To The Moon

On Wed, 05 Mar 2025 morning (Asia time), I waited eagerly for US president speech, to find out what is the grand scheme of things he will introduce to bring “greatness” back to US economy, that implies US stock market also.

I was disappointed after a 1 hour and 40 minutes of rehashed materials, laced with a lot of inaccurate facts (to put it mildly).

Full details on all the inaccuracies spewed, can be found here - https://edition.cnn.com/politics/live-news/trump-congress-address-03-04-25/index.html.

There are just too many to go through.

My viewpoints: (mine only)

Although Trump has covered plenty “points / topics” in the 100 minutes, a lot were rhetorics, short on facts and more of hollow feel good.

Below are the only key takeaways that I was interested and I think may impact the stock market:

(1) Touting action:

Trump lambasted the CHIPS and Science Act, that was passed with bipartisan majorities and signed into law by then-President Biden on 9 Aug 2022.

Taking his words at “face value”, does this mean below companies that stood to receive or have received grants in a bid to fortify US semiconductor industry landscape, maybe in “jeopardy” ?

• $Intel(INTC)$: Received $8.5 billion to build new semiconductor fabs in Chandler, Arizona, and New Albany, Ohio, and to upgrade existing plants in Hillsboro, Oregon, and Rio Rancho, New Mexico.

• $Taiwan Semiconductor Manufacturing(TSM)$ : Received $6.6 billion to build a third fab in Arizona, with plans to host the 2 nm process.

• Samsung: Received $6.4 billion to invest in additional capacity at its new Texas factory site and at its existing factory in nearby Austin.

• $Micron Technology(MU)$: Received $6.1 billion to build a new semiconductor chip manufacturing campus in Clay, New York, and a new leading-edge fab in Boise, Idaho.

• $GLOBALFOUNDRIES Inc.(GFS)$: Received $1.5 billion to build a new fab in Malta, New York, and upgrade its Essex Junction, Vermont plant.

• $Rocket Lab USA, Inc.(RKLB)$: Received $23.9 million to expand production of solar cells in Albuquerque, New Mexico.

• Microchip Technology(MCHP)$ : Received $162 million to upgrade its plants in Gresham, Oregon, and Colorado Springs, Colorado.

• BAE Systems: Received $35 million in national security-related grants to upgrade its Nashua, New Hampshire plant.

• Hemlock Semiconductor: Received $325 million to help build a new polysilicon crystal factory in Hemlock, Michigan. (not listed on US exchanges)

• Polar Semiconductor: Received $120 million to establish a new foundry in Bloomington, Minnesota. (not listed on US exchanges)

• Absolics (SK Group subsidiary): Received $75 million to build a new factory for glass wafers in Covington, Georgia. (not listed on US exchanges)

• HPI Federal LLC: Received up to $53 million in direct funding under the CHIPS Incentives Program6.

These grants are part of a broader effort to enhance U.S. semiconductor manufacturing and supply chain resilience.

CHIPS Act - Dismantle ?

President Donald Trump has expressed his intention to repeal the CHIPS Act

The dismantling or repealing a law that has already been enacted is a complex process that requires legislative action.

Below are key points (to know):

(i) Legislative Process:

• To repeal the CHIPS Act, Trump would need to work with Congress to pass new legislation that specifically repeals or modifies the existing law.

• This requires a majority vote in both the House of Representatives and the Senate, or a two-thirds majority in both chambers to override a potential veto if the repeal is opposed by the other party.

• This may pass because of Republicans majority controlling both House of Rep and Senate.

(ii) Existing Commitments:

• Much of the funding under the CHIPS Act has already been committed to various projects and companies through binding agreements.

• Repealing the act could lead to legal challenges from companies that have already received or are expecting funding, as these agreements are legally binding.

(iii) Political & Economic Implications:

• The CHIPS Act has bipartisan support and is seen as a strategic move to enhance US semiconductor manufacturing and reduce reliance on foreign suppliers.

• Repealing it could have significant economic and political implications, potentially affecting investments and jobs created under the act.

In summary, while President Trump can advocate for the repeal of the CHIPS Act, actually dismantling it would require significant legislative effort and could face legal and political hurdles.

Issue with reigning president is, he talks as though it is a done deal when it is still a piqued dream.

(2) Tariffs:

The president spent several minutes doubling down on his tariff agenda, that has:

• Sent stocks sinking.

• Businesses scrambling.

• Consumer confidence plunging.

He said his tariffs would “make America rich again” but acknowledged:

• There could be a little disturbance.

• There could be an adjustment period.

More (Tariffs) To Come.

• Tariffs that match other countries, dollar for dollar, are set for 02 Apr 2025.

• A similar 25% tariff on EU has already been announced on 27 Feb 2025.

• Other countries have used tariffs against us for decades, and now it’s our turn to start using them back against them, Trump said.

• He was referring to countries like India, South Korea and Brazil.

• India charges US tariffs higher than 100%.

• China’s average tariff (40%) on US products is twice what US charge them (20%).

• South Korea’s average tariff is four times higher.

The most concise window into President Donald Trump’s deeply held belief in the value of tariffs, four words tell the story - “Now it’s our turn”, he has said, in his speech.

That was Trump’s rationale for sweeping, worldwide tariffs he plans to implement come April 2025.

The tariffs come at a moment markets have whipsawed over the long-term feasibility of the 25% tariffs he slapped on Canada and Mexico less than 24 hours ago.

Investors to note !

His intention to use tariffs as a negotiating tool, has been exposed.

But his plans to reshape global trade are simply not a strategic ploy.

His advisers have confirmed that Trump is deeply serious about the tariff and dismisses the universal view from economists that tariffs raise prices and primarily hurt consumers.

Although Trump showed no sign of backing off his unprecedented Canada-Mexico tariffs during his speech, negotiations continued behind the scenes. (see below)

How to take a world leader at his words when they are built on sand ?

He made clear the “reciprocal” tariff proposal coming next month isn’t being scaled back any time soon.

It's a sign of how Trump has transformed the traditionally pro-free trade GOP, though there is some unease in the party about the tariffs' effects on prices and the broader economy.

A glance at “total value” of goods imported into US, (in November 2024) clearly shows on how dependent US is towards imported goods.

It does not take a genius to realize that Trump is tracking down a “dangerous” path with his tariffs endeavour.

If the EU tariff goes ahead, will EU stocks listed in US exchange be on the chopping board ?

Stocks like :

• ASML Holding N.V. (ASML).

• Novo Nordisk (NVO).

• SAP SE (SAP).

• AstraZeneca PLC (AZN).

• Nestlé SA (NESN).

Perhaps most telling of all, congressional Republicans, who are lukewarm at best on the widescale deployment of taxes on imports, just stood and politely applauded throughout that entire section.

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