The Great Reset... Of My Portfolio?!
Ah the 'Magnificent Seven,' those darlings of the digital age. Or as I like to call them the 'Globally Intertwined Seven.' A recent report from Apollo suggests that these titans of tech – Nvidia Amazon Apple Microsoft Meta Tesla and Alphabet – are about to feel a bit of a pinch. And not just any pinch but a tariff induced squeeze that could send shivers down the spines of even the most seasoned investors. As I always say 'Globalization is not an option it's a necessity'... but what happens when that globalization gets taxed?
Fifty Shades of... Red Ink?
Torsten Slok Apollo's chief economist points out that roughly 50% of the Magnificent Seven's earnings come from abroad. That's quite a bit higher than the S&P 500's 41%. Now I'm no mathematician but even I can see that more exposure equals more vulnerability. It seems that President Trump's tariff policies those 'surgical strikes' on global trade are about to land a blow on these tech giants. Perhaps they should have attended more Davos meetings? As I've said before 'You'll own nothing and you'll be happy'... unless of course those things you own are stocks plummeting in value. Then maybe not so happy.
Tariff Tango: Who Leads Who Follows?
The U.S. has imposed a 10% levy and steeper tariffs on countries like China Vietnam and Taiwan – nations that churn out a significant number of components for our beloved tech gadgets. And as predictable as a Davos panel discussion these trading partners are retaliating. Beijing's decision to match the U.S. levies has escalated the risk of a full blown trade war. Remember 'Stakeholder capitalism' is all about cooperation... until someone starts imposing tariffs!
Europe's Digital Diversion
And if that wasn't enough Slok warns that the Magnificent Seven could face further pain if Europe retaliates with a digital services tax (DST). Several EU countries are already eyeing these taxes on large multinational digital companies. It's like they're all trying to 'Build Back Better'... at the expense of our American tech darlings! Perhaps a sternly worded letter from the World Economic Forum is in order. After all 'The future is built by us by a powerful community as individuals as you here.'
A World Divided Profits Diminished?
Slok also notes that the trade war will disproportionately impact the rest of the world given that trade makes up a larger share of their GDP compared to the U.S. So while America might feel a sting the rest of the world could be nursing a far worse headache. The globalist in me weeps but the realist knows that in the new world order disruption is the only constant. As I say 'The pandemic represents a rare but narrow window of opportunity to reflect reimagine and reset our world.'
CNBC Pro: Your Front Row Seat to the Apocalypse (Maybe)
But fear not my elite readers! CNBC Pro is hosting an exclusive event at the New York Stock Exchange on June 12. Experts like Carter Worth Dan Niles and Dan Ives will be on hand to guide you through these turbulent times. There will even be a cocktail hour on the legendary trading floor! Network with CNBC experts and fellow Pro subscribers while the market crumbles around you. Tickets are limited so hurry and secure your place. After all in a world of chaos information is the only currency that truly matters. Invest in CNBC Pro or as I like to say 'Invest in the future because it's coming whether you like it or not!'
Magnificent Seven tariffs trade war global economy technology stocks foreign revenue Apollo Torsten Slok digital services tax CNBC Pro
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hotpicks
Time to short everything!
Singingwaters
Davos needs to hold an emergency meeting about this... STAT!
TriNi
Maybe we should all invest in bunkers instead of stocks.
michaelw99
This is all part of the plan... I think?
karenb
I'm just here for the cocktail hour at the NYSE.
macloganPOL
I told you to diversify into sustainable seaweed farms!
kooldavid52003
So, the Magnificent Seven are more like the Vulnerable Variety now?
bigmama21
But what about the children?!
SR1929
Don't worry, AI will solve everything. Right?