Evercore ISI's Mark Mahaney: There's an AI play that is under-appreciated in Google
Mark Mahaney, Evercore ISI head of internet research, joins CNBC's 'Closing Bell' to discuss market outlooks, his tech playbook, and more.
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USA Today
2 hours ago
- USA Today
The businesses that are, and aren't, shifting production under Trump's tariffs
New York-based manufacturer Gear Motions purchases the majority of its parts from U.S. suppliers, with roughly 4% of inputs imported from other countries. It's a small fraction, but with a 10% base tariff in effect since early April, President and CEO Dean Burrows said his company, which specializes in custom cut and ground gears, will have to pass down those price increases to customers. That's not for lack of trying to find new suppliers. 'We have not been able to find a U.S. source that can make the product, and we have searched globally,' Burrows said. Tariffs are meant to fix that, with the Trump administration aiming to 'reverse the decades of globalization that has decimated our industrial base,' according to an April White House press release. But reviving the U.S. manufacturing base would take years, and economists have doubts that President Donald Trump's tariffs will be enough to bring it back to its former glory. Meanwhile, many U.S. manufacturers that rely on imports may be more likely to pass on tariff costs to consumers than reshore their supply chains. Nearly one-third of U.S. manufacturers' intermediate inputs are imported from other countries, according to a 2022 report from the Commerce Department. 'In the short run, it's going to hurt manufacturers. It's going to hurt the factory owners. It's going to hurt the workers,' said Nancy Qian, an economics professor at Northwestern's Kellogg School of Management. 'And that's on top of the pain the workers will feel when they go to the store and need to pay more for their imported (items).' Why shifting to US suppliers isn't always an easy solution Trump's tariffs are meant to position the U.S. as a 'global superpower in manufacturing' by drawing in new factories and manufacturing investments. 'The president has said early and often that the best way to avoid tariffs is to just come here and produce," Trump's top trade adviser, Peter Navarro, told CNBC in early April. 'We're going to get to a place where America makes stuff again.' But moving supply chains to the U.S. can be costly. Nearly two-thirds of 380 surveyed companies say building a new domestic supply chain would at least double their current costs, according to an April CNBC survey. Sixty-one percent said it would be more cost-effective to relocate to a lower-tariffed country. 'If the U.S. continues its focus on China, it will be successful in moving production out of China to some extent, but it won't move so much of it back to the U.S.,' Qian said. 'There are many other countries out there that can manufacture at costs lower than the U.S.' Even if tariffs boost U.S. manufacturing, it'll take years for new factories to get up and running. That could leave U.S. companies searching for domestic suppliers struggling in the meantime. Take 000Skin, a beauty company launched by Hannah Chang earlier this year. While 000Skin is based in New York, Chang has been sourcing the containers for her skin care products in China, where she says manufacturing capabilities are unmatched. 'I think people are not aware how much work and infrastructure even creating a plastic jar takes,' Chang said. But rising import costs from tariffs have thrown her for a loop. Chang has looked for alternative suppliers in the U.S., but says she has yet to find options that match the quality and price of what Chinese manufacturers can supply. She's considered shifting to a Mexican producer, but said it's been difficult finding one willing to work with smaller businesses. 'I'll probably just continue to look at China-based partners,' Chang said, adding that she's considering raising prices to cover at least some of the 30% tariff rate. Courtney Rivenbark looked into working with U.S. manufacturers when she created her apparel and jewelry brand, Coco Clem, in 2018. The high production costs turned her away, and she eventually pivoted to a partnership with a Chinese factory she said aligned with her ethical and environmental goals. 