Dear valued client,
Markets are on track to lose ground this week amid forthcoming economic uncertainty. More on that below.Ukrainian President Volodymyr Zelensky is set to visit Washington, DC. to sign a minerals agreement with the United States, signaling a step toward peace amid ongoing tensions. This deal, which grants the U.S. access to Ukraine’s valuable rare earth metals, titanium, and lithium, follows a framework agreed upon by both nations, though it lacks explicit security guarantees, offering instead U.S. support for Ukraine’s pursuit of lasting peace. Despite diplomatic friction with European allies over UN resolutions marking the war’s third anniversary—where the U.S. favored neutral language over condemning Russia—the Trump administration appears poised to tie continued military aid to this mineral access, hinting at a broader negotiation. Zelensky, while pushing for better financial terms and firm security commitments, has expressed openness to stepping down if it secures peace or NATO membership for Ukraine, raising hopes that this visit could pave the way for a resolution to the conflict.
With potential peace on the horizon after three years of war that prompted a mass exodus of American companies, President Vladimir Putin is now signaling a desire to lure them back, touting opportunities in critical minerals mining, aluminum production, and titanium supplies, as highlighted in discussions with President Trump this week. However, experts caution that the political risks, shaky rule of law, and past losses—totaling $324 billion for U.S. firms since their 2022 withdrawal—make a return unlikely for many. Companies like ExxonMobil and Carlsberg, burned by asset seizures, and major players like Amazon, Apple, and McDonald’s, which severed ties, face a wary path forward, especially as local Russian producers have filled gaps left by Western exits. With Russia accounting for less than 1% of most multinationals’ pre-war revenues and its economy struggling, the potential rewards may not outweigh the hazards, leaving a full corporate comeback in doubt.
Apple announced a $500 billion investment plan to invigorate the U.S. economy over the next four years, focusing on advanced manufacturing and technology. The company will double its Advanced Manufacturing Fund to $10 billion to support domestic semiconductor production, including at Taiwan Semiconductor’s new Arizona plant, where Apple chip manufacturing kicked off last month, and will shift assembly of servers for its AI product, Apple Intelligence, to Houston from overseas. Additionally, Apple is launching a training academy in Detroit to help businesses adopt AI and upskill manufacturing workers while committing to hiring 20,000 U.S. employees for roles in research, semiconductor engineering, and AI development. The announcement, following CEO Tim Cook’s recent meeting with President Trump, dovetails with Trump’s economic priorities—especially as new tariffs, like a 10% duty on Chinese imports and a proposed 25% semiconductor tariff, threaten Apple’s margins—though analysts debate how much White House influence reshaped the plan.
Nvidia’s latest earnings report highlighted the enduring strength of the AI boom, with quarterly revenue soaring 78% to $39.3 billion and data center revenue—key to AI computing—nearly doubling to $35.6 billion, driven by robust demand for its new Blackwell chip series, which accounted for 28% of sales despite early production hiccups. The results, a relief after a 17% stock drop in January triggered by China’s DeepSeek unveiling a low-cost, open-source AI model, reaffirmed Nvidia’s pivotal role in powering AI, with CEO Jensen Huang dismissing overhype concerns. While the company outperformed Wall Street’s sales and profit forecasts, the earnings didn’t match the blockbuster highs of the past two years, leading to a slight dip in after-hours trading as investors tempered expectations. Nvidia’s performance, which fueled 22% of the S&P’s 2024 gains, remains a critical barometer for the AI sector, though future uncertainties loom, including potential US trade restrictions on China exports and the sustainability of massive data center investments by clients like Alphabet, Meta, and Amazon.
In a sharp U-turn, President Trump has confirmed that a 25% tariff on imports from Mexico and Canada will take effect on March 4, 2025, alongside an additional 10% tariff on Chinese goods, on top of an existing 10% duty. Initially paused earlier this month to address border security concerns—prompting Canada to appoint a “fentanyl czar” and Mexico to deploy 10,000 National Guard members to the U.S.–Mexico border—these measures failed to avert a broader trade conflict. Canadian energy products, such as oil and electricity, will face a reduced 10% tariff, while a separate 25% tariff on all steel and aluminum imports is set for March 12, affecting the U.S., which relies heavily on Canada for these materials. Trump’s tariff announcements, including a forthcoming reciprocal tariff plan expected on April 2, are already causing economic ripples: Canada’s election landscape is shifting as tariffs threaten its economy, while in the U.S., consumer sentiment and markets are declining, with businesses bracing for the impact on over $1 trillion in imports.
“Uncertainty actually is the friend of the buyer of long-term values.” – Warren Buffett
Have a good weekend,
PW
