Breakfast | "Tariff Storm" is Coming! Protests to "Take Down Tesla" Erupt

Last Week Review

Concerns over tariffs and inflation hit hard, with U.S. stocks plummeting; on Friday, the Nasdaq fell nearly 3%, and the S&P 500 dropped nearly 2%. Nvidia saw a weekly decline of nearly 7%; Tesla retreated over 3% but still gained nearly 6% for the week, ending a nine-week losing streak. CoreWeave's IPO experienced a rollercoaster on its first day, dropping over 6% during the day before turning positive, ultimately closing flat. Fears that chip bill funding may fall through led to a nearly 52% drop in Wolfspeed.

The China concept index fell over 3%. The pan-European stock index dropped over 1% for the week, marking its largest decline in three months.

After a surge in U.S. consumer inflation expectations, the yield on the 10-year U.S. Treasury bond plummeted by over 10 basis points during the day; the dollar hit a new daily low. Trump stated that the U.S. and Canada would hold talks, causing the Canadian dollar to spike. The offshore yuan fell over 100 points during the day, breaching 7.27, before turning positive. Bitcoin dropped over $4,000 during the day, falling below $84,000.

Crude oil fell from its monthly high, with Brent crude experiencing its first decline in a week, although it has risen for three consecutive weeks. Gold reached a new high, gaining over 2% for the week, marking four weeks of consecutive increases. Copper prices fell for three straight days.

"Take Down Tesla" Protest Day Erupts, "Nearly Half of Global Showrooms, Tens of Thousands Protest, Targeting Musk"

On March 29, a global protest called "Take Down Tesla" erupted simultaneously in the U.S., Canada, and Europe. Approximately 200 Tesla showrooms worldwide became targets of the protests, accounting for nearly half of Tesla's 438 showrooms, with thousands participating.

Protesters specifically targeted Tesla CEO Elon Musk's role as head of the "Department of Government Efficiency" (DOGE) under the Trump administration.

Since taking office, Musk has pushed for cuts to federal government spending, reduced regulations, and layoffs, including proposals to cut 20% of IRS employees and close the U.S. Institute of Peace. These radical measures have raised widespread concerns, with protesters arguing that this will harm the quality of government services and public interest.

Musk Announces xAI Acquisition of X, Total Valuation of $113 Billion

On Saturday, Tesla CEO, xAI founder, and the world's richest person Elon Musk announced that his artificial intelligence company xAI, founded two years ago, has acquired the X platform (formerly Twitter) that he purchased three years ago. Musk stated that this merger is a complete stock swap, valuing xAI at $80 billion and X at $33 billion. Additionally, the X platform has $12 billion in debt, so the overall cost of the xAI acquisition will reach $45 billion.

CoreWeave's U.S. IPO Opens Below Offering Price, Drops Over 6% During Trading Before Closing Flat

Despite support from Nvidia and strong customer demand, AI cloud computing company CoreWeave ultimately priced its IPO at $40 per share, below the expected range, reducing its valuation to $19 billion. The stock opened down 2.5%, dropped over 6% during the day, then rebounded and briefly turned positive, ultimately closing flat at $40. The CEO admitted that without Nvidia as an anchor investor, they would not have been able to complete the IPO.

Muddy Waters Short Report Strikes, Causing AppLovin's Stock Price to Plummet

Last Thursday, AppLovin's stock plummeted 20% in the U.S. stock market, marking the largest single-day drop, following a short-selling report released by Muddy Waters. This is at least the third report targeting AppLovin released by short sellers in about a month. In February, Fuzzy Panda and Culper Research both published short-selling reports on this marketing service provider for app developers, leading to a decline in its stock price. Just days before these reports were released, The Bear Cave also issued a cautious assessment report on AppLovin's stock.

AppLovin was once one of the standout tech stocks of 2024, with its stock price soaring over 700% driven by the AI boom. In November, the company's stock was included in the Nasdaq 100 index, further boosting its stock price, and by the end of the year, its market capitalization had exceeded $110 billion.