'China is just very advanced with their machines and equipment and technology,' Rivenbark said. 'The whole supply chain exists in China – the knits, the yard, the GOTS (Global Organic Textile Standard) certified organic cotton yarn.' After Trump announced new tariffs earlier this year, Rivenbark said she compared pricing from China with U.S. manufacturers. She said it would cost her three times more to create the same sweater in the U.S., and local manufacturers didn't have the technology to create certain garments in plus sizes. 'I would move (production to the U.S.) if the infrastructure was here,' Rivenbark said. But 'it's just so much more expensive. ... I'm not really interested in moving it outside of China because of a potential short-term policy switch.' How many factories, jobs are coming to the US? That's not to say tariffs aren't pressuring some businesses to increase their investments in the U.S. Whether those moves will lead to a dramatic influx of manufacturing jobs is another question. Cra-Z-Art – a New Jersey-based manufacturer that produces toys, activities and school supplies – in March announced plans to grow production space by 50% to 1.5 million square feet to combat the cost of tariffs. Lawrence Rosen, chairman of Cra-Z-Art, said it's too early to say how many jobs the move will create, but the company is looking to use automation 'wherever possible' to reduce direct labor costs. 'I need to control my 102-year-old company's destiny by controlling its future and not relying on global tariffs when things could change daily,' Lawrence said. 'By manufacturing in the USA, we save on freight, we save with automation. ... With automation, we can produce many of our products at a similar cost compared to increased costs with even 10% tariffs on freight.' A White House website claims Trump's policies have spurred trillions of dollars in new U.S. manufacturing investments that are 'fueling job growth, innovation, and opportunity across every corner of the country.' A number of those investments were in the works before Trump took office. A $5 billion investment from automaker Stellantis, for instance, includes plans to restart an idled plant in Belvidere, Illinois, to make trucks, a deal first announced in 2023. While there were talks of delays in 2024, the company in January confirmed that it would stick to the 2027 opening agreed to in union negotiations years prior. And a spokesperson for German medical technology company Siemens Healthineers, another company listed on the website, told USA TODAY that several of the initiatives included in its $150 million investment in new and expanded U.S. facilities have been underway for 'well over a year," although projects were accelerated to address rising economic and geopolitical uncertainty. Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, doesn't expect to see much reshoring tied to tariffs. 'For a business to set up a factory in the United States, that's a 10-year investment or longer,' Strain said. 'How can a business possibly know whether or not that would be profitable if tariff rates are changing every week?" Some data suggests the domestic manufacturing industry has actually taken a hit from tariffs, with trade policy uncertainty prompting some companies to tighten their purse strings. Economic activity in the manufacturing sector contracted in May for the third consecutive month to reach its lowest level since November, with both orders and output contracting, according to a survey by the Institute for Supply Management. Meanwhile, the manufacturing sector lost about 8,000 jobs between April and May despite an overall increase in employment, according to the Labor Department. Susan Helper, an economics professor at Case Western Reserve University in Ohio who served on the White House staff in both the Obama and Biden Administrations, believes tariffs can be a useful tool, but the uncertainty surrounding trade policy has been 'a real problem.' "I think what companies are doing is just not investing anywhere in anything and just waiting to see how things shake out,' she said.
