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Breakfast News: Tariffs Tapered

March 24, 2025

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An Executive Order about tariffs next to a tape measure on a table in the Oval Office.

1. More Measured April 2 Tariffs

Wide-ranging tariffs due to be launched on April 2 are set to be narrowed from the global barrage previously suggested, as a White House official said sector-specific tariffs on industries including cars and microchips will not now happen on that date. Stock futures rose this morning in response.

  • "Dirty 15": President Trump's "reciprocal tariffs", with which he aims to level the playing field between the U.S. and international partners, will still go ahead. They're aimed at the 15% of countries with persistent trade imbalances with the U.S.
  • "Flexibility is an important word": There have been hints from the president of flexibility in his approach to China trade. He still says his approach is reciprocal, but there's room for talk and he hopes to meet Chinese President Xi Jinping soon.

2. FuriosaAI Rebuffs Meta's Millions

AI start-up FuriosaAI has rejected a takeover bid from Meta (META -1.39%) worth $800 million, reports Bloomberg. The semiconductor developer's second-generation AI-inferencing processor could reduce Meta's dependence on Nvidia (NVDA -1.02%) chips and boost its planned $65 billion AI spend this year.

  • Forbes reports Meta among many admirers: FuriosaAI, founded by former Samsung and Advanced Micro Devices (AMD -0.25%) employees, intends to seek additional financing and eventually launch its own IPO. Reports of Meta's acquisition ambitions first came to attention in February.
  • Further international tie-ups: According to tech reporter The Information, Meta and OpenAI have both approached India's Reliance Industries to provide new outlets for AI services. That could include ChatGPT, but also direct AI developments between Meta and Reliance.

3. 20% Discount on AI Training

Cheaper AI training just got a boost from Ant Group, backed by Alibaba (BABA -0.62%) founder Jack Ma. Bloomberg reports the company has cut the cost of training AI models by 20% using Chinese-made processors. The "Mixture of Experts learning approach" used chips from Alibaba and Huawei.

  • Ant Group increasingly using Chinese and AMD offerings: The new achievement is claimed to be on a par with Nvidia's H800 chips, as export restrictions keep Chinese companies from using Blackwell and later products.
  • "The amount of computation needed is easily 100 times more than we thought we needed at this time last year": At last week's GTC conference, Nvidia CEO Jensen Huang said "almost the entire world got it wrong," explaining that DeepSeek AI needs more computation power, not less, implying cost saving is not the priority.

4. Earnings to Keep An Eye on This Week

KB Home (KBH 0.06%) is due to post first-quarter results after the closing bell today. The homebuilder reported a 19% rise in full-year revenue in January, saying it saw better market conditions despite high interest rates.

  • Watch for strategic changes: Dollar Tree (DLTR -1.93%) reports fourth-quarter earnings Wednesday, after Q3 saw revenue and earnings beat expectations. With a new CFO, the discount chain is adjusting its price-point strategy and revising store formats.
  • August's Stock Advisor recommendation beating the S&P 500 by 23%: Q4 results are due Thursday from Lululemon (LULU -3.08%). The company posted revenue and earnings beats for Q3, with its international business showing strength. Full-year guidance was modestly lifted.

5. Friday's Key Inflation Data

The February Personal Consumption Expenditures (PCE) print is due Friday, expected to remain steady from January with a 2.5% rise year over year. Analysts expect the core figure – the Federal Reserve's preferred inflation measure, which excludes volatile food and energy prices – to rise from 2.6% to 2.7%.

  • "I think that's kind of the base case": Fed chair Jerome Powell has said he expects transitory higher inflation in 2025 as tariffs increase uncertainty. But he's sticking with a 'wait and see' stance.
  • Next FOMC meeting on 6-7 May: Fed officials are still suggesting two further interest rate cuts in 2025, though the CME FedWatch tool shows an 85% chance of no change at May's meeting.

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