The stance may be softening in the trade war between China and the United States.
Last week US President Trump said the initial 145 percent tariffs wouldn't actually be that high.
China appears to now be mulling their imposed tariffs.
Greg Smiths of Devon Funs Management talks to Mike Hosking about the developments, the trade war's impact on the US economy and the good news for US tech stocks.
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Episode Transcript
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Speaker 1 (00:00):
Devin Fund's management, Greg Smith, Morning to you, Morning to Mike. So,
tariff's story, according to Trump's done over two hundred deals,
so things must be coming right, would that be true
or not? Greg?
Speaker 2 (00:09):
Yeah, they might be stretching in a little bit, but
what we have to see, won't we But you're talking
about negotiations. It seems a little bit of brightness suppose
on both sides this obviously game of tariff chicken run. Yeah,
that big development last week was Trump saying that one
hundred and forty five percent tariffs on Chinese imports wouldn't
be that high, or that Chinese didn't need to give
them something though, and clean being open to having more
(00:30):
use goods being sold. So it does seem like the
stance is softening a bit. You know, you have to
think that you know the numbers and you put on
that board, you know, the the triple digit tariffs. Yeah,
pretty ridiculous when you sort of think about it. So
reports that Chinese obviously it's been going toe to toe.
They're mulling the suspension of the one hundred and twenty
five percent tariff and stuff like medical equipment, dustrial chemicals.
(00:50):
So you just won the mic we passed peak trade
war fare and had to investors have less calls to
be terrified about the outcome. Yeah, perhaps say there's been
a lot of bravado from the Tree administration, but yeah,
that I was thinking a lot of it was doing
with the initial tariff tantrum, which might be settling down
a bit. You know, maybe Trump realized there's a lot
of stuff that the US can't make and the qunscities
(01:11):
they need at anytime soon, particularly from China and iPhones
is just one example. So he obviously wants to back
down without losing face, and so it was all part
of the master plan. But you know, he said also
over the weekend that he considers tariffs of twenty to
fifty percent on foreign countries eth from now as being
a victory. And as you said, he reckons is around
a bit two hundred deals coming, he said China as
(01:32):
in fact that was Scott Best in the treaty Sectory
over the weekend said that there is a special negotiation
underway with China, so maybe more twists and turns. I
note that also reports that China is preparing contingency plans
in case things don't work out. So yeah, stay tuned.
Speaker 1 (01:48):
Okay, So how domestically is that affecting America yet?
Speaker 2 (01:50):
If it is, yeah, it is, so I think you know,
part of the softening of the stance is obviously the
stock market volatility, but it is also having a real
impact on the economy. So a few numbers here, So
on Friday, years existing home sales they fell almost six percent,
four million units. Immature existing homes jumped eight percent. Supplies
up nearly twenty percent on a year ago. So we've
(02:11):
got higher borron costs, and of course, you know the
terror policy is also complicating what the fedloks to do
on on bringing down rates further. You've got lumber prices
that are shooting up thanks to tariffs. You've got general
concerns over and economics slow down. You got new homes
in the tree that's at the high since late two
thousand and seven. Then you look at durable goods orders,
so you look at the proxy for business spending plans,
(02:33):
and you exclude aircraft from the equation. Eached up just
zero point one percent in March. So my businesses are
cautious this is going to filter through to the economy.
We've got GDP out this week for the March quarter,
we're expecting growth of just half percent, and that compares
to two point four percent in the fourth quarter. On
the manufactured goods print that did serge nine point two percent.
(02:55):
That that was driven by commercial aircraft orders and they
are up one hundred and thirty eight percent by head
on its website that it received one hundred and ninety
two aircraft orders in March from thirteen few. Of course,
China has a ban on the mious things stand and ironically,
tourism is looking like another drag on the economy. Mic
so foreign visitors to the US by AFOL nearly ten
(03:17):
percent of March four and a half million. Now, this
is a big concern for the US travel winds Street
brings in a trillion a year and meanwile inflation expectations
as we know. Picking up the final University of Michigan
survey had the one year outlook at six and a
half percent. Now that's the highest since November nineteen eighty one.
So yeah, tough spot for the feed mic Ortho. At
least Jerome Powell isn't in the firing line anymore according
(03:39):
to Trump.
Speaker 1 (03:40):
Now, and then we got Alphabet who came to the
party with some some nice eye watering numbers.
