Latest news with #PeterBoockvar
Yahoo
4 days ago
- Business
- Yahoo
Commentary: Trump is reviving crony capitalism
If you're a CEO aiming to do business in the Trump era, set aside a slush fund for paying tribute to the Decider-in-Chief. Okay, so maybe they're not bribes, exactly. But Trump is essentially extorting certain companies to get things he wants from them. Clever CEOs are playing along, whether shareholders like it or not. Exhibit A consists of Nvidia (NVDA) and AMD (AMD), which are basically buying export licenses from the Trump administration so they can sell semiconductors in China. Both companies have agreed to pay the US government 15% of their revenues from chip sales in China in exchange for the right to sell there. 'My political head is spinning again with this new pay-to-play plan with Nvidia and AMD,' Peter Boockvar, chief investment officer at Bleakley Financial Group, wrote in an Aug. 11 analysis. 'I pray for the sake of American free market capitalism that it stops here." The Nvidia and AMD deals immediately bring to mind competitor Intel (INTC), which hasn't yet agreed to cough up an export toll. Here's a safe guess: It, too, will pay a similar fee for similar privileges. At the moment, Intel is doing damage control. On Aug. 7, Trump directly attacked CEO Lip-Bu Tan, saying on social media that he 'must resign, immediately.' Trump and some other Republicans seem to be concerned that Tan had improper connections with China's military at another firm he ran until 2021. Tan, a US citizen, now plans to meet with Trump to demonstrate his commitment to American interests, according to the Wall Street Journal. Fine. But that's probably not what Trump is looking for. Trump has a feral instinct for detecting vulnerability in adversaries and using that leverage to extract measurable gains. He'll want something more tangible from Tan and Intel than reassurances. Trump's favorite currency is money. Intel probably has no choice but to pay. Nvidia's 15% gratuity to the government for chip sales to China will cost the firm about $3 billion per year. The company's stock dipped on the news, then drifted up. Investors may have first thought only of the bottom line, then decided the payment would be better than losing chip sales to China completely. The hit to AMD would be smaller because its China sales are lower. AMD stock also dipped then rose following the news. Intel stock rose on news of Tan's chat with Trump, as buyers hope the company's damage-control effort pays off. Trump has engineered this whole scenario. In April, Trump tightened restrictions on US chip sales to China, essentially blocking the sale of certain chips. Nvidia said that move would cost the company $5.5 billion in lost revenue. Then, in July, Trump reversed himself and decided to allow such chip sales to China. Nvidia CEO Jensen Huang has met several times with Trump during the last several months and has become an aggressive advocate for policies that benefit his company. When Trump changed his position in mid-July, it looked as if Huang had simply convinced Trump it was the right move. But the 15% gratuity now makes it look as if a deal was in the works that gave Trump some additional government revenue to crow capitalism is a system in which the rich and well-connected get their way because they have personal sway with decision makers. The Gilded Age, or 'robber baron' era of the late 1800s was perhaps the peak of crony capitalism in the United States. One result was the massive concentration of wealth among leading industrialists, which eventually led to the union movement, the graduated income tax, and much stronger regulation of business. We're not back to the robber baron days — yet. But Trump clearly favors CEOs and companies that do his bidding and help him boast of what he considers victories. Trump often dangles the bait himself. And he clearly realizes that his authority to impose tariffs unilaterally gives him a certain power over CEOs, companies, and even entire countries. Trump threatened Apple with steep tariffs on its imported products earlier this year, unless it started making the iPhone and other products in the United States. That would double or triple the cost of an iPhone, making it financially ruinous. But CEO Tim Cook met with Trump recently to tout other domestic investments. That led to a splashy made-in-America 'announcement' with Cook at the White House on Aug. 6, the kind of publicity stunt Trump revels in. Read more: 5 ways to tariff-proof your finances Trump refused approval for a deal crucial to Paramount's finances until the company agreed to a generous legal settlement involving its CBS subsidiary and canceled the show of comedian Stephen Colbert, a vocal Trump critic. Then Trump's regulators approved the deal. Paramount did what Trump wanted and got the favor it was seeking. Trump has browbeaten Coca-Cola into making soda with real cane sugar, perhaps to reward sugar-industry barons who happen to be political supporters. He has muscled a dozen big law firms into doing pro bono work for his pet causes. Many big companies have rolled back diversity and inclusion policies because Trump finds them offensive. In many cases those firms moved preemptively, on their own, simply to avoid the possibility that Trump would threaten their federal contracts or try to drum up a consumer boycott against them. Trump's method of favor-trading is the velvet glove: seek back-scratching deals first, then attack if he doesn't get them. CEOs are figuring out that it's better to work with Trump behind the scenes than go through the whole painful process of refusing Trump's demands, facing a Trump threat, watching their stock tank, trying to make nice with Trump, and then agreeing to some kind of face-saving deal anyway. Nvidia's Huang is the model Trump-whisperer, making concessions that seem like win-wins and bypassing the confrontational part of the cycle. More CEOs are likely to follow. There are obvious risks. Some of these deals, such as the export gratuities, could be illegal and overturned by the courts, causing more uncertainty for firms than they might face otherwise. CEOs who bed down with Trump may also be betting too heavily on one party and pay the consequences if the other party ever regains power. Their brands could also suffer, as Elon Musk's Tesla has, if consumers begin to view CEOs or their companies as partisan operators. But for now, the money move is to play Trump's game, because it's the only game in town. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices.
