{"id":790062,"date":"2018-06-22T21:29:04","date_gmt":"2018-06-22T21:29:04","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=790062"},"modified":"2018-06-22T21:29:04","modified_gmt":"2018-06-22T21:29:04","slug":"heres-why-you-shouldnt-fear-a-trade-war-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=790062","title":{"rendered":"Here\u2019s Why You Shouldn\u2019t Fear a Trade War"},"content":{"rendered":"

By Brian Maher<\/a><\/span> <\/p>\n

This post Here’s Why You Shouldn’t Fear a Trade War<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The Dow Jones took its eighth consecutive licking yesterday \u2014 its worst streak since last March.<\/p>\n

Down too was the S&P\u2026 and the Nasdaq.<\/p>\n

VIX, Wall Street’s \u201cfear gauge,\u201d was in panicked spasm.<\/p>\n

For the explanation, we turn to CNBC:<\/p>\n

\u201cDow drops about 200 points on trade worries, extends losing streak to eight days.\u201d<\/p>\n

It is the trade wars \u2014 again.<\/p>\n

Trade-sensitive stocks such as Boeing and Caterpillar took the heaviest rattling yesterday.<\/p>\n

\u201cThe focus has been back on tariffs,\u201d confirms Michael Hans, CIO of Clarfeld Financial Advisors.<\/p>\n

Meantime, Goldman Sachs thinks \u201cfurther escalation seems likely.\u201d<\/p>\n

But in the face of trade upheaval, where can the smart investor find refuge?<\/p>\n

Gold, perhaps\u2026 or maybe Treasuries?<\/p>\n

Or something else altogether?<\/p>\n

We put our agents on the case:<\/p>\n

\u201cGo find us an investment that will advantage our readers while trade war hammers the markets!\u201d<\/p>\n

Dutifully, they soon reported a beacon of light\u2026 an investment class that has soared as trade war fears shake the overall market.<\/p>\n

\u201cWhile the U.S. and China are embroiled in an escalating trade war,\u201d affirms ETF Trends, this investment is \u201coutperforming.\u201d<\/p>\n

It is \u201cmostly immune to any external shocks,\u201d says Zacks.<\/p>\n

Indeed\u2026<\/p>\n

While the Dow Jones has lost 0.8% on the year\u2026<\/p>\n

And while the S&P has eked out a slender 3.1% gain, this investment class has surged as much as 13.2%.<\/p>\n

In fact, it tallied an all-time high on Wednesday\u2026 while the overall market sank in trade-filled despair.<\/p>\n

The asset under discussion is not gold. Or Treasuries.<\/p>\n

Then what?<\/p>\n

The answer is\u2026 small-cap stocks.<\/i><\/p>\n

Small-cap stocks are the antidote to trade-war fever.<\/p>\n

The iShares Core S&P Small-Cap ETF \u2014 which tracks the S&P Small-Cap 600 index \u2014 is up 13.2% this year.<\/p>\n

Meantime, the iShares Russell 2000 ETF \u2014 <\/b>which does duty for the small-cap Russell 2000 \u2014 is up 11.8%.<\/p>\n

The Russell 2000 has registered 23 record highs this year\u2026 even as the overall market \u201ccorrected\u201d 11% in February.<\/p>\n

Interesting, you say.<\/p>\n

But why are these small fry doing circles around the Dow Jones and the S&P?<\/p>\n

The answer begins with the dollar.<\/p>\n

We must first look to the stronger dollar\u2026<\/p>\n

Large U.S. multinationals earn vast revenues overseas \u2014 but they are earning these in weaker currencies.<\/p>\n

When they convert these revenues from softer currencies to stronger dollars\u2026 the conversion leaves them short.<\/p>\n

Their dollar <\/i>earnings are depressed.<\/p>\n

And according to FactSet, S&P 500 companies earn 38% of their income abroad.<\/p>\n

On the other hand\u2026 S&P Small Cap 600 businesses only generate some 20% from overseas sales.<\/p>\n

Thus, much of their earnings arrive in stronger dollars.<\/p>\n

Thus their greater earnings.<\/p>\n

Thus their greater investor appeal.<\/p>\n

\u201cWe continue to like small-cap equities because they have a more domestic focus, [and are] less impacted by trade or dollar fluctuations,\u201d explains Angus Sippe, fund manager at Schroders.<\/p>\n

\u201cSmaller companies have some natural hedges against risks like trade,\u201d adds Tim Courtney, CIO at Exencial Wealth Advisors.<\/p>\n

Meantime, official numbers indicate strong retail and consumer spending trends \u2014 rightly or wrongly.<\/p>\n

And the National Federation of Independent Business reports small-business profits have notched their highest reading since records began in 1973.<\/p>\n

This pleasant fact they attribute to the Trump tax cuts.<\/p>\n

In summary, concludes Ryan Crane, CIO of Stephens Investment Management Group:<\/p>\n

\n

Small caps are being favored because they’re less exposed to foreign markets, and because they don’t have currency issues, which is becoming a problem for bigger names. Also, they should derive a disproportionate benefit from the tax bill, because the larger firms have big teams that were already working to minimize their tax burdens, so lower rates will mean less for them.<\/i><\/p>\n<\/blockquote>\n

And so we rest our case on behalf of the small-cap stock.<\/p>\n

Our default setting is one of detached indifference \u2014 we are observers, not drummers.<\/p>\n

And detached observers we remain.<\/p>\n

But if you wish to hunt big game right now\u2026 it appears you may wish to think small\u2026<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/i><\/p>\n

The post Here’s Why You Shouldn’t Fear a Trade War<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

…read more<\/a> <\/p>\n

From:: Daily Reckoning<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Brian Maher This post Here’s Why You Shouldn’t Fear a Trade War appeared first on Daily Reckoning. The Dow Jones took its eighth consecutive licking yesterday \u2014 its worst streak since last March. Down too was the S&P\u2026 and the Nasdaq. VIX, Wall Street’s \u201cfear gauge,\u201d was in panicked spasm. For the explanation, we […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[366],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/790062"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=790062"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/790062\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=790062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=790062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=790062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}