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Roches-Douvres Light, Cotes-d’Armor, France
This lighthouse is an active lighthouse located on the north-western coast of France. The lighthouse sits on a 5-story stone dwelling. It is claimed to be the waveswept lighthouse farthest from mainland in Europe, about 30 kilometres (19 mi) off the French coast. The location is accessible only by boat in very rough seas. Both the site and the tower are closed to the public.
Calcanhar Lighthouse/ Touros Lighthouse, Rio Grande do Norte, Brazi
This lighthouse stands at 203 feet tall. It was originally constructed in 1912, and the current structure was built in 1937. The lighthouse is located on the eastern coast of Brazil.
*Feel free to send us your photos of Lighthouses to be featured in our weekly market observations. *
China makes a warning to the world
China has reportedly warned countries worldwide against signing trade deals with the U.S. that harm China. Beijing will reportedly retaliate against countries that make fresh deals with the U.S. that negatively impact China. This report will further complicate trade talks around the world.
President Trump is reportedly currently negotiating trade deals with over 70 countries. The Trump administration is pushing for their trading partners to limit their dealings with China moving forward.
The Trump administration is dangling trade deals over the heads of some of their biggest allies and pushing for a global decoupling of economies, pushing for countries to limit their trade and relationships with China.
According to White House trade advisor Peter Navarro, the Trump administration hopes to have 90 deals in 90 days, quite a lofty target. According to the Peterson Institute for International Economics past trade agreements took 18 months to negotiate on average.
For now, global trade, the strained relationship between China and the U.S., and President Trump’s irrationality will continue to hamper global markets and spook investors. We remain vigilant in today’s choppy markets and will continue to look for quality names trading at a discount.
According to Vice President, JD Vance, the U.S. has negotiated its first new trade deal. Reports point to the US finalizing a trade deal with India. Trump and Vance have been quite complimentary of Indian political leaders, so it’s no surprise a deal with India was a priority for the Trump administration. According to industry executives and lobbyists the Trump administration intends to press India to give online retailers such as Walmart and Amazon full access to its e-commerce market as part of the deal. The Indian market has been quite restrictive with international corporations despite its recent growth. India has been home to some of the world’s highest average import duties, something the U.S. wants to limit. The deal will reportedly be finalized in the autumn, but this is the first step in finalizing an ever-lasting trade deal between the two nations.
The U.S. is India’s largest trading partner, and the two nations have said they want to increase bilateral trade to $500 billion by 2030 (double the current amount). India will reportedly buy more American energy to create a secure energy supply. India will also continue to buy more American defense and technology products. New Delhi has drifted closer to Washington in terms of security and defense in recent years as their mutual distrust of China grows.
We have been bullish on India for quite some time and believe the country will continue to grow at a rapid rate. We think a deal between the U.S. and India would accelerate that growth. After the recent pullback in Indian equities, we think the current risk-reward relationship of Indian equities is extremely attractive for long-term investors. We think that India will be one of the major beneficiaries of the rotation away from China and the decoupling of the global economy.
Chipotle’s next market
Chipotle (CMG) has been one of the fastest-growing fast-food restaurants of the last decade. The company has grown in popularity across Canada and the U.S. This week the company announced it will be entering a new market which could fuel its stage of growth. CMG announced plans to open its first location in Mexico and is looking to expand into other Latin American markets.
CMG shares moved lower on this news due to broader market weakness. CMG currently operates 3,700 restaurants and expects to open 315-345 new locations in 2025. Their long-term target is to open 7,000 locations across Canada and the U.S. The restaurant chain has been able to maintain growth in same-store sales despite inflation worries over the last few years. New restaurant openings have also fueled their growth in recent years. During the fourth quarter of 2024, CMG saw its revenue jump by 13% and earnings per share jump by 19%. We expect CMG’s growth trajectory to continue, however, we do believe CMG shares are currently overvalued at their current valuation of 40x earnings.
CMG has an interesting business model and thousands of loyal customers who prefer Chipotle over its competitors. CMG offers fresh ingredients and is healthier than traditional fast-food options. It’s no surprise that CMG’s shares have surged in recent years.
Trump attacks Powell
President Trump attacked the Federal Reserve Chairman on Monday stating that he will fire Powell. Trump also called Chairman Powell a ‘loser’ and demanded for the FED to lower rates now. Trump has been highly critical of Powell in recent years, especially since winning the election.
Trump warned Powell that the U.S. economy will slow down unless rates are cut. He also stated that inflation has been beat and should not be a worry for the FED.
Trump has been pushing for lower rates to spur economic growth and to combat his tariffs. Trump’s administration is also facing the reality of a growing government deficit which needs to be refinanced this year. Trump hopes that debt will be refinanced at much lower rates.
The ironic part of Trump’s comments regarding Powell is that he nominated Powell to lead the FED during his first term as President.
Any attempt by Trump to fire Powell would more than likely lead to a steep sell off across equity markets. The move would raise questions about the FED’s independence. Markets pulled back on Monday due to his comments alone regarding Powell. Meanwhile, the U.S. dollar continued its slide on Monday to its lowest level since 2022 (even the sleepy fiscally beaten down loonie has woken up relative to the U.S. Dollar).
