Joining us now, Courtney Breen, senior analyst at Bernstein, covering US Pharma, Bioarma. Courtney, great to have you with us. Um, obviously there's still some some questions outstanding.I'm I'm wondering if you're you know, as you think about companies with US manufacturing, if companies have pre-existing plants, are they also exempt. I think what we've had so far is a a tweet or a post uh on on truth social rather than necessarily the discreet and detailed policy. So I think there are a lot of questions t ...

Stocks are on pace right now to snap a three-week winning streak. Investors are eyeing two big developing stories out of Washington at this hour. President Trump is launching a new wave of tariffs as the clock ticks closer to a government shutdown.We have full team coverage of both on these front. Emily Wilkins is tracking the latest on the shutdown dynamics. But first, we will start with Aean Jabvers and the new round of tariffs being announced.Aean >> Dom. That's right. President Trump announced a slate o ...

Core Insights - PVH Corporation is facing challenges in a promotional retail environment, particularly in the U.S. and China, leading to a decline in consumer demand and a gross margin drop of 240 basis points to 57.7% in Q2 FY2025 [1][7] - The company is experiencing increased tariff pressures, with tariffs expected to reduce EBIT by $70 million in FY2025, which is a revision from earlier estimates [2][7] - Despite these challenges, PVH is focusing on cost discipline and operational efficiencies, aiming for a 200 basis point improvement in operating margin by year-end [3][7] - PVH's brand strength in Calvin Klein and Tommy Hilfiger, along with digital growth, is expected to provide resilience against margin pressures [4] Financial Performance - In Q2 FY2025, PVH's gross margin decreased by 240 basis points to 57.7% due to heightened promotional activities [1][7] - Tariffs are projected to impact EBIT by approximately $70 million in FY2025, indicating a significant increase in cost pressures [2][7] - The company anticipates that cost-saving measures will contribute an additional 200 basis points to operating margin by the end of the fiscal year [3][7] Market Position - PVH's stock has outperformed the broader Consumer Discretionary sector, gaining 30.4% over the past three months, while the sector fell by 3.3% [5] - The current forward P/E ratio for PVH is 7.55X, which is below the industry average of 11.58X and the sector average of 19.94X, indicating a modest discount relative to peers [8]

Tariffs on Various Products - President Trump announced a 100% tariff on brand name or patented pharmaceutical products starting October 1st, unless manufacturers establish a plant in the US [1] - A 50% tariff will be imposed on kitchen cabinets, bathroom vanities, and related products, along with a 30% tariff on upholstered furniture, effective next week [2] - Additionally, a 25% tariff on imported heavy trucks is being introduced, framed as a national security measure to support American truckers [2] Impact on Costs and Prices - Critics argue that these tariffs could increase costs for businesses and consumers, with previous tariffs on steel, aluminum, and copper already raising expenses for US truck manufacturers [3] - Furniture prices have also seen significant increases due to earlier tariffs, with living and dining room pieces rising nearly 10% over the past year according to the Bureau of Labor Statistics [3][4]

Government Policy & Trade - US government is considering new tariffs, including a potential 100% tariff on pharmaceutical products if companies don't build manufacturing plants in the US [1] - A 25% tariff on heavy trucks, 50% on kitchen cabinets and bathroom vanities, and 30% on upholstered furniture are also part of the effort to boost domestic manufacturing [2] Industry Impact & Concerns - Pharmaceutical companies are reportedly moving back to America [2] - The tariffs may lead to higher prices amid rising inflation [3] - Pharmaceutical Research and Manufacturers of America suggests billions in US investment are at risk, as every dollar spent on tariffs is a dollar that cannot be invested in American manufacturing or future treatments and cures [3]

Core Insights - President Donald Trump imposed 100% tariffs on pharmaceuticals, with exemptions for companies that build manufacturing plants in the U.S. [2] - Eli Lilly and Amgen announced new investments in the U.S. shortly after the tariff announcement [2] Company Actions - Eli Lilly is opening a new manufacturing facility in the U.S. as part of its investment strategy [2] - Amgen is also making significant investments in domestic manufacturing in response to the tariff policy [2]

