Weekly Brief #76
The market is wrong about these companies... Plus, Apple and Meta fined $800 million, Merck to-buy SpringWorks for $3.5 billion, Harvard sues the U.S. government, and more.
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Good morning investor 👋,
Welcome back to the 76th Weekly Brief.
This week’s performance:
S&P 500: +3.38% | Nasdaq: +4.67% | Dow Jones: +0.88% | TSX: +2.53% | Gold: +0.58% | Bitcoin: +7.50% | The Quality Fund: +7.98%.
Markets are rebounding; a tear has left my eye. No. In all seriousness, earnings season is right around the corner for The Quality Fund (some positions have already reported), and I wanted to go over what to look out for in the coming weeks as these amazing companies report. Plus, how badly tariffs are/could be expected to affect them.
Also, I’ve changed the ‘Politics’ section to ‘Macro’ for consistency with the market theme of this blog. From now on, expect tariff news, inflation data, CPI and other related metrics, major regulatory changes, and interest rate decisions from major central banks to appear in that section. (Opposed to the usual political fluff that doesn’t affect your investments.)
Let’s get into it. (11 min read)
In this issue:
📄 Q2 2025 earnings season is here
💰 Apple and Meta fined $800 million
🇺🇸 U.S. expects to slash China tariffs
FEATURED STORY
📄 Q2 2025 earnings season is here
It’s the most wonderful time of the year again, my friends. And no, it’s not snowing. Welcome to Q2 2025 earnings season. Thank you to those in the Discord for pitching me this week’s featured story. Three chaotic months—gone just like that. Now is one of only four special times of the year when we see if this chaos has caused any material damage to our investments. A time when we need to stay informed and stay educated on what we own.
In today’s main story—minus the two positions that have already reported1—I’ll be sharing with you all a quick and easy “what to look out for” in the coming weeks as my companies report their quarterly results. This will be a no-fluff, insightful rundown of the most important metric(s) to watch, along with a bull/bear case on the tariff news and its impact for each company in my portfolio, by weighting. Starting with Amazon.
Pleasant side note: If you’d like a better say on the content you see here on the blog, access to my full quarterly earnings reviews of these companies when they come out, early trades, and more—feel free to join the Discord (included in the paid membership).
Amazon
18.11% of portfolio
As Amazon continues with investments in data centres and servers—like in the past few years—Amazon’s report will largely depend on AWS performance. We’ve seen acceleration in growth over the past two quarters, but it’s starting to stagnate. At the same time, we’re hearing Jassy talk about insatiable demand for cloud services and no plans to slow down on spending (currently expected to be $100 billion or more in capex for this year). There are some concerns over a broader slowdown in cloud infrastructure spending—Google’s cloud segment, released on Thursday, just barely missed estimates—so this is the main point to monitor throughout the report and call, given that 60% of operating profit comes from AWS. Advertising would be another aspect, as well as international profitability, which just recently turned positive.
On the tariff front, most of Amazon’s retail sales are in the U.S., though many suppliers are Chinese. Direct exposure is minimal for Amazon, but indirect exposure is high due to its dependence on Chinese imports. Amazon’s profitability hinges on its digital sales, so this can be weathered—and likely will be. Worst case, if the tariffs are long term, Amazon may absorb the sunk costs or help suppliers move away from China (and more; this is an entire post in itself).
MercadoLibre
16.91% of portfolio
MercadoLibre remains one of the most resilient compounders in my portfolio. The largest headwind for the company is currency depreciation, as always. Most of the market will be looking for signs of continuing momentum to offset this risk—especially in Brazil and Mexico, where it earns most of its revenue. Fintech growth is also something to watch, considering current investments there, as well as advertising, which is a key future growth driver.
MELI has absolutely zero exposure to both America and China as it pertains to tariffs, so it’s a relatively safe play in our current trade environment—so long as momentum continues, as I mentioned—which I believe it will.
Uber
12.74% of portfolio
With rideshare nearing full recovery after the pandemic lows (in terms of total rides) and cost discipline improving thanks to Dara’s management and leadership team, the key focus now will be margin expansion—at least that’s what I’m watching out for. Growth will stay its course for ridesharing and delivery until AV partnerships become a key aspect of the business (over the next 10 years or so), so I’m optimistic. As for tariffs, Uber has almost no exposure. If anything, protectionist policies like the ones proposed by Trump might actually help Uber. But if that leads to a weaker macro environment, then Uber could be hurt. I feel this is very minimal though.
Uber analysis:
Brookfield
11.43% of portfolio
Brookfield is a business I can’t really generalize into a ‘single thing to watch out for.’ The company is also resilient, like MercadoLibre and Uber, in these times. Watching how the insurance business grows and how much capital is deployed across the ecosystem are some of the more relevant metrics to look for to see how Brookfield is progressing. Any asset sales and liquidity, monitoring DE growth—generally, everything matters. Not much specific in the past few months has led me to worry about anything this quarter.
Tariffs might indirectly benefit Brookfield if they use it to their advantage to invest more in domestic infrastructure and other assets. But seeing how the extreme tariffs likely won’t last long enough to matter (my prediction), this doesn’t matter much. Very little direct exposure as well. Possibly none, but I don’t want to be too sure.
Brookfield analysis:
Shopify
10.44% of portfolio
Continued operating leverage is the key to look out for here as it has been in the past few quarters. Again, not much news has happened in the past three months to make me care about anything specific here, though the tariffs are a major concern to the business indirectly. Assuming Shopify merchants source from China (which many do—dropshipping), it only hurts the merchants, which hurts Shopify. But Shopify could benefit if the tariffs end up turning more merchants to a DTC model—which is exactly what Shopify is best at.
