Many US Industries Will Thrive During Trade Tensions

Many US Industries Will Thrive During Trade Tensions

Many US Industries Will Thrive During Trade Tensions

$DIA, $SPY, $QQQ, $RUTX,$ VXX

Several US industries are set to withstand the trade dust-up or even thrive, according to US financial services firm Cowen and Company.

China’s recent revisions to tariffs have a clear benefit to luxury retailers, Cowen analysts said in its report. While the country raised import duties on several categories of US goods, it lowered tariffs on apparel, cosmetics, household goods and jewelry.

The lower tariffs on jewelry could especially benefit Tiffany & Co.(NYSE:TIF), as 16% of its sales come from China, Cowen said.

Other industries, including banks, restaurants and discount retailers, face minimal impact from the growing trade tensions and could even benefit under certain conditions, Cowen said.

Banks do not rely directly upon imports and exports, so the biggest risk for the group would be an overall economic slowdown if the trade war were prolonged.

In that case, regional and community banks in areas especially hit by tariffs, such as the rural US Midwest, would have the most exposure to risk from an economic slowdown.

On the other-hand, if the President’s stance on trade resulted in fewer tariffs on US goods and stronger IP (intellectual property) protections for US companies in China, it could boost the US economy and thereby brighten banks’ outlooks.

Restaurants are insulated from tariffs because they source most of their food from within the United States. The biggest tariff-related risk for the industry is a general economic slowdown.

Ongoing trade disputes have pushed down agriculture grain prices, which could lead to increased protein production and ultimately lower prices for poultry and cattle.

As a result, quick-service restaurants may cut prices.

That scenario would benefit large chains such as McDonald’s Corp. (NYSE:MCD) and Taco Bell, owned by Yum Brands Inc.(NYSE:YUM), but not regional chains such as Sonic Corp. or Jack in the Box Inc.(NYSE:JACK), Cowen analysts said.

Discount and off-price retailers are also well-positioned as trade tensions ratchet up. Walmart Inc (NYSE:WMT) and Costco Wholesale Corp (NASDAQ:COST) derive more than half of their sales from groceries, which shields them from tariff pressures, Cowen said.

Both chains would benefit from shoppers seeking lower prices in the event of an economic downturn. That same scenario would help off-price discretionary retailers such as TJX Companies Inc., Ross Stores Inc. and Burlington Stores Inc., according to the Cowen report.

Friday, the major US stock market indexes finished at: DJIA +94.52 at 25019.41, NAS Comp +2.06 at 7825.99, S&P 500 +3.02 at 2801.05

Volume: Trade on the NYSE came in at 635-M/shares exchanged

  • NAS Comp +13.4% YTD
  • Russell 2000 +9.9% YTD
  • S&P 500 +4.8% YTD
  • DJIA +1.2% YTD

HeffX-LTN’s US Major Stock Market Indexes Technical Analysis for Week Ended 13 July 2018

Date Symbol Price Technical Analysis Support Resistance
13 July 2018 QQQ 179.5 Bullish (0.32) 177.39 183.50
13 July 2018 DIA 250.19 Neutral (0.10) 246.91 253.94
13 July 2018 SPY 280.10 Bullish (0.39) 279.83 286,58

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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