Podcast Summary: Full Signal – "Stocks to BUY for Trump’s new tariffs!" with Michael Casper
Date: February 26, 2026
Host: Phil Rosen
Guest: Michael Casper, Senior U.S. Equity Strategist, Bloomberg Intelligence

Main Theme

This episode centers on the implications of former President Trump’s newly structured tariffs for US equities. Phil Rosen and guest Michael Casper explore which sectors and stocks have benefited from recent changes—including the Supreme Court’s striking down of aspects of Trump’s earlier tariffs—and discuss how investors might think about winners and losers, sector rotations, and the performance gap between the “Mag 7,” small caps, and other market baskets.

Key Discussion Points and Insights

1. The New Tariff Landscape: Winners & Losers

[00:39–03:47]

• Section 122 Tariffs: Trump’s tariffs are now routed through Section 122, resulting in an effective average tariff rate of about 12% due to exemptions for certain goods (e.g., aircraft, pharmaceuticals, some tech). This is down from ~13.6% pre-Supreme Court ruling and up from 2% before recent policy changes.
  • Michael Casper: “The current effective tariff rate...is expected to fall somewhere around 12% given his 15% flat rate. And there’s exemptions under the surface.” [00:39]
• Relief for S&P 500 Earnings: Lower effective tariffs mean a positive boost (est. 133 bps accretive) to S&P 500 earnings, as about 43% of the S&P 500’s cost of goods sold (COGS) is imported.
• Decreased Uncertainty:
  • Tariffs are no longer being applied unpredictably to specific countries, creating a less volatile investment environment.
  • Casper: “Stocks hate uncertainty and there will be less of it around tariff policy now as a result.” [03:43]

2. Differentiated Regional Exposure

[04:26–07:03]

• Countries Benefiting Most: China, Brazil, and India see the biggest effective tariff rate decrease for 150 days under Section 122. Sectors exposed to these regions—tech, materials, and industrials—stand to benefit.
• Countries Facing Higher Tariffs: Nations that negotiated with Trump earlier, like the EU, UK, and Japan, are now subject to the blanket 10–15% rate, potentially hurting US healthcare, which has significant COGS exposure to Europe and UK.

3. Tariff-Insulated vs. Tariff-Sensitive Stocks: The Titans and the Tulips

[07:03–09:55, 11:03–13:31]

• Methodology: Bloomberg Intelligence sorted stocks into “Titans” (tariff-insulated) and “Tulips” (tariff-sensitive) based on stock price reactions in 2018 and 2025 tariff events and COGS exposure.
  • Titan examples: Dollar General, Dollar Tree, Palantir, Northrop Grumman, First Solar, Lockheed Martin, Kroger, Super Micro, Constellation Brands.
  • Tulip examples: Garmin, Meta, Best Buy, HP, Nike, Merck, Zimmer Biomet, Celanese, Pfizer, Bristol-Myers, etc.
• Performance: Since early 2025, Titans have outperformed Tulips by 2000+ basis points, but Tulips have rebounded strongly since the April 2025 bottom.
  • Casper: “The Titans have really held up well. I believe they’re outperforming the Tulips by over 2000 basis points.” [08:18]

4. Retail and Defense: Specific Stock and Sector Dynamics

[11:35–13:31, 13:31–14:20]

• Consumer Staples & Retail:
  • Tariffs plus high inflation drove consumer trade-down to discounters (Dollar General, Dollar Tree), grocers (Kroger), and big-box retailers (Costco, Walmart).
    • Casper: “…You really saw this trade down effect in the consumer...the consumer did a very good job of shifting their spending patterns...” [11:35]
• Defense Stocks: Northrop Grumman, Lockheed Martin, and Palantir outperformed due to increased geopolitical risk and stable performance during uncertainty.
• Tech Stocks in “Tulips”: Some, like Meta, are tariff-sensitive not due to goods, but global user base and political backlash in other digital markets.
  • Casper on Meta: “...they do have a large global user base. And as these tariffs kind of roil the relationship between the US and whatever country...it significantly hurts the business.” [17:40]

5. Materials, Energy, and the Sector Rotation Theme

[18:50–21:14]

• Materials Sector Strength: Up ~17% YTD, driven by:
  • Rising commodity prices (gold/silver “to the moon”).
  • Stronger earnings inflection after years of contraction.
  • Improving macro (ISM PMI back in expansion).
  • Tariffs contributing by raising commodity prices, aiding metals producers like FCX.
• Chemicals vs. Metals: Chemicals are the largest material sub-sector, starting to recover after weak earnings; metals have led the upturn.

