💼 Market Sips: Skip the Hangover

Good morning,

Today’s market feels like a bottle of Burgundy that’s been left open a bit too long—what started as a smooth, promising vintage is now a bit too acidic for our liking. The tariffs have introduced a sharp edge, and investors are left wondering whether they should pour themselves a glass of optimism or just put the cork back in and wait. It’s still early, though—sometimes, a little air can do wonders. But don’t be surprised if we’re all looking for a more palatable option by the end of the day.

"Burgundy makes you think of silly things, Bordeaux makes you talk of them, and Champagne makes you do them."
—Charles Baudelaire (French author and poet)

Tariff Tango: Will a Deal End the Market's Freefall?

Late Tuesday, Commerce Secretary Howard Lutnick hinted that a tariff compromise with Canada and Mexico might be “probably” coming soon. The markets, meanwhile, decided they were too busy panicking to wait for the dance to start. The S&P 500—bless its heart—has now wiped out all its post-election gains, tumbling back to levels we haven't seen since November.

What this means What could possibly soothe the markets after such a catastrophic drop? A tariff compromise? More likely a bandaid on a gaping wound. Markets are responding to this like an old friend who's been borrowing your car and somehow managed to wreck it. The compromise might be enough to stop the bleeding, but it won’t fix the car.

Point of interest Watch the ADP payroll numbers and Trump’s speech to Congress tonight. If investors don’t respond positively, we may have just witnessed the first official market panic of the year.

Stock picks

• Low risk: Apple $AAPL ( ▼ 7.29% ) – Even tariffs can’t dent its global empire.

• Medium risk: Boeing $BA ( ▼ 9.49% ) – Aviation still needs those planes, tariffs or not.

• High risk: Tesla $TSLA ( ▼ 10.42% ) – You never know with Musk, but if he gets distracted by tariffs, expect some strange turbulence.

• Wildcard: Shopify $SHOP ( ▼ 6.56% ) – Because if you're looking for a small, but potent market shift, this is your e-commerce wildcard.

Hershey Demands Cocoa Market Investigation

The cocoa market is officially a mess. Even Hershey's has requested an investigation. The volatility of cocoa futures has hit new highs and lows, making the market about as stable as a toddler on espresso.

What this means When even a multi-billion-dollar chocolate company is crying foul, you know something’s broken. With cocoa inventories at 21-year lows and West African yields being destroyed by weather, the market is less of a marketplace and more of a circus. The speculators are running the show, and the real buyers—like Hershey—are being kicked to the curb.

Point of interest Hershey has recently asked for regulatory approval to buy up to nine times more cocoa than typical, because, apparently, the real issue isn’t that cocoa is expensive. It's that no one can figure out where it's going.

Stock picks

• Low risk: Hershey $HSY ( ▼ 2.75% ) – Even with the chaos, they’ve got the brand power to weather this.

• Medium risk: Mondelez $MDLZ ( ▼ 2.34% ) – If you like a little more risk in your candy stash.

• High risk: Lindt & Sprüngli $LDSVF – Their European operations may be spared, but this is chocolate roulette.

• Wildcard: Nestlé $NSRGY ( ▼ 4.25% ) – A wildcard because they’re so big, they can handle a little volatility. Plus, they probably have a secret cocoa stash somewhere.

Markets Not Impressed at SoftBank’s $16B Loan

You know what’s fun? Asking for $16 billion while your stock plunges 5%. SoftBank just did that, and the market’s response was... let’s say “unenthusiastic.” After all, if you're asking for that kind of loan in an environment full of tariff-triggered chaos, you’re going to get more than a few raised eyebrows.

What this means SoftBank’s stock drop and its ill-timed loan request are the financial equivalent of running a marathon with a broken leg. The company is already struggling, and adding more debt only compounds the issue. In short: SoftBank needs a win. Badly.

Point of interest As tariffs are pushed and pulled around the world, expect more companies to follow in SoftBank’s wake—seeking liquidity as if their lives depend on it. Spoiler alert: they do.

Stock picks

• Low risk: Microsoft $MSFT ( ▼ 3.56% ) – Because you don’t lose with a steady hand in software.

• Medium risk: SoftBank $SFTBY ( ▼ 10.62% ) – This could go either way, so take your pick of wreckage or recovery.

• High risk: Alibaba $BABA ( ▼ 9.89% ) – A Chinese tech giant that’s not making friends in Washington.