Core Viewpoint - The Trump administration's announcement of a potential 100% tariff on pharmaceutical products not manufactured in the U.S. has significant implications for the pharmaceutical industry, creating uncertainty and prompting companies to increase domestic manufacturing investments [1][2]. Group 1: Tariff Announcement and Market Reaction - President Trump threatened a 100% tariff on branded or patented pharmaceutical products starting October 1 unless companies establish manufacturing plants in the U.S. [1] - Following the announcement, pharmaceutical stocks remained stable, with the SPDR S&P Pharmaceutical ETF (XPH) rising by 1.6% and the VanEck Pharmaceutical ETF (PPH) increasing by 0.6% [3]. - Analysts suggest that larger biopharmaceutical companies may not be significantly affected due to ongoing U.S. facility construction, but smaller companies could face exposure [2]. Group 2: Company Responses and Investments - Pharmaceutical companies have announced over $350 million in U.S. manufacturing investments, with Amgen committing to expand its U.S. manufacturing by $650 million following the tariff threat [4]. - Amgen's CEO emphasized the importance of increasing capacity to deliver innovative medicines and creating high-quality jobs in biotechnology [5]. - Companies like Argenx, AbbVie, and Novartis highlighted their U.S. manufacturing capabilities during recent earnings calls, indicating a strong domestic presence [6]. Group 3: Broader Implications and Investigations - The tariff threat may serve as a negotiating tactic related to the ongoing Section 232 investigation into the impact of imports on national security [7]. - A separate Section 232 investigation into medical devices was announced, causing a nearly 2% decline in the medical-products industry group [8]. - Analysts predict that the medical device investigation may lead to additional tariffs, similar to the pharmaceutical tariffs, but the timing remains uncertain [9][10].

Core Insights - Economists anticipate inflation to rise in the fourth quarter due to the impact of President Trump's tariffs on consumer prices [2][8] - The Consumer Price Index (CPI) is projected to increase by 3% year-over-year in the fourth quarter, up from 2.9% in August, marking the highest level since May 2024 [3][8] - Inflation, as measured by Personal Consumption Expenditures (PCE), is expected to reach 3.2% in December, a rise from 2.9% in August, with a forecasted decline starting in 2026 [4][9] Inflation Trends - The CPI is expected to accelerate in the fourth quarter as companies begin to pass on tariff-related costs to consumers [3][8] - The PCE index rose by 2.7% year-over-year in August, indicating a slight increase from 2.6% in July, while core PCE remained stable at 2.9% [4] - A significant portion of tariff costs, estimated at 70%, is being passed on to consumers, with expectations of further increases in the coming months [6][7] Consumer Impact - Rising inflation is affecting household budgets, particularly for essential goods like gas and groceries, with wage increases not being evenly distributed among Americans [5] - Companies have been hesitant to raise prices due to potential loss of business, but surveys indicate a shift towards passing on costs to consumers [6][7]

Tariffs Announcement - The US will impose a 100% tariff on branded or patented pharmaceutical products starting October 1st, with exemptions for companies building drug manufacturing plants in the US or those with ongoing construction projects [1][2] - A 25% tariff on imported heavy trucks will also take effect on October 1st [2] - A 50% tariff will be applied to kitchen cabinets, bathroom vanities, and associated products, while a 30% tariff will be imposed on upholstered furniture, both starting on October 1st [3] National Security Justification - The president cited national security as a reason for the new tariffs on kitchen supplies and furniture, indicating a broader interpretation of national security that includes economic productive capacity [3][17] - Section 232 investigations into imports of robotics, industrial machinery, and medical devices may lead to additional tariffs, suggesting a strategic approach to tariff implementation [3][16] Impact on Agriculture - The trade war has negatively affected American farmers, particularly in soybean exports to China, prompting the president to develop a mechanism to transfer tariff revenues to support farmers [4] Trade Agreements and Exemptions - Questions arise regarding how these new tariffs will interact with existing trade agreements with countries like Japan, Korea, and Europe, particularly for products already covered under those deals [5][6] - The potential for exemptions from tariffs has raised concerns about crony capitalism and favoritism towards large businesses, as highlighted by industry leaders [8][9] Future Political Landscape - Speculation exists that even if a Democratic administration were to take power, the current tariffs may not be fully rolled back due to the political implications of harming American workers [20][21] - The ongoing use of tariffs as a tool for political leverage may complicate future trade negotiations and exemptions [22]

Let's turn to the broader market action this morning. Joining us here at Post 9 is DWS Group America's CIO David Biano. Welcome, David.It's good to have you. And today we we've got a nice broad rally, although NASDAQ is actually lagging for a change. Do you buy into the the broadening trend that this rally continues and it doesn't have to be led by big tech.It's a Friday morning and and not too bad. It's been a bit of a tough week though for those arguing for the the broadening of uh the equity market. Uh t ...