Shopify analysis:
Salesforce
6.21% of portfolio
And finally, Salesforce. Salesforce, like half this list, isn’t very interesting. The focus should be on profitability, margin expansion, and continued momentum in those areas—including with the launch of AI agents last September. Salesforce is almost immune to tariff disruptions (SaaS), but any signs of IT budget tightening or prolonged sales cycles due to macro fears could hurt the results. It’s one of my safer holdings amid these trade wars.
Thoughts
I’ll keep this short: I suspect business as usual for most of my companies this quarter, with minimal impact from the tariffs thus far. We shall see, but I will be watching out. Right now, tariffs seem to be backround noise for the markets. I’ll be keeping you updated once/if that changes. Happy investing, folks.
Enjoy the rest of today’s issue.
FINANCE
a. 💰 Apple and Meta fined $800 million
The European Union has fined Apple and Meta a combined €700 million ($797 million) for violating its new Digital Markets Act (DMA). Apple was fined €500 million ($570 million) and Meta €200 million ($228 million). (The fines are well below the DMA’s maximum of 10–20% of global revenue—which is an incredible maximum when talking about these two companies specifically2.)
This is the first use of the law. Apple was fined for preventing app developers from steering users to cheaper options outside its App Store, and Meta’s “consent or pay” model, which forced users to agree to data tracking or pay a monthly subscription… didn’t translate so well with the EU. Both companies criticized the decision, and both plan to appeal.
Related articles:
b. 💊 Merck to-buy SpringWorks for $3.5 billion
Germany’s Merck KGaA (which I just found out was the original owner of America’s Merck & Co. before WWI when America forced it to sell its U.S. assets) is in advanced talks to acquire U.S.-based SpringWorks Therapeutics for around $3.5 billion to expand its rare disease and cancer drug pipeline. The deal is $47 per share and would be one of Merck’s largest pharma buyouts in recent years.
SpringWorks recently gained U.S. approval for Ogsiveo, a treatment for desmoid tumours, and a genetic disorder drug called Gomekli. Merck hopes the acquisition will offset slowing sales of its cancer drug, and soon, patent losses for its multiple sclerosis (autoimmune disease) drug. No agreement has been signed, but the deal could close Monday.
BUSINESS
c. 🎓 Harvard sues the U.S. government
Harvard University has filed a lawsuit to block the Trump administration’s freeze on over $2.2 billion in federal research grants after it refused to comply with demands to limit campus activism, reform leadership, and change admissions policies. The Trump administration said its demands were due to concerns over antisemitism at pro-Palestinian protests. They wanted stricter discipline, viewpoint audits, and bans on certain student clubs as a result. Harvard said no, and the Trump administration froze funding.
Harvard President Alan Garber said the move “threatens academic freedom and national innovation.” And the suit argues the freeze violates Harvard’s First Amendment rights and Title VI of the Civil Rights Act (read that, here). The White House responded saying federal funds are a “privilege” and accused Harvard of misusing taxpayer money.
All the gibberish aside, both parties are willing to make a deal.
Related articles:
d. 🏬 Hudson’s Bay begins total liquidation
Hudson’s Bay Co. will begin liquidating all merchandise at its final six stores on Friday, effectively marking the official end of Canada’s oldest company—nearly 355 years of concurrent operations. The company said it’s unlikely a buyer would “emerge” with its ‘last six stores model’ remaining, as it would be seen as unviable. Thus, the choice was made to sell off those stores as well.
The decision follows court approval last month for widespread liquidations after Hudson’s Bay filed for creditor protection. The company says it could still pull stores from liquidation if a buyer comes into play, but there hasn’t been anyone yet, and the process is set to wrap by June 15. Over 9,000 jobs are at risk without severance. Executives and manager get $3 million in bonuses, though.
Related articles:
MACRO
e. 🇺🇸 U.S. expects to slash China tariffs
Donald Trump said U.S. tariffs on Chinese goods will “come down substantially, but not to zero,” this week, right after comments earlier from Treasury Secretary Scott Bessent (who seems to be the only one in the current administration trying to avoid an American—and frankly global—economic meltdown) that the current 145% import taxes are unsustainable. Talks are ongoing.
China has repeatedly criticized the tariffs and has warned other nations not to make any trade deals that would harm Chinese interests. There are also reports showing Beijing might be pressuring countries like South Korea to avoid supporting U.S. military contractors. (Also, while Trump still wants him to lower rates, he will not be firing Fed Chair Jerome Powell anytime soon.)
Related articles:
📚 Book of the Week
For every book purchased using the links below, 100% of affiliate commissions are donated to charity. (Amount donated so far: $36.42.)
An investor’s bookshelf: Here.
Think and Grow Rich - Napoleon Hill
Book Description:
The most famous of all teachers of success spent “a fortune and the better part of a lifetime of effort” to produce the “Law of Success” philosophy that forms the basis of his books and that is so powerfully summarized and explained for the general public in this book.
In Think and Grow Rich(R), Hill draws on stories of Andrew Carnegie, Thomas Edison, Henry Ford, and other millionaires of his generation to illustrate his principles. This book will teach you the secrets that could bring you a fortune. It will show you not only what to do but how to do it. Once you learn and apply the simple, basic techniques revealed here, you will have mastered the secret of true and lasting success.
Money and material things are essential for freedom of body and mind, but there are some who will feel that the greatest of all riches can be evaluated only in terms of lasting friendships, loving family relationships, understanding between business associates, and introspective harmony which brings one true peace of mind! All who read, understand, and apply this philosophy will be better prepared to attract and enjoy these spiritual values.
Thank you for reading, partner. If you enjoyed today’s issue, feel free to share it with friends and family. I’ve placed a button below for you to do so (right underneath the paid membership line (see what I did there).
All the best,
Jacob
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Google and American Express.
At the very maximum, the combined fines could have been over $112 billion.
Another banger!