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In his first executive act as President of the United States, Donald Trump came through on a campaign pledge, pulling the US out of the Trans-Pacific Partnership trade deal and said he is prepared to renegotiate the North American Free Trade Agreement. He also warned business leaders in a business breakfast meeting on Monday that he would impose a “major border tax” for companies which moved production and jobs outside the US.
It wasn’t just threats though, as the incoming President suggested he would cut taxes to anywhere between 15% and 20% for companies and reduce regulation drastically by 75% – whatever that means. “We want to make our products here… it’s going to be a wave.”
It was indeed a wave… of selling, in stocks at least. All major European and US bourses were down for the day, seemingly caught off guard by Trump’s protectionist tone (really?). European stock markets hit their lows for the year, and volatility hit a 4-month high. US 10-year Treasuries are now 10 basis points lower than the recent highs hit last Friday, and the US dollar kept selling off.
More Patent Trolling
In the latest episode from the tech industry of “it’s not legal unless I did it first”, Apple is filing multiple lawsuits against Qualcomm, alleging unfair use of its patents. Lawyers from Cupertino – the same people who felt it was justified to smack a design patent on a “rectangle with rounded corners” – argue that some fundamental patents on core phone systems by the chip maker are bolstering its already dominant position in the industry.
Qualcomm closed lower by more than 12% – a not-so-unexpected reaction by the market considering around 75% of Qualcomm’s pre-tax profit comes from licensing as opposed to the ‘core’ chip unit. If Apple wins the case (in a couple of years at the very least), other big customers might follow suit, spelling more trouble for the chipmaker.
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