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A Bird's Eye View Blog

Fireside Charts: Implications of New Tariffs, Energy Underperforms Crude Oil, Record Defaulter of 2019

By:BCM Investment Team | Date:May08, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

We can only hope the latest round of tariffs is a negotiation tactic from Trump. The new tariffs under consideration will have a much larger drag on growth, and they will come into effect in two days. U.S. farmers don't expect the soybean trade dispute with China to be resolved by July. Meanwhile, company defaults in China are headed towards a record high in 2019. How have earnings per share forecasts performed one month into each quarter? Energy has been under-performing crude oil over the past couple of years. Finally, company defaults in China are hitting a record pace as 2019 could be a new high. 

  

1. Our hope is that the latest round of tariffs is a negotiating ploy. But the Chinese do not take kindly to such actions...

 

5.8 chart 1

Source: Oxford Economics, as of 5/7/19

 

 

2. Let's give some perspective on the U.S. tariffs:

 

5.8 chart 2

 Source: Deutsche Bank Research, as of 5/7/19

 

 

3. The U.S. farmer is taking much of the brunt of the earlier tariffs...and we often forget that other actions, such as withdrawing from TPP, hurt Americans...



Source: Purdue University, as of 5/8/19

 

 

4. In addition to thee trade war, the Chinese economic slowdown is showing up in in bad debt...

5.8 chart 7

Source: Bloomberg, as of 5/8/19

 

 

5. Stock market analysts are often overly optimistic...

 

Source: FactSet, as of 5/7/19

  

 

6. Energy stocks have disconnected from the price of oil...

5.8 chart 3

 Source: Bloomberg, as of 5/7/19

  

 

7. Can you imagine if our pipelines had 15,000 holes drilled in them?

5.8 chart 8

Source: Pemex, as of 5/8/19

 

 

8. Do demographics drive inflation and/or economic activity?  

 

 Source: Yardeni Research, as of 5/7i/19

 

 

  

 

 

   

 

Effective Friday, the U.S. Trade Representative’s office will formally raise tariffs to 25% from 10% on about $200 billion a year of Chinese import. With current tariffs at 10% hurting margins for the U.S. business owner, 25% will only further stall growth and consumption. Are you already feeling the effects? In order to keep updated on the latest trade tariff data, subscribe to the chart blog for daily or weekly notifications.

 

 

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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.