The tariffs uncertainty will hurt Q2 outlook but there might be opportunities to buy 

关税的不确定性将大幅影响第二季度业绩预期，但个股仍有买入的机会

Back in late Dec 2024, we wrote an article and said 10% pull back could be coming for US major indexes. As of 11 Mar, S&P500 was down 10% from recent high. Dow Jones was down 8.6%, NASAQ was down 14.3%, and Russell 2000 was down 13.9%.

The decline in NASDAQ was sharper than the bear market in 2022, and interestingly, the first 13 days decline was bigger than the first 13 days of COVID.

We want to look beyond market sentiment and look at whether this is an opportunity to buy dip. 

The most detrimental thing about current policies environment is not just tariffs, but tariffs uncertainty. For example, US construction companies were in a panic buying frenzy of lumber at very high price when Trump first announced tariffs in Canada, only to find out sometime later that the tariff will be on hold. Another industry which felt more pain is automotive, which production is set up by region i.e. North America not by country. Even Trump’s new tariffs policies stay permanent for his term, he only has 4 years left in the office, and a new auto manufacturing plant will take 3-4 years to set up and cost USD3-4bn, so what’s going to happen when the next president comes into office, or even, Trump changes his mind tomorrow. Companies’ CEOs can not operate in environment like this, and they will most likely halt fixed asset investments, slow down hiring, and not make M&A decisions. 

Investors have to understand the current market decline is not just about multiple contraction, but also real earning contraction too. 

When most of the companies announced Q4 result for 2024, the trade war had not yet intensified, even then, the market punished good (but not great) results, such as NVIDA, Google, Paypal, etc. Fast forward to April/May when companies will announce Q1 earnings, we expect lots of companies to downgrade their Q2 forecast, and give less certainty on their earning call.

To make things worse, the recent pull back is not just in the technology sector, which retail investors are heavily concentrated in. Sectors such as financials, which are very much institutional trades, are also seeing significant pull back. Airlines, retails and consumer spendings related stocks are also down. It indicates market are starting to price in a recession. 

In addition, tariff resulted inflation will make Fed’s job a lot harder, and we may not see the next rate cut until July.

However, we think there are potential opportunities to buy. We think that the market will stop panicking after the policy makers stop panicking. Even we don’t think the policies will stabilize in the coming days especially Trump will implement reciprocal tariff on most of US trading partners on Apr 2nd . But given a peace deal in Ukraine is getting closer, most of the tariff news will be absorbed post Apr, and because we don’t believe the US will go into recession this year, we think some pockets of the market can see meaningful bounce from current lows.

In addition, even US exceptionalism sentiment is fading, while we see revaluation of Chinese stocks from all major buy sides and sell sides, and capital start to flow outside of the US to other equity markets. We still believe Trump is pro business and economy, and his political support base will only be strong if he delivers economic results. We believe when Trump said he does not care about short term market volatility, it is only true to certain extent, his policy will stabilize if the economic certainty and the market goes down beyond his tolerance level. 

While we don’t give any financial advice. We want to share some trades in our portfolio. 

Our strategy in this environment is to pick stocks:

1. Had either strong growth or profitability or policy tailwind

2. Have valuation below historical levels and sector average

3. Price had large retracement with tariff/recession fears but business will not directly be impacted by tariffs  

4. Reached good technical support levels 

In addition, we are also paying closing attention to next round of AI trade, which we think both infrastructure (include chips and power generation) and software trades are still viable. We will be looking for stocks with reasonable valuation and good growth visibilities.

This week, we opened new long positions in Alphabet (GOOG) , Lyft（NASDAQ: LYFT）, Super Micro（NASDAQ: SMCI）, Block（NYSE: XYZ） and Norwegian Cruise（NYSE: NCLH）, and we close our short position in Tesla（NASDAQ: TSLA）. 

In the next week or so, we look to add additional long position for Paypal（NASDAQ: PYPL） at around USD67, Coin Base（NASDAQ: COIN） at around USD160, AMD（NASDAQ: AMD） at around USD90.

