1. US stock index futures are down more than 2% in early Asian trading hours, after US President Donald Trump imposed 10% tariffs on imports of Chinese products and levies of 25% on goods from Canada and Mexico.

“The markets have been very optimistic since the election, hoping to avoid significant tariffs like these — that has proven to be a mistake,” said Michael O’Rourke, chief market strategist at JonesTrading. “These tariffs crossed the finish line and it appears to be just the beginning.”

2. “US exceptionalism is now exceptionally expensive and exceptionally well-owned”, says Bank of America.

US big tech stocks are set to become the “Lagnificent 7” this year, Bank of America Corp.’s Michael Hartnett warned, suggesting investors should buy cheap international stocks instead of chasing pricey US shares.

The strategist, who coined the popular Magnificent Seven term, said investors have become overexposed to US equities after they attracted record inflows in January.

Those positions are at risk as spending on artificial intelligence is set to peak, Hartnett wrote in a note.

He also sees other catalysts of a US outperformance including excess fiscal support and immigration fading this year.

Hartnett is particularly positive on European and Japanese banks, calling both sectors cheap and “unloved” at a time when global business activity is turning a corner.

3. DAX versus M-DAX.

Germany is the most correlated to the ECB rate cuts and further easing should broaden the rally to the German midcaps. In case of a cease-fire in Ukraine, the M-DAX could also outperform.

The DAX (red) includes the 30 largest and most liquid companies listed on the Frankfurt Stock Exchange.

The MDAX (blue), on the other hand, includes the next 60 largest companies after the DAX constituents.

4. Tesla shares and profit estimates on opposite paths.

Tesla Inc.’s quarterly results this week has shown that profit and sales numbers don’t seem to matter much for this stock anymore. Instead, it’s Elon Musk’s narrative that’s wooing investors at the moment.

“The earnings were terrible, but this company is now all hopes and dreams for Musk’s vision of autonomous driving and robotaxi,” said Thomas Thornton, founder at Hedge Fund Telemetry.

Tesla is a major beneficiary of the Biden policies and stands to lose from any aggressive “Trump” rollbacks. At the same time, its robotaxi — on which a huge chunk of its $1.3 trillion market value rests — is far from a viable product right now, and it may be a while before it is ready for full commercial use.

Musk said the company expects to start offering a paid service in Austin this June, while Waymo has been operational for more than a year already.

5. When nobody was looking.

Shares of IBM, the 114-year-old tech firm, hit an all-time high last week. Buoyed by a strong earnings report that fueled AI enthusiasm, IBM’s stock rose 13%, its largest percentage increase since July 2000.

Bank of America analysts said that generative AI consulting is robust. Investors should expect software to continue driving growth in 2025, the analysts added.

It has finally caught up with the S&P.

Source: WSJ

6. Energy transition in full swing.

Batteries start playing a huge role in energy systems around the world.

Look at California - not long ago you wouldn’t even be able to see the contribution from batteries. Few expected batteries to ever be able to compete.

Today batteries can provide more than 20% of peak load in California.

Source: California ISO

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