NFLX reports earnings right after the close (~4:02pm ET) with conference call at 4:45pm ET. 

With 1Q marking the first quarter of no subscriber / net adds disclosures, the tactical ‘subs’ debate has quieted down (yes, still some q/q questions off the big 4Q and/or how to think about the WSJ story earlier in the week about the company hitting a $1 trillion market cap, which seemed like a planted attempt to smoke out shorts ahead of earnings and give the stock a buffer to fall from on disappointing news) with most of the debate around who will be the ‘incremental buyer’ of Netflix shares post print as the valuation us starting to stick out relative to large-cap Internet peers (albeit vs expectations for Netflix to deliver what may be a rare ‘beat’ on earnings given perceived insulation from a number of the ‘headwinds’ out there – e.g. macro slowdown, tariffs, AI capex, etc).

Here are Wall Street consensus estimates

• Q1 EPS $5.763
• Q1 Revenue $10.496BN
• Q1 Operating Profit: $3.00BN
• Q1 Net Income $2.484BN

… and UBS’ bogeys:

• Q1 Revenue Growth Reported: $10.5bn/up 12% y/y
• Q1 Revenue Growth FXN: $15%
• Q1 EBIT: $3 bn
• Q2 Revenue Growth FXN: up 16%
• Q2 EBIT: around $3.3 bn
• FY25 Operating Margin: reiterate versus prior guide 29% (some hopes for a slight walk up)
• FY25 Revenue Guide: reiterate versus prior guide $43.5-44.5 bn/14-17% y/y

And visually

In its preview of NFLX earnings, UBS writes that “shockingly” the amount of inbound on bogeys has only picked up over the course of this past week. Netflix is a crowded long and has been a defensive safe haven with investors. 

According to UBS, the bar seems low, and they are the first one out of the gate, which has proved to be a lucrative move for them in the past.

Despite the broader market carnage, Netflix still comes up as a top name to own into 2025, so price action may be dictated more so by what management says to update (though not expected) FY25 and margin expansion (bulls playing for upside to the 100bp of growth, though it doesn’t feel like investors are playing for them to update this quarter). Netflix is also seen as a secular winner, with pricing power and solid underlying sub momentum given the competitive backdrop.

Investors will be focused on: 

1. tone and confidence in ability to sustain double-digit revenue growth and margin expansion in 2025; 
2. impact of recent pricing changes; 
3. impacts to ad business given softer macro versus guide for double ad revs in 2025; 
4. any implications for transitioning onto in-house ad platform along with any early learnings thus far; 
5. updates on live content/sports strategy and gaming; 
6. updates on content spend ($18 bn content spend versus $17 bn in 2024); and 
7. competitive dynamics and what the pullback at peers is doing to their business.

Here, Goldman’s sellside desk chimes in and writes that in terms of idiosyncratic company debates coming out of the last earnings report, the bank expects investor debates to remain centered around: 

1. the perceptions of competitive moat (both against traditional media competition and increasingly forward competition from YouTube, TikTok & Meta); 
2. the ability for the company to continue to efficiently close the monetization gap when compared to consumption patterns; 
3. how the ad supported tier might continue to scale; & 
4. the rising focus on live entertainment in terms of the company’s content investments.

In its latest model, Goldman updated its forward estimates as follows: 

1. slightly lowered forward net add trajectory by ~0.5mm on an annual basis (with a skew toward more ad supported subscriber adds in the coming quarters in terms of mix); 
2. modestly lowered advertising revenue assumptions throughout the remaining quarters of 2025 reflecting a weakening (& less certain) advertising environment (especially among the type of brand advertising dollars that are deployed into NFLX’s platform). 

Goldman remains Neutral (on the shares on the back of a balanced risk/reward from current levels) and lowered its 12-month price target from $960 to $955.

Goldman is hosting its Private Tech Tour 2025 this week.

From Monday through Thursday, Goldman analysts will visit companies in Shanghai, Shenzhen, and Guangzhou. The tour will feature C-suite meetings and factory tours at 19 companies in eight critical industries. These industries—including AI, semiconductors, eVTOL, and photonics—are poised to define the great powers of the 2030s.

Early takeaways from China’s tech ecosystem suggest that Asia holds the lead, especially regarding handsets, eVTOL, and other technologies that share similar production ecosystems. This report serves as a wake-up call for Washington elites: re-shoring these critical supply chains is essential for 2030 dominance. 

Here’s a list of the 19 companies in 8 critical industries the analysts have either visited or will visit this week:

1. Satellites: Landspace, Chinese liquid rocket and reusable rocket supplier

2. Silicon Photonics: Sicoya, Qianmu Laser, Macrochip, Chinese CW (continuous wave) laser suppliers

3. Robotaxi: Deeproute AI, Rhino.ai, GigaAI, Chinese autonomous driving software and chipsets suppliers

4. eVTOL: Aeroht (Xpeng affiliate), Chinese flying vehicles

5. AI Software: 01.AI, AutoArk AI, Chinese AI foundation model and AI agent AI hardware: MetaX, ZStack, xFusion, Chinese AI computing power and servers

6. Semiconductors: Innogrit, Ascen Power, ZenSemi, Capcon Semi, Chinese memory IC, SiC, foundry, and advanced packaging equipment suppliers

