Cash has become king until we get some clarity on what the White House plans next with China.
We know two things: 1. The Treasury Secretary, Steve Mnuchin, was way too hopeful there would be fruitful trade talks. That didn't pan out and, 2. The President doesn't want to back away from a trade war because his mantra is and has been that we've been in a way we just have chosen not to fight back. That's been his view since I first interviewed him more than a decade ago and it is his view now.
We've seen that 2018 is totally different for this White House than 2017. We have a president who feels that corporate America got what it wanted with tax reform so now it has to pay the price for getting trade deals that are fair and free. His endless attacks on Amazon (AMZN) show his commitment to the small business people who have been wiped out by them. His belief that the steel industry must be preserved no matter what makes him determined to take the war even as it now involves Boeing (BA) , GM (GM) , Ford (F) and even medical device companies.
I think that there were so many people who thought that the trade battle would just include ag from the Chinese side. I have been saying the Chinese play for keeps and that first announcement was a fig leaf hoping for more negotiations.
Boeing can handle the tariffs because it has a good book of business but it does need something negotiated soon in order not to freak people out (see Kamich for chart). But the autos, particularly GM? Just when it was getting its footing, the tariffs for its best market - 4 million vehicles sold - are just CRUSHING.
Let's see what happens but the President's Secretary of Treasury's optimism was so misplaced that we have to digest these new tariffs before we can advance from a lower level.