6. Small Cap Revival & Structural Change

[23:24–26:24, 26:34–29:07]

• Small Caps Outperforming: Early 2026 has seen strong performance, driven by:
  • Improved macro tailwinds.
  • Anticipation of increased IPO and M&A activity, which historically drove small cap outperformance.
  • Casper: “Our biggest theses for 2026 is that the IPO stream and MA activity should pick up.” [23:24]
• Profitables vs. Unprofitables: Russell 2000’s return historically comes from profitables. Recently, unprofitable small caps have rallied, but valuation spread is not concerning.

7. The Mag 7, AI, and Valuation Bubbles

[29:07–32:48]

• No Mag 7 Bubble: Contrary to “bubble” fears, today’s Mag 7 PE ratios (mid-30s) are far below the dot-com era (80x). Their forward EPS growth is strong (~20% through late 2020s), and the recent multiple compression is not outsized.

  • Casper: “If you aggregate up their PE around 1999, they were trading at an aggregated 80 times PE. You look at the MAG7 today, mid 30s…” [30:15-30:30]

• Rotation: Tech’s growth is no longer uniquely attractive as “the 493” (rest of S&P) picks up steam, so investors are considering lower-multiple sectors with rising growth.

• Valuations & Psychology: Market psychology and fears—rather than any fundamental change—are driving software/tech repricing. Terminal growth rates (long-term DCF) are being questioned, not near-term earnings.

  Casper: “What instead is happening is a repricing of the terminal growth rates for software companies. ...If you think the company is going to exist, it’s starting to look like this is very washed out, especially in software.” [33:12–34:00]

Memorable Quotes & Moments

• On Tariff Certainty:
  • “Stocks hate uncertainty and there will be less of it around tariff policy now as a result.” – Michael Casper [03:43]
• On Defensive Outperformance:
  • “Defense stocks tend to hold up very well when there’s overall market disruption, periods of geopolitical risk…” – Michael Casper [13:39]
• On Retail Resilience:
  • “…the consumer did a very good job of shifting their spending patterns… to going to a Kroger or going to a Dollar Tree or Dollar General…” – Michael Casper [11:35]
• On Small Cap IPO Dynamics:
  • “If our thesis plays out and there’s more IPO activity happening, that’s a huge benefit [for small caps].” – Michael Casper [23:54]
• On Mag 7 Bubble Risk:
  • “I actually argue that AI and the Mag 7 trade is not in a bubble now.…The issue more is the opportunities outside the Mag 7.” – Michael Casper [29:10]

Important Timestamps

• 00:39–03:47: Overview of the Section 122 tariffs, effective rates, and winners/losers
• 07:03–09:55: Explanation of Titans & Tulips baskets methodology and performance
• 11:35–13:31: Review of key stocks (Dollar General, defense, etc.) and category reasoning
• 14:20–16:24: Deeper look at Tulip stocks, input costs, and why Meta is included
• 18:50–21:14: Materials and energy sector strength; impact of policy and macro
• 23:24–26:24: Small cap sector outlook and the role of IPO/M&A dynamics
• 29:07–32:48: Mag 7, valuation, and AI bubble discussion

Conclusion & Takeaways

• Tariff Policy Now More Predictable: Investors should expect less volatility from tariff announcements, lower effective rates, and clearer impact calculations.
• Sector Rotation Underway: Tech’s dominance is being challenged by outperforming materials, energy, and small caps (the “493”).
• Stay Alert for Small Cap, Materials, and Select Defensive Plays: Titans continue to outperform, but some Tulips may claw back ground as the market adjusts.
• Long-term Tech Growth Intact: Mag 7 is not in a bubble by historical standards; market recalibrations are driven by psychology and expectations, not collapse in fundamentals.
• Tools & Resources: Michael Casper’s research is available for Bloomberg Terminal subscribers via BI STOKS GO.

For those who missed the episode, this summary outlines the major policy shift affecting tariffs, which sectors and stocks to watch, and why a more predictable policy environment is (mostly) good news for equities.