7. Smartphones: OPPO, Nothing, Chinese smartphone brand makers

The analyst provided the companies that clients should get exposure:

1. Satellites: UMT, WNC, Hon Hai; Satellites deepdive report,

2. Silicon Photonics: Landmark, VPEC; initiation report,

3. Robotaxi: Horizon Robotics, Pony AI,

4. eVTOL: Ehang,

5. AI software: Kingsoft Office, Kingdee, Yonyou,

6. AI hardware: Cambricon, FII, Quanta,

7. Semiconductors: Montage, SICC, SMIC, ASMPT,

8. Smartphones: Transsion.

It turns out that silicon photonics, robotaxi, eVTOL, AI software, semiconductors, and smartphones share a deeply interconnected production ecosystem centered around advanced electronics manufacturing, semiconductor integration, and software-hardware co-optimization. Right now, China controls a sizeable chunk of these supply chains that are essential for U.S. national defense. 

空飛ぶ車と人型ロボット、2つのテクノロジーの共演https://t.co/omaXfwnXP9#FlyingCar #eVTOL #bipedal #humanoid #robot #technology #unitree #XPENGAEROHT pic.twitter.com/PkXCz48Spw

— T.Yamazaki (@ZappyZappy7) January 26, 2025

President Trump’s trade war is about re-shoring these critical supply chains to ensure U.S. dominance in the 2030s. 

Marc Andreessen of Andreessen Horowitz recently highlighted in a podcast that three key industries—drones, cars, and robots—are set to succeed smartphones as the next major technology platforms. He said these technologies share a similar production ecosystem and warned that China dominates these supply chains. 

🚨 NEW: Marc Andreessen on China’s manufacturing dominance

“There’s three industries that follow phones that the Chinese own the global market at:

1) Drones
Something over 90% of all the consumer drones are made in China. Which is what the US Military also uses. It’s the whole… pic.twitter.com/e94C927MMU

— Autism Capital 🧩 (@AutismCapital) January 15, 2025

The big challenge for the U.S. is the lack of companies with all or most of these technologies under one umbrella—EVs, robots, AI, drones, space, and more. Chinese firms like BYD, NIO, Xpeng, and others are rapidly building this full-stack ecosystem. In the U.S., the only comparable example is Elon Musk’s empire: Tesla (EVs and humanoid robots), xAI (AI development and social media via X), and SpaceX (rocket launches and satellite internet).

Even more alarming is the Democratic Party’s ongoing effort to kill Tesla and Elon Musk’s companies—companies that are positioned to lead the U.S. through the 2030s in the great power competition against the Chinese Communist Party. 

This raises a troubling question: Is there foreign influence at play—possibly from Beijing? After all, the Democrats’ history with China has long raised red flags.

• U.S. Rolls Out New Romantic Restrictions For Gov’t Workers In China To Prevent CCP Honey Traps

• MTG Bares Fang-Fangs, Throws House Meeting Into Chaos Over Swalwell’ Sexual Relationship With A Chinese Spy’

• Watch: Taxpayer-Funded NGO With China & Democratic Party Ties Giving ICE Evasion Training

• Was Biden China’s Manchurian Candidate The Entire Time?

Democrats targeting the very American companies poised to lead in the 2030s sends a disturbing message that raises national security risks. 

Via SchiffGold.com,

In a recent podcast appearance with Glenn Diesen, Peter makes a compelling case regarding the fragile state of the American economy, highlighting the unsustainable reliance on monetary inflation, trade deficits, and artificially low interest rates. He contrasts the challenging road ahead for America against the comparatively smoother transition other parts of the world might experience by turning their productive capacities inward. 

Peter starts by revealing the fundamental imbalance driving the U.S. economy—its dependence on consuming goods it doesn’t produce, paid for by printing dollars:

We’re able to consume what we don’t produce, and we pay for it by printing money. And so the world gets our inflation and we get their stuff. So we’ve got the better end of the bargain. Now they use our paper to buy our financial assets, our stocks, our bonds, our real estate. So they are accumulating assets and they’re getting the income from those assets. So what we’re doing is we’re indulging our present and we’re sacrificing our future.

This indulgent behavior is unsustainable, Peter argues. To truly stabilize the U.S. economy, Americans must be prepared for sacrifices and cuts in public spending, reforms that politicians are loath to pursue:

Because in order to free up resources to build factories, we can’t spend all this money and run these huge deficits to crowd out all of our capital. So we need to cut Medicare, Social Security, national defense, and Americans have to stop spending. We need to save our money to build those factories. They’re not going to just grow out of thin air. So there’s a lot of hard work that needs to be done. But of course, nobody has a stomach for that. Our whole economy is a house of cards built on the overvalued dollar and our trade deficits and our excess consumption and artificially low rates. And all that’s about to come toppling down.

Far from solving the economic woes, Peter warns that the current combination of monetary policy and tariffs will exacerbate existing inflation and economic stagnation, pushing America deeper into recession:

We already have stagflation now. We’re just going to have higher inflation and a weaker economy. We’re going to be in a recession and there’s going to be a lot of inflation. Mainly because the tariffs redirect the inflation out of the financial markets back into the real economy. We’ve benefited from diverting our inflation to the stock market and the bond market. That’s all going to reverse. That’s why if you look at what’s happening today, the foreign stocks are going way up. I own a lot of stocks today that are up 3%, 4%, 5%, 6% that are in Europe, they’re in Asia, they’re in South America. Money is being sucked out of the US right now, the opposite of what Trump wants. Capital is not coming to America, it’s fleeing America.

