Maggie Fitzgerald posted an August 11, 2019 article to the website of CNBC, with the title above. She writes that “the U.S./China trade war is going to have a bigger [negative] impact on [global] growth than originally forecast.” The financial corporate giant “lowered its fourth-quarter forecast by 20 basis points to just +1.8 percent — citing a larger than-expected [negative] impact of recent trade ‘war’ events.”
“We have increased our estimate of the [negative] growth impact of the trade war,” said Goldman Sachs Chief Economist Jan Hatzius in a note to clients on Sunday,” Ms. Fitzgerald wrote. “The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects that financial markets have responded notably to recent trade news.”
“The policy uncertainty effect may lead firms to lower capex spending, as they wait for uncertainty to resolve. Relatedly, the business sentiment effect of increased pessimism about the outlook from trade war news, may lead firms to invest, hire, or produce less.”
Hatzius “also said supply chain disruption of rising input costs, may lead U.S. firms to lower their domestic activity,” Ms. Fitzgerald wrote. “Due to the recent trade war events, Goldman Sachs now estimates a cumulative drag on [global] GDP of 0.6 percent, including a 0.2 [negative] percent impact from the latest escalation,” and POTUS Trumps stated intent to impose new tarriffs on China, beginning September 1.
“Fears that the trade war will trigger a [U.S.] recession are growing,” said Hatzius. “Goldman Sachs said it expects the new round of tarriffs to go through on September 1; and, it no longer expects a [U.S./China] trade deal before the 2020 [U.S. presidential] election.”
The U.S. has very low unemployment and the consumer remains strong. There are clear indications that the U,S. economy is slowing and yes, the U.S./China trade spat is not helping, But, if we do not confront China now about their very bad behavior — then when? Fear of currency ‘wars’, and with Brexit looming as well, the U.S. Federal Reserve is likely to lower interest rates again before the end of this year as a counterbalance to slower growth. If it does, gold and precious metals should continue to do well.
Stock Picks For Investors To Play The Trade Wars Next Scary Phase
Avi Salzman had an article in this weekend’s (August 10/11) Barron’s about how investors and stock pickers might want to posture themselves, as we enter a new phase of the U.S./China trade war on September 1. He writes that “portfolio managers and strategists this past week were reevaluating their portfolios — not to exit the market completely, but to focus on investments that can withstand a longer, and costlier trade war.”
“Stocks that can absorb the tariffs, or sidestep them altogether, are in a better position to advance,” Mr. Salzman wrote. “Peter Anderson, a Boston money manager, who oversees just under $1B in client assets, said he is particularly bullish on areas like cyber security,” Mr. Salzman wrote,. “That is an area that where no company is going to cut the budget,” Mr. Anderson said.
“Anderson likes Cyber Ark Software (CYBR), and Palo Alto Networks (PANW),” Mr. Salzman wrote “Anderson also likes Proctor & Gamble (PG), which isn’t immune to tariffs; but, has shown it can manage the [higher] costs.”
Martin Leclerc, a portfolio manager at Barrick Yard Advisers in Washington D.C., “is finding ways to navigate around the tariffs by concentrating his bets in areas that he thinks will be less [negatively] affected,” Mr. Salzman wrote. “He likes U.S. companies that do all their business domestically, including small-cap rural broad-band provider, LCT. As for global stocks, he favors brands such as Hemes International (RMS.France), and Michelin (ML.France),” although he told Barron’s that “Hermes valuation is too high for now.”
Leclerc also likes companies that have a “regional specialty” an ability to profit from trade and growth, without getting stuck in regulatory binds,” Mr. Leclerc said. “That’s why he owns Jardine Matheson Holdings (JMHLY), a conglomerate headquartered in Hong Kong that has operated in Asia for nearly 200 years, and owns a diverse set of industries, from hotel chains, to insurance, to vehicle sales. RCP, fortunascorner,com
No comments:
Post a Comment