Ep 67: The New Trump Trade

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by: Tematica Research

The Fireworks Set Off By The Trump Tariffs And Their Impact On Earnings, Inflation And The Market Going Forward

On this week's podcast, Tematica's mixologists Lenore Hawkins and Chris Versace explain what investors should be prepared for as we move into the 2Q 2018 earnings season. While the 2018 narrative started with tax reform, as 2Q 2018 wore on, it became increasingly focused on trade as tariff talk escalated among the US, China, European Union, Mexico and Canada. With companies ranging from Harley-Davidson (NYSE:HOG) to General Motors (NYSE:GM), Toyota (NYSE:TM) and BMW (OTCPK:BMWYY) all crying uncle from the potential tariff impact, we could be in for a very different earnings season than many thought back in January.

Current expectations have the S&P 500 group of companies delivering EPS growth between 20%-22% year over year in the back half of 2018. As Lenore and Chris point out, however, the growing number of headwinds from trade and tariffs to slowing growth, higher interest rates and the rebound in the dollar could result in more conservative guidance than the market is expecting. What could it mean if that expected EPS growth in the second half is more like 15%… well, you'll just have to listen to the episode to find out.