple with is this really broad approach to tariffs
• 06:30 - 07:00 the right way to accomplish their objective of rebuilding manufacturing or should we have something a bit more targeted one final uh point because you you you talked about earnings Look I think that you know big US corporates have a low tariff environment heavily baked into their uh earnings uh uh sort of earnings estimates you know one estimate I saw a couple of weeks ago uh before we've gotten these narrower reports but you know the initial kind of reports of 20 25% reciprocal tariffs on
• 07:00 - 07:30 pretty much everyone could have been a you know 16% hit to S&P 500 earnings uh this year because you know that would be the cost of actually paying the tariff So I think there are some real potential earnings implications uh here for companies that are dependent on imports Peter great to see you this morning Thanks so much for taking the time with us Next find out why Fernando Valet hedge eye energy analyst expects copper prices to
• 07:30 - 08:00 accelerate Copper prices surge following reports of a potential new copper tariff Fernando Valet hedgei energy analyst joins us to share why he remains bullish on the metal US tariffs on copper imports could be coming within weeks according to reporting from Bloomberg Copper traded in New York surged to a record on the report President Trump previously ordered an investigation into potential tariffs on the metal to be resolved within 270 days Now appears the report may be coming much sooner Joining
• 08:00 - 08:30 us to discuss Fernando Valet hedge eye energy analyst Fernando thank you so much for joining us here I want to pull up a chart if we can Just taking a look at copper prices state side hitting a record here outperforming copper prices on the London Metal Exchange I wonder where you see New York copper prices going particularly given just the shift that we've seen in metals prices and kind of the impact of tariff prices on precious metals like copper
• 08:30 - 09:00 Well we've been uh bullish on on copper despite what we define as a quad four environment in the US which is essentially what we're having uh inflation accelerating and uh just lower growth Uh so the reason for that is exactly what you mentioned is we think copper will follow a similar trend to what steel has done um which is ramp uh on the back of tariffs Uh the the big issue that we see is that uh on our trading ranges is getting close to the
• 09:00 - 09:30 top of the range and so there might be some limited room here uh to grow We we think that that's already a little bit front run as it as it goes uh but you the one thing that I'll caveat that is we're expecting to see a large stimuli from uh from uh Europe and uh China specifically uh which has been the largest buyer of copper and that could be a significant impact positive impact uh even after the tariffs So to what extent do you think we're nearing a top with copper given the multitude of
• 09:30 - 10:00 factors that you just laid out so at the in the near term it's at the top of our range So we think we're we're we're coming close to to that to that near-term peak Got it And I wonder how you're thinking about just the shift in metals prices overall and how big an impact that could have on the prices of other you know goods that obviously these metals are put into in the United States in particular How should we be thinking about the impact that this lift in copper prices could be having just on
• 10:00 - 10:30 everyday products so the the near-term the biggest copper goes primarily into the construction side in the US uh we are already seeing it we've seen a slowdown there uh on the overall construction so we aren't expecting to see again a huge impact near term um we are the biggest factor for us has been the slowdown uh from the economy itself obviously you've had deflationary measures uh in with Doge
• 10:30 - 11:00 and others cutting some of that consumption uh so when it comes into April we expect to see a little bit more of an acceleration we incrementally more positive But in the near term we've seen more we we've been very bearish on the on US consumption We've actually seen capital flows going outside the US as I mentioned to Europe and Asia where you're getting uh more stimuli and potentially recovery from what has been a very dire uh previous period Fernando with the uh strength in China
• 11:00 - 11:30 and the pivot for them to increase their economic growth they're they're putting lots of orders in and buying lots of copper They're one of the biggest importers of copper uh in the world But with supply imbalances the way they are right now are they are they willing to to pay these high dollar prices uh for for copper just to keep their economy going and if their supply imbalances continue we could see lower prices for copper down the road this is what you're pointing towards as far as a peak in in prices for copper Yeah And well no more
• 11:30 - 12:00 in the near term has been the US demand side being weaker because as we we said that that quad 4 is biting right now Uh as you mentioned China I think there the stimuli is because their economy is struggling and so they are going to try to to increase demand is the same thing that we've said on the natural gas side uh with the caveat the natural gas has already been strong because of the the inclement weather in the northern hemisphere over the winter Uh we think there's going to be an increase in
• 12:00 - 12:30 demand because uh Europe and China are are stimulating their economies whereas the US has been trying to contract or at least trying to reduce some of the deficit with uh again acts like doge and others trying to cartail some demand and then just the effect of prices itself going into April we see an acceleration in in in overall demand and that could be positive for copper I want to switch gears a bit Fernando and talk to you about oil Obviously a lot of headlines impacting oil right now but I
• 12:30 - 13:00 specifically want to talk to you about this idea that we may be moving towards a ceasefire between Russia and Ukraine I I first of all wonder if you buy that idea that we are moving towards a ceasefire but also to what extent you think the end of this war could impact oil prices if at all just given the fact that we do know that China and India have been purchasing oil from Russia this whole time Yeah as you said there's very limited impact on the overall uh supply of crude In fact crude itself could decrease because one of the areas
• 13:00 - 13:30 that Ukraine has attacked in the near term has been uh refineries and other infrastructure within Russia So there may be fewer crude exports and more uh refined product exports from from Russia uh if there is a ceasefire as far as you know the the likelihood of a ceasefire I I I'm an oil guy and my geopolitics are not as as strong but you know I I I take everything with a grain of salt uh covering energy for 15 years you've seen that governments come uh come and go in
