The Rundown - Tariff Wars Bring Chaos to Market, Tesla China-Made EV Sales Drop 49% Last Month

Episode Date: March 4, 2025

Stock market update for March 4, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Tuesday, March 4th. In today's episode, we're talking about tariffs. The trade war got kicked into gear today, and the market reaction has been swift. We'll break it all down. We also recap earnings from Target and Best Buy

and why they expect prices to go up. Then stick around to the end of the show to find out which economy is likely to get hurt the most from these tariffs. All right, let's go. Well, the trade wars are officially underway and the markets do not like it. Yesterday was the worst day of the year for the S&P 500, losing more than 1.7% and the NASDAG dropped more than 2.5%. This reaction from the markets come after President Trump announced that 25% tariffs against Canada and Mexico would move forward starting today. On top of that, Trump slapped China with an additional

10% tariff. Remember, he had initiated a 10% tariff on China in early February. Well, starting today, Chinese imports will be hit with a 20% tariff. So, yeah, these tariffs are real. And I think markets never took Trump's tariff threats seriously until this point, thinking that it was just a negotiation tactic or something. But now that these tariffs have officially gone into effect, it's like a gut punch to investors. But don't get so comfortable because we got even more tariffs coming. Trump says he plans to slap reciprocal tariffs on any country the U.S. has a trade deficit with starting on April 2nd. There's also going to be a 25% tariff on aluminum and steel that's expected to go into effect later this month. And Trump has also threatened the EU with tariffs.

So we might just be in phase one of Trump's tariff plans. Now China, Canada, and Mexico have all announced plans to fight back against these tariffs. China is imposing a 15% tariff on American foods and also banning 15 U.S. companies from buying products from China. That goes into effect immediately. Canada is also slapping a 25% tariff on $30 billion of U.S. imports starting immediately. And then another $125 billion of U.S. products will be hit with a 25% tariff starting in 21 days. And then finally, Mexico says they plan to announce their retaliation by Sunday of this week.

So yeah, the trade war is escalating quickly. and we might start feeling the impacts of these tariffs pretty quick. In fact, the Atlanta Fed has already updated their forecast for Q1 GDP. Yesterday, the Atlanta Fed GDP now economic forecasting tool is now expecting a 2.8% drop in GDP for Q1. I mean, last week they were forecasting a 1.5% decline in Q1 GDP, and just a month ago, they were expecting a 2.3% growth in GDP. So that is quite a reversal going from projecting a 2% growth down to nearly a 3% drop, down to nearly a 3% drop.

So people are already starting to throw the term Trump session around after these latest projections. So yeah, a lot going on right now to say the least. And I feel like we get hit with new stuff like every other day that we barely have time to process it. Like this crypto strategic reserve announcement from Trump over the weekend, that's already old news. And now we're talking about tariffs.

By the way, Bitcoin has given up all of its gains since that announcement. But yeah, what I'm trying to say is with the way the last six weeks have gone, I feel like we're going to have a lot to talk about over the next few weeks, months and probably over the next four years. So if you're a new listener to the show, it's a great time to get subscribed to the podcast. It's to stay in the loop. We've got a great team over at public.com.

Shout out to Mike and Connor doing a lot of the work behind the scenes to stay on top of this stuff. And thank you to everyone that's been listening to the show over the last year. You guys listening to the show and engaging with the show allows us to invest in the show and put out good content. All right, let's get back to the markets.

Let's run through some headlines. And we're going to start with an earnings recap from Target and Best Buy. Both these retailers reported earnings this morning, and they had a very similar story. Let's start with Target. Their revenues dropped by 3% in Q4, and their profits dropped by 20% to $1.1 billion.

But both those numbers did beat Wall Street estimates. Now, the company is expecting a meaningful drop in first quarter profits compared to a year ago. Target seems to be worried about consumers cutting back on spending, specifically discretionary spending, which is like the thing that Target is known for. The company also said that 25%

tariffs on Mexican imports would lead to higher prices for produce like bananas, strawberries, and avocados within the next coming days. So because of all this uncertainty, investors are dumping target stock today, which shares down more than 5% this morning. Best Buy also had a very similar story. Their revenues and profits were down in Q4 compared to a year ago, but they also beat Wall Street estimates. Just like Target, they expect a slowdown in Q1.

To make matters worse for Best Buy, their top two supply chain sources are Mexico and Canada, and they expect these tariffs to lead to higher prices for consumers. The stock is facing some heavy selling today, which shares down nearly 15% this morning in reaction to these earnings. So, brutal day for both these retailers. Switching gears a bit, let's talk about AI. One of the hottest names in the AI space has been the AI cloud provider, Corweef, and the company just filed for an IPO.

Now, CoreWeef provides computing capacity for clients who want to train and use artificial intelligence. Basically, they own data centers with a ton of Nvidia chips, and they rent out that capacity to companies to train their AI models. At the end of 2024, CoreWeaves' 32 data centers housed 250,000 Nvidia chips. And as you can imagine, their business has surged over the last couple of years. In fact, their revenues jumped nearly $740% to $1.9 billion in 2024. Now, 62% of CoreWeaves's sales comes from Microsoft, and 77% of their total sales were generated from just two clients,

to Microsoft. So they're relying on just a couple key paying clients. Seems kind of risky to me. So I wonder what their IPO is going to be priced at. Corweave is expecting a $35 billion valuation. So we'll see if they get that or more because of the AI hype. By the way, Nvidia and Cisco are amongst one of CoreWeaves's investors. Now, fun fact about Corweave, they actually started off as a crypto mining company when they were founded back in 2017. They were originally named Atlantic Crypto and they sold infrastructure for mining Ethereum. And because of that, they bought a ton of Nvidia GPUs. And then they smartly pivoted to AI once they saw the AI stuff take off.

Let's talk about some stocks making moves today. Not a lot of green on the board today. But Octa is a big winner after a strong earnings report. The cloud software company pulled off the earnings trifecta. They beat on top line and bottom line. And they raised their guidance not just for Q1, but for the full year as well. The CEO says the company is positioning to be an AI winner because it adds the security layer for companies selling AI infrastructure and applications using AI models.

Octa stock is up nearly 20% this morning. Now, on the flip side, Tesla not doing so hot. Tough news for them coming out of China. Tesla's China-made EV sales dropped 49% in February compared to a year ago. The total sales amounted to just under 30,700, which is the lowest level since August of 2022. You know, we've talked about this a lot, but Tesla is feeling a ton of pressure from homegrown Chinese EVs like BYD. In fact, BYD's EV and hybrid sales soared 90% in February. So investors are nervous about that, and Tesla stock is down around 7% this morning at the time of this recording.

Oh, also, Nvidia is down around 2% this morning after losing 8% yesterday, and its stock prices near 6-month lows. Let's wrap the show with the fun fact. Canada and Mexico send about 80% of their exports to the U.S. While China sends only about 15%. So what that means is that tariffs on Canada and Mexico are likely to have a pretty significant impact on the Canadian and Mexican economy. Now, a bonus fun fact, outside of oil,

the biggest import from both of these countries are cars and auto parts, which just gives you an idea of which industry in the U.S. is likely to be impacted the most from these tariffs. We're going to be talking about the fallout from these tariffs for weeks. Well, all right, guys, that's the rundown for today.

What a wild start of the week. And somehow, I bet it's only going to get crazier. So make sure you guys are subscribed to the podcast to stay in the loop. And if you guys enjoyed today's show, consider giving us a five-star rating on Apple or Spotify. Vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really does help us out. And it helps other people find the show.

Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you. you guys back here tomorrow.