The Truth About Liberation Day

Trump’s goal with tariffs … is it working? … the stock market has turned “manic” … Goldman slashes its earnings forecast … your final day to get Louis’ AI picks

The hysterical financial media has promoted the narrative that these tariffs will be catastrophic for the U.S. economy – and that President Trump is hellbent on destruction.

Nothing could be further from the truth.

So says legendary investor Louis Navellier.

Let’s begin today by separating fact from fiction regarding President Trump’s trade war and tomorrow’s much-anticipated “Liberation Day.”

If “destruction” isn’t driving Trump’s tariff plans, what is?

Back to Louis:

This is all about leverage, plain and simple…

At the heart of it, Trump’s tariff strategy is two-fold:

1. Level the playing field– “What they charge us, we charge them.”
2. Encourage onshoringto avoid tariffs altogether.

Both goals are designed to strengthen the U.S. economy – and both are already working.

As one example of tariffs achieving their intended effect, Louis points toward Vietnam and the auto industry

Vietnam has the third-largest U.S. trade surplus after China and Mexico. And Louis notes that Trump tariffs are already achieving the desired outcome:

[Vietnam] has already responded.

It announced it would lower tariffs on certain U.S. products like liquefied natural gas and vehicles – a clear sign that countries are preparing to negotiate rather than retaliate…

This illustrates the “lowering their tariffs” part of the dual goal; let’s continue with the auto industry to highlight the “onshoring” aspect.

Back to Louis:

The EU is still hell-bent on net zero. So that’s why they want all-electric cars by 2035.

Well, if you’re sitting in Germany right now, you’re not making hardly any money, if any, on electric cars. All your money is made on cars with engines.

And Trump’s inviting you to come to America. He’s already said this, and he’ll give you the work visas for all your workers, and your electricity will be a quarter of the cost it is in Germany, and all these states will be throwing incentives at you to move, and you already have plants in America.

So, why don’t you just pick up and move? That’s what’s going on.

Of course, Trump’s tariff strategy isn’t limited to cars.

Louis notes that, altogether, $1.2 trillion in technology onshoring has already been announced. If pharmaceutical and auto companies follow suit, Louis believes that we could see several trillion dollars in new domestic investment.

Louis urges investors to resist the temptation to join the herd in panicking

We know what we’re supposed to do when market conditions turn nasty. We’ve heard the quotes like Warren Buffett’s, “be greedy only when others are fearful.”

But when you’re seeing your portfolio drop 5%… 8%… 14%… watching that translate into losses of thousands (or hundreds of thousands) of dollars, cool-headed logic is often overcome by emotion.

In moments like these, it’s helpful to take a page out of Louis’ playbook and shift our focus from portfolio values to earnings.

From Louis:

Remember, markets are manic. Wall Street has ignored a lot of great AI news lately.

On March 10, for instance, Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) reported that February revenues had surged 43.1% to 260 billion Taiwan dollars.

This is a historically strong forward indicator for chip-designing firms like Arm Holdings plc (ARM) and NVIDIA Corporation (NVDA).

Now, forgetting ARM and NVDA for the moment, look at TSM.

Since that March 10^th announcement, TSM has fallen 2%. This is a continuation of its broader 25% pullback since late-January.

This could be a great long-term entry point.

As to Nvidia, regular Digest readers know that this is one of Louis’ favorite stocks.

He put his Growth Investor subscribers into it back in 2019. They’re sitting on open gains of 2,436% as I write Tuesday morning.

Despite its continued earnings/revenue strength over recent quarters, the stock has fallen 27% since the first week of January.

Remember, Louis has called Nvidia his “stock of the decade.” Might a 27% discount be something to consider?

Here’s Louis’ overall take:

[Despite AI earnings growth], investors have only focused on the negatives lately (mainly tariffs). The media only adds fuel to the fire in situations like this, because every setback in talks, and every ensuing pullback, is covered like it’s a full-blown crisis.

This has sent the prices of many world-class AI stocks into correction territory. As a result, we’re now facing a grossly oversold stock market where phenomenal companies like NVIDIA are trading at incredible discounts.

Stock markets are not rational calculating machines. Again, markets are manic.

“Manic market” or not, this does not mean that investors have a green light to go on an indiscriminate buying spree

I was on a call this morning with a handful of analysts from InvestorPlace and our corporate affiliate TradeSmith. The takeaway? This is a stock picker’s market.