Given this reality, Peter offers practical advice to investors, encouraging a pivot away from overpriced U.S. assets toward more fundamentally sound investment opportunities abroad, particularly in precious metals:

They should own mining stocks, precious metals mining stocks that will benefit from the rising gold price. Gold is over 3,000. It’s going higher as the world de-dollarizes. Central banks are going to be buying more gold and less treasuries. That’s great for gold mining stocks. That’s not good for the U.S. government, because who’s going to buy those treasuries? The deficits are going to be much bigger in this recession. I think the Fed is going to buy them, and that’s going to be even more inflation. Not only are the tariffs going to be pushing up prices, but so will inflation that the Fed is going to create. The weak dollar is going to add to the pain of the tariffs.

Peter concludes that while America faces daunting structural economic challenges, many international economies have an easier path forward. They can simply redirect their existing productive capacity inward, decoupling themselves from a collapsing dollar:

All the world has to do is turn its productive capacity that already exists and use those factories, use those workers, use those resources and supply chains and infrastructure to make stuff for themselves instead of making stuff for Americans. 

… 

So the world has an easy task and actually a pleasant task because they get to consume. The hard work is here in America because we got to figure out how to consume without factories, which we can’t do. So we have to build non-existing factories. That takes a lot of resources. That takes a lot of effort. So we have the difficult road ahead, not the world.

Be sure to listen to Peter’s latest podcast, where he analyzes economic news in even more detail.

Two of China’s fastest-growing e-commerce players are dialing back their U.S. expansion strategies as tariffs and trade restrictions reshape the competitive landscape.

Temu and Shein, whose ultra-low prices and aggressive digital marketing campaigns have challenged industry incumbents like Amazon, have significantly cut U.S. advertising spending and notified customers of upcoming price increases – amid mounting pressure from President Donald Trump’s recent tariff hikes on Chinese goods.

According to data from analytics firm Sensor Tower, Temu cut its average daily advertising spend on platforms including Meta, X (formerly Twitter), and YouTube by 31% in the two weeks leading up to April 13. Shein’s spending fell by 19% over the same period. Temu also eliminated its entire U.S. spend on Google Shopping as of April 9, the day new tariffs on Chinese goods were introduced.

The two companies sent near-identical emails to U.S. customers this week citing “global trade rules and tariffs” as drivers of higher operating expenses and warning that “price adjustments” will begin on April 25.

The pullback underscores how Trump’s revived trade confrontation with China, which includes ending the de minimis exemption that allowed duty-free imports under $800 – is reverberating across the U.S. consumer and tech sectors. The new rules, set to take effect May 2, impose tariffs of up to 90% of a parcel’s value or $75–$150 per shipment, a dramatic shift for companies that relied on small-package loopholes to flood the U.S. market with inexpensive goods.

“The decision to close the de minimis loophole has been like a targeted weed killer,” Mike Ryan, an analyst at Smarter Ecommerce, told the Financial Times.

The price advantage that helped Temu and Shein amass tens of millions of American customers is now eroding, and with it, their digital dominance. Temu’s app, once a top-five staple in Apple’s U.S. App Store, has dropped to 75th place, according to the BBC. Shein, previously in the top 15, is now ranked 58th, reflecting a rapid decline in user acquisition.

Both companies have urged customers to shop before prices rise and said they were “doing everything we can to keep prices low and minimize the impact on you.”

Advertising Cuts Could Hit U.S. Platforms

The shift could dent revenues for major U.S. advertising platforms. Meta, whose advertising business brought in $18.4 billion from China-based advertisers last year, more than 10% of its total, warned investors in January that tariffs and trade disputes posed a material risk to its business.

Temu and Shein were among the largest Chinese advertisers in the U.S. in 2023 and early 2024. Temu alone was the top U.S. advertiser on X last year. According to marketing intelligence company WARC, the recent ad cuts will likely affect sales, as “they need to constantly advertise to keep customers,” said James McDonald, the company’s director of data intelligence and forecasting.

While their combined U.S. market share remains under 1%, according to Consumer Edge, Temu and Shein accounted for more than 30% of the 1.5 million daily tariff-free shipments to the U.S. last year, based on congressional reports and customs data.

The loss of the de minimis privilege, long criticized by U.S. lawmakers as an unfair advantage, has bipartisan support. In 2023, 1.4 billion packages entered the U.S. under the provision, up from 140 million in 2013, customs authorities report.

Amazon and U.S. Retailers Eye Opportunity

Amazon, which has faced margin pressure from the deep discounts offered by its Chinese rivals, is already adjusting. Last November, the e-commerce giant quietly launched Haul, a sub-platform for products under $20, in what many viewed as a direct response to Temu and Shein.

Now, with tariffs set to level the playing field, U.S. retailers may see an opening to reclaim market share, though it could come at the cost of higher prices for consumers.

As Trump’s administration pushes ahead with additional levies that could raise tariffs on certain Chinese goods to as high as 245%, the road ahead for Chinese e-commerce upstarts looks steeper.

