Deal or No Deal? Let’s talk what everyone’s talking about, the trade war with China and tariffs. What is the bottom line –the impact on your money? Paul Fain, president of Asset Planning Corporation, joins us again this morning with your Sunday Money.
PAUL, LET’S START WITH BASIC QUESTIONS: WHY IS THERE A TRADE WAR WITH CHINA?
Getting China to back down from its more aggressive practices around:
- forced technology transfer.
- intellectual property theft.
WHAT IS A TARIFF AND WHAT IMPACT ARE TARIFFS HAVING?
- Tariffs are a tax on imported goods.
- Rising cost (inflation) on goods directly impacted by tariffs.
WHAT IS THE IMPACT OF “DEAL OR NO DEAL” FOR STOCK INVESTMENTS?
Deal – reduction of trade tensions would result in at least a short-term deal-related stock market pop for:
- Technology and
- Industrials
No Deal –
- Utilities and Real estate: sectors with more domestically oriented businesses will likely perform somewhat better.
- Boost for homebuilders: from slower growth leading to lower interest rates.
- Companies adjust:
- Brooks Running, a subsidiary of Berkshire Hathaway, announced that it was moving production out of China to Vietnam.
- Apple is moving production of its MacBook and iPad products to Indonesia.
SO SHOULD INVESTORS PROCEED WITH CAUTION? yes
- The situation can change quickly.
- Don’t make bets one way or the other.
- Stay diversified so you have some level of “stability.”
FAST MARKET FACT: “The Balance of Trade”
U.S Imports: $3.1 trillion
U.S. Exports: $2.5 trillion
Trade Deficit: $600 billion
QUESTION FOR OUR MONEYMAN?
Send them to Paul@assetplanningcorp.com!
You can also reach our financial planner Paul by using the contact page on APC’s website.
