- In today’s CEO Daily: Geoff Colvin on the opportunity for CEOs to use the chaos of trade tariffs to give up the bad habit of giving earnings guidance.
- The big story: Tech tariffs are back on. Maybe. It’s confusing!
- The markets: Broad gains on hopes that tech tariffs won’t happen even though Trump says they will. U.S. futures are strongly up.
- Analyst notes from Goldman Sachs on tariff risk, Oxford Economics on consumer confidence, and UBS on the dollar.
- Plus: All the news and watercooler chat from Fortune.
Good morning. We are in the thick of earnings season, and tariff tumult is forcing companies to confront an uncomfortable new reality: They have no earthly idea what their profits will be in this quarter or the next. In response, some CEOs are abandoning the sacred tradition of predicting quarterly profits for investors and Wall Street analysts to obsess over. Those CEOs may soon wish they had made the change long ago.
The trend is spanning quickly across industries. “We do not expect most tech companies to give any guidance on the 1Q conference calls over the next month including Apple,” Wedbush analyst Dan Ives wrote in a recent note to investors. The reason: “too much uncertainty.” CarMax told investors its financial goals remain the same, but it scrapped its timeline for reaching them because of “the potential impact of broader macro factors.” Delta Air Lines has withdrawn its entire 2025 performance guidance because, as CEO Ed Bastian said, “the level of uncertainty” is “a bit unprecedented.”
CEOs of those and other companies, freed of ginning up quarterly profit predictions, may realize that profits are unpredictable all the time, not just amid extraordinary uncertainty. So why try to foresee the unforeseeable at all? No rule requires companies to predict performance. Warren Buffett’s Berkshire Hathaway has never given guidance, which hasn’t prevented it from achieving stupendous performance. Another company in the performance pantheon, Amazon, has never provided earnings-per-share guidance. Coca-Cola gave up guidance in 2002.
The problems with guidance aren’t just that it devotes time and money to an impossible task. Quarterly guidance also incentivizes bad behavior. It happens all the time. The quarter is about to end and the company won’t reach the numbers it announced, so it ships extra products to dealers or distributors and counts that as revenue. It’s called channel stuffing or trade loading. The company meets guidance but may have committed a crime, and in any case it might have to do the same thing at the end of the next quarter now that the channel is filled with product that was attributed to the previous quarter. Company leaders focus on the short term, not the long term.
Most CEOs hate quarterly guidance but feel they must provide it. For them, today’s global economic chaos is a perfect opportunity to break the habit. Virtually any CEO can now state unabashedly that next quarter’s profits are unknowable, and investors won’t be alarmed. They’ll nod their heads and think, “Of course.” By the time things eventually settle down, earnings calls without quarterly guidance will feel like the new normal. Companies—and their investors—will be better off. If you are still reeling from the last two weeks, I encourage you to check out Fortune’s special report on the “Economy in Crisis” here. We look at how major companies are responding to tariffs, why the bond market has economists so troubled, and more. — Geoff Colvin
More news below.
Contact CEO Daily via Diane Brady at diane.brady@fortune.com
Top news
New tech tariffs are coming. Again. After President Trump imposed 145% trade tariffs on China the White House then, on Friday, exempted smartphones, computers, and other components from the new tax. But on Sunday Trump zig-zagged again, saying tech tariffs would be coming after all: “NOBODY is getting ‘off the hook’ … There was no Tariff ‘exception’ announced on Friday … they are just moving to a different Tariff ‘bucket.’ … We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN,” he said on Truth Social.
Lutnick also said the tech tariff break is temporary. Commerce Secretary Howard Lutnick told ABC News on Sunday that the recently suspended tech tariffs will be coming in “probably a month or two.” The statement was a pivot from a Friday notice from the US Customs and Border Protection that stated semiconductors and smartphones would be exempt from reciprocal tariffs.
The public isn’t buying it. 75% of Americans said they believed the tariffs would increase prices in the short term, according to a CBS News/YouGov poll.