Shares of Exxon had their 2nd largest pop since the regional banking crisis of 2023 (second only to last week’s record surge) after the Wall Street Journal reported that the Energy Department is eyeing steep cuts that could wipe out nearly $10 billion in clean-energy funding, jeopardizing major projects with Exxon Mobil and Occidental Petroleum.

Or, as the market appears to see it, a cost saving measure for the likes of Exxon, who will no longer have to endeavor to spend on low-margin “green” businesses. 

Internal memos show the cuts would scrap government contracts tied to hydrogen, carbon capture, and energy storage, with thousands of DOE jobs on the chopping block. Part of President Trump’s broader push to slash federal spending, the move is driven by the Department of Government Efficiency (DOGE), led by adviser Elon Musk. The agency has already axed numerous contracts and federal jobs.

The $10 billion figure spans two DOE offices and reflects broader DOGE-driven cancellations under review, according to the Wall Street Journal report.

“No final decisions have been made and multiple plans are still being considered,” a DOE spokeswoman said.

The Energy Department, responsible for everything from nuclear weapons oversight to energy R&D, is weighing steep funding cuts, including pulling support from four hydrogen hubs in Democratic-leaning states, while continuing to fund three in GOP-leaning regions. Over 250 clean-tech projects—spanning EV charging, solar, wind, and more—could be scrapped.

The report says that roughly 9,000 of the department’s 17,500 jobs are deemed essential. More than 1,200 employees have resigned or been sidelined—many tied to diversity efforts. Another round of buyouts is underway.

Federal grants and loans have largely been frozen since February, when Trump halted funding tied to Biden-era laws, including the Inflation Reduction Act—legislation he’s criticized as the “green new scam.”

Only a few projects, such as Michigan’s Palisades nuclear plant, have received funding.

Jigar Shah, former head of the DOE’s Loan Programs Office, warned this risks driving clean-tech investment overseas: “That just makes me so sad… now they’re receiving the opposite message.”

Submitted by “Hyper Pi”,

Yesterday at the Economic Club of Chicago, Jerome Powell doubled down on his tariff-pocalypse fetish, warning that Trump’s trade levies could spark “higher inflation and slower growth.” 

Sound familiar? 

In 2021, he called 9.1% inflation “transitory” while M2 money supply exploded 42%. 

That delusion triggered a market rout and crushed Main Street. 

Now, Powell’s playing Nostradamus again, fixating on hypothetical tariff shocks while ignoring deflationary red flags like $60/barrel oil prices. 

The Fed’s job isn’t to predict trade wars – it’s to react to data. Powell’s flunking that test, again. 

Powell’s April 16 speech hyped Trump’s 10-25% tariff proposals as a looming inflation bomb, claiming they’re “larger than anticipated” and could derail the Fed’s 2% target. 

Sure, tariffs might bump some prices, but Powell’s acting like they’re the whole story. 

Meanwhile, West Texas Intermediate crude is at $60 – multi-year lows – slashing transport and production costs. 

That’s a deflationary sledgehammer, yet Powell barely nods at it. 

The data screams caution, not panic. 

Consumer confidence cratered to January 2021 lows in March 2025. Small-business uncertainty spiked to near-record highs in February. 

First-quarter GDP growth is slowing, with consumer spending “modest” despite car sales. 

These are signs of an economy wheezing, not overheating. 

Yet Powell’s 4.3% interest rates, frozen since mid-2024, are squeezing harder than a bear market vise. 

Trump’s Truth Social rants for rate cuts might be brash, but they’re not wrong. 

Powell’s tariff obsession mirrors his 2021 blunder: betting on guesses over facts.

Back then, he ignored money supply and CPI spikes. 

Now, he’s blind to oil prices and softening demand, chasing trade-war ghosts. 

The Fed has tools—producer price indices, commodity trackers—to spot real inflation. 

If tariffs bite, hike rates then. 

Preemptively choking growth on “what-ifs” is malpractice. 

History honors Fed chairs who act, not prophesize. 

Volcker smashed 1980s inflation by reading the data, not tea leaves. 

Powell’s stuck in model-land, leaving markets jittery—S&P 500 dropped 2% post- speech—and Main Street exposed. 

Oil’s at $60, confidence is tanking, and Powell’s still dreaming of tariff-driven doom. 

Ditch the guesses and drive the damn car.

The European luxury sector, tracked by Goldman via GSXELUXG, came under continued pressure on Thursday after French luxury giant Hermes added to the gloom with a disappointing Q1 earnings report, following LVMH Moet Hennessy’s shock results just a day earlier. Most notably, a slowdown in Chinese demand is rippling through the industry — prompting one Goldman analyst to warn: “Luxury is late cycle.”

Hermes’ first-quarter earnings report was mixed to say the least, with growth in Europe, Japan, and the Americas, but disappointing results in Asia and key segments like Watches and Perfumes.

