INSUBCONTINENT EXCLUSIVE:
only getting louder.
Goldman Sachs Group Inc
have weighed in, highlighting the potential danger to corporate America if a full-blown trade war erupts
In separate notes this week, strategists at the firms estimated the possible hit to earnings
Goldman chief strategist David Kostin went as far as to call for a bear market under a scenario where the US imposed 10 per cent tariffs on
all imports.
The concerns echo those of UBS Group AG strategist Keith Parker, who last week alerted investors that the standout resilience
of US stocks is under threat with President Donald Trump mulling a new round of levies against China
best year since 2014 versus the rest of the world -- it coincides with growing unease among corporate executives.
Trade associations are
mobilizing to advocate a de-escalation in the trade war -- read about that here.
After studying more than 7,000 earnings transcripts and
conference calls, JPMorgan found that trade tariffs surpassed tax cuts as a more frequent topic during the last reporting season, with 35
per cent of companies citing them as a threat
as $10 if bi-lateral tariffs of 25 per cent are imposed
A 25 per cent tariff on Chinese goods could wipe out growth for SP 500 companies next year
And in a more extreme case, where the US imposed levies on all global imports, earnings could drop 10 per cent as costs went up for
Americans, the firm estimated.
Investor sentiment could also suffer, driving down valuations
As a result, the worst-case scenario could result in the SP 500 falling to 2,230, Kostin wrote in a note earlier this week
That would represent a 23 per cent decline from the record 2,914 reached last month, meeting the traditional definition of a bear
market.
The SP 500 briefly rebounded Wednesday on news that the US is proposing new round of trade talks with China in the near future
The benchmark gauge has climbed about 8 per cent this year, compared with a 6 per cent decline in the MSCI World ex-US Index.
