Stocks Fall as U.S.-China Trade War Escalates
May 6, 2019
Stocks Down on U.S.-China Trade Tensions##
Global stock markets fell on Monday on U.S.-China trade tensions. Both countries had been pretty quiet since December, but tensions erupted again this weekend.
President Trump announced two fresh trade war attacks:
- Increasing the tax we impose on $200B worth of annual imports from China, from 10% to 25% this Friday
- Adding $325B of additional "Made in China" goods to the list of imports taxed at 25%
Who is Impacted?##
Tariffs hurt importers, exporters, and most consumers:
Corporate winners: "Made in USA" companies stand to benefit. Chinese rivals become more expensive relative to domestic-made goods (e.g. Harley-Davidson motorcycles, John Deere tractors).
Corporate losers: American exporters (e.g. Caterpillar) suffer from China's retaliatory tariffs. They either need to raise prices for consumers abroad, or eat the tariffs themselves.
Consumers: We effectively "pay" for tariffs via higher prices on what we import from China
What It Means for Titan##
We believe two stocks in the Titan composite could be fundamentally impacted by tariffs (both import some raw materials from China):
- Apple - Broadcom (chip supplier to Apple)
Most Apple products are assembled in China, but fall into the "not tariffed yet" category. Trump is threatening to include the whole suite of Apple products, which would hurt AAPL's profits, though we believe it has lower likelihood given the importance of AAPL to the overall U.S. economy's bottom line.
Overall, we think the Titan composite has minimal exposure to Chinese tariffs. The predominantly asset-light, services-heavy portfolio stocks are positioned to do quite well in most environments, in our view.
Like we mentioned in late 2018 in our State of the Markets, we believe the sharp decline in stocks today could be an opportunity for long-term investors willing to look beyond the tit-for-tat dynamics you hear in the media.
Bottom line: emotions often drive markets in the short term, but in the long run, we think the Titan composite's earnings are relatively immune from the threatened tariffs.
Cash Management
© Copyright 2024 Titan Global Capital Management USA LLC. All Rights Reserved.
Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept and agree to Titan’s Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities or investment products. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings and other information provided are for illustrative purposes only and are not to be considered investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.
Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.
Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.
The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.
Cryptocurrency advisory services are provided by Titan.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
Contact Titan at support@titan.com. 508 LaGuardia Place NY, NY 10012.