Displaying items by tag: tariffs
President Trump followed through on his threats today, hiking tariffs on China to 25% across $200 bn worth of goods. The move came as US and Chinese negotiators have not been making much progress in talks. Beijing has vowed to retaliate, but the talks between the two nations are continuing. Trump reinforced that there was no need to rush on a deal. Stocks opened lower on the news.
FINSUM: This certainly does not seem like good news and we are starting to think it may be some time before a real deal happens, which means the issue may continue to loom over the market.
Investors are currently worried about the trade war between China and the US. Tensions have reached a new peak this week after threats from President Trump regarding hiking the tariff rate to 25%. This big development, and the trade war generally, prompted JP Morgan CEO Jamie Dimon to weigh in this week. “The odds of something bad happening [in trade negotiations] is now double. Whatever you thought they were — 2%, 5%, 10% is probably doubled. That’s why the market is reacting to it because they’re not just afraid of the direct effect, they’re afraid if it reverses global trade, it reverses global growth and hurts trade around the world”. All that said, he sees an 80% likelihood a deal will occur because smart people on both sides will make it happen.
FINSUM: We agree with Jamie. Both sides have a lot on the line and we think everyone will eager to seal a deal, even if a modest one, and move on. Perhaps that is western-centric thinking though.
What is the biggest threat to the bull market? Is it a recession, high valuations, interest rate volatility? In reality, the biggest threat to the bull market might be rearing its ugly head now—a trade war. Trade tensions between the US and China have skyrocketed again this week and it has investors worried that there could be a global slowdown in trading which would sink the economy. In fact, that is the point that some don’t understand—it is not just about whether the US and China close a deal in the near term, it is about how the trade tensions the US and China create percolate through the global economy. Astute market watchers will have noticed new data out of China shows that exports have dropped, a sign of potential weakening.
FINSUM: We think cooler heads will prevail and the US and China will get a deal done. Our expectation is that it will not be ground-breaking in scope, but that it will be enough so that both countries can claim victory and investors can happily put these tensions in the rear view mirror.
Stocks woke up to a volatility explosion this morning. President Trump made a surprise announcement that he was considering boosting tariffs on China. Specifically, the president threatened to raise tariffs to 25%. Beijing is reportedly infuriated. The comments come towards the end of what seemed to be a smooth negotiation with Beijing about a new trade package. Therefore, they riled markets to a major extent. Headline indexes shed a couple percent at peak (so far) and sectors like technology and industrials sold off sharply. The trade delegation from Beijing is still expected to attended a planned tariff meeting this week.
FINSUM: It is very hard to know how significant this is (whether Trump actually wants to do this), or whether this is just a negotiating tactic.
The trade war seems to be back on with full force. Trump spooked markets today by warning that he may impose higher tariffs on China. With that in mind, here are the stocks and sectors most at risk of big selloffs. Industrials and technology shares are the most vulnerable to tariff worries. It is difficult to say what stocks will be most affected because the potential impacts are widespread. However, the following list looks very at-risk: Colfax, Danaher, Emerson Electric, Fortive, Gates Industrial, 3M, and Kennametal.
FINSUM: We are very early in the volatility for this round of trade fears. Hopefully this minor panic will be the extent of it.