Early and fast
2025 has been historic for equity markets (for all the wrong reasons). The S&P 500 has had its 3rd worst start to a year ever drawing down 12.3% over the first 74 trading days of the year.
Quite the first hundred days for President Trump as he continues to shake things up, ignoring the costs of his actions. We are not sure how the year will finish as it’s been quite a volatile year that has been anything but predictable. The only thing we can do is continue to crunch the data and best position our investors for what is next.
Telecom beats
Defensive stocks continue to outperform but some are still feeling the pinch of uncertainty, tariffs, and looming inflation. On Tuesday, a core holding of ours reported earnings, Verizon Communications (VZ). We know telecommunication companies are traditionally not defensive or a staple, but in today’s world, a phone plan is one area consumers will continue to spend especially when it comes to their monthly plans. VZ shares are up 6% in 2025, significantly outperforming communication ETFs and broad U.S. indices.
The company reported strong numbers overall, but the stock moved slightly lower due to comments made by management that claimed more customers exited their phone plans amid worries about a rise in inflation. Earnings-per-share and revenue beat street estimates. However, VZ lost 289,000 postpaid net phone subscribers last quarter, more than the 197,000 analysts were expecting.
Wireless service revenue rose 2.7% from a year ago and revenue from wireless equipment rose 0.7%. VZ also reported a strong increase in free cash flow over the last year as FCF jumped 33%. VZ reaffirmed its 2025 earnings and dividend forecast. VZ shares currently yield 6.3%, a nice dividend that is covered in uncertain times. VZ also does not rely on imports or exports to make money so the company will mostly avoid the impacts from tariffs. VZ’s CEO along with the CEO of AT&T warned investors that Trump’s tariff policies will lead to higher smartphone prices. Both Verizon and AT&T are large sellers of iPhones which are predominantly made in China. VZ’s CEO said the company will have to be creative to figure out how consumers can digest an increase in pricing on devices.
VZ will have to show a sustainable improvement in their wireless postpaid consumer subscriber growth to justify a higher multiple. We think this will happen in the long term but are happy to remain invested in the short term due to the limited risk that VZ has relative to broader markets. We also like the income aspect of owning VZ. VZ’s dividend has consistently grown over the last 20 years. After all, take a look at VZ’s dividend history (talk about low volatility and steady growth):
Disclaimer: MacNicol & Associates Asset Management holds shares of Verizon Communications (VZ) across various client accounts.
Wednesday relief
On Wednesday, investors got some relief as Trump eased his rhetoric on China and claimed he will not replace Chairman Powell. These statements completely differ from Trump’s stance over the last few weeks where his verbiage suggested that he would not negotiate with China on trade and that he was considering firing Chairman Powell.
According to reports Trump and the White House are considering slashing tariffs on China to de-escalate the trade war. Secretary Bessent went even further by stating ‘America first does not mean America alone’.
Markets surged on these reports as the Trump administration toned down its rhetoric and blinked on two policy stances that have been worrying investors.
According to reports from The Wall Street Journal, tariffs on China will likely land between 50-65% much less than the rate Trump has threatened China with.
We are not diving into buying the market after this good news as the headline could be white noise. The Trump administration has been all over the map when it comes to policy, why should we believe them this time?
During a speech on Wednesday, Secretary Bessent said a deal between China and the U.S. could take up to 2-3 years to finalize.
Another strong quarter for Vertiv
Vertiv Holdings (VRT) has been a core holding across some of our investor accounts for a few years now. We have slowly exited the trade, cashing in on some large profits. Recently we sold down our holding due to some technical breakdowns. The company from a fundamental standpoint remained strong. We continue to forecast substantial growth moving forward. VRT provides cooling equipment for data centers and communication networks.
Despite our forecasted growth, several factors led us to our decision to partially sell our holdings in VRT. Those factors included the overall pullback in the market and its instability, the multiple VRT traded at, and the technical analysis our team conducted where VRT broke through certain price levels.
VRT shares have been on a wild ride this year. As the market has drawn down, so has VRT. We remain bullish on the stock and were pleased on Wednesday when shares soared after a strong earnings report. Both revenue and adjusted earnings per share beat street estimates. Overall sales grew by 24% year-over-year and VRT rose its 2025 net sales forecast lifting the midpoint by $250 million. Diluted earnings-per-share jumped 49% year-over-year.
VRT continues to see growing demand despite certain companies pivoting from their AI strategies in recent months. VRT’s position in the market and partnerships with the likes of Nvidia will help management mitigate the impact of tariffs this year.
Despite this year’s pullback, VRT shares are significantly higher than when we originally purchased them in 2023.
Analysts remain bullish on VRT and AI infrastructure stocks in the long run but warn of a potentially bumpy near term due to the market, tariffs, and some companies slowing their investments into AI. We think VRT will be a major winner in the AI trade and will capitalize on the technological developments in the space. We think this company will have a much higher market capitalization a few years down the road.
Disclaimer: MacNicol & Associates Asset Management holds shares of Vertiv Holdings (VRT) across various client accounts.
MacNicol & Associates Asset Management
April 25, 2025
