Zerohedge

Ahead of Amazon’s earnings, UBS said that the online retailer is the “cleanest Mag7 name to own”, although in retrospect it may also be the cleanest Ma7 name to sell, which is what is taking place after hours when the stock tumbled after it missed on Q4 cloud revenue and also guided well below estimates.

First, here is a big picture of what the company reported for the just concluded 4th quarter:

• EPS $1.86 vs. $1.43 q/q, beating estimates of $1.50
   
• Net sales $187.79 billion, +10% y/y, beating estimates of $187.32 billion
  • Online stores net sales $75.56 billion, +7.1% y/y, beating estimates of $74.71 billion
  • Physical Stores net sales $5.58 billion, +8.3% y/y, beating estimates of $5.4 billion
  • Subscription Services net sales $11.51 billion, +9.7% y/y, missing estimates of $11.58 billion
    • Subscription services net sales excluding F/X +10% vs. +13% y/y, estimate +10.3%
  • North America net sales $115.59 billion, +9.5% y/y, beating estimates of $114.27 billion
  • International net sales $43.42 billion, +7.9% y/y, beating estimates of $44.13 billion
  • Third-Party Seller Services net sales $47.49 billion, +9% y/y, missing estimates of $48.02 billion
    • Third-party seller services net sales excluding F/X +9% vs. +19% y/y, estimate +10.2%

So far so good (with some exceptions). But what caught the market’s attention first was Amazon’s AWS revenue, which came in just below estimates:

• AWS net sales $28.79 billion, +19% y/y, estimate $28.82 billion
• Amazon Web Services net sales excluding F/X +19% vs. +13% y/y, estimate +19%

Turning to operating results, here the results were uniformly solid:

• AWS operating profit 36.9%, down from 38.1% but beating estimates of 34.7%
• Operating income $21.20 billion, +61% y/y, beating estimate $18.84 billion
• Operating margin 11.3% vs. 7.8% y/y, beating estimate 10.1%
• North America operating margin +8% vs. +6.1% y/y, beating estimate +6.48%
• International operating margin 3% vs. -1% y/y, missing estimate 3.08%

As for fulfillment expenses, these came in slightly below estimates, while the seller unit mix was slightly higher than expected:

• Fulfillment expense $27.96 billion, +7.2% y/y, estimate $28.45 billion
• Seller unit mix 62% vs. 61% y/y, estimate 60.2%

Of the above, the most notable highlight – as per our preview – was AWS which grew revenue by 19% for a second consecutive quarter to $28.79BN, which however was just below the sellside estimate of $28.82BN. So maybe a little weakness here similar to Microsoft.

Still, if revenue growth for AWS was a bit light, the 36.9% margin likely offset it, beating estimates of 34.7%, but below last quarter’s print of 38.1%. Elsewhere, North American profit rose to $25 billion, resulting in a profit of 6.44%, the highest since at least 2015 (although one wonders how much higher this number can rise). Meanwhile, international margins dipped to 3.03% from 3.63%.

As a result of the jump in North American profits, Amazon’s consolidated operating margin rebounded strongly, and after dipping modestly in Q2 from the previous record, rose to a new all time high of 11.3% in Q4.

However, while the above data was mixed to modestly solid, it was the company’s guidance that led to an after hours drop in the stock; that’s because the company projected profit and revenue in the current quarter both of which came in below Wall Street expectations:

• Sees net sales $151.0 billion to $155.5 billion, below the estimate of $158.64 billion 
• Sees operating income $14.0 billion to $18.0 billion, below the estimate $18.24 billion

If accurate, that would mean Q4 revenue will grow at the slowest pace since the global financial crisis.

And while any other day the cloud miss and ugly guidance would have been enough to send the stock tumbling – as it did for a bit, sliding as much as 7% after hours, the unprecedented retail BTFD kneejerk reaction has taken the stock after hours and remarkable pushed it back flat on the session as the market plumbs new levels of stupidity.

Authored by Jeffrey A. Tucker via The Epoch Times (emphasis ours),

In 1917, American journalist Jack Reed, a naive but talented communist ideologue with a blue-blood education, was in Russia to watch and cheer on a revolution. He was there in October when the provisional government of Alexander Kerensky held power—Czar Nicholas II had been overthrown—but refused to pull the nation out of the murderous Great War or otherwise reform.

The government was thus overthrown again, this time by the Bolsheviks who ruled for 70 years thereafter. Reed chronicled the moment in his famous book “Ten Days that Shook the World.” It set forth the narrative of these days for a century. It was a major reason why that generation of literate Americans, lacking access to other information sources, considered Vladimir Lenin to be a hero. Reed, by the way, later died and was buried in the Kremlin.