根据我们2024年12月底的分析报告预测，美国主要股指会出现10%的回调。截至3月11日，标普500指数较近期高点下跌了10%，道琼斯指数下跌了8.6%，纳斯达克指数下跌了14.3%，罗素2000指数下跌了13.9%。

纳斯达克下跌速度比2022年的熊市更快，市场前13天的市场跌幅甚至比新冠疫情的前13天市场跌幅还大。可见市场情绪的恐慌程度。

恐慌情绪往往伴随着超跌和错杀，极速的下跌往往伴随着很好的买入机会，我们就来尝试揭开恐慌情绪的面纱，看看是否到了买入的时机。

当下政策环境中杀伤力最大的不仅是关税本身，而是关税政策的朝令夕改。就好比当特朗普首次宣布对加拿大征收关税时，美国建筑公司立刻以高价抢购木材，但很快被告知相关关税暂缓执行，导致木材价格过山车一般的起伏。另一个受到更大影响的是汽车产业，大部分汽车生产基地的布局是按照大区部署（如北美地区）而不是按国家部署。就算特朗普为了振兴美国汽车产业，宣布汽车关税会自始至终的贯彻，但他的任期也只有4年，而建设一个新的汽车制造基地最少需要3-4年的时间，耗资30 - 40亿美元。如果产线刚建好，下一任总统政策180度转弯，这些车企将面临无法估量的损失。更何况，没人知道特朗普的心情能不能让汽车的关税坚持到下个月。没有企业的CEO可以在这种环境下为企业做长期规划，所以在这段不短的动荡期内，企业会减少固定资产投资，放慢招聘速度，且放弃并购计划。

所以投资者需要清晰地认知到，目前的市场下跌不仅仅是市盈率的收缩，还包括净利润的下滑。

在当大多数公司公布2024年Q4业绩时，贸易战还未加剧，但即便在那时，市场也给了业绩优秀（但不够超出预期）的企业当头一棒，比如英伟达、谷歌、Paypal等，公布业绩后股价都出现不同程度的下跌。在即将来到的4月到5月，公司公布第一季度业绩时，我们预计许多公司将下调第二季度业绩预期，并在投资者交流会上以贸易战为理由告诉投资者未来业绩有很强的不确定性，到时可能会引发新一轮的恐慌。

更差的是，最近的回落不仅发生在散户投资者高度集中的科技行业。以机构建仓为主的金融等行业也出现了大幅回落，航空、零售和消费相关的股票也在下跌。这似乎意味着市场嗅到了那个让人望而生畏的词 - Recession（经济衰退）。此外，关税导致的通胀将使美联储的决策更加困难，我们可能要等到7月份才会看到下一次的降息，这意味着美联储也没法为股市托底了。

但我们认为现在仍有潜在的买入机会。我们认为，在政策制定者不乱出牌后，市场就能不乱出牌。虽然我们并不认为这些政策会在未来几天稳定下来，尤其是特朗普将于4月2日对大多数美国贸易伙伴实施的报复性关税。但鉴于乌克兰的和平协议越来越近，大部分关税新闻也将在4月后被消化。而且我们认为美国今年不会真正陷入经济衰退周期，本轮下跌可能给一些个股带来绝佳的买入时机。

此外，尽管美国例外论的情绪在消退，所有主要买方和卖方都在重估中国资产，资本开始从美国流向其他地区，但我们仍然相信特朗普政策的核心是振兴民营经济，减少官僚主义，只有他在经济上取得成果，他的政治支持基础才会强大。即便特朗普声称他不关心短期市场波动，但如果未来经济和市场下跌超过他的容忍水平时，他也将出台稳定市场的政策。

虽然我们在此不提供任何财务建议，但仍想分享一些我们投资组合中的交易。

1. 有强劲收入增长，或高盈利水平，或有新政策支持

2. 估值倍数低于历史水平和行业平均水平

此外，我们也高度关注下一波AI概念股，包括基础设施（芯片、能源）和软件，从中挑选估值合理，增长前景良好的个股。

本周，我们在Alphabet (GOOG), Lyft（NASDAQ: LYFT）, Super Micro（NASDAQ: SMCI）, Block（NYSE: XYZ）以及Norwegian Cruise（NYSE: NCLH）建立了新的买入仓位，并平仓了Tesla（NASDAQ: TSLA）的空头头寸。

在接下来的一周左右，我们打算在Paypal（NASDAQ: PYPL）67美元左右，Coin Base（NASDAQ: COIN） 160美元左右，AMD NASDAQ: AMD） 90美元左右增加额外的买入仓位。