Imagine that, S&P 500 firms still concerned about Trump’s trade policies and the Growth Recession* now already underway.
Tag #GrowthRecession is in our list of categories. There is no denying a Growth Recession has been underway for some time now. Certainly not the worse, also not the least severe. The question on everyone’s mind however, is does this get worse, and become a classic NBER “full-throated” downturn… now with the coronavirus dimension adding to the list of potential pitfalls for not just the U.S. but also global economy.
Investors who believe the “Phase 1” U.S.-China trade deal put tariff worries to bed for U.S. companies might want to think again. U.S. stocks have had an impressive run over the first six weeks of the year, shaking off concerns over the impact of the coronavirus outbreak, potential policy uncertainty relating to the 2020 presidential election, and manufacturing sectors in many advanced economies that remained mired in contraction. The Dow Jones Industrial Average DJIA, +0.73% has risen about 2.8% since 2020 began, while the S&P 500 index SPX, +0.54% has gained 4.3% and the Nasdaq Composite Index COMP, +0.70% is up a lofty 8.1%. The S&P 500 and Nasdaq each posted a record-high finish on Tuesday. All the main indexes were up early Wednesday . One reason for the market’s resilience is the belief that last month’s U.S.-China trade deal, pitched as the first phase of, presumably, a larger accord, would lessen impact of trade uncertainty on corporate performance, but an analysis of corporate conference calls this earnings season shows that a significant share of companies are still concerned about tariffs and the chances of a global economic slowdown. Through Friday, at which point about two-thirds of the S&P 500 had reported fourth-quarter earnings, there had been 184 mentions of “trade war,” “tariffs” and other concerns in earnings calls, a decline from peak of 705 in the third quarter of 2019, but a figure that will […]