Yahoo
4 days ago
- Business
- Yahoo
Commentary: Trump is reviving crony capitalism
If you're a CEO aiming to do business in the Trump era, set aside a slush fund for paying tribute to the Decider-in-Chief. Okay, so maybe they're not bribes, exactly. But Trump is essentially extorting certain companies to get things he wants from them. Clever CEOs are playing along, whether shareholders like it or not. Exhibit A consists of Nvidia (NVDA) and AMD (AMD), which are basically buying export licenses from the Trump administration so they can sell semiconductors in China. Both companies have agreed to pay the US government 15% of their revenues from chip sales in China in exchange for the right to sell there. 'My political head is spinning again with this new pay-to-play plan with Nvidia and AMD,' Peter Boockvar, chief investment officer at Bleakley Financial Group, wrote in an Aug. 11 analysis. 'I pray for the sake of American free market capitalism that it stops here." The Nvidia and AMD deals immediately bring to mind competitor Intel (INTC), which hasn't yet agreed to cough up an export toll. Here's a safe guess: It, too, will pay a similar fee for similar privileges. At the moment, Intel is doing damage control. On Aug. 7, Trump directly attacked CEO Lip-Bu Tan, saying on social media that he 'must resign, immediately.' Trump and some other Republicans seem to be concerned that Tan had improper connections with China's military at another firm he ran until 2021. Tan, a US citizen, now plans to meet with Trump to demonstrate his commitment to American interests, according to the Wall Street Journal. Fine. But that's probably not what Trump is looking for. Trump has a feral instinct for detecting vulnerability in adversaries and using that leverage to extract measurable gains. He'll want something more tangible from Tan and Intel than reassurances. Trump's favorite currency is money. Intel probably has no choice but to pay. Nvidia's 15% gratuity to the government for chip sales to China will cost the firm about $3 billion per year. The company's stock dipped on the news, then drifted up. Investors may have first thought only of the bottom line, then decided the payment would be better than losing chip sales to China completely. The hit to AMD would be smaller because its China sales are lower. AMD stock also dipped then rose following the news. Intel stock rose on news of Tan's chat with Trump, as buyers hope the company's damage-control effort pays off. Trump has engineered this whole scenario. In April, Trump tightened restrictions on US chip sales to China, essentially blocking the sale of certain chips. Nvidia said that move would cost the company $5.5 billion in lost revenue. Then, in July, Trump reversed himself and decided to allow such chip sales to China. Nvidia CEO Jensen Huang has met several times with Trump during the last several months and has become an aggressive advocate for policies that benefit his company. When Trump changed his position in mid-July, it looked as if Huang had simply convinced Trump it was the right move. But the 15% gratuity now makes it look as if a deal was in the works that gave Trump some additional government revenue to crow capitalism is a system in which the rich and well-connected get their way because they have personal sway with decision makers. The Gilded Age, or 'robber baron' era of the late 1800s was perhaps the peak of crony capitalism in the United States. One result was the massive concentration of wealth among leading industrialists, which eventually led to the union movement, the graduated income tax, and much stronger regulation of business. We're not back to the robber baron days — yet. But Trump clearly favors CEOs and companies that do his bidding and help him boast of what he considers victories. Trump often dangles the bait himself. And he clearly realizes that his authority to impose tariffs unilaterally gives him a certain power over CEOs, companies, and even entire countries. Trump threatened Apple with steep tariffs on its imported products earlier this year, unless it started making the iPhone and other products in the United States. That would double or triple the cost of an iPhone, making it financially ruinous. But CEO Tim Cook met with Trump recently to tout other domestic investments. That led to a splashy made-in-America 'announcement' with Cook at the White House on Aug. 6, the kind of publicity stunt Trump revels in. Read more: 5 ways to tariff-proof your finances Trump refused approval for a deal crucial to Paramount's finances until the company agreed to a generous legal settlement involving its CBS subsidiary and canceled the show of comedian Stephen Colbert, a vocal Trump critic. Then Trump's regulators approved the deal. Paramount did what Trump wanted and got the favor it was seeking. Trump has browbeaten Coca-Cola into making soda with real cane sugar, perhaps to reward sugar-industry barons who happen to be political supporters. He has muscled a dozen big law firms into doing pro bono work for his pet causes. Many big companies have rolled back diversity and inclusion policies because Trump finds them offensive. In many cases those firms moved preemptively, on their own, simply to avoid the possibility that Trump would threaten their federal contracts or try to drum up a consumer boycott against them. Trump's method of favor-trading is the velvet glove: seek back-scratching deals first, then attack if he doesn't get them. CEOs are figuring out that it's better to work with Trump behind the scenes than go through the whole painful process of refusing Trump's demands, facing a Trump threat, watching their stock tank, trying to make nice with Trump, and then agreeing to some kind of face-saving deal anyway. Nvidia's Huang is the model Trump-whisperer, making concessions that seem like win-wins and bypassing the confrontational part of the cycle. More CEOs are likely to follow. There are obvious risks. Some of these deals, such as the export gratuities, could be illegal and overturned by the courts, causing more uncertainty for firms than they might face otherwise. CEOs who bed down with Trump may also be betting too heavily on one party and pay the consequences if the other party ever regains power. Their brands could also suffer, as Elon Musk's Tesla has, if consumers begin to view CEOs or their companies as partisan operators. But for now, the money move is to play Trump's game, because it's the only game in town. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
