The Tariff Steamroller Has Flattened Some Good Stocks

Ladies and gentlemen, the tariff steamroller has flattened some good stocks, and it's time to take a look at what's happening in the market. The Trump administration's new tariffs have sent shockwaves through the economy, and investors are feeling the pain. But don't worry, I've got the scoop on what's happening and how you can protect your portfolio.

First things first, let's talk about the tariffs. Trump has imposed a 10% tariff on almost every country and much steeper duties on many. This has sent the stock market into a tailspin, with the S&P 500 down nearly 14% since the tariffs were announced. The Dow is down 12%, and the Nasdaq has decreased nearly 16%, putting the tech-heavy index in a bear market.



But it's not just the big indices that are taking a hit. Individual stocks are feeling the pain too. Starbucks, for example, has seen its shares fall more than 3% following a downgrade to neutral from Baird, citing near-term economic headwinds. The coffee chain, which is already attempting to turn around its U.S. business, has seen its shares sink nearly 20% since Trump unveiled the new tariffs.

And it's not just Starbucks. Restaurant stocks fell in afternoon trading as investors worry that the Trump tariffs will weigh on consumer spending. Investors pulled back across restaurant segments, from fast food to full-service dining. The airline industry is also feeling the pain, with U.S. airlines expected to cut their outlooks for the year when they report earnings starting this week.

But it's not all doom and gloom. There are still opportunities out there for savvy investors. For example, U.S. Steel shares spiked about 9% in reaction to Trump's decision to order a new review of the proposed acquisition of U.S. Steel by Japan's Nippon Steel. This is a clear sign that some companies are benefiting from the tariffs.

So, what should you do? First, stay away from stocks that are heavily reliant on imported goods. This includes companies in the automotive, restaurant, and manufacturing sectors. These companies are facing higher input costs and reduced demand, which is putting pressure on their profit margins and stock prices.

Second, focus on companies with strong balance sheets and cash flow. These companies are better equipped to weather the storm and can continue to invest in growth even in a tough economic environment. Examples include companies like Apple and Microsoft, which have robust cash reserves and strong earnings growth.

Third, consider diversifying your portfolio into bonds and alternatives. This can help manage risk and provide a buffer against market volatility. BlackRock advises investors to consider high-quality short-term bonds and alternatives like real estate and commodities.

Finally, keep an eye on geopolitical developments. The tariffs are a moving target, and policy shifts can create opportunities for agile investors. For example, the White House's veto threat against bipartisan tariff legislation shows that policy reversals are possible, creating opportunities for investors who are quick to act.

In conclusion, the tariff steamroller has flattened some good stocks, but there are still opportunities out there for savvy investors. Stay away from heavily exposed sectors, focus on companies with strong balance sheets, diversify your portfolio, and keep an eye on geopolitical developments. And remember, the market is a fickle beast, so stay nimble and be ready to act when opportunities arise. BOO-YAH!