More tariffs are coming, and the market isn’t happy.

Let’s get serious for a moment…

Last night, President Trump tweeted that the U.S. will impose a 5% tariff on all imports from Mexico until the country stops illegal migrants crossing the border. What’s more, those tariffs could rise to as much as 25% by October if Mexico fails to “substantially stop the illegal inflow of aliens coming through its territory.”

Mexico clearly wasn’t going to take this lying down, and Mexican President Andrés Manuel López Obrador responded, stating that: “Social problems cannot be resolved with taxes or coercive measures.” He continued by calling for a deeper dialogue with the U.S. to seek alternatives.

The prospect of another front opening in the trade war has already had significant impact on the market.

The Takeaway — 4 Things You Need to Know:

  1. The Dow Jones Industrial Average plunged 300 points on the open, putting Wall Street’s biggest sentiment indicator below the 25,000 mark. Breaking this key psychological area could have negative repercussions for the market. Get defensive now [Note: link to 10X promo].
  2. Gold prices are soaring. The flight to safety on the Street has pushed gold futures to their highest levels since April. Gold is set to gain 1.4% on the week and 1.2% on the month. If you can’t (or won’t) buy gold, at least consider the SPDR Gold Shares (NYSE: GLD) exchange-traded fund for exposure.
  3. U.S. automakers are already getting hammered by the Mexico tariffs. General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) were down more than 4% in early-morning trading. Mexico is a key supplier for both automakers, with analysts estimating that GM and Ford source 29% and 10% of their North American production from Mexico, respectively.
  4. U.S.-China trade might also be impacted. According to Ed Mills, policy analyst at Raymond James: “We view this action as further deteriorating the U.S.-China trade fight. Chinese officials have stated their concern about the reliability of President Trump as a trading partner.”

Turn on your images.

The Good: Get Big or Go Home

Big Lots Inc. (NYSE: BIG) stock surged as much as 12% this morning before the Mexican tariffs brought shares back to earth. The discount retailer posted earnings that beat expectations by a whopping $0.22 per share … though revenue came up short of expectations.

What’s more, Big Lots lifted 2019 full-year guidance above expectations. It’s safe to say that this is a pretty big deal with nearly every other retailer out there closing stores this year.

The Bad: Another Billion Lost

Another billion lost! Seriously, Uber Technologies Inc. (NYSE: UBER)? And why is Wall Street cheering this madness? In its first earnings report as a publicly traded company, Uber said it lost $1.01 billion. But it was “in line” with expectations. If you’re in line it’s fine, I guess.

Still, revenue rose to $3.10 billion, a 20% increase over year-ago results. Which is nice, I suppose. But where is all that money going? Why is Uber burning through $4 billion per quarter? So many questions…

The Ugly: When Tariff Avoidance Goes Wrong

Someone has egg burrito on their face now. Back in the second week of May, GoPro Inc. (Nasdaq: GPRO) announced that it was moving production operations to Mexico from China to avoid fallout from potential tariffs. That strategy appears to have backfired as of this morning.

“As stated previously, our decision to move most of our U.S.-bound production to Mexico supports our goal to insulate us against possible tariffs, as well as recognize some cost savings and efficiencies,” GoPro chief financial officer Brian McGee said back on May 13.

With today’s announcement of tariffs on Mexico, GPRO stock is down roughly 1.5%.

Turn on your images.

As we heard yesterday [Note: link to yesterday’s GS article], Dollar General Corp. (NYSE: DG) is knocking it out of the park. This heated competition has Dollar Tree Stores Inc. (Nasdaq: DLTR) turning to alcohol as a solution.

Banyan Hill gurus took this idea and ran with it, suggesting that it could open the door for dollar-type stores to begin selling cannabis. That could be a huge investment possibility for Dollar Tree and Dollar General.

But the hidden gold this week was the following quote on pot snobs:

But snobs who are like: “I don’t eat ‘seafood’ from Taco Bell” will also say: “I don’t smoke ‘weed’ from Dollar Tree.” — Sarah G., Publisher

Which led to Great Stuff’s first official meme of the week:

Turn on your images.

— Larry F., Publisher

Welcome to America in the 2020s.

Yoo-Hoo! I’ll Make You Famous

Turn on your images.

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Send me your great stuff! Market memes, snide remarks, stock tips … the sky’s the limit. (But no profanity, please. We can’t publish that s%*& here.) Drop me a line at [Note: this email is still being set up.], and, if you’re really lucky, your wisdom could end up immortalized in the Great Stuff ezine.

Until next time, good trading!


Joseph Hargett
Great Stuff Managing Editor, Banyan Hill Publishing