That book and the events it valorized has now been superseded by another 10 days that have shaken the world. Donald Trump took the oath of office to become U.S. President on Jan. 20, 2025, following a sweeping and decisive victory that the entire establishment fought ferociously.

I’m typing this 10 days later. It is clear to me and many others that nothing will ever be the same, not in the United States and not anywhere in the world that is watching the exciting events unfold. It’s nothing like we’ve ever seen, and far beyond anything we had expected or even been promised.

Whereas Reed’s Ten Days were about the building of the Leviathan state, our own 10 days is about tearing it down and restoring freedom. Already what has been uncovered and stopped is for the ages, to the point that as I write the United States has plugged scandalous spending leakage at a rate of $4 billion per day, thanks to the work of Trump’s Department of Government Efficiency.

That appears just to be the beginning. Agencies and funding sources are being shut down by the day and hour. The whole spending machine was shut down for a few days before a federal judge intervened. Even that did not stop the push to shut down the spigots: it took a second judge to intervene and finally restart it all. Even then, it was just the beginning.

What is popularly known as the “deep state” has never faced such disruption.

Hardly a minute goes by when we do not get news of various outrages operating at all agencies of government, spending that gives new meaning to the word decadence. It’s all been happening for many years, even decades, even as the American middle class has been hollowed out, real incomes have declined, and economic opportunities for average people have thinned out to create culture-wide despair and ill-health.

The excitement began minutes after inauguration when the team of Elon Musk, tasked by Trump to figure out what is going on with this empire of lies, unfurled a plan that had long been in the works but never announced. They installed sofa beds on the 5th floor of the Office of Personnel Management and tossed out the chief of staff. The plan was to work 24/7 to get the job done, never leaving the offices. Yes, in Godfather parlance, they literally “went to the mattresses.”

They gained access to the computer system and sent a memo to 2.3 million federal government employees. It invited all of them to resign immediately and get 8 months of severance. They only needed to hit reply and type “resign.” The expectation going into this was that 10 percent would flee but it could be more. We are still waiting for the numbers.

All the while, the Trump administration was issuing executive orders, more than 300 in these magical 10 days. They froze regulations. They froze spending. They issued a universal fatwa against all DEI policies and abolished “affirmative action”—all while heralding the single principle of non-discrimination. They proclaimed that no government agency may ever again tell private media and social media accounts how to operate, either directly or indirectly through third-party cutouts. They banned the absurdities of the transgender movement and made adolescent mutilation illegal.

The orders were so sensible that they generated almost no resistance other than predictable sputtering. There were of course muttering that Trump was behaving like an authoritarian. If so, it is an odd form of authoritarianism that uses power to take power away from government and give it back to the people. The driving motivation of all these efforts was to reboot the promise of 2016 to drain the swamp. This time they were serious.

Following the takeover of the Office of Personnel Management, the truly great challenge was to get to the source of the largess, the spigot spilling so much money that it was creating $1 trillion in debt every 100 days. This has gotten worse decade after decade. It is the determination of DOGE to get to the bottom of it.

The team—which converted itself quickly into an official government office to evade that obvious criticism—headed to the U.S. Treasury and announced an audit of the entire government. In order to conduct that, they would need the logins to the system. The auditors had already figured out that the whole government was operating on autopay, with billions flowing to enemy regimes and rackets of all sorts. Shutting that down had to be priority number one.

What they found was an acting head of the U.S. Treasury named David A. Lebryk, who turns out to be the highest-ranking person in the civil service. Lebryk had been promoted to that position on January 20, but his former boss was the deputy head of Treasury, a Nigerian émigré named Wally Adeyemo, who had at one time been head of the Obama Foundation. His resignation put Lebryk in the driver’s seat of the world’s biggest outgoing payroll system.

That’s right, you cannot make this stuff up!

Lebryk absolutely refused to turn over the passwords. After what was said to be a shouting match, he resigned on the spot. Then Elon’s crew took control of the passwords to the system that was sending out $6 trillion on autopay.

This action generated panicked headlines in the New York Times and Wall Street Journal that the Trump administration has gotten hold of the control center of government spending, strongly suggesting that nothing like this has ever happened. For reasons that are unclear, regime media seemed shocked and alarmed that the Trump administration had broken into the sanctum sanctorum.

When regular people think about this, they start asking serious questions. Why is it not a normal thing for the new administration to be in control of the spending systems? Why is this such a shocking thing to have happened? Isn’t auditing the books just what any new president would do?

Most likely, it is shocking simply because it has never happened. For all the world, this looks to be a situation in which we are witnessing the very first actual transition of power in our lifetimes.

There will be more court challenges, claims, and counterclaims, but mainly we can look forward to an information flood of finding out precisely how our tax dollars have been used these many years if not for decades. This is in many ways the ultimate nightmare of any entrenched bureaucracy that has been unburdened by accountability for a very long time.