Speaker 2 (03:45):
Yeah, that's what lots of big techtocks on the up
on fighting cleaning Teaser it was up nearly ten percent,
but alf bet their own Scoogle that was up one
and a half percent. That'd be on the top and
bottom line. Search and advertising units going pretty well. Revenue
for the quarter about a billion more and expected ninety
two billion. YouTube's going pretty well. Google Google Cloud revenue
was strong. Alfabet said Aiover's overviews, which is its AI
(04:09):
tool place at the top of the Google search page,
now has one point five billion users per month. That's
going pretty well. They did talk about the tariff situation.
They said there will be some headwinds, including the ending
of this deminymous trade loophole which which stops on May second.
So that basically means that shipments worth less than eight
hundred bucks ken into the US duty free not anymore,
(04:32):
and that'll effait advertising from likes of Timur and Shine.
Despite some caution of the outlook here and now is
going pretty well for Apple, culling needn't come up forty
six percent to thirty four point five billion, so she
is a higher one tech which was low as Intel
down nearly seven percent. The chip maker issued disappointing guidance
and talked about very fluid trade policies as the reason.
(04:54):
So we'll see what other companies are saying this week.
We've got a deluge burnings. Lots of big tech names
as well, so that'll be good stuff.
Speaker 1 (05:00):
Numbers please, so they're on the up.
Speaker 2 (05:03):
On Friday the day, I was up twenty points forty
or one one three s and P five hundred point
seven percent five five to two five, NAI's deck up
one point three percent, forty one hundred one point one percent,
Nike up one point nine percent. So the Japanese PM
announced to some measures to conflict what we're seeing on
the on the tariff and trade front. Asex two hundred
and insidex fifty of course closed for ENZIC day unless
(05:25):
we forget spot goal down thirty dollars three three twenty
WTI l up twenty three cents sixty three spot O
two and the currency's key we lower against the US
fifty nine point six, strain dollar ninety three point two
lower also against the pound forty four point eight, but
we were high against the end eighty five point seven
This week Mike Lot's going on locally business confidence building,
(05:46):
permits and off shore, we've got GDP in inflation data
of the US and the Eurozone, China manufacturing data also
for the US and the US non farm payrolls Bank
of Japan. They are also meeting, and big week for innings.
We've got and the supercap tech names. We've got Microsoft, Meta,
Epple and Amazon. And then the more sort of traditional
end of the scar We've got Visa, Caterpillar, Coca Cola,
(06:09):
and McDonald's.
Speaker 1 (06:10):
So what's going on, Jeeves. We'll look forward to it
all well. Then make Grief Smith devon Funds Management. For
more from the Mic Asking Breakfast, listen live to news talks.
It'd be from six am weekdays, or follow the podcast
on iHeartRadio
Devin Fund's management, Greg Smith, Morning to you, Morning to Mike. So,
tariff's story, according to Trump's done over two hundred deals,
so things must be coming right, would that be true
or not? Greg?
Speaker 2 (00:09):
Yeah, they might be stretching in a little bit, but
what we have to see, won't we But you're talking
about negotiations. It seems a little bit of brightness suppose
on both sides this obviously game of tariff chicken run. Yeah,
that big development last week was Trump saying that one
hundred and forty five percent tariffs on Chinese imports wouldn't
be that high, or that Chinese didn't need to give
them something though, and clean being open to having more
(00:30):
use goods being sold. So it does seem like the
stance is softening a bit. You know, you have to
think that you know the numbers and you put on
that board, you know, the the triple digit tariffs. Yeah,
pretty ridiculous when you sort of think about it. So
reports that Chinese obviously it's been going toe to toe.
They're mulling the suspension of the one hundred and twenty
five percent tariff and stuff like medical equipment, dustrial chemicals.
(00:50):
So you just won the mic we passed peak trade
war fare and had to investors have less calls to
be terrified about the outcome. Yeah, perhaps say there's been
a lot of bravado from the Tree administration, but yeah,
that I was thinking a lot of it was doing
with the initial tariff tantrum, which might be settling down
a bit. You know, maybe Trump realized there's a lot
of stuff that the US can't make and the qunscities
(01:11):
they need at anytime soon, particularly from China and iPhones
is just one example. So he obviously wants to back
down without losing face, and so it was all part
of the master plan. But you know, he said also
over the weekend that he considers tariffs of twenty to
fifty percent on foreign countries eth from now as being
a victory. And as you said, he reckons is around
a bit two hundred deals coming, he said China as
(01:32):
in fact that was Scott Best in the treaty Sectory
over the weekend said that there is a special negotiation
underway with China, so maybe more twists and turns. I
note that also reports that China is preparing contingency plans
in case things don't work out. So yeah, stay tuned.
Speaker 1 (01:48):
Okay, So how domestically is that affecting America yet?
