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1. Chaos is always just one tweet away.

Trump said he would save Hollywood, announcing 100% tariffs on foreign-made movies, whatever that could mean.

Industry stocks were falling , as it was not clear how the White House would implement levies on intellectual property. Did it mean all streaming from outside the country as well? Would Formula 1 races in Dubai get a surcharge for American audiences?

The largest content producers felt the sell-off, with Netflix, Warner Bros. Discovery, and Walt Disney falling. According to production tech firm ProdPro, in 2023, about half of U.S. production spending went outside the U.S., for projects over $10M. It’s not just Hollywood that should be worried. Axios reported that up until now, tariffs have focused on physical shipments.

70% of the U.S. economy is “services”, including tech subscriptions and financial products. No one makes goods in the U.S. anymore, but the U.S. is one of the wealthiest countries in the world largely because of its intellectual property.

If the White House starts taxing ideas like they have shipping containers… no one knows what could happen.

Meanwhile, the S&P 500 will still finish the year at 7,000 says Wells Fargo. They're not budging.

2. European first quarter earnings look solid.

European firms are reporting earnings signifcantly ahead of expectations allowing for some relief in the market but tariffs and the uncertain path of economic growth continue to cloud the outlook.

European firms in the MSCI Europe index are averaging earnings growth of 3.8% so far, outpacing pre-season estimates of a 1.4% decline, with half of the index’s market value having reported. Sales growth for the basket of European firms is also currently ahead of estimates, Bloomberg Intelligence data shows.

“First quarter earnings look solid with blended EPS starting to inflect higher, but top-line beats have been tepid,” say Barclays strategists including Magesh Kumar Chandrasekaran and Emmanuel Cau.

For now, investors seem to be taking the glass half-full approach. Amid signs of a potential thawing in trade tensions, the Stoxx Europe 600 Index posted its ninth straight advance on Friday, recovering to pre-tariff announcement levels.

In terms of earnings, the positive surprise is being led by firms in the pharmaceutical, banking and technology sectors, which were also top performers in the fourth-quarter earnings season.

Defensives have been delivering better than cyclicals, Barclays’ Cau says, with health care and utilities delivering the bulk of the beats while financials and technology follow closely behind.

3. Goldman Sachs’ model says US recession probability is (only) at 23% within the next year. Much ado about nothing then?

Regardless, even absent recession, the risk of an extended period of soft growth should also be a concern.

One factor underlying this risk is a lack of potential policy offsets, particularly in the US where the Fed is likely to remain on extended hold.

4. Regulation is big business.

The Testing, Inspection and Certification (TIC) industry plays a crucial role in ensuring quality, safety, and compliance across global supply chains and industries.

However, many investors and prospective investors struggle to understand what the Testing and Inspection companies do, given the vast array of countries, industries andclients they serve – from electronics to clothing, and from offshore oil to aviation.

With strong structural growth drivers, attractive financial characteristics, and ongoing consolidation opportunities, this sector is well-positioned for continued growth and margin expansion, and outperformance vs the rest of the sector.

The Testing, Inspection and Certification market totals ~€300bn according to Bureau Veritas and is forecast to grow at mid single digit per year to 2030.

Here are the main players in this sector.

5. Next gen defense tech is AI-enabled.

The utility of low-cost aerial vehicles is being proven real-time on the battlefield in Ukraine, and the US Defense Department (DoD) and others are digesting important lessons from history’s first true ‘drone war.’ The US has accelerated investments in these capabilities and are building an AI pilot capable of commanding swarms of diverse drones and aircraft in high threat environments.

“Hivemind” is an AI autonomy platform that allows for centralized control of a wide range of unmanned systems to execute complex missions in disrupted and ommunications-denied environments. Using Hivemind, militaries can simultaneously operate diverse swarms of unmanned platforms including large drones, quadcopters, and fighter jets for missions including surveillance, close quarters combat, and dogfights.

Needless to say, the US Defense Industry will benefit from an expected ~$1 trillion US Defense budget in FY26 – the highest in history.

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