Here’s a snapshot of the first quarter report with estimates provided by Bloomberg: 

Total sales growth: +7.2%, missed Bloomberg Consensus of +7.89%

Revenue: €4.13B, +8.5% y/y, just shy of €4.16B estimate

Segment Performance:

• Leather Goods: +10.0% (vs. est. +10.8%) — Slight miss, still strong double-digit growth

• Watches: -10.0% (vs. est. -3.9%) — Deep miss, weakest segment

• Perfumes: -0.5% (vs. est. +7.06%) — Sharp disappointment

• Silk & Textiles: +4.5% (vs. est. +3.64%) — Beat

• Ready-to-Wear & Fashion: +7.2% (vs. est. +9.34%) — Moderate miss

Regional Breakdown:

• France: +14.2% (vs. est. +10.3%) — Strong outperformance

• Europe (ex-France): +13.3% (vs. est. +13.1%) — In line

• Japan: +17.2% (vs. est. +12.7%) — Significant beat

• Asia Pacific: +1.2% (vs. est. +4.02%) — Weak

• Asia (total): +3.7% (vs. est. +5.39%) — Soft demand in China likely a drag

• Americas: +11.0% (vs. est. +8.55%) — Strong outperformance

Axel Dumas, Executive Chairman of Hermes, released comments about the challenging macroeconomic environment: 

“In a complex geopolitical and economic context, the house is strengthening its fundamentals more than ever: uncompromising quality, creativity at the heart of all development, and vertical integration, a guarantee of preserving unique savoir-faire. Despite a high comparison basis in the first quarter, the group achieved solid growth in sales, thanks to the trust of its customers and the commitment of the teams, whom I thank warmly.” 

Hermes’ uninspiring quarterly report builds on LVMH’s first-quarter results yesterday, which served as a luxury gut-check for the industry. The miss was broad-based across segments and regions, led by sliding demand in key markets, including China and the U.S. Fashion and Leather Goods—the group’s growth engine—also stumbled, signaling concerns about a wider slowdown in the high-end consumer space. 

“Magnitude Of Deterioration”: Wall Street Stunned By LVMH’s Earnings https://t.co/96uM1CoZQA

— zerohedge (@zerohedge) April 15, 2025

Commenting on Hermes, but more importantly, the broader industry, Goldman analyst Natasha de la Grense warned, “Luxury is a late cycle.” 

Here’s more from the analyst:

• The Luxury sector is failing to perform this morning (GSXELUXG flat) despite three relatively reassuring prints and watch exports in positive territory in March. We think this is partly a function of positioning (Hermes, Brunello and Moncler all consensus longs) but also reflects wariness around the forward.

• First the good news: Brunello was bang in line, while Moncler and Hermes beat in the areas of the business that usually matter most (Moncler brand retail, Hermes Leather Goods). All three said that they are not seeing a noticeable change in trend through April. And all three sounded relatively calm on the direct impact of tariffs – the message has unanimously been that there will be no change production footprints, strategy is unaltered (Moncler still sees the U.S. as a growth opportunity) and any price increases would take place in the U.S. in H2 (Brunello quantified this at 3-4% which feels manageable).

• However, feedback this morning is that Q1 is backward looking and Luxury is late cycle – people pretty much unanimously expect U.S. demand to deteriorate even if this is not happening just yet. Moncler acknowledged risks to U.S. underlying demand looking forwards. In addition, the misses in Hermes’ non-leather divisions has made some wonder if the business will be more cyclical than in the past as these categories have grown in the mix. Meanwhile, everyone understands that March Swiss Watch exports were helped by stocking up (exports to the US +14%) while other major markets were weak (China -12%).

• Big picture, the takeaway from this week is that the outperformers last year (high end, strong brand momo) are still putting up better growth. Coupled with some potential pull forward of demand in watches/jewellery, that does bode well I think for Richemont cFX. Interestingly, unlike Moncler/Hermes/Brunello, our data suggests Richemont is a consensus short (with bears worried about higher gold costs, CHF headwinds and management’s tone on outlook). That said, the other takeaway from reactions today is that the market doesn’t care too much about Q1 beats which don’t tell us anything about what’s to come.

• Bottom line: conviction levels low in this space right now. We are net sellers on the desk this morning. I haven’t changed my view that Hermes and Moncler are relatively better places to be but I still think the whole space is going down. On Hermes, I expect Leather to accelerate in Q2 (as supply constraints drop out) and note that anyone on a list for a bag is expected to spend on other product categories first. Beauty and Watches are small and can be quite volatile, relating to timing of shipments and launches – I’m not overly concerned about the misses here. Meanwhile at Moncler, the strong performance with the Chinese cluster really stands out and speaks to excellent brand momo. Moncler also accelerated in Japan which is impressive post LVMH comments. Pushback on Moncler this morning is we are now entering low seasonality for the business/stock – I wonder if that’s actually helpful to have a smaller proportion of FY sales vulnerable to near-term shocks to demand. Remain cautious on Kering and Burberry based on weak brand momo, more limited pricing power to pass on tariffs and idiosyncratic risks. On Kering, we still think FY25 consensus EBIT is too high and expect some comments on H1 margin outlook could drive further downgrades. On Burberry, we see negative read across from Moncler/LV comments on the South Korean cluster. I’m also concerned that the scarf/trench push will be less relevant into S/S months.