Chinese suppliers offer illegal tariff workaround. Over the weekend, Fortune exclusively reported that suppliers in China are suggesting Amazon sellers in the U.S. report the value of their imports as lower than they actually are to reduce tariff charges. This illegal workaround was offered to executives from a mid-sized household goods brand that sells on Amazon, according to emails and WeChat messages viewed by Fortune.
Big Law offers $1 billion in pro bono work to Trump. Nine white-shoe firms have pledged to provide $940 million in support for conservative causes in order to avoid investigations and bans from the White House.
The White House is going easy on business corruption. The WSJ: “A few themes are emerging: Prosecuting executives for wrongdoing that doesn’t have obvious victims is out. The Justice Department is open to arguments that a defendant has been targeted for political reasons, or that some prosecutions undermine economic competitiveness and national-security interests. And political connections within Trump’s world seem to matter.”
Yes, retirees watch the daily gyrations of the stock market even if Treasury Secretary Scott Bessent thinks they do not.
In conversation with Intuit CEO Sasan Goodarzi. Intuit CEO Sasan Goodarzi joined Fortune for a new interview describing the six years he’s spent in the company’s top seat. Read about his layoff strategy, approach to AI, and more here.
The markets
Global markets rose this morning on news that President Trump’s impending tariffs on tech products would be exempted or delayed — despite the confusion over whether, and when, the White House will act against the smartphone, semiconductor, and device supply chain. Apple stock was boosted 5.45% in overnight trading and stood at $208.95 this morning, premarket. Most of the company’s supply chain is trapped behind Trump’s tariff barriers on China. Here’s a snapshot of the major indexes:
- UK’s FTSE 100 was up 1.9% in early trading.
- The Euro Stoxx 600 was up strongly by 2.3% this morning.
- Japan’s Nikkei was up 1.2%.
- Hong Kong’s Hang Seng was up 2.4%.
- China’s SSE Composite was up 0.76%.
- The VIX fear index has fallen by 30% over the last five days.
- The S&P 500 closed up 1.8% on Friday and futures contracts for the index were trading up a further 1.5% this morning, premarket.
From the analysts
- Goldman Sachs on tariff risk: “The 90-day pause effectively adds 90 more days of lingering uncertainty, constraining activity in the real economy and keeping Sharpe ratios [a measure of desired risk] depressed in financial markets. Investors will need to continue to separate the signal from the noise. Even if the 90-day pause becomes permanent, the ensuing macro backdrop is far from being rosy: a 15% increase in the effective tariff rate and a negative shock to aggregate demand,” per Lotfi Karoui et al.
- Oxford Economics on consumer confidence: “Confidence is increasingly important and it’s going in the wrong direction. Tariffs and the drop in equity prices are not sitting well with consumers. … The bond market doesn’t believe tariffs will cause persistently higher inflation, but consumers are less convinced. Keeping inflation expectations anchored is critical for the Fed and one reason we don’t anticipate the central bank cutting interest rates until December,” per Ryan Sweet.
- UBS on the dollar: “The dollar's dominance as the leading reserve currency is likely to continue to fade as its relative advantages lessen. The fading importance of any reserve currency's status is also likely to continue, as global trade in goods falls as a share of global economic activity. The dollar as a reserve is therefore likely to be a falling share of a falling market. However, the dollar is not going to be replaced, and it is very unlikely that any single alternative will emerge,” per Paul Donovan.
Around the watercooler
Just to break even after the recent selloff, stocks will need to have the sort of rally that only happens during bull markets by Paolo Confino
Trump’s ‘punitive’ China tariffs could end trade between the world’s two largest economies—and that would be painful, volatile, and dangerous by Nicholas Gordon
Jamie Dimon argues JPMorgan can help fix the bond chaos if regulators get on board — ‘It’s not relief to the banks, it’s relief to the markets’ by Greg McKenna