Change is now here, and it appears that the Trump administration is not letting up. All the while, Trump’s cabinet picks were facing a brutal grilling from Senators. This time, however, we have the means to discover the hand in the glove. We have tools like Open the Books, Open Secrets, and others, to reveal precisely what industrial interests are behind these politicians. It appears as of this writing that public pressure is going to push all of Trump’s picks through.

No one can say for sure how this story ends but we are getting an intuition. The Trump administration, barring some unforeseen disaster, is well positioned to go down in history as the regime that saved the country from secret and systematic pillaging that has been going on without check for probably all living memory.

Is that an exaggeration? Sadly, it does not appear to be so based on what we are learning by the hour. These are the new Ten Days that Shook the World. The first time around, history was set on a path toward the disaster of communism and totalitarianism. This time, the revolution is being reversed—the people are really taking charge from an elite class that has enjoyed unchecked rule in the Western world for all of living memory.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Update (1545ET): Politico has responded to the controversy, writing in a Thursday memo that they have “never received any government funding — no subsidies, no grants, no handouts. Not one dime, ever, in 18 years,” but that $27 million in government subscriptions to “Politico Pro” is simply “a transaction,” akin to the government buying “research, equipment, software and industry reports.”

Wait till you folks read some of these profoundly unique (almost literally) priceless articles behind the Politico Pro paywall.,,

— zerohedge (@zerohedge) February 6, 2025

Hunter Biden’s lucrative art sales were also a transaction, totally not buying influence either.

Wait till you folks read some of these profoundly unique (almost literally) priceless articles behind the Politico Pro paywall.,,

— zerohedge (@zerohedge) February 6, 2025

Meanwhile, we’re re-upping our subscription / store drive since we don’t have $27 million in government subs to our actually useful Pro service. Thanks to everyone who’s flooded us with orders in the past 24 hours!

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Update (1344ET): During Wednesday’s White House presser, spox Karoline Leavitt confirmed that Politico has been getting ‘more than $8 million taxpayer dollars,’ which has ‘gone to essentially subsidizing subscriptions.’

Watch:

.@PressSec: “I can confirm that the more than $8 million taxpayer that have gone to essentially subsidizing subscriptions to Politico will no longer be happening.”

“The DOGE team is working on canceling those payments now.” pic.twitter.com/xfzyzA5Xwd

— CAPITAL (@capitalnewshq) February 5, 2025

*  *  *

On Tuesday, staffers at Politico were notified that a ‘technical error’ had prevented paychecks from going out. Many joked that this had something to do with the Trump administration putting a freeze on USAID funding.

Staff at Politico did not get paid for the latest pay period. The company just sent several emails to employees saying it believes there was a technical error, and is looking into how to fix the issue. pic.twitter.com/PYcWYdbrEC

— Max Tani (@maxwelltani) February 4, 2025

And while there’s no evidence the two are linked, the suggestion prompted internet sleuths to look into Politico‘s sources of funding. What they found was absolutely shocking.

According to government spending tracker website USASPENDING.gov, Politico – which laundered the Hunter Biden ’51 intel officials’ propaganda during the 2020 election – received up to $27 million (and by some counts $32 million) from various US agencies during the Biden years.

I found $27M during the Biden years. https://t.co/14sVnvkbEH

— Pacheco the Ghost (@PMtalking) February 5, 2025

In one instance, roughly $500,000 was spent on 37 Politico ‘pro’ subscriptions.

This is odd https://t.co/iGi82JqhzG

— Elon Musk (@elonmusk) February 5, 2025

POLITICO has a subscription called PoliticoPro, which costs around $10,000 a year. @politico should be transparent about how many of these pro subscriptions are government-funded.
Given the ludicrous cost, I’m guessing its upwards of 90%.
It seems to me the entire program is a…

— Chris Tomlinson (@TomlinsonCJ) February 5, 2025

Of note, Politico was sold to German media giant Axel Springer (which also owns Business Insider) for $1 billion in 2021, meaning US taxpayer dollars have been flowing to the German media giant to prop up their US propaganda rags.

So 90% of “subscribers” to left-wing publications like Politico are fake and “taxpayer funded”. And then using fake subs to artificially pump up revenue, Politico gets to sell itself to German propaganda giant Axel Springer for $1 billion. https://t.co/j8wEv5MybL

— zerohedge (@zerohedge) February 5, 2025

It’s not just the subscriptions: there are huge “ad contracts”, dinner parties DC throws itself under the guise of “media conferences”, sponsorships, etc all paid for by taxpayers.