While there are plenty of overhyped, overvalued stocks to avoid, some fantastic buying opportunities are available for investors who know where to look – and Louis is looking (and buying) today.

I’ll circle back to those details in a moment. But first, let’s look at why a broad “buy the dip” mentality is dangerous today.

In short, we’re at risk of bearish sentiment eventually broadening into bearish earnings.

In recent Digests, we’ve been highlighting the push and pull on a stock price that comes from two sources: earnings and sentiment.

In the short term, sentiment drives a stock’s price movement, but in the long term, earnings win the day.

Today, bearish sentiment has weighed on stock prices even though earnings forecasts are bullish.

So, if trade wars (and other market overhangs) affect sentiment only, then – eventually – today’s bearish sentiment will turn bullish, and stocks will roar higher as bullish earnings retake the spotlight.

Our hypergrowth/technology expert Luke Lango made this point in yesterday’s Digest:

If the trade war doesn’t heat up… and the economy doesn’t slow… then those earnings estimates will only keep pushing higher… and the current valuation discount will make no sense…

So, AI stocks should rebound strongly.

But if trade wars result not only in today’s bearish sentiment, but also in tomorrow’s weaker earnings, then Wall Street will have to recalculate stock prices across the board.

Not only would those calculations include today’s lower sentiment multiples (and likely, even lower ones), but they’ll also have to include new, lower earnings per share numbers.

That could be brutal for stocks.

To illustrate, over the weekend, Goldman Sachs released a research note updating their market projections. In a worst-case recession scenario, they see stocks falling ~50%.

This leaves us with a rough binary…

If we begin to see evidence that sentiment is turning bullish, that’s a buy signal for great stocks in this “stock picker’s” market.

But if we begin to see a strong case that earnings are weakening, that’s a “take caution” signal.

Well, circling back to Goldman, they just lowered their expectations for where the S&P will finish the year (now projecting a loss). And a big reason for this is earnings.

From Chief U.S. Equity Strategist David Kostin:

These estimates incorporate downward revisions to both earnings growth and valuations, reflecting a weaker base case economic growth backdrop, higher uncertainty, and higher recession risk.

Goldman lowered its 2025 price target for the S&P from 6,200 to 5,700.

Though that target is a little over 1% higher than the S&P’s price as I write, it’s about 4% lower than where we started the year.

Such a tepid broad market forecast amplifies the importance of investing only in fundamentally strong stocks. These companies tend to fall less in bearish markets and rebound faster/higher in bullish markets. Or, as Louis often puts it:

Fundamentally superior stocks bounce like fresh tennis balls.

And this brings us back to what Louis is investing in today, and what he recommends for investors:

With things still volatile and uncertain right now, how should you invest?

The answer is simple: Buy fundamentally superior stocks that bounce!

These are the stocks that hold up when the market gets choppy – and sprint ahead when things turn around.

For an illustration of such stocks, let’s rewind to last week

As we’ve been profiling here in the Digest, Louis, along with our other experts, Eric Fry and Luke Lango held a roundtable discussion centered on AI.

They provided a roadmap for how to invest right now, highlighting a small portfolio of elite AI stocks that they believe will be tomorrow’s market leaders. “Fundamental strength” is a core attribute.

Here’s Louis with earnings data on their top AI plays:

Of the 11 AI Revolution Portfolio companies that reported earnings last month, nine beat expectations, and another met forecasts.

As a group, these 11 firms posted 18% revenue growth and 24% earnings growth, and they are set to increase profits by another 77% by 2026. 

In comparison, the S&P 500 grew earnings 7.1% in the first quarter, while revenue increased 4.2%.

These are phenomenal numbers and serve as a reminder that great investment themes will outlast any market wobble. 

If you missed last week’s presentation, you can catch a free replay right here. Please note, it’ll only be available through tomorrow.

Wrapping up…

All eyes are on “Liberation Day” tomorrow.

Fortunately, Louis (and Luke) believe that while the market pain may not end tomorrow, we’ll begin the tariff clarification process that will result in the return of bullish conditions.

Back to Louis:

The fact is, once the April 2 “Liberation Day” deadline passes and the rules of the road are better understood, much of the uncertainty plaguing the market should fade away.

Clarity, optimism and strong corporate earnings – along with lower interest rates on the horizon – could give stocks the push they need to move higher.

We’ll report back tomorrow when Liberation Day details emerge.

Have a good evening,

Jeff Remsburg