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Taxation Is Theft, Tariffs Are Stealing

🇺🇸 Taxation is theft, but tariffs are straight-up stealing... and it turns out they’re a damn good negotiating tactic too. Find out how doing nothing has already done something.

February 11, 2025

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In this issue of the peel:

  • 🇺🇸 Taxation is theft, but tariffs are straight-up stealing… and it turns out they’re a damn good negotiating tactic too. Find out how doing nothing has already done something.

  • 🍔 Mondays just became your new favorite day of the week, and McDonald’s is excited to clog your arteries in 2025. Meanwhile, DeepSeek might’ve gotten its first confirmed kill, and Charles Schwab suffers from TD Bank’s shenanigans.

  • 🏈 Now I get how the rest of the world can stand to sit through a game of soccer. Although high scoring, that was one of the most boring Super Bowls on record.

Banana Bits

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Macro Monkey Says

Steeling Tariffs

If taxation is theft, does that mean tariffs are stealing?

Obviously, the answers are yes, and oh hell yes—at least, if you’re President Trump.

But as tariff peekaboo becomes more of a will-they, won’t they than Jennifer Aniston and Ross, I mean *Barack Obama, it’s tough to keep track of what’s real and rumored.

So, let’s get into it.

What Happened?

According to FactSet, 2025’s first Most Wonderful Time of the Year—Q4 earnings szn—has flexed the highest number of S&P companies citing tariffs during their earnings calls since Q2’19.

Now, that “citing” of tariffs can be good or bad depending on the firm. 

A primary concern for a lot of companies is the impact of currency exchange rates. When the dollar rises (due to things like tariffs), international currencies carry less purchasing power when converting back to USD.

On the other hand, some companies—like U.S.-based steel and aluminum producers—were hyped to hear about the latest round of tariffs on Monday. President Trump announced plans to impose 25% tariffs on all steel and aluminum imports to the U.S.

Until now, President Trump’s actual use and threat of tariffs have primarily been targeted at specific countries and trade deals. However, the President is now explicitly targeting an international industry with hopes of improving American competitiveness.

The good news is that the countries that will feel the most pain here are those classic evil empires, enemies of the U.S., like Canada or South Korea, among others.

Anyway, steel tariffs are nothing new. During President Trump 1.0, the dawg slapped tariffs on steel imports from Canada, Mexico, and the E.U. 

At the time, the same chatter about destroying demand was prevalent, but according to analysts at commodity research firm CRU, those tariffs led to an increase in investment in U.S. steel production. 

Further, a congressional report from 2018 notes that those tariffs earned $1.5bn in revenue in the first 5-months in which they were in place. 

So, despite the headline noise about threats to short-term demand, the last time the U.S. did this, it worked out well for both the domestic industry and Uncle Sam.

Now, under Trump 2.0, the President’s goals are similar.

While less targeted on these specific industries compared to 2018, this is part of the President’s sweeping economic agenda to create a “level playing field” in international trade.

However, the justification for these tariffs is equal to national security and economics.

Much of the President’s 2024 campaign centered on revitalizing domestic production in what are viewed as key industries. 

Disruptions from the pandemic made this all too clear and, considering how crucial steel and aluminum are as inputs to other goods, these industries make for an obvious starting point.

So, in addition to wanting to grow global demand for U.S. steel, expand domestic production capacity, and maybe even create jobs in the industry again, making sure we have the sh*t we need if/when sh*t hits the fan again is crucial (excuse the technical jargon).

Any serious conversation about these tariffs has to include what could come down the line. Analyzing them independently is like analyzing a stock without checking the valuation of its peer group or how it impacts portfolio beta. 

Betting markets seem to understand this well, with most tariff-based wagers on the prediction markets website considering the totality of tariffs rather than their individual impacts or likelihood.

Meanwhile, U.S.-based steel and aluminum producers are already jumping—literally—for joy at the potential for an artificial boost in their international competitiveness:

The Takeaway?

Although the only material tariffs put in place thus far include the 10% levy on all imports from China, tangible impacts have already been felt—and I don’t just mean your latest Shein order.

Canada and Mexico have both beefed up border security. China agreed to take further steps to stymie illegal fentanyl production and distribution. 

Along with these steel and aluminum tariffs, Nippon Steel is greedy enough to re-work its planned acquisition of U.S. steel into a large investment.

We’ll see if they actually get put in place, but regardless of your assessment of their overall economic impact, they certainly seem like an objectively effective negotiating tactic.

Career Corner

Question

One of the responses I got from a cold email was basically just, "If you're interested in the position, send me your CV."

This is definitely positive, but I think a phone call would still help me learn about the bank and allow me to speak about that in an interview. Should I just say yes, I'm interested, and send him the CV, or should I ask again for a quick phone call?

Answer

You definitely have to respond with your CV, and you can follow up by saying you would still love to chat if he/she has time.

Head Mentor, WSO Academy

What's Ripe

Monday.com (MNDY) 26.5%

  • They gotta be doing this on purpose. This is about the 11-ventyth time in a row in which Monday.com drops earnings on a Monday. Usually, it only makes it easier for the week’s worst day to live up to its reputation, but not this Monday.