Commentary from other analysts:

Barclays (overweight)

• Hermes reported a slight miss on its first-quarter sales update, analyst Carole Madjo writes, though all regions saw robust growth

• Growth in its leather goods division should be driven by a price increase and volume contribution in 2025, so it should pick up throughout the year

CIC Market Solutions (neutral)

• Hermes saw a solid start to the year which confirms its status as a safe haven, says analyst David Da Maia

• Its unique status is “highly valuable” in a backdrop that has become very uncertain, and has been reflected in its premium to the luxury sector

Bernstein (outperform)

• Tough comparisons in China weigh heavily, but should get better as the year progresses, says analyst Luca Solca

• Category mix confirms a slower consumer demand environment; watches again are the weakest link in the Hermes lineup

Stifel (buy)

• Lighter-than-expected growth in Asia Pacific overshadowed solid growth in the Americas, France, Europe ex-France and Japan, writes analyst Rogerio Fujimori

• Share-price weakness offers opportunity to buy ahead of growth re-acceleration for leather goods in the second and third quarters

Citi (neutral)

• Hermes continues to outperform with resilient sales, says analyst Thomas Chauvet, noting continued double-digit growth in all regions but Asia ex-Japan

• Notes that U.S. tariffs will be fully offset with pricing from May 1

Jefferies (buy)

• Hermes’s first-quarter organic growth confirms the resilience of the group’s model, even if it may be slightly below buyside ambitions, says analyst James Grzinic

• The 2025 price rise in leather will have helped, but also provides a good sense for Hermes’s pricing power at a time when tariffs, as well as euro strength, are likely to represent mounting gross margin challenges

Bloomberg Intelligence

• Hermes’s 1% Asia Pacific-excluding-Japan sales gain in the first quarter dragged otherwise robust low double-digit constant currency growth elsewhere, writes analyst Deborah Aitken

• Slowed China store traffic in April could see more trimming to consensus

For the first time in decades, Hermes’s market cap exceeded LVMH’s this week.

The theme sticking here is Goldman’s “Luxury is late cycle.”

By Michael Every of Rabobank

The Bank of Canada left rates on hold at 2.75%, as expected and predicted either we get a quick resolution to US-Canada trade tensions or a year-long recession (see here for more). There’s the kind of nasty, geopolitical, binary outcome I was flagging for 2025 from mid-2024.

Fed Chair Powell said tariffs may raise inflation and unemployment, so no rate cuts for you. It’s nice to see the guys who earn, and manage, the big bucks are on the ball.

Next up today, the ECB: please see our preview here (Many forks in the road). We expect them to cut the deposit rate by 25bp to 2.25%, an additional cut to the one we see in June, so we now have our terminal rate at 2%. However, this is again all very much contingent on trade developments, and a significant further escalation of the trade war could require the ECB to return to an accommodative policy stance, even as the Fed seems to be leaning the other way.  

On trade, President Trump said “big progress” is being made on a deal with Japan, and the White House also expects one with the UK “in three weeks.” Europe can get one too if it decouples from China; but German/EU firms are lobbying to ‘give China a second chance’ –and why wouldn’t Europe ‘try again’ with the economy wiping out its auto industry and propping up the Russian war-economy which the EU is rearming against?– as some worry the EU will sleepwalk into the China bloc due to its own rigidities.

That outcome could risk making the US outright adversarial in energy, defence, and swaplines as well as trade – but even that doesn’t necessarily mean institutional inertia/motion, or “because markets” mindsets, can adapt in time. It’s unclear what the ECB would do in those worst-case scenarios, and presumably they won’t even be alluded to today. Expect them to remain cryptic.

Aware of this, however, is Italian PM Meloni, in the US today, with the EU worried she might strike a side deal for zero-tariffs on Italian goods that would split the EU and open the door for others to follow suite. If you were the US and didn’t like the EU, wouldn’t you do exactly that? The question may be if the Italians are prepared to reap the rewards for being the first to break rank while risking brickbats from the EU, and the downside if the US reneges on any agreement. Chi non risica non rosica?

Elsewhere, oil markets noticed earlier Arab press reports about a troop build-up vs the Houthis now it’s in English on Bloomberg; and the latter also ran an op-ed about the five signs to look for ahead of a US-China war (not trade war): and we are already seeing all of them. That isn’t very reassuring, or much guidance for markets.

Gold just surged to a new nominal high and is starting to move like a stock. Glibly, this is ‘risk off’. Yet even with the Middle East and China news above that misses what’s also happening as the US tries to remake itself by remaking the global trading and financial system.

This missive from Matthew Pines shows how US gold reserves could be revalued vastly higher to create $1 trillion of fiscal breathing room and to bid up Bitcoin. Alongside tectonic shifts in the global architecture, is gold up only as a ‘haven’ rather than front-running? Likewise, USD-backed stablecoins, where framing legislation is moving forwards, may also see up to $1-1.5 trillion of new demand for US T-bills ahead. That’s also a controversial and potentially market-moving hypothesis that goes beyond just saying ‘crypto’.

Ok, so here’s my latest take on how Bessent may be able to revalue the gold certificates w/o legislation:

Under 31 USC §5117 & the Gold Reserve Act of 1934, the U.S. Treasury is authorized to issue gold certificates to the Federal Reserve Banks, backed by the gold it holds, at… https://t.co/vRRCS3pGui

— Matthew Pines (@matthew_pines) April 16, 2025

However, looking ahead, the larger issue would be if such financial ‘fartcraft’ were followed by the economic statecraft of adopting gold, Bitcoin, or stablecoins –only accessible via the US dollar– as neutral reserve assets for external trade and clearing. That would truly start the global bifurcation some have been warning of as a risk for years and have massive market implications.