GPT-4o's image generation is hot, but the official has limited access

Industry insiders believe that as the capabilities of foundational large models improve, some star AI startups' image generation tools may become insignificant. After all, if GPT-4o is likened to a knowledgeable and rational designer, then Stable Diffusion is still limited to the level of a graphic designer.

Michigan's long-term inflation expectations hit a 32-year high, consumer confidence hits a two-year low

The Federal Reserve's favorite inflation indicator is heating up, with the U.S. core PCE rising 2.79% year-on-year in February, but personal spending saw almost no growth. Due to tariff shocks, Michigan's long-term inflation expectations have reached a 32-year high, while consumer confidence has hit a two-year low.

The PCE report has raised concerns about stubborn inflation and potential stagflation, with traders continuing to bet on a rate cut by the Federal Reserve in July.

The final value of Michigan's one-year inflation expectation for March is 5%, higher than the expected 4.9%, with an initial value of 4.9%; the final value of the five-year inflation expectation for March is 4.1%, the highest since February 1993, exceeding the expected 3.9%, with an initial value of 3.9%. Following the data release, U.S. stocks plummeted.

"Tariff storm" is coming!

Trump announced plans to implement reciprocal tariffs on April 2.

Trump called out to the world: tariff agreements can be negotiated, but only after April 2.

Trump stated that he is willing to negotiate certain agreements with countries seeking to avoid U.S. tariffs, but such negotiations must wait until his government announces the global "reciprocal tariffs" and potential tariff details for certain specific industries on April 2.

Trump told reporters that several countries, including the UK, have approached the U.S., trying to negotiate to avoid retaliatory tariffs or so-called "reciprocal tariffs." "They want to reach an agreement. If we can benefit from it, reaching an agreement is entirely possible," he said in an interview. "There is no doubt that I am open to it—provided we ensure that we receive corresponding returns."

Citi's commentary on the "tariff storm" is as follows Global Economic Outlook: It is expected that the average tariff in the United States will increase by 10%-15%.

Stock Outlook: This may lead to a decline of about 5% in the earnings per share (EPS) of U.S. companies (the decline for European stocks is smaller and will also be reflected in stock prices).

U.S. Interest Rate Outlook: There are opportunities in the mid-range of the inflation curve.

Foreign Exchange Strategy Outlook believes that the tariff announcement date on April 2 may become a catalyst for the weakening of the euro, with whether value-added tax (VAT) is included in the tariff scope being a key factor.

Commodity Outlook: The basis (EFP) contracts for silver futures and spot can hedge against the risks of more aggressive tariff policies.

In terms of asset allocation, Citigroup analyzed three scenarios: a significant increase in tariffs would trigger risk-averse sentiment, while a moderate outcome could drive the U.S. stock market up; currently, Citigroup remains cautious and reserves funds to take action when opportunities arise.

State Administration for Market Regulation: Legal Review of CK Hutchison Port Transactions

The State Administration for Market Regulation stated that it will conduct a legal review to protect fair market competition and maintain public interest. The official website of the State Administration for Market Regulation shows that the Anti-Monopoly Enforcement Division II is responsible for conducting anti-monopoly reviews of operator concentration behaviors in accordance with the law.

Zhu Xiaohu: Jinsha River is Gradually Exiting Humanoid Robot Companies

He stated that he currently does not see the commercialization potential of embodied intelligence or humanoid robot companies. He said, "What we fear most is a highly concentrated market consensus with unclear commercialization. We have never made money in such cases."

This Week's Major Agenda

In terms of major events, Trump announced plans to implement reciprocal tariffs on April 2, Federal Reserve Chairman Powell and Vice Chairman Jefferson will speak, European Central Bank President Lagarde will speak, the European Central Bank will release the minutes of the March monetary policy meeting, a new round of price adjustments for domestic refined oil will begin, and events for Microsoft's 50th anniversary and Xiaomi's 15th anniversary will take place.

In terms of data, focus on U.S. March non-farm employment and PMI, China's March PMI, and the Eurozone's March harmonized CPI report. In terms of earnings reports, pay attention to Sirius, Kweichow Moutai, Haitian Flavoring & Food, Stone Technology, Helen's, and Fosun International