  • The project management platform took off after revenue jumped 32% annually to $268mn, well above estimates. EPS of $1.08/sh beat estimates by 40%.

  • The firm is getting double-teamed by AI, expanding revenue with AI-based offerings while cutting costs with AI-based operational integration. FY’25 revenue guidance was well above estimates, too.

McDonald’s (MCD) 4.8%

  • No one is a bigger fan of Ozempic than McDonald’s. Like the pill ushered in the sexual revolution of the 60s, weight loss drugs present a revenue revolution for fast food chains.

  • But… not last quarter. McDonald’s missed on revenue estimates in Q4, reporting $6.39bn in sales vs $6.44bn expected, blaming a weeks-long E. coli outbreak in the U.S. at the onset of the quarter.

  • Per-share earnings of $2.83/sh were right in line with estimates. Same-store sales grew 0.4% while the Street was pricing for a 1% decline.

  • Shifting their focus back to value, as I guess $18 was a bit much for a Big Mac, McDonald’s expects weakness in Q1 but gave strong guidance for FY’25.

What's Rotten

Semtech (SMTC) 31.0%

  • We might be witnessing DeepSeek’s first confirmed kill as Semtech drastically reduces FY’2026 sales expectations for a key product expected to ride the AI wave.

  • Semtech, a provider of chips, IoT, and connectivity services, announced in an 8-K on Monday that the firm no longer expects a minimum of $50mn in revenue from its CopperEdge line in FY’26.

  • CopperEdge is a connectivity product designed to enable high-bandwidth, low-latency signaling for 800G and 1.6T Ethernet cables. 

  • But, after DeepSeek showed the world you could make a best-in-class AI model with two sticks and a ton of IP theft, demand for Semtech’s hardware could fall.

Charles Schwab (SCHW) 3.4%

  • Much like the GPAs of the poor souls who partnered with me on group projects in college, Charles Schwab is tanking, and it’s entirely not their fault.

  • The brokerage firm fell off Monday after TD Bank announced plans to dispose of its 184.7mn shares of Charles Schwab, representing ~10.1% of total beneficial ownership.

  • However, the sale is more reflective of conditions at TD Bank. The firm started selling its Schwab position in 2024 to raise funds to cover a pending anti-money laundering charge.

  • But, TD Bank holds other fines like a portfolio that owns stocks. Most notably, the U.S. slapped a $3bn fine on the firm for “deficient internal safeguards,” leading analysts to cite this as the root of the sale. 

Thought Banana

Not-So-Super Bowl

It’s a sad day in America when the most exciting moment of the Super Bowl was when the halftime performer called the biggest rapper in the world a p*dophile.

Now, I think we can all agree that it’s pretty damn exciting whenever it happens. But, usually, we’re supposed to care about the game, too. Not this year, not even a minor.

Let’s dive in.

The Numbers

It’ll take some time for the official data to roll in, but based on the estimates and the info we have so far, the economics of this year’s Super Bowl were about as boring as the game itself.

I’d say congrats to Philly for winning, but as a diehard Patriots fan old enough to remember 2018, I can’t say that and expect to be allowed back at my parent’s house.

What I can say is that the biggest winner of this year’s Super Bowl was easily Fox. Forbes estimates the game averaged around 117 million viewers—a 3.7% drop from last year.

However, the price of a 30-second ad more than made up for a potential decline in viewers. Most of these slots sold for around $7.5mn, but a few of the last-minute additions went as high as $8mn for a 30-second slot.

Regardless of the dollar amount, it would have been clearly expensive if Kanye could only afford to put this nightmare together. 

Meanwhile, as Fox reaped the reward of the nearly 200,000% inflation in Super Bowl ad prices since 1968, sportsbooks found themselves on the wrong side of the bet.

According to the American Gambling Association—a club I wish I started in high school—Americans bet $1.4bn on Sunday’s game. That’s a ~11.2% increase from 2024.

The AGA says the most popular bet of the year was the Eagles money line at +110 odds. A $100 bet at those odds pays out $210, or a $110 profit, so sportsbooks are writing a lot of checks on Monday.

80% of Super Bowl bets came during the weekend, so, combined with prop bets on Sunday night, we’ll probably (and hopefully) be hearing about some crazy ones in the coming days.

The Takeaway?

Hopefully, that scumbag Roger Goodell and the other stiffs in the NFL HQ learned something from this.

How they managed to take a three-peat on the line with the world’s biggest pop star and the literal President of the United States in attendance while Kendrick re-opened his p*dophile allegations against the biggest rapper in the world and still lost viewers compared to last year is honestly amazing.

It takes a special kind of stupid to pull that off—luckily, Roger Goodell is exactly the man for the job.

The Big Question: As sports betting continues to grow, what impact do you think it will have on fan engagement and the integrity of professional sports?

Banana Brain Teaser

Previous

Mark and Ann together were allocated n boxes of cookies to sell for a club project. Mark sold 10 boxes less than n, and Ann sold 2 boxes less than n. If Mark and Ann have each sold at least 1 box of cookies, but together they have sold less than n boxes, what is the value of n?

Answer: 11

Today

A certain high school has 5,000 students. Of these students, x are taking music, y are taking art, and z are taking both music and art. How many students are neither taking music nor art?

Send your guesses to [email protected]

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