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Market Update: 06-25-18

TRADE TENSIONS PLAYBOOK

John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial

Escalating trade tensions have made for a difficult investing environment. This is not news to anyone at this point. But investors’ angst was ratcheted higher last week after the Trump administration played its next card — announcing tariffs on an additional $200 billion in Chinese goods — sooner than many expected. Certainly the stock market expressed displeasure, though the 0.9% drop in the S&P 500 for the week still leaves the index with a respectable 4% total return this year. Here we provide our playbook for trade tensions. For additional insights on the subject, see today’s Weekly Economic Commentary.

WHERE WE ARE

The latest $200 billion salvo directed at China garnered the most headlines last week, but there was more: retaliatory tariffs from India, a profit warning from a European automaker blaming tariffs, President Trump’s call for a 20% tariff on EU auto imports, and threats over the weekend to restrict Chinese investments in U.S. technology and certain technology exports to Beijing. Late last week, reports that the U.S. was prepared to go back to the negotiating table with China before the next round of tariffs go into effect...

Download the complete PDF with graphs here.

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