1. “Trump may put US into a recession.”

The trade war has begun, with Donald Trump saying that 25% taxes on imports from Mexico and Canada will begin on tuesday. He also slapped another 10% tariff on imports from China, bringing the total rate to 20%.

Concerns about the tariff impact are beginning to surface.

“They’re an act of war, to some degree,” Berkshire Hathaway (BRK-B) CEO Warren Buffett said in a new CBS News interview on Sunday. “Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!

EY chief economist Greg Daco estimated US GDP would contract by 1.5% in 2025 and 2.1% in 2026 if the tariffs kick in, as they would "dampen" consumer spending and business investment. Inflation would rise by about 0.7% in the first quarter, Daco projected.

"A full-scale US trade war against the world would deliver a 'stagflationary shock' to the US economy," Apollo Global chief economist Torsten Sløk said.

2. More big tech pain.

Here is the MAG7 versus the S&P equally weighted year-to-date.

3. Europe’s rearmament cycle is for real.

There is a new political consensus in Europe in support of higher defense spending. Europe needs to address 30 years of underinvestment in defense and the US might be less willing to subsidise Europe’s defense. Also, Europe will progressively seek to produce more of its own military equipment and import less from the US.

The events of the last two weeks have turbo-charged this thesis. In the last two weeks Denmark and the UK have announced significant increases in their defence budgets and Germany’s new Chancellor has proposed a new €200bn Special Defence Fund for Germany alone.

There are 30 European countries in NATO and we expect many of them will soon commit to much higher defense spending.

Here is the ETF since the start of the war.

4. Morgan Stanley reinstates Tesla as ’Top Pick’ with nearly 50% upside to its target.

Tesla’s auto deliveries have softened, but Morgan Stanley views the company as transitioning from an automotive “pure play” to “a highly diversified play on AI and robotics.”

The bank expects Tesla’s total addressable market (TAM) to expand significantly as AI moves from the digital world to the physical realm, encompassing broader domains beyond just autonomous vehicles.

One of the key drivers of Tesla’s upside is its potential in humanoid robotics.

Morgan Stanley analysts led by Adam Jonas note that "every 1% of US labor force that can be captured by Tesla Optimus is worth approximately $100/TSLA share." They see growing investor attention in this segment, with the potential for humanoid robots to be a larger opportunity than autonomous vehicles.

5. Microstrategy and Coinbase are getting a (small) boost on speculation about the U.S. government building a crypto reserve.

Trump announced that a strategic reserve would include additional tokens that would require tens of billions in taxpayer cash.

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