Need to Know Archives | Email alerts

Oct. 26, 2019, 9:42 a.m. EDT

This unexpected trade-war outcome will send stocks soaring, says Jefferies analyst

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Facebook Inc. Cl A (FB)
  • X
    Amazon.com Inc. (AMZN)
  • X
    Apple Inc. (AAPL)

or Cancel Already have a watchlist? Log In

By Callum Keown


Getty Images
U.S. and Chinese officials were slated to hold high-level trade talks on Friday.

A bumper week of earnings may be catching the eye of investors, but trade tensions are never far away.

Amazon shares were expected to hog the limelight on Friday after the e-commerce giant’s profit fell for the first time in two years as it also warned of a weaker holiday period.

U.S. and China trade officials will meet as Beijing requests existing and planned tariffs be canceled in exchange for buying more U.S. agricultural products.

Jefferies analysts Christopher Wood, in our call of the day , says existing tariffs could be unexpectedly dropped if a trade deal is reached, resulting in a rally in global stocks.

He said: “Almost no one is expecting this, but this is what should happen should a deal be agreed, since the tariffs were put in place by the Trump administration as leverage in a negotiation.”

Wood said he was increasingly optimistic of a U.S.-China trade deal this quarter but that the key question was whether that would be a “minideal” or something more substantial in the form of tariffs being dropped.

However, if a deal were to be struck and tariffs stayed in place, Wood said it would signal a long-term slump in Sino-American relations.

President Trump announced the world’s two largest economies had reached a partial trade agreement, describing it as “phase one,” earlier this month.

Trade representatives have been thrashing out the wording of the agreement, which could be signed by Trump and Chinese President Xi Jinping next month.

China has reportedly asked for planned and existing tariffs to be dropped in exchange for buying more U.S. agricultural goods.

The chart

The fabled “FAANG” stocks, comprising Facebook Inc. /zigman2/quotes/205064656/composite FB -4.32% , Amazon.com /zigman2/quotes/210331248/composite AMZN -2.16% , Apple /zigman2/quotes/202934861/composite AAPL -5.26% , Netflix /zigman2/quotes/202353025/composite NFLX -3.04% and Google parent Alphabet /zigman2/quotes/205453964/composite GOOG -4.92% /zigman2/quotes/202490156/composite GOOGL -5.15% , have had a mixed year, and the trade is no longer what it once was.

This chart from Bespoke Investment Group, shows how one stock — Apple — has broken out and left the others in its wake.

Related: FAANG is out, and FANMAG is in — and, how ever you spell it, it’s in a bubble

/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 159.60
-7.20 -4.32%
Volume: 19.51M
April 1, 2020 4:00p
P/E Ratio
24.80
Dividend Yield
N/A
Market Cap
$475.46 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 1,907.70
-42.02 -2.16%
Volume: 4.12M
April 1, 2020 4:00p
P/E Ratio
82.88
Dividend Yield
N/A
Market Cap
$970.68 billion
Rev. per Employee
$359,671
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 240.91
-13.38 -5.26%
Volume: 44.05M
April 1, 2020 4:00p
P/E Ratio
19.03
Dividend Yield
1.28%
Market Cap
$1112.64 billion
Rev. per Employee
$1.98M
loading...
/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 364.08
-11.42 -3.04%
Volume: 6.67M
April 1, 2020 4:00p
P/E Ratio
88.08
Dividend Yield
N/A
Market Cap
$164.77 billion
Rev. per Employee
$2.22M
loading...
/zigman2/quotes/205453964/composite
US : U.S.: Nasdaq
$ 1,105.62
-57.19 -4.92%
Volume: 2.34M
April 1, 2020 4:00p
P/E Ratio
22.48
Dividend Yield
N/A
Market Cap
$835.52 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,102.10
-59.85 -5.15%
Volume: 2.60M
April 1, 2020 4:00p
P/E Ratio
22.41
Dividend Yield
N/A
Market Cap
$835.52 billion
Rev. per Employee
$1.39M
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.