Monday, May 6th 2019
U.S.-China trade war tensions had been quiet since December, but erupted again this weekend. We still believe Titan co's are mostly resilient.
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:
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
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.
Learn with titan
Become the smartest investor you've ever been through straightforward, easy-to-read investment articles.
Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. 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. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members FINRA/SIPC. For more information, see our disclosures. Contact: 508 LaGuardia Place NY, NY 10012. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice. Check the background of these firms on FINRA's BrokerCheck.
© Copyright 2022 Titan Global Capital Management, Inc. All Rights Reserved.