Once done with Politico look at its spawn Axios, founded by Politico veterans https://t.co/ShM4zTbnyX

— zerohedge (@zerohedge) February 5, 2025

And look at this, the NY Times received $3.1 million in taxpayer funds, while the UK’s BBC received $3.2 million.

USAID funding:

New York Times $3.1M
Politico $32M
BBC $3.2M (approximate)

h/t @StormTorx pic.twitter.com/3AKQydP4Oo

— David Procino (@APBIOonly) February 5, 2025

Meanwhile…

ZeroHedge hasn’t received a dime from the US government (or any government, assholes), while coming under recurring attack from the deep state and their various tentacles. We subsist on dwindling ad revenues thanks to the media censorship complex, subscriptions, and revenue from our new store.

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The Trump administration’s additional 10% tariffs on all Chinese imports took effect Tuesday, prompting Beijing to fire back with retaliatory measures, including tariffs on US goods, antitrust probes on US big tech firms, entity list additions, and export controls on critical minerals. 

Focusing on export controls on critical metals, Beijing imposed restrictions on key minerals such as tungsten, tellurium, bismuth, molybdenum, and indium, along with certain metallic compounds derived from them.

Days later, Bloomberg’s Annie Lee spoke with Lewis Black, chief executive officer of North America’s Almonty Industries, who stated his customer base is in a “state of disbelief” after Beijing’s export controls on the metal used in electronics, defense systems, and machinery. 

“It’s the warning shot, because we cannot exist without it,” Black told Lee. He noted: “Our economy, manufacturing, defense, everything, is so dependent on it. And yet, Russia, China and North Korea have about 90% of the output.“

Shares of Almonty in the US have surged 40% in recent days. The company describes itself as “the largest tungsten mining company in the world outside of China.”

“The question is, how much will China tighten the screw to be heard?” Black said, adding, “I think the news was bad, but I think it’s going to get worse.”

Beijing’s willingness to restrict exports of critical minerals to the US became evident in late 2024 when it banned the export of gallium, germanium, and antimony.

Beijing’s ongoing export restrictions on critical minerals should serve as a warning to America’s military-industrial complex and chipmakers. Perhaps it’s time for the Trump administration to ramp up efforts to expand domestic supply chains for mining and refining rare earth minerals, reducing dependence on China. 

Yesterday’s report that the US government has been funding outlets such as Politico, the Associated Press, the BBC, and others raised more questions than it answered – though the obvious implication is that the US government has effectively been propping up regime-friendly media, which then peddles regime-friendly coverage – and spent years attacking independent outlets such as ZeroHedge, The Federalist, and many unlucky ones who have since been starved out of business.

(By the way, thank you to everyone who subscribed or bought something from our store yesterday. That goes a long way towards our mission to bring you a host of divergent opinions, and let you talk almost as much shit as you want in the comments section).

And while funding for Politico and others has come from all over the federal government – WikiLeaks, citing a RSF report, highlighted that USAID was funding over 6,200 journalists across 707 media outlets and 279 “media” NGOs, which includes 90% of the reportage out of Ukraine.

USAID was funding over 6,200 journalists across 707 media outlets and 279 “media” NGOs, including nine out of ten media outlets in Ukraine.https://t.co/tLUoBT2GfNhttps://t.co/Siq2RJOXQf pic.twitter.com/LyaUFuq3He

— WikiLeaks (@wikileaks) February 6, 2025

According to RSF, the Trump administration’s freeze on foreign aid – roughly $268 million earmarked to fund “independent media and the free flow of information,” has ‘thrown journalism around the world into chaos.’

Almost immediately after the freeze went into effect, journalistic organizations around the world that receive American aid funding started reaching out to RSF expressing confusion, chaos, and uncertainty. The affected organizations include large international NGOs that support independent media like the International Fund for Public Interest Media and smaller, individual media outlets serving audiences living under repressive conditions in countries like Iran and Russia.

…

USAID programs support independent media in more than 30 countries, but it is difficult to assess the full extent of the harm done to the global media. Many organizations are hesitant to draw attention for fear of risking long-term funding or coming under political attacks. According to a USAID fact sheet which has since been taken offline, in 2023, the agency funded training and support for 6,200 journalists, assisted 707 non-state news outlets, and supported 279 media-sector civil society organizations dedicated to strengthening independent media. The 2025 foreign aid budget included $268,376,000 allocated by Congress to support “independent media and the free flow of information.”

Note the recurring use of the term ‘independent media.’

Of course, the RSF report, and another from the Columbia Journalism Review are sounding the alarm over the ‘silencing of independent media’ around the world.

The critical context they omit, however, is that USAID – despite the best of intentions when it was formed, has been corrupted into a deep-state slush-fund.