CNBC
5 hours ago
- CNBC
The global week ahead: A hectic half first heralds a volatile second
"Politics isn't wagging the tail – it's shaking the entire dog." These strong words from one wealth manager to CNBC last week capture a hectic first half of trading. They also set the stage for an uncertain second half, where "geoeconomics" looks set to remain a dominant market force. This week, expect attention to return to monetary policy, as central bankers from across the globe — who have kept their heads down amid political tensions — prepare to speak at the ECB Forum in Sintra, Portugal. A lot has happened in the last six months, with trade tensions and truces sending equity markets across the globe haywire. The VIX volatility index — also known as the Wall Street fear gauge — spiked in April as tariff threats, followed by tariff pauses, caused huge intraday swings across major indices. Meanwhile, "black swan" moments in the Middle East also kept investors on edge. Amid all the uncertainty, some stock markets showed remarkable resilience: Germany's Dax remains the outperformer in Europe, up over 18% so far this year, followed by London's FTSE 100 up around 9%, while the French CAC 40 lags with around 5% gains. But what does this all mean for trading in the second half of the year? Goldman Sachs warns that, "elevated policy uncertainty paired with a worsening macro backdrop are likely to support higher equity volatility in the next months."As Goldman's warning rings loudly in investors' ears, the stage is set for central banks to return to the limelight. This week, the town of Sintra in Portugal plays host to the annual ECB Forum, where European central bankers are joined by their international counterparts to exchange views on current policy issues. The sun may well be shining in Portugal — but President Donald Trump's recent comments will no doubt cast a shadow over the meeting, as he continues to put unprecedented pressure on Federal Reserve Chair Jerome Powell. Just last week, Trump's name-calling of Powell ramped up, sparking talk of a so-called "shadow Fed chair," who could keep an eye on things until taking over as chair next year. Powell also put the pressure on his monetary policy peers, calling on central bankers to hold steady until they see the impact of trade tariffs: "We are well positioned to wait and learn more about the likely course of the economy before considering any adjustments to our policy stance." Europe will need to decide how much it lets the U.S. approach dictate its policy, with ECB President Christine Lagarde opening proceedings in Sintra with a speech on Monday evening. Expect a punchy tone; her recent op-ed in the Financial Times saw her call for the euro to take advantage of the current environment and "gain global prominence." Next Friday marks the first anniversary of the Labour Party taking power in the U.K., following 14 years of Conservative rule. A landslide victory saw a jubilant Labour return to Downing Street with the promise of change and growth. But the honeymoon period was short-lived. Fast-forward 12 months and Prime Minister Keir Starmer looks set to reach his first year in office with plummeting approval ratings which put him below his rival party leaders, including Reform's Nigel Farage, Liberal Democrat Sir Ed Davey and Conservative leader Kemi Badenoch. Starmer has faced a lot of external pressure, ranging from a public spat with Elon Musk to a slew of foreign policy challenges in Ukraine and the Middle East. Even three trade deals — with Europe, India and the very first U.S. agreement — did little to improve his popularity. But the economic challenges at home are causing the most discontent, with pressure even from within his own party to review certain reforms.
Business Insider
12 hours ago
- Business Insider
‘Don't Worry About Amazon Taking Market Share,' Says Evercore about TTD Stock
Shares of adtech firm Trade Desk (TTD) are rallying at the time of writing after Evercore ISI, led by five-star analyst Mark Mahaney, upgraded the stock from Hold to Buy. The upgrade was based on the investment firm's growing confidence in digital ad spending, better execution by Trade Desk, and strong new product developments. Indeed, Evercore said that it has seen clear improvements in how Trade Desk is performing, both in the products it offers and how it markets them to clients. Confident Investing Starts Here: In a research note dated June 26, Evercore highlighted the positive feedback about Trade Desk's updated Kokai user experience. One programmatic ad agency leader noted that the transition from Solimar to Kokai in early 2024 went very well and that client service has improved significantly. And while Wells Fargo downgraded Trade Desk the day before due to worries about competition from Amazon (AMZN), Evercore believes that Google (GOOGL) is more likely to lose market share to Amazon's demand-side platform. In fact, it argues that Amazon's ad offerings overlap more with Google's DV360 than with Trade Desk's platform. Looking ahead to 2026, Evercore expects Trade Desk to grow its revenue by about 20% per year, not including political ad boosts, which could add an additional percentage point of growth during the U.S. midterm elections. Other key growth drivers include rising ad spending from Netflix (NFLX), increased retail media budgets, better targeting through Trade Desk's Retail Sales Index, and major global events like the 2026 FIFA World Cup and Winter Olympics. As a result, Evercore has a $90 price target for the stock, which equates to more than 28% upside from current levels. Is TTD Stock a Good Buy? Overall, analysts have a Strong Buy consensus rating on TTD stock based on 23 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average TTD price target of $87.29 per share implies 23.5% upside potential.
