Imagine for a moment if you will, if U.S. economic policy was led by a six-assed turtle. I know, stay with me, this will make sense. Six asses, six different directions, infinite capacity for self-destruction. You have a creature that craps in every direction simultaneously while wondering why it can never find clean lettuce.
This weekend the turtle proclaims: "We're implementing a $100,000 fee for new H1B visa applications to protect American workers!"
Each ass flatulates supportively in turn:
Ass One: "This is to ensure companies hire Americans first."
Ass Two: "If you're going to train someone, you should train a recent graduate from one of our nation's esteemed universities."
Ass Three: "Companies are very happy about paying $100,000 per skilled foreign worker. They realize what a great deal it is."
Ass Four: "This fee will finally ensure Americans are hired first for ALL technology jobs."
Ass Five: "This policy will not disrupt the U.S. labor market or global business."
Ass Six: "This is about protecting American workers and families. Anyone who objects must want to prioritize foreigners."
The turtle is very proud of itself. The lettuce fields are burning.
When the market opens Monday morning, we're having turtle soup. You wrinkle your nose.
Estimating the Impact
It gets a little tiring, if I'm honest, estimating the eggs this turtle lays almost every weekend, and in a hurry. But that's the mission we signed up for, isn't it? I just published a fairly detailed bottoms-up take on the macro impact to startups over at Next Wave. The key takeaways: we're looking at a 90-95% collapse in H1B applications, creating a cumulative talent shortfall of ~154,000 workers over three years.
The direct GDP impact is modest, but the bigger story is the structural redistribution of global talent flows. American startups get priced out entirely while Big Tech pivots to offshore talent hubs. Meanwhile, India's IT sector and Canada's immigration-friendly cities become the primary beneficiaries of America's self-imposed brain drain.
But let's sketch out what probably happens when markets open Monday and start pricing in this latest bureaucratic masterpiece.This policy is not a marginal visa tweak, it is a structural redistribution of human capital. In equity terms, it creates relative winners abroad (India, Canada) and concentrated losers in U.S. IT services, healthcare providers, and early-stage growth. For U.S. megacap tech, it’s more about erosion of long-term innovation density than near-term earnings, but markets may not price that risk until productivity growth visibly slows.
1. Large-cap tech (FAAMG, semis, cloud)
- Direct impact: Manageable. These firms can absorb $100k fees for a narrow set of “superstar” hires.
- Response: Offshoring mid-tier engineering to existing capability centers in India, Canada, and Eastern Europe.
- Equity impact: Neutral to modestly negative. Margins hold, but U.S. R&D density is diluted over time.
- Tickers: MSFT, AMZN, GOOGL, META, AAPL → neutral in the near term; downside risk is medium-to-long term innovation velocity.
- Semis: (NVDA, AMD, AVGO, QCOM) relatively insulated — demand drivers (AI/edge compute) outweigh immigration headwinds.
2. IT services and outsourcing
- Direct impact: Existential for onshore staffing model. The $100k fee kills the economics of volume H1B hires.
- Response: Wholesale pivot offshore. U.S. delivery shrinks sharply; margins squeezed during transition.
- Equity impact: Negative for U.S.-listed IT services (CTSH, ACN); positive for India-listed IT majors (INFY, TCS.NS, WIT).
- Relative trade: Long Nifty IT vs. short U.S.-listed IT services.
3. Startups and venture ecosystem
- Direct impact: Severe. Startups lose access to affordable global talent. For early-stage firms, $100k = prohibitive.
- Response: Slower product cycles, higher burn rates, weaker scalability.
- Equity impact: Hits VC portfolios → downstream effect is narrower U.S. IPO pipeline. Depresses innovation beta in the Russell 2000 growth cohort.
- Tickers: IWM, Kauffman Index proxies. Secondary negative for private-market valuations in AI/biotech startups.
4. Healthcare and education
- Direct impact: Critical shortage risk. Physicians, postdocs, professors disproportionately rely on H1Bs.
- Response: Lobbying for carve-outs likely. If not granted, staffing shortages worsen → wage inflation in healthcare.
- Equity impact:
- Hospitals (HCA, UHS): margin compression as labor costs rise.
- Staffing agencies (AMN, CCRN): relative winners, demand for locums/temp spikes.
- Universities (non-listed but relevant for munis): pressure on research output.
5. Financials
- Direct impact: Wall Street absorbs cost for frontier quants but curtails mid-tier H1B hiring.
- Response: Shift quant/IT ops to global hubs (Toronto, Warsaw, Bangalore).
- Equity impact: Negligible at the P&L level (JPM, GS, MS). Structural risk is long-term innovation leakage in fintech.
6. Regional winners abroad
- India: Expands as global capability hub.
- Nifty IT Index, NSE-listed majors (INFY, TCS, HCLT, WIPRO) benefit.
- Real estate and REITs in Bangalore/Hyderabad gain from GCC expansion.
- Canada: Beneficiary of diverted STEM immigration.
- Office REITs in Toronto/Waterloo → long tailwinds.
- Eastern Europe: Warsaw, Bucharest, Prague expand as secondary hubs (harder to express via liquid equities, but worth tracking).
7. FX & cross-asset
- USD: Long-term headwind via slower productivity growth.
- INR, CAD: Beneficiaries of capital and labor inflows.
- Rates: Lower r* trajectory as potential growth erodes; marginally dovish implication for the Fed in the 5–10y horizon.
Tactical trade deas
- Relative equity: Long India IT (INFY, TCS) vs. short U.S. IT services (CTSH, ACN).
- Thematic hedge: Short Russell 2000 growth vs. long NDX, startup ecosystem impaired, megacap tech relatively insulated.
- Healthcare spread: Long AMN/CCRN vs. short HCA/UHS on labor cost divergence.
- Geographic rotation: Canada REITs (OTC: CAR.UN, REI.UN) as indirect beneficiaries of inflows.
- Probably more when I think about it