24-07-2025
- Business
- CNBC
The best sector this year is not tech - it's a group of stocks riding Trump's trade deals
Move over, technology stocks. There's a new leading sector in the market. The industrials sector has led the S & P 500 higher this year, climbing more than 16%. After several years when technology companies delivered outsized gains, information technology and communication services have trailed in 2025, with both rising around 12%. The S & P 500 as a whole has risen less than 9% over the same span. XLI .SPX YTD mountain Industrial ETF vs. S & P 500, year to date Industrial companies are benefiting from several tailwinds. First, the economy's continued strength in the face of tariffs bodes well for production and investment. Second, the tariffs are aimed at spurring U.S.-based manufacturing and imposing higher costs on imports. A look under the hood at the industrial leaders also shows how the performance of certain subsectors and specific names has helped the entire group outperform, according to Peter Boockvar, investing chief at One Point BFG Wealth Partners. "It's sort of themed in a way," Boockvar said. "It's not necessarily this broad-based recovery in industrials." Notably, the manufacturing companies that were spun off from General Electric are among those leading the market this year. GE Vernova has surged nearly 90% this year and is the second-best performing stock in the S & P 500. The power turbine's company's exposure to growing electricity demand stemming from artificial intelligence data centers is softening the impact of President Trump's tariff policy. GEV YTD mountain GE Vernova, year to date GE Vernova's gas turbines are in high demand from data center developers and it is a leader in the development of small modular nuclear reactors, an emerging technology that the tech industry is interested in. Power equipment providers are expected to fare well amid the AI buildout, which Trump has championed . That helps explain the strong performances of Johnson Controls International and Quanta Services , both of which traded at all-time highs Thursday. Shares of GE Aerospace , meanwhile, have soared more than 60% on strong demand for new aircraft engines and repairing existing ones. Airbus and Boeing are struggling to keep up with demand for commercial jets, so older planes are running for longer which means high demand for engine replacements and services. Boeing has also rallied this year, surging more than 30%. Trump's trade war might have been expected to create headwinds for the aerospace industry, which has benefited from a tariff-free trade regime for decades. But GE Aerospace CEO Larry Culp said earlier this month that the U.S.-U.K. trade agreement has raised hopes that Trump will spare the industry from tariffs. It's proven a bumpy year for aerospace and defense contractors, many of which tumbled after the president unveiled his tariff plan in April, only to climb to all-time highs as implementation of many proposed levies was delayed.
CNBC
02-07-2025
- Business
- CNBC
What Wall Street has to say about the horrid June private payrolls report
ADP's latest surprise report was not on anyone's bingo card. Private payrolls fell by 33,000 in June , the company said Wednesday. Economists polled by Dow Jones expected an increase of 100,000. The report marks the first time since March 2023 that ADP reported a contraction in private payrolls. The data took the wind out of the market's sails in early morning trading. S & P 500 futures gave up their slight gains and were slightly lower following the release. Nasdaq-100 futures were also down 0.3%. To be sure, ADP's track record for predicting the U.S. government's monthly jobs report isn't great — giving investors hope that Thursday's June nonfarm numbers payrolls from the Bureau of Labor Statistics won't be as bad as ADP's figures released Wednesday. The economy is expected to have added 110,000 nonfarm payrolls, according to economists polled by Dow Jones. Here's what some Wall Street investors and strategists had to say about Wednesday's ADP figures: Ian Lyngen, head of U.S. rates at BMO: "The negative print was a clear downside surprise versus the +98k consensus. This is the first negative print since March 2023, and second negative print since the early stages of the pandemic. Overall, it was a disappointing jobs proxy that sets up tomorrow's BLS release as a major wildcard." Peter Boockvar, chief investment officer at Bleakley Financial: "I wasn't planning on writing this week but felt the need right now after seeing the ADP private sector jobs report … I'll say again, a blanket 10% tariff on all incoming imports of goods just loaded about $330b of fresh taxes on American importers (yes, some are absorbed by the exporter) which has the effective impact of raising the corporate income tax rate to 34% from 21%." Liz Ann Sonders, chief investment strategist at Charles Schwab: "Ouch: June @ADP payrolls -33k vs. +98k est. & +29k prior (rev down from +37k) … first monthly decline since March 2023 ." Peter Berezin, chief global strategist at BCA Research: "Remember: ADP is a bad predictor of nonfarm payrolls … mainly because nonfarm payrolls are a bad predictor of what is actually happening to payrolls." Guy LeBas, chief fixed income strategist at Janney: "Your monthly reminder: surprises in the ADP employment change are uncorrelated with surprises in NFPs. But this doesn't look great ." — CNBC's Alex Harring and Yun Li contributed reporting.
