- Advertisement -
Corporate America stumbles in the dark, just like investors.
Ford And General Motors Managers say they cannot estimate what awaits us. There is even too much fog to have a gamble, so both companies have suspended profit guidance – signals about future sales and profit – so that investors themselves navigate. And the car manufacturers are not the only ones. A wide range of companies, including Delta Air Lines” Southwest AirlinesThe shoe company Skechers” Ups and the motorcycle manufacturer CumminsSay that they cannot talk about the future with confidence.
It is again a profit season on Wall Street, and it is a stranger. The listed companies usually issue their recent financial data every three months and then discuss what they can expect in the coming weeks. Not this time.
The rear -sighted performance data is as usual available, but it is already an old history. The Trump government On-again, off-again The imposition of the steepest rates in a century has shifted the prospects for the world economy and for individual companies so thoroughly that many managers, especially those who are directly affected by rates, cannot project in a meaningful way.
“Given material rate -related risks in the short term and the potential reach of the results, we suspend guidance for the entire year 2025,” said Serry House, Chief Financial Officer of Ford, this week.
They recorded some things that Ford does not know: “These risks in the short term include: industrial disruption of the supply chain that influences production; future or increased rates in the US; changes in the implementation of the rates, including rates related to tax and disposal policy.” That is quite a list, but it is a realistic one.
No wonder that “uncertainty” has become a verbal word for managers. This season they pronounced it in 87 percent of the profit calls, compared to 38 percent in the past three months, according to John Butters, the vice -president and senior profit analyst of FactSet. Managers used ‘rates’ in 93 percent of the profit calls. “Recession” came in 30 percent of these discussions, versus 3 percent in the previous quarter.
Solid economic and market reviews require knowledge of how far the administration goes with rates and other matters that weigh on consumers and companies. At the moment it is impossible to know.
Consider the precarious state of American relations with its three largest trading partners, Mexico, Canada and China.
President Trump wants the US Army to enter Mexico to fight against the drug cartels. Last Sunday, he confirmed That he had encouraged Claudia Sheinbaum, the president of Mexico, to approve an American military raid.
In one rack Last weekend she told the Mexican audience how she reacted. “I said to him:” No, President Trump, our territory is inviolable, our sovereignty is inviolable, our sovereignty is not for sale. “She added:” We will never accept the presence of the army of the United States on our territory. “
But is this really the end of the case? With Mr. Trump it would be unwise to make that assumption.
Then there is Canada. In a white house meeting last week with Mark Carney, the new Prime Minister of Canada, Mr. Trump once again insisted that one day Canada would be the 51st state. Prime Minister Carney quickly replied: “It is not for sale, it will never be for sale.” Mr. Trump could have stayed well enough alone – but he didn’t. “Never say never,” said the president.
Because the North -American car production is intertwined in Canada, Mexico and the United States, diplomatic relations between the three countries have a direct influence on the prospects of the large car companies. Where tariff levels will end is crucial for the car industry – and of course for American employees and consumers. Without more certainty, production will delay or stop and prices will rise.
But it is not only cars that are affected by the hesitant threats and rules for rates of Mr Trump. Almost everywhere you look, you can find companies that are working on winding maneuvers to maximize profit and to handle possible rates, which they will ultimately be.
Take Apple. Tim Cook, the chief executive of the company, said on a profit call of 1 May that the rates in the three months that start in June, probably add $ 900 million to the costs of Apple. But, he said, that estimate assumes: “The current global tariff percentages, policy and applications do not change for the balance of the quarter and no new rates are added.” That assumption is of course probably not valid. It can be partly why Mr. Cook warned that “this estimate should not be used to make projections for future quarters.”
Many Apple products have been made in China for years, but even that changes quickly because of the rates.
“We expect that the majority of the iPhones sold in the US will have India as their country of origin and Vietnam as the country of origin for almost all iPad, Mac, Apple Watch and AirPods products,” said Mr. Cook. “China would remain the country of origin for the vast majority of total product sales outside the US”
How many iPhones and other Apple gadgets will cost, and whether Apple can maintain its thick 47 percent gross margin in the coming quarters are crucial questions for investors in the gigantic company.
This also applies to the American relations with China, which have fallen to their lowest EB in decades. American rates on many Chinese products are now at 145 percent, a level that is so high that it comes down to ‘the equivalent of an embargo’, in the words of Scott Bessent, the Minister of Finance. For the time being, Apple benefits from a temporary exemption from rates on smartphones from China, although higher rates for semiconductors (important ingredients of smartphones and much different) are considered by the Trump administration, and the smartphone exemption can be saved. Moreover, Apple came under pressure to move production to the United States, which would also increase the iPhone costs.
The first official American Chinese meeting since the start of the trade conflict is planned for this weekend in Geneva. But both parties have filled in expectations. It is a start, they say, but it is not very likely that there will be substantive negotiations.
Due to rates induced disturbances, economic data is difficult to dissect. Companies and consumers hurried to buy imported goods in the first months of the year before the rates started. The American trade deficit increased, which influenced the gross domestic product figures for the first quarter – which would have been three months of positive growth in a negative territory. And the import dump may already be over. Container Traffic from China to the US West Coast Ports has fallen, which could mean shortages of imported products on American shopping boards in a few weeks.
“The uncertainty about the economic prospects has increased further”, the Federal Reserve said in a statement last week. And Jerome H. Powell, the FED chairman, said in a press conference: “There is so much uncertainty about the scale, scope, timing and perseverance of the rates.” Until it is clear whether the greatest threatening economic threat of rates is a higher inflation or a delay in the economy – both being able to develop, in a dreaded phenomenon known as stagflation – the Fed will keep the interest rates stable, Mr Powell said.
The stock market has been remarkably resilient, given the extent of the threatening, self -caused damage that the rates could cause for the US economy. Stock analysts have, very slowly, started to take the tariff shock into their estimates. But although they project a delay in profit growth for American companies, they have largely included the possibility of a recession. In a likely reduction in profit growth this year, they are expecting that the profit will continue to grow-with a re-acceleration in 2026. If they are right, the stock market will probably increase in the coming years.
And they can be right. But really, they base these projections on scanty proof. Risk -Aasprowte Investors will want to store a substantial amount in a safe place for the short term, because US government policy can bake the markets. It is not a pleasant look, but it is what the economic situation requires.
- Advertisement -