My full hit on USAID on Newsmax tonight with @DavidJHarrisJr. If you’re a policymaker or legislator involved in USAID oversight, I implore you to listen to this segment very carefully: pic.twitter.com/sTGaVOKrTJ

— Mike Benz (@MikeBenzCyber) February 5, 2025

Y’all wanna know why the Democrats are FREAKING OUT over USAID?

WATCH THIS!!👇🏻

pic.twitter.com/39QObeuWLu

— SaltyGoat (@SaltyGoat17) February 4, 2025

The architects behind the Trump impeachments and lawfare were plotting to launder money through USAID for their anti-Trump resistance efforts.

I obtained their “2025 Democracy Playbook” which admits to all of this. pic.twitter.com/izopd5G4P4

— Natalie Winters (@nataliegwinters) February 4, 2025

And so, no matter how ‘independent’ these USAID-funded media outlets are around the world, they’re all eating fruit from the same poisonous tree.

Sales of Tesla fell in Europe to start the year, falling 59% in Germany in January, as reported by Financial Times.

And, at least for now, as the report notes, the trend appears to be following suit throughout the rest of Europe. 

In January, Tesla’s new car registrations in Germany plunged 59.5% to 1,277, despite hosting its sole European factory. Sales also fell sharply in France (down 63%), Norway (38%), and the UK (8%) year-over-year, FT writes. 

EV sales “slowed sharply in Germany and France” last year after subsidy cuts but have recently started to rebound. Despite this, Tesla’s January sales fell, dropping its German market share from 14% to 4%, even as the overall EV market grew over 50%.

Analysts cite anticipation for the updated Model Y in 2025 and backlash against Elon Musk’s political activities as possible reasons for the dropoff. Schmidt Automotive Research told the New York Times that buyers in Germany could be “reacting to Musk’s comments” about politics in Europe. 

In California, Tesla’s largest U.S. market, new registrations also fell 11.6% in 2024, despite overall EV sales rising 1.2%, per the California New Car Dealers Association and NYT. 

Days ago, Tesla reported a softer expected Q4 2024, but Tesla stock has mostly held up in the interim. At the time, reactions were mixed, with some bearish:

“It’s clear that the market was looking for better profitability and better guidance,” said Seth Goldstein of Morningstar. “We heard on the last earnings call 20% to 30% growth, and now it’s just ‘return to growth.’ People want more firm guidance: What is the plan, and how are you going to get there?”

…and others bullish:

Cathie Wood said she thinks the stock reversal was fueled, in part, by the idea that Tesla will be scaling the Cybercab in 2026 and that production has to start this year. “We can see Tesla get down to a $15,000 car,” she said on a livestream on X spaces, noting a five-year time horizon. “This is nothing a traditional auto analyst can relate to.”

Recall, we reported late last year when CEO Elon Musk penned a supportive op-ed for Germany’s AfD party in the country’s Welt am Sonntag newspaper… prompting the resignation of the paper’s editor. 

Authored by Martin Young via CoinTelegraph.com,

The world’s largest stablecoin issuer, Tether, is venturing deeper into artificial intelligence with a number of AI applications in development, according to the firm’s chief executive.

Tether’s AI division, Tether Data, is developing a number of AI apps, such as AI Translate, AI Voice Assistant, and AI Bitcoin Wallet Assistant, according to a Feb. 4 announcement from CEO Paolo Ardoino.

Tether Data, preview of some of the AI apps we’re developing: AI translate, AI voice assistant, AI bitcoin wallet assistant.

Tether will launch soon its own AI SDK platform, open-source, built upon Bare (Holepunch’s javascript runtime), working on every hardware, from embedded… pic.twitter.com/W5JFmoVcnh

— Paolo Ardoino 🤖🍐 (@paoloardoino) February 4, 2025

“Tether will soon launch its own AI SDK [software development kit] platform, open-source, built upon Bare, working on every hardware, from embedded devices, any mobile phone, any laptop, powerful servers, clusters of servers,” he added. 

Further details were thin but Ardoino said that Tether Data’s apps “will focus on working locally on any device, full privacy, self-custodial for both data and money.”

In the demo for the AI Bitcoin Wallet Assistant, a user asked the “Payment Agent” what their BTC wallet address was before querying about the BTC balance. 

The demo also showed the user asking what recipients they had in their address book before requesting the agent send a small amount of BTC to one of them.

The entire process was conducted through the AI chatbot interface and carried out autonomously. 

Source: Paolo Ardoino 

Tether’s AI Translate was a simple AI chatbot translation tool and AI Voice Assistant involved the chatbot responding to voice inputs rather than text. 

Tether’s AI ambitions were evident back in 2023 when the firm acquired a stake in European crypto miner Northern Data Group, which specializes in cloud computing and generative AI. 

