Slow News Morning
While it feels like there is a ton going on already on Monday, there really isn’t when I take a step back. