German Business Outlook Edges Up as EU-US Move Toward Trade Deal
An expectations index by the Ifo institute rose to 90.7 in July from a revised 90.6 in June. The reading is the highest since April 2023. Economists surveyed by Bloomberg had expected an increase to 91.1.
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NBC News
an hour ago
- NBC News
Trump reaches agreement with E.U. to lower tariffs to 15%
President Donald Trump announced a trade agreement on Sunday with the European Union that would lower tariffs to 15%, ending what had been months of uncertainty surrounding trade with the United States' largest trade partner. The tariff rate is a reduction from the 30% that Trump threatened on July 12 and the 20% he said he would impose on April 2. Announcing the agreement, Trump said the E.U. will not impose a tariff on U.S. imports. He added this agreement was 'satisfactory to both sides.' European Commission President Ursula von der Leyen said Sunday alongside Trump that the pact 'will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic.' The agreement appears to closely mirror the trade agreement announced with Japan on Tuesday, under which Japanese imports will face a 15% import duty, which was also lower than Trump earlier threatened. But last year, the average U.S. tariff on imports from the European Union was just 1.2%, according to Capital Economics' chief Europe economist. The European Union has been in active negotiations with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer for weeks and had believed it was extremely close to a deal before Trump suddenly fired off a letter on Truth Social saying he would hike tariffs to 30%. The EU's top trade negotiator made multiple trips across the Atlantic to meet with his U.S. counterparts and was set to speak by phone with Lutnick again Wednesday, according to a spokesperson for the E.U. 'Imposing 30% tariffs on E.U. exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic,' European Commission President Ursula von der Leyen said after Trump's July letter. Immediately after the letter, the E.U. said it would continue working towards an agreement of some type by the new deadline of August 1. But the bloc continued to simultaneously prepare an extensive list of U.S. products against which it could apply retaliatory tariffs if an agreement wasn't reached amid fears that Trump could end talks. Some of those products included Boeing aircraft, U.S. vehicles and imports from politically sensitive states such as bourbon from Kentucky and soybeans from Louisiana. At the time of the announcement, the E.U. had about $100 billion worth of retaliatory tariffs ready to deploy. Agricultural and business groups warned that 30% tariffs on the European Union could have dramatically impacted the price and availability of wines, cheeses, pasta and called the levy 'incomprehensible.' Cars and other vehicles produced in the E.U. could still face increased prices. 'The costs for our companies have already reached the billions—and with each passing day, the total continues to grow,' the German auto trade group VDA told NBC News in a statement on July 14. The 27 countries of the European Union are the United States' largest trading partner — its $605 billion worth of imports into the U.S. surpass Mexico, Canada and even China. The most valuable category of imports in 2024 was drugs and pharmaceuticals primarily from Ireland, followed by autos, aircraft and other heavy machinery from nations such as France and Germany. Trump has separately threatened to impose a 200% tariff on any drugs imported into the U.S., though it would not be applied for at least 18 months. It was unclear if the deal with the E.U. would prevent that.
Miami Herald
3 hours ago
- Miami Herald
Legendary Wall Street forecaster Bob Doll is having his best year
Stock market prognosticators are wrong so frequently that observers can rightly wonder if they're making forecasts using the oldest soothsaying methods, drawing pebbles from a pile, dropping hot wax into water, using random dots on paper or, of course, trying to find something magical in numbers. Yet at the start of every year – and again at the midpoint – countless market watchers take their crack at divining the future, mixing educated conjecture, informed hunches and the occasional WAG (wild-ass guess). Related: Veteran analyst drops updated stock market forecast Measured just about any way possible, most of those projections are wrong. CXO Advisory Group analyzed more than 6,500 forecasts-using methodologies ranging from fundamental to technical analysis-made by 68 experts on the U.S. stock market from 2005 through 2012. The investigation found that the accuracy of the forecasts was below 47% on average. That loses to a coin flip. Bloomberg/Getty Images Bad calls tend to be forgotten quickly, as soon as a forecast is updated based on new information. Winning picks are lionized and celebrated, even though the expert may have less staying power than a bull market rally. Wall Streeters sometimes call the tendency to place too much trust in a guru who made the most recent good call the "Elaine Garzarelli Effect." Garzarelli made her reputation as a Lehman Brothers investment strategist by urging clients to get out of the stock market the week before the Black Monday crash in 1987. That call made her one of the most widely quoted strategists on the Street, but it was also the pinnacle of her success. Whether it was brilliant prescience or dumb luck may be argued forever, but she never really duplicated that success. Garzarelli failed to generate much interest when she tried running mutual funds and a call on stocks being 25% undervalued late in 2007 as the global financial crisis was looming, further dimmed her star. While old-timers remember her name – she runs Garzarelli Research and her newsletter suggests that she is currently bullish on small- and mid-caps plus transportation stocks – she is like many one-time stars, known more for one right call than for being right consistently over years or decades. One Wall Street analyst who hasn't shied away from forecasts -- and has a stellar track record -- is Bob Doll, chief executive and investment officer at Crossmark Global Investors. In a 40-plus-year career, Doll has also been the top equity strategist at Blackrock, Nuveen, Merrill Lynch, and Oppenheimer Funds; at each of those stops, Doll-a regular guest on CNBC, Fox Business, and seemingly all financial media outlets-has started each year with 10 forecasts for the coming 12 months. Related: Top analyst sends message on pending ugly earnings miss (plus one big beat) Doll holds his picks up to a grader each year and historically has been right 72% of the time. That's roughly where he stood with his 2024 prognostications. He has said that his best years ever put him at just above 80%. Entering 2025, Doll was expecting "fewer tailwinds, but more tail risks." His picks reflected that, calling for "some bumps in the road, but some good news and probably more volatility," in an interview on Money Life with Chuck Jaffe that aired in January. Now, seven months later, Doll is getting the results he expected. Eight of Doll's 10 picks tend to be tied to the economy and stock market, with one tied to politics and a wildcard. This is what Doll was calling for entering 2025, and how it's turning out: Slower economic growth as unemployment rises past 4.5%. The jury is out on this one, but if unemployment hits Doll's target – it's currently just north of 4% -- mark this as a inflation that stays above Fed's 2% target, causing the central bank to cut rates less than expected. Barring a Fed surprise, this one's on track.10-year Treasury yields primarily between 4% and 5% with wider credit spreads. The 10-year Treasury has spent the year in that range; credit spreads were up around the tariff tantrum but have narrowed since. But if there's an economic slowdown, they will widen and this one will be a fail to achieve the market's consensus 14% expectation entering the year, and yet every sector has up earnings. This forecast is virtually a lock at this point, even with Doll expecting a second-half slowdown that could hurt some volatility rises, with the VIX average approaching 20. The VIX averaged 18.5 in the first quarter and 24.4 in the second, so this call –and the VIX has only been this high in two of the last 13 calendar years – might have seemed like a longshot but now looks like a sure experience a 10% correction and price/earnings ratios contract. The correction went on the books in April, and P/E ratios are down and appear likely to stay that way. This can be marked in the win portfolios beat cap-weighted portfolios and value beats growth. Both of these conditions are true at the moment; the question is whether that will hold up through energy and consumer staples outperform healthcare, technology and industrials. This looked like a sure thing into June, when the margin of outperformance shrank. If financials weaken, it could put this one in jeopardy; barring that, it looks like another win."Congress passes the Trump tax cut extension, reduces regulation, but tariffs and deportation are less than expected." The tariff forecast here is the one thing where Doll looks like he's wrong and won't recover; by year's end, this one is likely to look half-right, making it the one