• 13:30 - 14:00 their promises u I I think the overall impact on the oil side again the stimuli uh in these uh economies would be a much bigger driver than the supply chain because again as you said that oil is already getting to the market If anything it helps reduce some of the differential prices between Russian crude and others increases the competition So it could be bad for example for WTI versus Brent but not necessarily for the overall Brent price Well we always appreciate your
• 14:00 - 14:30 geopolitical takes Fernando Thank you so much for joining us this morning Appreciate it Thank you Coming up Greg Miglori AutoGu's editorial director breaks down the winners and losers of the Trump administration's 25% tariff on imported cars Looking to capitalize on Trump's auto tariff Greg Miglori Auto Guides editorial director shares insights on potential opportunities for both investors and consumers Shares of US and
• 14:30 - 15:00 international automakers moving to the downside after President Trump's announcement of 25% tariffs on all cars imported into the US and some auto parts starting next week So who are on the winners and losers list of the trade war here joining us now to break it all down Greg Miglori Auto Guide editorial director here Greg great to have you here with us to help us really parse through what we do and what we don't know at this juncture But let's just start with your assessment of some of
• 15:00 - 15:30 the winners and losers on kind of both sides of the column here Hey good morning Brad Uh thanks for having me It's a It's kind of a complicated situation because no vehicle I think is entirely Americanmade uh or fully imported You know parts are sourced It's a global economy They're sourced from all over So you look at the companies that are best positioned to perhaps weather this out and that's Tesla likely You've got the Detroit 3 Ford General Motors and Stalantis are in better
• 15:30 - 16:00 positions but I think it's also fairly inconvenient for them because while they do rely on their US footprint they also have many factories in Canada and Mexico I think of those three Ford is probably uh relies most on you know US production though so they're going to come out a little bit better right now And then you kind of break it down into the different international automakers Honda is in pretty good shape actually They make a fair amount of their vehicles in the US Toyota it's a little bit of a mixed bag The Tacoma uh comes from Mexico so that
• 16:00 - 16:30 could be subject to tariffs On the other hand the Tundra is built in Texas The Toyota Camry top seller built in Kentucky So it's a bit of a mix a mixed bag for them Then you have companies like BMW and Mercedes that do have factories in the south in the American South the Southeast but they don't have nearly as much production here as some of the others So their exposure is going to be greater and it's you know I think at the end of the day you put consumers also in the the bucket of perhaps people
• 16:30 - 17:00 who will be most affected perhaps losers because most likely you know we're going to see price increases five to maybe $12,000 increases depending on the vehicle and perhaps you know how severely they're impacted Greg let's pause there for our viewers who are not just investors but also everyday consumers help us understand where consumers who are in in the unfortunate position of needing to buy a car at the moment would potentially see the biggest price increases Are used cars going to
• 17:00 - 17:30 potentially increase as well we've already seen this record run up in the consumer price index when it comes to new cars How should consumers be thinking about where they might be able to find some opportunity so right now I think if you're in the market you really want to just have your head almost like on a swivel I think you want to be aggressive I think you want to look at used cars because I think while the intent of the tariffs is to try to uh you know increase production in the United States what's going to happen is used car prices are going to
• 17:30 - 18:00 go up Just it's a supply and demand simple economics uh issue So used car prices are going to go up You're going to want to probably do as good as you can to try to get a good loan if that's what you're looking to do to finance your new vehicle or your used vehicle And it just makes the car buying process much more complicated Now I think you might see dealers maybe a little more willing to deal because they know their situation uh you know after April 2nd is going to get more and more complicated So perhaps you know in the next couple days even this weekend you might want to
• 18:00 - 18:30 try to really get in there and see what you can do as far as perhaps getting a new or used car because it's I mean complicated is just underelling it because right now we don't even we know what vehicles and what companies will be affected But then you start to drill down deeper and it's like even Teslas are only about 80% made in the United States The Ford Mustang is about 80% US parts because not every single part is built in the US So it's it's it's going to be quite complicated And so Greg all
• 18:30 - 19:00 this in mind what season of vehicles I mean because as we'd know typically some of the 2026 vehicles would make it onto dealership lots and whatnot by late summer early fall So it sounds like is this a current this year problem or a next year's vehicles that are in production right now type of problem oh it it will be immediately for this year because the car companies you know they they have to follow the law So they're going to have to figure out how to apply
• 19:00 - 19:30 the tariffs and how to uh break down which ones may or may not be subject to the US Canada Mexico um agreement which was passed in 2020 by by the first Trump administration So they need to kind of parse all of that out But I mean after you know April 2nd you know it's you know we're going live You know these things are going to happen So it's you know it's going to be an immediate impact for consumers and for automakers Greg 30 seconds here I want to talk about Tesla before we let you go Elon
• 19:30 - 20:00 Musk saying the cost impact on Tesla's is not trivial when it comes to tariffs breaking his three-year streak of not posting about tariffs on X How should investors and consumers be thinking about the impact on Tesla so I think for Tesla you're going to look at a couple things One is pricing but Elon Musk has shown an ability to be very flexible with pricing He will be aggressive He will pull back He's sometimes he's all over the map with pricing I think with Tesla the big concern for investors is what is their core model elon Musk
• 20:00 - 20:30 hasn't been focused very much on building cars in the last probably two months I think you want to figure out what are they are they a car company are they an AI company uh those are the big questions I have because right now obviously Elon Musk seems quite distracted from the task at hand to Tesla Optimus wants to know if they're a humanoid robot company Greg that's true That's a cool one Thanks for watching Stay tuned to Yahoo Finance for the latest financial news and updates