Speaker 2 (01:50):
If it is, yeah, it is, so I think you know,
part of the softening of the stance is obviously the
stock market volatility, but it is also having a real
impact on the economy. So a few numbers here, So
on Friday, years existing home sales they fell almost six percent,
four million units. Immature existing homes jumped eight percent. Supplies
up nearly twenty percent on a year ago. So we've
(02:11):
got higher borron costs, and of course, you know the
terror policy is also complicating what the fedloks to do
on on bringing down rates further. You've got lumber prices
that are shooting up thanks to tariffs. You've got general
concerns over and economics slow down. You got new homes
in the tree that's at the high since late two
thousand and seven. Then you look at durable goods orders,
so you look at the proxy for business spending plans,
(02:33):
and you exclude aircraft from the equation. Eached up just
zero point one percent in March. So my businesses are
cautious this is going to filter through to the economy.
We've got GDP out this week for the March quarter,
we're expecting growth of just half percent, and that compares
to two point four percent in the fourth quarter. On
the manufactured goods print that did serge nine point two percent.
(02:55):
That that was driven by commercial aircraft orders and they
are up one hundred and thirty eight percent by head
on its website that it received one hundred and ninety
two aircraft orders in March from thirteen few. Of course,
China has a ban on the mious things stand and ironically,
tourism is looking like another drag on the economy. Mic
so foreign visitors to the US by AFOL nearly ten
(03:17):
percent of March four and a half million. Now, this
is a big concern for the US travel winds Street
brings in a trillion a year and meanwile inflation expectations
as we know. Picking up the final University of Michigan
survey had the one year outlook at six and a
half percent. Now that's the highest since November nineteen eighty one.
So yeah, tough spot for the feed mic Ortho. At
least Jerome Powell isn't in the firing line anymore according
(03:39):
to Trump.
Speaker 1 (03:40):
Now, and then we got Alphabet who came to the
party with some some nice eye watering numbers.
Speaker 2 (03:45):
Yeah, that's what lots of big techtocks on the up
on fighting cleaning Teaser it was up nearly ten percent,
but alf bet their own Scoogle that was up one
and a half percent. That'd be on the top and
bottom line. Search and advertising units going pretty well. Revenue
for the quarter about a billion more and expected ninety
two billion. YouTube's going pretty well. Google Google Cloud revenue
was strong. Alfabet said Aiover's overviews, which is its AI
(04:09):
tool place at the top of the Google search page,
now has one point five billion users per month. That's
going pretty well. They did talk about the tariff situation.
They said there will be some headwinds, including the ending
of this deminymous trade loophole which which stops on May second.
So that basically means that shipments worth less than eight
hundred bucks ken into the US duty free not anymore,
(04:32):
and that'll effait advertising from likes of Timur and Shine.
Despite some caution of the outlook here and now is
going pretty well for Apple, culling needn't come up forty
six percent to thirty four point five billion, so she
is a higher one tech which was low as Intel
down nearly seven percent. The chip maker issued disappointing guidance
and talked about very fluid trade policies as the reason.
(04:54):
So we'll see what other companies are saying this week.
We've got a deluge burnings. Lots of big tech names
as well, so that'll be good stuff.
Speaker 1 (05:00):
Numbers please, so they're on the up.
Speaker 2 (05:03):
On Friday the day, I was up twenty points forty
or one one three s and P five hundred point
seven percent five five to two five, NAI's deck up
one point three percent, forty one hundred one point one percent,
Nike up one point nine percent. So the Japanese PM
announced to some measures to conflict what we're seeing on
the on the tariff and trade front. Asex two hundred
and insidex fifty of course closed for ENZIC day unless
(05:25):
we forget spot goal down thirty dollars three three twenty
WTI l up twenty three cents sixty three spot O
two and the currency's key we lower against the US
fifty nine point six, strain dollar ninety three point two
lower also against the pound forty four point eight, but
we were high against the end eighty five point seven
This week Mike Lot's going on locally business confidence building,
(05:46):
permits and off shore, we've got GDP in inflation data
of the US and the Eurozone, China manufacturing data also
for the US and the US non farm payrolls Bank
of Japan. They are also meeting, and big week for innings.
We've got and the supercap tech names. We've got Microsoft, Meta,
Epple and Amazon. And then the more sort of traditional
end of the scar We've got Visa, Caterpillar, Coca Cola,
(06:09):
and McDonald's.
Speaker 1 (06:10):
So what's going on, Jeeves. We'll look forward to it
all well. Then make Grief Smith devon Funds Management. For
more from the Mic Asking Breakfast, listen live to news talks.
It'd be from six am weekdays, or follow the podcast
on iHeartRadio
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