& the other potential results of these continued tariff threats on the stock market.
The news this week has taken quite the global turn, as President Trump adds tariffs to Mexico, threatens Japan, and adds more industry groups to the escalation in the trade war with China.
I’ve maintained a cautiously bullish stance through the selling in May, as the fundamental backing of the stock market has been strong (as shown through corporate earnings and stock market returns in 2019). In addition, we know that the Federal Reserve has a watchful eye on the stock market, and has the ability to cut interest rates… if need be.
However, this week…
I feel as though the political climate, and the escalation of the trade war to include particularly Mexico and consumer goods, has cast a dark shadow on the US stock market.
It also has me reflecting on how far I’ve gone in this profession — from the beaches of Costa Rica, teaching elementary school, seemingly far from the impact of a global political standoff. Next week, I’ll be headed back to the NYSE to discuss the impacts of the current tariff war on the US stock market. But, more on that later… back to the analysis.
Upon the re-escalation of the rhetoric with China, I initially believed President Trump would come to a quick resolution. At this point in time, it’s become clear that isn’t the case.
Rising tariffs on US consumer goods will impact a huge variety of companies, particularly those within the consumer discretionary sector (XLY) and consumer staples (XLP). I also expect retail to be hit even harder than it already has been. This is under the assumption President Trump goes through with the latest round of threatened tariffs. The result? Companies like big box retail stores, Nordstrom (JWN), Kohls (KSS), Macy’s (M), JCPenny (JCP) will surely continue their decline.
Why?
Retail stores depend on products purchased from China. When their costs rise, they’ll be forced to rise prices in-store and pass the cost on to consumers. Higher prices equal even less consumers than these big box chains already have.
The retail apocalypse has been going on for awhile, but the names that haven’t been hurt (until recently) and used to be on my millennials list, are going to have to be removed:
- Ross (ROST)
- TJMaxx (TJX)
- Burlington (BURL
These stores thrive on low prices… prices which will have to be increase upon rising retail tariffs impacting China.
What About Mexico’s Tariffs?
Everyone wants to make jokes about avocado toast but think about all the mom and pop restaurant chains, big chain restaurants, and grocery stores that depend on produce that’s imported from Mexico. This is no joke. This’ll have far-reaching impacts on restaurant owners, big restaurant companies, and most of all, consumers, who lose the most when the cost is passed on to them.
I know it seems like a lot.
So many people hear about the trade war, and it goes right over their head. There are so many complexities that it makes it seem impossible. But, I’m here to tell you, that it’s not. So much of it is based purely on logic. It comes down to thinking about how we’re all connected, where we spend money, what we thrive on, and companies we prefer.
Don’t forget… 7 years ago I was living on the beach in Costa Rica, with not a trade war worry on my mind. In this time, I’ve completely remade myself and my career, and next week I’m going back to New York to discuss the impacts of these policies on the US and global stock markets.
My Last Media Tour in New York
My last media tour in New York, in March 2018, I was able to appear from the floor of the NYSE on Cheddar, speak with Charles Payne in studio on his show ‘Making Money with Charles Payne’ on Fox Business, and appear in studio on Yahoo Finance. I met with Simpler members in a New York bar and shared trading war stories over cocktails.
Here’s a picture of me, when I was on Charles Payne, discussing consumer discretionary stocks and the overall market condition. I told Charles I was looking for the S&P to hit new all-time highs (it did), and I was continuing to focus on consumer discretionary names.
This time around, I’m looking forward to appearing on Cheddar, Asset TV, Yahoo Finance, the Nasdaq, and a few others! I’m especially looking forward to meeting KC Armstrong, who previously worked with Howard Stern, and who now runs ‘World’s Most Amazing People,’ a radio show based out of New York. I was lucky enough to have him select me to be a lead author in the second edition of his book, Simply Amazing, that’s called Simply Amazing Women, that comes out in November 2019.
You’ll continue to hear more from me next week, but make sure to check out my TV schedule on the front page of www.fivestartrader.com if you want to watch me live.
I’ve grown tremendously and started news media appearances, mainly because I had to as it’s one of the most efficient ways to pass along my knowledge. I love the stock market, this career, and the transformation I’ve gone through over the past 7 years. That’s why I’m here to teach you, because that’s at my core, what I am.
I was, and have always been a teacher.
Go get em Danielle, good for you, Darrell, your son, and Simpler. You’re a passionate, fine ambassador! Just don’t forget to take plenty of time for chillaxin!
Thanks Kelly!
Have a great weekend –
Danielle
It is amazing how many people live and do not have any idea or do not care about what is going on a round them until one day it impacts their life and they start looking for reasons as to why (Sheep mentality).
I personally feel the Trade war with China was a necessity to try to bring things back in line but at some point a resolution has to be made before it has an inverse effect to the desired result, make America great again but without biting ones Nose to spite its Face.
Congratulations on your all your successes! It is an amazing journey you are undertaking and it is so nice to be able to follow along, thank you for all the work you do and the help that you give.
China is waiting out our next election; all the chaos around the false Mueller report has China hoping that we will return to the establishment politicians that they have been able to pay off in the past.
Mexico tariffs are a result of Congress not doing their jobs, attempting to grow their voter base by allowing illegal immigrants to come in and in some elections give them the right to vote. As Americans we need to FLOOD Congress’s phone lines and remind them that they work for us, they are not there to dictate to us what we are allowed to do. Has anyone awakened to the fact that on their 174K salary many become millionaires after their first term in office.
Tariffs and rising prices are uncomfortable to us, businesses because we see it on a daily basis; the cost of stolen intellectual property, the cost of illegal immigration is not as apparent but is much more expensive and not only in terms of dollars.
We have the strongest economy in the world and while it is a bold step in getting countries in line to trade fairly with us using tariffs, something has to be done and with Congress not acting in the best interest of the US. I look at the current situation as similar to that during WWI and WWII when rationing was in place.
Congratulations again on all your successes, it’s an inspiration.