Trade Squeeze Hits Markets

In this issue of the peel:

• ?? New trade barriers with our neighbors to the north and south leave markets feeling the squeeze.
• ?? Best Buy, Target, and other retailers will struggle to keep up with soaring costs.
• ?? Solar?Green energy stocks are basking in the proverbial policy spotlight.

Market Snapshot

Banana Bits

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Macro Monkey Says

Tariff Tantrum—The Great Follow-Through

While investors may have thought he was bluffing, Trump followed through with a slate of tariffs on Canadian, Mexican, and Chinese imports.?

The administration aims to boost domestic production by taxing goods such as tech components, electric vehicles, solar panels, and a host of others.?

While the policies are marketed as America first, the market’s reaction reflects something quite different.

Let’s take a look into it.

Winners and Losers

As always, tariffs create winners and losers:

• Winners: Domestic solar companies like Enphase Energy saw their stocks surge, benefiting from protectionist policies that favor U.S. manufacturers. Steel and aluminum producers also celebrated.
• Losers: Retail giants like Best Buy and Target warned that higher import costs would trickle down to consumers, leading to higher prices and lower sales. Meanwhile, Tesla’s reliance on foreign-made EV components put it in a tight spot.

What This Could Mean?

For investors, these tariffs create more uncertainty—especially since all three countries have vowed to retaliate. The market fears a partial redo of 2020-2022, including:

• Supply chain disruptions → Delays and shortages in consumer goods
• Inflation pressure → Higher costs passed onto customers
• Geopolitical tensions → Trade wars historically don’t end well for markets

What’s Next?

The White House says these tariffs are part of a long-term strategy to strengthen U.S. manufacturing.?

But, Wall Street knows that in the short term, corporate earnings may take a hit. Investors will be watching corporate guidance closely, especially from major importers like Apple, Walmart, and Ford.

Bottom Line: Markets hate uncertainty, and these tariffs just turned trade policy into March Madness. Buckle up.?

Career Corner

Question

How should you answer a desired salary question when you are required to select a number on the app?

Answer

Research their average salary on the WSO company database, Glassdoor, etc., and put that.

Head Mentor, WSO Academy

Check out WSO Academy

What's Ripe

Enphase Energy (ENPH) 9.4%

• Trade restrictions on solar panels boosted demand for U.S. solar stocks like Enphase, which received a nice tariff glow-up.
• The company makes smart home energy solutions for the solar industry. It specializes in microinverters that convert energy at the panel level, battery storage systems, energy monitoring software, and EV chargers.
• With government incentives and a tariff shield, Enphase is charging ahead while competitors scramble.

Walgreens Boots Alliance (WBA) 5.6%

• Reports that Sycamore Partners is eyeing a $10 billion takeover had investors loading up on shares.
• Unlike other retailers, Walgreens benefits from the demand for essential goods, making it less vulnerable to economic swings.
• A mix of pharmacy sales and potential private equity backing gave investors a much-needed booster shot.

What's Rotten

Best Buy (BBY) 13.3%

• New import taxes on electronics spelled bad news for a retailer heavily dependent on foreign-made goods.
• The company’s CEO warned that higher costs would be passed to consumers,?potentially hurting demand.
• With margins already tight, Best Buy faces a lose-lose situation—raise prices or take a profitability hit.

Tesla (TSLA) 4.4%

• Tesla’s China-made vehicle sales are in a perilous situation. Tariffs raised concerns over international demand.
• New trade rules impact not only demand but also threaten supply chains, making it more expensive to source parts from Mexico and Canada.
• Wall Street doesn’t like uncertainty, and with regulatory and supply chain issues mounting, Tesla hit a speed bump.

Thought Banana

Walgreens’ Big Pharma Play—A Prescription for Change?

Rumors are swirling that private equity giant Sycamore Partners is considering a $10 billion buyout of Walgreens Boots Alliance (WBA).?

If true, this could mark one of the biggest leveraged buyouts in the retail pharmacy space. But why would a PE firm want to acquire Walgreens, and what does it mean for investors and customers?

Let’s get into it.

Why Walgreens?

Walgreens has been struggling to keep up with the rapidly changing healthcare and retail landscape.?

Its core pharmacy business faces rising competition from Amazon, CVS, and Walmart, while foot traffic in its stores has declined post-pandemic.?

At the same time, Walgreens has been shifting toward healthcare services, acquiring stakes in primary care providers and urgent care clinics to diversify revenue streams.

For a PE firm like Sycamore, Walgreens presents an opportunity to cut costs, streamline operations, and potentially spin off valuable assets—including its international Boots pharmacy chain.

Buyout Benefits (and Risks)

If Sycamore follows through, here’s what could happen:

• Cost Cutting: Expect store closures, job reductions, and efficiency improvements
• Healthcare Expansion: Walgreens' push into primary care could accelerate under new ownership
• Debt Overload: Leveraged buyouts often come with heavy debt burdens, which could weigh on Walgreens' long-term prospects
• Investor Concerns: If Walgreens goes private, current shareholders would cash out, but they’d also miss any long-term turnaround upside

What’s Next?

While talks are still speculative, Walgreens' stock jumped 5.6% on the news, signaling that Wall Street sees potential in a buyout.?

If Sycamore moves forward, it could reshape the U.S. pharmacy industry, setting up a showdown between private equity-backed Walgreens and its biggest rival, CVS Health.

Bottom Line: Walgreens is at a crossroads—whether it stays public or goes private, its future will be shaped by how well it adapts to the evolving healthcare landscape. Stay tuned.?

Banana Brain Teaser

Previous

For each student in a certain class, a teacher adjusted the student’s test score using the formula y = 0.8x + 20, where x is the student’s original test score and y is the student’s adjusted test score. If the standard deviation of the original test scores of the students in the class was 20, what was the standard deviation of the adjusted test scores of the students in the class?

Answer: 16

Today

Last year, 26 members of a certain club traveled to England, 26 members traveled to France, and 32 members traveled to Italy. Last year, no members of the club traveled to both England and France; 6 members traveled to both England and Italy, and 11 members traveled to both France and Italy. How many members of the club traveled to at least one of these three countries last year?

Send your guesses to [email protected]

?

In the short run, the market is a voting machine, but in the long run, it is a weighing machine.

Benjamin Graham

How Would You Rate Today's Peel?

?? All the bananas

?? Meh

?? Rotten AF

Happy Investing,

Chris, Vyom, Ankit & Patrick