In March, Tether further expanded its AI operations with a global recruitment drive for top-tier talent, telling Cointelegraph at the time that it “plans to push the boundaries of AI technology,” and set “new industry standards for innovation and utility.”

In December, Ardoino said he “just got the draft of the site for Tether’s AI platform,” before adding that the firm was targeting a launch at the end of Q1, 2025. 

On Jan. 31, Tether announced record-breaking profits of $13 billion in 2024 and revealed having a larger-than-ever stockpile of US government bonds. Tether’s US Treasury portfolio is now worth approximately $113 billion, it stated. 

Meanwhile, its stablecoin is the third-largest cryptocurrency by market capitalization, which is at an all-time high of $141 billion, following the issuance of another billion dollars worth on Feb. 5.

Authored by James Rickards via DailyReckoning.com,

It’s game on for the trade wars.

After months of threatening tariffs on U.S. trading partners during his 2024 presidential campaign, Trump has now taken definitive action on that front. On Saturday, February 1, Trump announced that the U.S. was imposing 25% tariffs on all goods imported to the U.S. from Mexico and Canada (with the exception of Canadian energy, which was tariffed at 10%) and additional 10% tariffs on all goods imported from China.

These new Chinese tariffs were on top of tariffs Trump imposed on China in 2018, many of which were left in place during the Biden administration. All of these new tariffs were to take effect on Monday, February 3rd.

Trade Wars Are Heating Up

Canada announced they will retaliate against Trump’s tariffs with 25% on a list of U.S. imports and warned Americans that Trump’s actions would have real consequences for them. Mexico has said it will also impose retaliatory tariffs, without mentioning any rate or products.

Meanwhile, China struck back at the United States by announcing tariffs on select American goods, escalating the trade war. Some U.S. goods imported into China will be subject to tariffs of up to 15%, as they rolled out a series of retaliatory measures to counteract Trump’s planned tariffs.

The new trade wars have now gone global. In addition to the Mexican, Canadian and Chinese tariffs, Trump announced that EU tariffs are coming soon. Trump tentatively indicated that the EU tariffs would be 10% across the board.

Even though there have been concession moves by both Canada and Mexico recently, Trump has only delayed his tariff plans in the negotiations.

But It’s clear that a full-scale global trade war is now underway. And it could be devastating for investors who don’t know how to maneuver through the landmines.

Neighborhood Wars

Canada ($419 billion) and Mexico ($475 billion) account for almost 30% of all goods imported by the United States. Canada, Mexico and China are the three largest trading partners of the U.S.

Obviously, Canada and Mexico are our closest neighbors, and each shares a long border with the U.S. The new trade wars will have many facets, but solving problems with regard to Canada and Mexico will be a big part of the global puzzle and establish benchmarks by which other countries will be judged by the U.S.

The extent of Canadian and Mexican trade with the United States is difficult to overstate. Twenty-three of the fifty states rank Canada as their number one trading partner measured by imports. That includes the entire northern tier of U.S. states from Washington to Maine (with the exceptions of Idaho and Michigan) and most of the Midwest.

Ten of the fifty states rank Mexico as their number one trading partner measured by imports. That includes the entire southern tier of U.S. states (with the exceptions of California and Florida), plus the states of Missouri, Kentucky and Michigan. From automobiles to avocados, Canadian and Mexican imports are everywhere.

Trump cited three reasons for imposing tariffs on Mexico and Canada: illegal immigration, fentanyl and unfair trade practices. The issues of illegal immigration and fentanyl are closely linked because they both involve securing the border.

A bigger issue lurking behind the U.S.-Mexico negotiations is the extent to which Chinese companies have taken over Mexican companies or built their own factories in Mexico to do an end-run around direct tariffs on China.

The Chinese are putting automobile assembly plants in Mexico and exporting the cars to the U.S. free of tariffs under the U.S.-Mexico-Canada Trade Agreement (USMCA, the successor treaty to NAFTA). It may be the case that U.S. auto companies (Ford, GM) will be able to continue bringing in cars to the U.S. without duties while the Chinese-owned companies in Mexico get whacked.

That leaves open the issue of European car makers with plants in Mexico. I spoke to a well-informed source at Audi recently. They’re frantic. They just built a multi-billion-dollar plant in Mexico to do final assembly on the Q5 SUV (their most popular model). They expect that new Mexican tariffs will price it out of the market (compared to Toyotas and Nissans that are built in the USA).

Volkswagen, which owns Audi, may be in financial distress as a result of Audi’s mistake. It was clearly a major blunder on Volkswagen’s part not to locate their Audi factory in Tennessee or South Carolina as other foreign car manufacturers have.

The trade situation with Canada is more problematic.

