Markets were rocked to the core this week on trade war fears.
Especially after President Trump tweeted:
“The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!”
But we can actually use that fear to our advantage shortly by simply buying the “blood in the streets” opportunities that others quickly exited.
Remember, at some point, the bleeding will stop and opportunities will be noticeable.
Apple (AAPL) for example, which depends on China to produce its iPhone and other popular products. In fact, about 20% of its revenue came from China in the most recent fiscal year. It also shipped more than 41 million iPhones to China. And while smartphones may not be hit with levies, there are concerns that trade war tensions could impact Apple suppliers, risking delays.
Apple fell from $195 to $182 on the fear.
Boeing (BA) and Caterpillar (CAT), which fell from $160 to $137, are facing headwinds with sales from China. In fact, our tariffs on steel and aluminum hit the margins of those companies by raising the price of the raw materials they use to build their airplanes for example. Further retaliation from China in this situation could limit their ability to sell products in China, damaging revenue.
Even consumer goods stocks have taken a hit.
Nike (NKE) for example saw 15% of its revenue come from China in 2017. Its stock fell from $76 to $72 on fear.
Tech stocks that derive up to 50% of their revenue from China, as of 2017 include Skyworks Solutions (SWKS), Qualcomm (QCOM), Broadcom (AVGO) and Micron Technology (MU).
Daimler Chrysler just lowered it earnings outlook for the year, citing increased import tariffs for U.S. vehicles in the Chinese market.
Even BMW just noted that it was looking at “strategic options” in the trade war fiasco.
Tesla (TSLA) is seeing an impact, as well with China accounting for 17% of sales. While that may not sound significant, consider that China’s electric vehicle mandates and growing population of wealthier consumers has the potential to become a major market for Tesla.
However, when and if trade war tensions cool, current losers could become “blood in the streets” opportunities for investors in the know. Once that happens, stay tuned to Traders Daily for instructions on how to trade them.