Should I Hold Or Sell When Trade War Is On?
The ongoing trade war was in news again when the President Donald Trump threatened a 20 percent tariff on cars imported from the European Union unless the bloc removes import duties and other barriers to U.S. goods, escalating a global trade war the EU warned could endanger $300 billion in commerce.
Following are the safe sectors, where you can invest during the Trade War;
Duke Energy, the second-largest utility in the U.S. by market capitalization, provides power in the South and Midwest. The stock has a 4.6% dividend yield and a price-earnings ratio, based on expected profits for 2018, of 17–in line with the broader market. Another good choice is Chicago-based Exelon, which operates 11 nuclear plants and provides power to 10 million customers through regulated utilities in its home state and the mid-Atlantic region. Exelon has a P/E of 13, based on projected earnings for 2018, and a current yield of 3.6%.
Large banks with international operations will probably suffer in a trade war, but regional U.S. banks should be unaffected–unless the economy falls into recession. I have long been fond of Iberiabank, based in Lafayette, La., with offices in eight southern states, and Cullen/Frost Bankers, a Texas-centric bank founded in 1868. For diversification, my favorite ETF in this sector is PowerShares KBW Regional Banking Portfolio, with 50 holdings, none of which represents more than 4% of total assets.
Donald Trump wants to open a new front in his trade offensive by punishing China for theft of America’s intellectual property rights. Trump started World Trade War by imposing a 25% tariff on steel imports as well as 10% tariff on aluminum imports. After doing this, he has been waiting for retaliations. China is the biggest culprit who has been accused of dumping the metals on American soil. However, the country has declared that they do not wish to fight America.