Indeed, what if either the US or China, or Europe refuse to accept Bitcoin, stablecoins, or gold even if the other/s do/does? Mercantilist China, with a vast trade surplus, has no issues with any neutral reserve asset. Partially-mercantilist Europe is pushing ahead with a digital Euro CBDC: would it want to switch to another USD asset if it’s in the China bloc, or to gold? The US, with a vast trade deficit, has a huge problem with a neutral reserve asset until it reindustrialises if it wants to avoid a larger inflation shock than that presented by tariffs (i.e., all commodities follow gold higher). And it has already banned all Central Bank Digital Currencies within the US system, which will necessarily keep a digital Euro off the balance sheet of any US entity.

Hypothetically, what if the US revalued gold higher –encouraging China to buy more of it, which it is doing, partly to prevent capital flight– then used the $1 trillion from that and the $1-1.5 trillion from stablecoin issuance to help onshore production…. and then banned gold again, leaving China with a lot of shiny metal that wouldn’t be useful to it as reserves, or within the US/Western bloc? Why wouldn’t it do so, in fact? “Because gold”? Recall the US has form, having seized/gone off gold in the 1930s, and going off it again in the 1970s.

Of course, this is probably too many dots for those who think only in dot plots, or gold & yachts, to join. Yet if we are going to see financial steps in that bifurcating direction, again we can look for warning signs; like more digital ring-fencing of crypto assets to keep some in and some *out*. Saying what assets can and can’t be used where is not just ‘regulation’, as some will dully put it, any more than China’s Common Prosperity was: it would literally be the digging of trenches to lay the pipes for future central bank liquidity within non-fungible systems.

Meanwhile, see here for our indicative quantitative scenario of what trade bifurcation and milder trade war outcomes could imply for the US, Europe, and China: don’t focus on any one macro number – the point is to look at the spread between them. And, yes, the current American bull in a China shop may be able to force China to shop a lot more… at a high economic price to everyone – but that would just be economic statecraft over policy again. (And kudos to Jeffrey Powell and Lize Naute for their brilliantly original innovation of using an economic gravity model of trade that places China 1,000,000km from the US, three times the distance of the Moon from the Earth, to simulate a Cold War-style bifurcation.)

It’s also hardly a quiet day on multiple other fronts.

Reportedly, the IRS have begun stripping Harvard University — which some have called a hedge-fund with a (highly politicised) school attached– of its tax-exempt status.

A US judge has found probable cause to hold the Trump administration in criminal contempt of court for defying his order to turn around planes in mid-air, as some legal experts point out he likely doesn’t have jurisdiction on the issue at all, which will now have to be adjudicated by the Supreme Court (again).

Lastly, the Financial Times says astronomers have found the strongest signs yet of alien life. I now await their editorial piece arguing that anyone coming from ‘Krypton’ must be in favour of Ricardian free trade, because anything else would be illogical.

Then again, Superman used to promote “Truth, Justice, and the American Way” – which today would mean high tariffs, Bitcoin, and USD-backed stablecoins.

As Democrats work themselves into hysterics over Kilmar Abrego Garcia, a now-deported El Salvadoran man (aka, ‘Maryland Man’) at the center of an intense court battle, several new details about ‘St. Abrego’ have surfaced in the last several days – most recently that the Biden administration flagged him as a ‘suspect alien’ who was potentially involved in “human smuggling/trafficking” following a traffic stop hundreds of miles away from his Maryland home, according to DHS records reviewed by Just the News.

And while it should come as no surprise that the Biden administration did not follow up (or at least the records don’t indicate whether they did), here’s what we know:

Abrego Garcia was pulled over in November 2022 by a Tennessee state trooper for driving an SUV full of people erratically and speeding.

“Subject was observed speeding and unable to maintain its lane, and was subsequently pulled over,” reads one entry. “Encountering officer decided not to cite the subject for driving infractions but gave him a warning citation for driving with an expired driver’s license,” the memo continues. Of note, Maryland issues driver’s licenses to illegal aliens.

According to the report, the trooper believed human trafficking was involved according to a DHS summary recorded on Dec. 6, 2022. 

“During the interview, subject pretended to speak less English than he was capable of and attempted to put encountering officer off-track by responding to questions with questions,” reads the summary. “When asked what relationship he had with the registered owner of the vehicle, subject replied the owner of the vehicle is his boss, and that his work is in construction.”

“There was no luggage in the vehicle, leading the encountering officer to suspect this was a human trafficking incident,” the report continues.

The incident was filed in DHS’s system as “human smuggling/trafficking” according to the memos.

There is no record showing whether the Biden’s DHS ever followed up on enforcing the matter. 

The initial review determined that Abrego Garcia was a “suspect alien” and referred his matter for review to “passport control,” the records show. Three weeks later on Dec. 27, 2022, Homeland updated its record to urge all personnel who encountered Abrego Garcia in the future to “escort to secondary,” a term referring to the investigative procedures used when someone suspected of wrongdoing is encountered at a port of entry or by border patrol agents. -Just the News

This is just the latest tidbit on Abrego Garcia, the left’s new George Floyd.

Domestic Violence, MS-13 Ties

On Wednesday, DHS released a court filing revealing that Abrego Garcia’s wife sought a restraining order for domestic violence a year before the traffic stop.