Even with the one-month delay in imposing tariffs on Canada, the substantive policy issues remain. Trudeau is not in a strong position to negotiate anything because he has already agreed to step down as party leader and Prime Minister. The fight to replace him as party leader is being led by former Deputy Prime Minister Chrystia Freeland, a trade-hawk and neo-fascist sympathizer.

National elections in Canada are scheduled for October 20, 2025, but could be held sooner. The national election could come down to Chrystia Freeland as the Liberal Party Leader and Pierre Poilievre as Conservative Party Leader. Poilievre is far more reasonable on trade issues than Freeland.

The Freeland Plan to fight Trump includes dollar-for-dollar tariff retaliation, an international anti-Trump trade coalition including Mexico, Denmark, Panama and the EU, a ban on purchases of U.S. goods by all Canadian federal government agencies, a ban on American companies bidding on Canadian government contracts, a ban on American firms participating in projects funded by Canada, and support for Canada’s cultural sector against “Donald Trump’s billionaire buddies.”

The even more radical Ottawa Premier Doug Ford has proposed halting Canadian energy exports to the U.S. and “ripping up” Ottawa’s contract with Elon Musk’s Starlink company.

Canadian exports to the U.S. are dominated by energy products (about $165 billion) followed by automobiles and parts (about $83 billion), and consumer goods (about $70 billion). Electronics, food, fish and aircraft make up a relatively small part of the total.

Investors should accustom themselves to continual trade wars and the market volatility that goes with them. But this also means there are profit opportunities as Trump pursues the art of the trade deal.

Why Higher Tariffs?

Trump wants America to enter a “new golden age”. He wants to do that by a revival of the American System. Part of that system was imposing high tariffs on imports to support manufacturing and high-paying jobs in the United States. You can see from the chart below how historically America ran trade surpluses when high tariffs were in place.

Foreign companies will be free to sell goods to Americans, but only if they are manufactured in the U.S. This will lead to a wave of inbound investment in the U.S., a reduction in U.S. trade deficits, a stronger dollar (as the world demands dollars to invest here), and higher wages for U.S. workers.

Higher wages will raise real incomes, stimulate consumption, decrease income inequality and expand the tax base to help reduce deficits without raising tax rates. Trump’s plan is designed to rebuild American factories, the American economy, and support American workers.

The increase in investment in the U.S. also accelerates the U.S. lead in high technology including semiconductors, artificial intelligence, nanotechnology and quantum computing. China has kept pace in these fields by stealing intellectual property and providing massive government support. Now, the U.S. can pull away from China by importing some of that technology and relying on private investment along with government support.

Contemporary critics of tariffs (basically all mainstream economists) claim that these tariffs will invite retaliation by trading partners and may cause a replay of the collapse of world trade that did occur in the 1930s.

This flawed analysis ignores the initial conditions qualifications described above. China is in the opposite position of the U.S. It produces too much and does not consume enough. China’s best approach would be to lower its tariffs, encourage consumption by its citizens and attempt to strengthen its currency so that its consumers can afford more imported goods.

In fact, we expect China to do the opposite and hunker down in its neo-mercantilist approach by cheapening its currency and attempting to flood the world with more exports.

If China takes the latter approach, it will fail. That won’t be the fault of the United States, it will be China’s own failure. U.S. policy should not be designed to Make China Great Again. That’s China’s job.

U.S. policy is to Make American Great Again. That means high tariffs, lower taxes, more productive investment (including public investment) and high-paying jobs that will support consumption side-by-side with increased investment.

The global tariff and financial wars will feature countries stealing growth from their trading partners. There will be pain but also opportunity. Some sectors will do better than others as this chess match plays out.

Investors want a slice of X as Elon Musk’s social media platform becomes the epicenter of news distribution, while corporate leftist media outlets and their government-funded censorship cartel face a fiery demise (see: Politico). This follows a multi-year advertiser boycott led by mega-corporations and relentless lawfare by an army of leftist nonprofits in their attempt to destroy the platform. However, those efforts have failed, and Musk has gone on the offensive, positioning X for a year of success.

In the latest report from The Wall Street Journal, top banks finished up a sale of debt backed by X. Sources familiar with the debt deal stated that the banks initially planned to sell around $3 billion in debt at 95 cents on the dollar. However, due to surging demand from large high-yield fund managers, the deal was upsized to $5.5 billion. 

Buyers of the debt included Pimco and Citadel, who agreed to pay 97 cents on the dollar. The floating-rate debt carries an interest rate of 11%, with borrowing costs several percentage points higher than some of the riskiest loans on Wall Street. 