• Wildcard: Snap $SNAP ( ▲ 0.37% ) – Because nothing says “risky” like betting on a meme-heavy social media company in uncertain times.

BlackRock’s $23B Panama Power Play

BlackRock has just made a bold move in the world of infrastructure, acquiring a 90% stake in two vital ports at the Panama Canal. This deal could reshape U.S. influence in the region, while also reminding us that global trade is always a game of chess... and not just with a single pawn.

What this means While Trump continues to bluster about China’s influence over the Panama Canal, BlackRock is quietly positioning itself as a major player in global trade logistics. And, let’s be real: If BlackRock’s involved, you might as well assume they’ve already won the game.

Point of interest The deal could be seen as a response to Chinese presence in the region. Expect more strategic maneuvers as global influence battles for position.

Stock picks

• Low risk: BlackRock $BLK ( ▼ 7.33% ) – When BlackRock moves, it’s usually a good time to follow.

• Medium risk: Global X MSCI China Financials ETF $CHIX ( ▲ 0.08% ) – Keep an eye on this as U.S.-China tensions rise.

• High risk: Cathay Pacific Airways $CPCAY ( ▲ 0.86% ) – A wild bet on international trade routes.

• Wildcard: ZIM Integrated Shipping Services $ZIM ( ▼ 7.19% ) – As global trade shifts, ZIM could capitalize on increased shipping demand, making it a high-risk, high-reward play.

M&A Frenzy: Honeywell, KKR, and More Dealmaking

In case you missed it, there’s a flurry of M&A activity happening. BlackRock leads the charge with a $23 billion deal for the Panama Canal’s port operations, while Honeywell has gobbled up Sundyne for a mere $2.16 billion. Meanwhile, KKR’s raising a cool $1.5 billion to keep the M&A engine humming.

What this means The M&A landscape is still booming, despite the market’s volatility. Companies with deep pockets are hunting for assets while the gettin’ is good, so expect more deals to roll out like clockwork.

Point of interest Some of these deals are signaling major shifts in market power. BlackRock’s Panama move is especially noteworthy for geopolitical reasons, and Honeywell’s purchase of Sundyne is a reminder that industry consolidation is alive and well.

Stock picks

• Low risk: Honeywell $HON ( ▼ 7.59% ) – This is more consolidation than chaos.

• Medium risk: KKR $KKR ( ▼ 9.52% ) – If they can close their deals, the returns could be substantial.

• High risk: Sundyne (private) – Not publicly traded, but definitely one to keep an eye on.

• Wildcard: Brookfield Infrastructure Partners $BIP ( ▼ 6.78% ) – They’re always in the thick of these major moves.

Roundup: The Week’s Other Headlines

1. Walgreens Nearing $10 Billion Deal to Go Private
   Walgreens is preparing to go private in a deal worth up to $10 billion. With tariffs shaking up the retail sector, this could be a strategic move to shield itself from external volatility.

2. Target Beats Q4 Earnings But Forecasts Rough Q1
   Target surprised with strong Q4 earnings but warned of a rough Q1, citing concerns over consumer health and the impact of tariffs on product prices. It’s a bit of a “buy now, worry later” scenario.

3. Okta Surges 24% After Strong Earnings Report
   Cybersecurity firm Okta posted impressive earnings, sending its stock up by 24%. A bright spot in a mostly gloomy market, showing that some sectors are still thriving amid some disruption.

4. Best Buy's Stock Drops 13% Despite Strong Q4 Earnings
   Best Buy beat earnings expectations for Q4, yet its stock took a 13% hit. With rising costs and the looming effects of tariffs, it seems investors aren’t ready to celebrate just yet.

5. China Hits U.S. Agricultural Exports With New Tariffs
   In a tit-for-tat escalation, China imposed 10%-15% tariffs on U.S. agricultural products, including chicken, wheat, and soybeans. This is just another chapter in the ongoing trade war, with global markets bracing for more volatility.

Wrapping up

Like a decent Burgundy, this market might need time to breathe before it reveals its true character—or it could end up being the type of wine you regret drinking. Either way, keep your strategy sharp and your portfolio less "oxidized." May your investments be as rich as a well-aged Bordeaux and not as bitter as the tariffs we’re all currently sipping on.

Oh - and a friendly reminder to get your early bird access to Briefcase: Unlocked

Santé,
The Briefcase Team 💼