Yahoo
14-05-2025
- Business
- Yahoo
The U.S.-China detente could ‘save Christmas,' but expect ‘a rush of ordering the likes we've never seen before,' economist says
Freight bookings jumped the day after the U.S. lowered tariffs on China to 30%. Industry pros say it's the start of a 90-day scramble as importers rush to bring goods and components into the U.S. The U.S. and China have entered a 90-day detente in their tariff war , which means one thing for the roughly 40% of U.S. businesses that source from China: It's time to stock up. 'You are going to see a rush of ordering over the next 90 days the likes we've never seen before,' said Peter Boockvar, chief investment officer at Bleakley Financial Group, in a note that began, 'So, both sides luckily decided to save Christmas.' Prior to the announcement, shipments from China to the U.S. had fallen for five weeks straight, according to data from supply-chain tracker Project44. Volumes were down 30% from May 2024. Now, the tariff reduction presents a chance to stock up. To be sure, a 30% import tax on goods from China is historically high and prohibitive for many shippers, with some industry experts warning 'we are not out of the woods yet.' But for many businesses that have seen shipments dry up, paying a certain 30% now is less nerve-racking than holding out for a possible future drop. 'In addition to clearing inventory held back by the previous 145% tariff, many importers may choose to front-load shipments to avoid future uncertainty,' Project44 wrote in a blog post. Already, some indicators show freight reviving. 'Our ocean freight bookings from China to [the] US increased 35% in the first day since the trade deal,' Ryan Petersen, CEO of supply-chain platform Flexport, posted on X. 'A big backlog is looming, soon the ships will be sold out.' In the first few months of the year, importers pulled forward huge volumes of shipments from China to try to get ahead of tariffs. Imports hit record numbers—so much so that they skewed first-quarter GDP, flipping it into reverse. But shipments fell off in later months; at the same time, consumers stocked up on goods to front-run future price increases. That's put inventories at very low levels, said Kathy Bostjancic, chief economist at Nationwide. 'Inventory levels are by and large quite thin,' Bostjancic told Fortune. 'You're getting less coming in through the ships, but also because consumers went out and purchased a lot—there's been a surge of consumer spending ahead of these tariff increases.' Still, it will take time for the surge to be felt. A container ship leaving China will need roughly three weeks to arrive in Los Angeles. Eric Fullerton, VP of product marketing at Project44, expects to see the data start to shift within a few days. 'You'll probably have to call your carriers, network, the ocean liners–Maersk, and say, 'we now want to move this freight which has been hanging out at this warehouse or distribution center in China,'' he said. While some importers have had goods waiting in a warehouse in China for this very moment, others will need to put in orders with factories. 'Between ordering a product, making it, putting it on a ship, getting it here, everyone doing it at the same time—you're going to have to believe there will be delays in production—90 days goes pretty fast,' Boockvar told Fortune, adding that the unpredictable nature of tariff negotiations are an added impetus for companies to move fast. 'What happens if we're 45 days in and negotiations aren't going well, and Trump wakes up and says, 'if this doesn't change, I'm going to reinstate the tariffs?'' he said. 'While there's a 90 day reprieve, it doesn't mean that people will take their time.' The net effect, according to Fullerton, will be like 'rush hour.' 'Well, everyone left at 5—so there's more demand,' he said. Importers will have different strategies for beating the crunch, he said: Some will likely wait out the initial 30-day surge and the shipping cost; others will accept surge pricing; still others will likely ship via air, which is much more costly than boat. 'The number-one nightmare for these companies,' he said, 'is not cost but empty shelves. That's the post-COVID fear that still impacts supply chain professionals today.' He added, 'they're terrified of empty shelves so they'll pay to mitigate that.' This story was originally featured on Sign in to access your portfolio