The upsized sale of X debt marks the end of the multi-year doom loop for Musk’s social media company. Since purchasing the platform in 2022, Musk has faced relentless advertiser boycotts and endless lawfare from shadowy leftist billionaire-funded nonprofit groups. However, X’s ability to circumvent the Biden-Harris regime’s censorship cartel and play a key role in the Trump-Vance presidential victory has placed Musk in Washington as a special government employee leading DOGE efforts. This, in return, has strengthened Wall Street’s confidence in X.  

Additionally, Trump’s executive order on “restoring free speech and ending federal censorship” is expected to provide additional tailwinds for X and other alternative media platforms. This is yet another key driver of soaring optimism around X. 

Last Friday, X CEO Linda Yaccarino and Morgan Stanley bankers presented prospective investors with metrics showing the social media platform’s financial health was set to rebound in 2025. 

“Revenue should improve rapidly this year, as the advertising boycott winds down,” Musk told one X user. 

Revenue should improve rapidly this year, as the advertising boycott winds down

— Elon Musk (@elonmusk) February 6, 2025

WSJ noted:

Financial documents reviewed by investors showed that the artificial-intelligence company transferred hundreds of millions of dollars to the social-media company, the people said. That money has helped X pay its bills and stay current on its obligations, the people said. Growing advertising revenue at X should mean fewer transfers in the coming months and years, the people said.

The financial documents said X now holds a 10% stake in xAI, valued at around $5 billion, people familiar with the matter said. The AI company last year was valued at $50 billion. Musk had previously posted that X investors would own 25% of xAI.

X also reported to the investors 2024 adjusted earnings before interest, taxes, depreciation and amortization of about $1.25 billion and annual revenue of $2.7 billion. Investors said that was a better picture than they had expected and that X’s finances hit an inflection point a few months before the November election.

In 2021, Twitter reported adjusted Ebitda of about $682 million and about $5 billion in revenue. That was the last full year before Musk took the company private.-WSJ

X’s debt sale is a big relief for banks…

You’ll never guess what happened next https://t.co/Z2hX260Up5 pic.twitter.com/5SnGA9Vz6K

— zerohedge (@zerohedge) February 6, 2025

Yaccarino and X CFO Mahmoud Reza Banki told investors that advertisers are returning and that the company’s valuable stake in xAI should give them enough confidence to invest in the social media platform.

“Go. Fuck. Yourself.” – Elon Musk (2023) 💥 pic.twitter.com/FH4PhMV0o5

— Kevin Svenson (@KevinSvenson_) November 29, 2023

. . .  

Authored by Sam Bourgi via CoinTelegraph.com,

Trump Media and Technology Group (TMTG) intends to launch exchange-traded funds (ETFs) and separately managed accounts (SMAs) tied to its Truth Social platform, which includes investment strategies related to Bitcoin.

According to a Feb. 6 announcement, TMTG has filed trademark registrations for various ETFs and SMAs tied to the Truth Social platform and Truth+ video streaming service. 

The trademarks include Truth.Fi Made in America ETF, Truth.Fi Made in America SMA, Truth.Fi US Energy Indepedence ETF, Truth.Fi US Energy Independence SMA, Truth.Fi Bitcoin Plus ETF and Truth.Fi Bitcoin Plus SMA.

TMTG Chairman and CEO Devin Nunes said the funds give investors the ability to invest in “American energy, manufacturing and other firms that provide a competitive alternative to the woke funds and debanking problems” allegedly found in other parts of the market. 

This strategy includes “exploring a range of ways to differentiate our products, including strategies related to Bitcoin,” said Nunes.

The proposed Truth.Fi funds include an initial investment of up to $250 million to be custodied by Charles Schwab, the announcement said. The New Jersey-based Yorkville Advisors will serve as the Registered Investment Advisor for the new products.

TMTG was founded in 2021 and is majority-owned by US President Donald Trump. The company went public in March 2024 and its stock currently trades on the Nasdaq.

Trump’s crypto MAGA promise

President Trump has promised that cryptocurrencies will flourish under his administration. This was further reiterated on Feb. 4 when Republican congressional leaders said they would form a working group to focus on crypto and stablecoin legislation. 

“We don’t want to be behind in financial technology and digital assets in the United States,” said Arkansas Representative French Hill.

Senator Tim Scott, Rep. French Hill and Senator John Boozman reiterate Republicans’ push for pro-crypto legislation. Source: US Senate Banking Committee

On the same day that Republicans announced their renewed regulatory push for pro-crypto legislation, Securities and Exchange Commission Commissioner Hester Peirce vowed to fix the “mess” that ex-SEC Chair Gary Gensler left behind regarding crypto. 

According to Peirce, the White House’s newly formed Crypto Task Force is recommending that the SEC “provide temporary prospective and retroactive relief for coin or token offerings” that were unfairly targeted by the previous regime.