clear blemish that's efforts make progress but fall far short of $2 trillion in annualized savings. Even Doll acknowledges that this was a softball. In a July 22 interview on Money Life with Chuck Jaffe, Doll acknowledged that he now expects to be right at least 70 percent of the time, "but I wish coming into the year we knew which seven we were going to get right. We could make a lot of money. The problem is you don't know which ones you're going to get right and wrong." As for the rest of 2025, Doll gave three quick assessments for where things stand now: "One, the economy is slowing. We just don't know how much it's going to slow. Two, we're beginning to see tariffs show up in the inflation numbers. We don't know how much. And number three we have this tailwind called [artificial intelligence] which is real and is keeping things moving." Further, Doll said he expects the AI play to broaden out. The tailwind called AI has also been particularly strong at the high end of the market. We all were expecting some measure of breadth this year. Are we going to see the breadth show up at some point? Yeah. Well, it obviously occurred in the first quarter, and then it went away in the second quarter. While Doll noted that tariffs seem to be showing up in slight increases in the Consumer Price Index, or CPI, he did not think they would cause a spike in inflation over the rest of the year. "I don't think [the impact of tariffs on inflation] it's going to be horrible," he said. "It's just going to be there. Remember, only 15% approximately of our GDP is from outside the United States. The other 85 is pretty domestic. So it's limited by how much of the economy it really affects. "Now, having said that, remember the Fed saying 'We've got to get inflation down to 2% and they're struggling at 3% and we're not going to get to 2%. And that means all these people who want the Fed to lower rates are going to have to wait a little bit longer." Related: Top analysts say investors are suckers for bad dividend stocks The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Miami Herald
4 hours ago
- Miami Herald
Elon Musk has a simple solution for Tesla's problems in Europe
Elon Musk's time in Washington, D.C., leading the Department of Government Efficiency may have been short, but he seems to have learned a lot from the experience. As an unofficial member of President Donald Trump's cabinet, Musk was only allowed to serve in government for 130 days. Once his time was up, his relationship with Trump disintegrated, leading to a war of words and online threats that have continued to this week. Related: Tesla is set to deliver dismal sales, but here's why investors don't care While Musk promised investors he would spend more time at Tesla HQ in Austin once his time in D.C. ended, he has flirted with starting his own political party and spends much of his social media bandwidth commenting on government concerns. But his political interests aren't just confined to the U.S.; Musk has also commented on the nonexistent white genocide he believes is happening in South Africa. Musk has also publicly endorsed the AfD, a German right-wing party that some view as extremist, and he was accused of doing a Nazi salute on stage. Coincidentally, Germany is also one of the many European countries where Tesla sales have fallen sharply since Musk embarked on his far-right political journey. Just a couple of years after it spent billions to build a European hub in Germany, Tesla's future on the mainland appears to be worse than ever. Tesla sales in Europe were down nearly 40% from January to April compared to the previous year. In June, sales dropped another 39%. According to the European Automobile Manufacturers Association, Tesla's first-half sales were down 44% in Europe. Image source: Leong/Washington Post via Getty Images Months ago, Musk seemingly acknowledged that his political activities have played a part in his company's decline. After sales in Germany reportedly fell 62%, and numbers in Norway, the UK, and France weren't much better, Musk said that any politically left-leaning buyers who abandoned the company have been replaced by people who align better with his politics. Perhaps his time in Washington has made him more diplomatic, because he wasn't so flippant when talking to investors this week. During his second-quarter earnings call, he detailed how Tesla would win back customers. "It's worth noting that we do not actually yet have approval for supervised FSD in Europe. So our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the U.S.," Musk said. Related: Tesla driver gives damning testimony in fatal Autopilot crash trial "[FSD] really is the single biggest demand driver." But that doesn't explain why the company reported six months of falling market share. January YouGov polls showing 71% unfavorability ratings in Germany and the UK may explain the decline a bit more. One reason investors may have trouble swallowing Musk's assertion that a lack of FSD is the reason for falling European sales is the company's recent C-suite shakeup. Tesla reportedly fired Omead Afshar, its head of North American and European operations, in June following a massive drop in European EV deliveries. Afshar, who joined Tesla in 2017, was just promoted to the position in November. The Wall Street Journal described Afshar as one of Musk's closest confidants at the company. Tesla shares closed the week down about 4%, rallying sharply after the steep decline immediately following its earnings release. Related: Tesla fires longtime insider as Europe slump deepens The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
