(401 G.C. & CNBC Sunday, June 2nd, 2019) – Here’s where investors can hide out and areas they should avoid as global trade tensions intensify –
FIRST IS METALS, owning Gold, and particularly Palladium right now will add tangible, hard assets that are both uniquely set up fundamentally to outperform. Palladium has benefitted from the world auto market turning to gas/hybrid vehicles since the VW diesel scandal three years ago in CA. forced the car industry to look at the cleaner emissions offered by gas/hybrid vehicles that use Palladium over diesel – powered vehicles.
NOTE : Especially handy for customers are the U.S. denominated coins offered by the U.S. Mint that are both legal tender and largely private transactions. These are hard assets not matched by a liability, ( like paper dollar assets) and therefore offer no counter- party risk when held by investors. Global central banks also quietly took advantage last year as a record 615 tons of gold was snapped up by Russia, China, Turkey and south Asian countries, what do they know that we Americans do not? Remember, unlike the U.S. dollar markets, gold denominated in other world currencies is rallying as their currencies decline.
Up next for equity purchases are consumer staples and utilities, two traditional trade-insulated sectors as they are domestically focused and non-cyclical. Both sectors have outperformed in May when the trade battle heated up.
“Our favorite ways to add defensive exposure remain Consumer Staples and Utilities. For both, China tariff/trade war risks are lower than other sectors, valuations have looked more reasonable than other defensive sectors,” said Lori Calvasina, head of U.S. equity strategy at RBC.
Companies with high revenue exposure in China could take a much bigger hit from the trade war. These firms are concentrated in technology sector, especially chipmakers, according to Goldman Sachs
Stocks posted their first negative month of the year as trade angst deepened, and it doesn’t get easier from here since the U.S. toughened its stance on more trading partners. Now is a good time for investors to find the trade-proof areas to hide out and tariff-ridden companies to avoid.
Not only did investors grapple with more back and forth trade threats between the U.S. and China, President Donald Trump’s latest vow to slap tariffs on all Mexican imports also fueled investor anxiety. The surprise move also undermined the chance of a trade resolution with China.
In such a turmoil, investor could add consumer staples and utilities as defense while staying away from companies with explicit sales exposure to China, according to Wall Street analysts.
“Our favorite ways to add defensive exposure remain Consumer Staples and Utilities. For both, China tariff/trade war risks are lower than other sectors, valuations have looked more reasonable than other defensive sectors,” said Lori Calvasina, head of U.S. equity strategy at RBC, in a note on Wednesday. “Staples has also already been deeply out of favor.”
posted by :
Jack Dempsey , President
401 Gold Consultants LLC
jdemp2003@gmail.com