In May 2021, a document signed by a judge described allegations of a “violent encounter.” The case was eventually dismissed when his wife, Jennifer Vasquez, failed to appear for a final court hearing in June 2021.

“Just this morning, it was revealed through Maryland court documents that Abrego Garcia’s wife petitioned for an order of protection against him for two instances of domestic violence in May of 2021,” said White House Press Secretary Karoline Leavitt on Wednesday. “The court ordered that ‘the respondent committed the following acts of abuse. Once, in May of 2021, assault in any degree….’” she added. “On May 4th of 2021, he punched and scratched his wife, ripped off her shirt, and grabbed and bruised her.”

“This is from a court in Maryland,” Leavitt continued. “So not only are Democrats rushing to defend an illegal criminal foreign terrorist gang member, but also an apparent woman-beater.”

Of course, Vasquez has now changed her tune – claiming she filed the restraining order “out of an abundance of caution…”

An abundance of caution… pic.twitter.com/GJGZvzmG9s

— Byron York (@ByronYork) April 17, 2025

Kinda like why he was deported?

Meanwhile, Leavitt noted that “When Gilmar Abrego Garcia was originally arrested, he was wearing a sweatshirt with rolls of money covering the ears, mouth, and eyes of presidents on various currency denominations,” adding “This is a known MS-13 gang symbol of ‘Hear no evil. Speak no evil. See no evil.’”

.@PressSec: “It’s appalling and sad that Senator @ChrisVanHollen and the Democrats applauding his trip to El Salvador today are incapable of having any shred of common sense or empathy for their own constituents and our citizens. Nobody knows this more than the woman standing to… pic.twitter.com/EiNoth8zwM

— Rapid Response 47 (@RapidResponse47) April 16, 2025

“He was also arrested with two other well-known members of the vicious MS-13 gang,” she continued.

Leavitt went on to point out that not one, but two separate judges confirmed Abrego Garcia’s affiliation with MS-13 — a finding that has never been disputed. But the gang ties are just the beginning. “Just this morning, it was revealed through Maryland court documents that Abrego Garcia’s wife petitioned for an order of protection against him for two instances of domestic violence in May of 2021,” she told reporters. –PJ Media

Abrego-Garcia’s lawyers insisted that there was no evidence that he was MS-13, that the cops were just making it all up, that he’s just a Maryland father.

Turns out that he was hanging out with multiple confirmed MS-13 members when he was arrested, that he was wearing apparel… pic.twitter.com/hwrwDnJcGY

— Will Chamberlain (@willchamberlain) April 16, 2025

And so…

If you’re not fighting tooth and nail for a serial domestic abusing MS13 deported non-citizen — it’s only a matter of time before dictator Trump starts abducting American citizens and disappearing them into torture prisons.

– Current Democrat mid-term campaign message

— Western Lensman (@WesternLensman) April 17, 2025

Authored by Travis Gillmore via The Epoch Times (emphasis ours),

The federal government will facilitate and pay for the self-deportation of those who have entered the country illegally, while operations will continue to target gang members and violent criminals, President Donald Trump told Fox Noticias host Rachel Campos-Duffy in an interview filmed at the White House that aired on April 15.

The president said that stipends, including plane tickets and money, could help incentivize illegal immigrants to leave and pursue legal status.

“We’re going to make it comfortable for people, and we’re going to work with those people to come back into our country legally,” Trump said during the interview. “And then … if they’re good, if we want them back in, we’re going to work with them to get them back in as quickly as we can.”

He did not provide further details about how much money illegal immigrants could receive or how to apply for such benefits.

The president also announced a plan to work with some industries, including hospitality and agriculture, to help business owners mitigate the effect of mass deportations.

“We’re making it so that if a farmer can give recommendations to people, we’re going to be very soothing,” he said.

“They’re sort of responsible, and we’re going to have the farmer take responsibility. But you know, ultimately, at some point, we want the people to go out, come back as legal.”

Broadcast to a Hispanic audience, the interview was conducted in English and released with Spanish subtitles. Trump successfully courted the Hispanic vote during his 2024 campaign, according to exit polling that showed him garnering a record share for a Republican Party candidate.

While the United States is offering paths to citizenship for many in the workforce, the president said aggressive deportation operations will continue for violent criminals.

“Right now, we’re getting the murderers out,” Trump said. “We have our total aim on the very bad ones, as you can imagine. These are rough, bad people. We want them out, and that’s mostly our focus.”

He thanked Salvadoran President Nayib Bukele—who visited the White House on April 14 to discuss migration and national security policies—for housing violent deportees in his country’s Terrorism Confinement Center.

Trump said White House officials are looking into the legality of potentially housing dangerous U.S. citizens in the supermax prison.

“I call them homegrown criminals,” the president said. “We are looking into it, and we want to do it. I would love to do that.”

Regarding tariffs imposed on nations around the world, the president suggested that revenues could grow large enough to replace income taxes.

“We’re making tremendous amounts of money, taking in billions and billions, hundreds of billions of dollars in tariffs from other countries that, for many, many decades, just ripped off the United States,” he said.

He also repeated his goals of introducing more lenient mortgage deductions; allowing interest deductions for U.S.-made vehicles; and eliminating taxes on tips, overtime, and Social Security. But he cautioned that political winds on Capitol Hill are challenging to overcome.

“I have some strange people I deal with, and we have to get it approved,” Trump said.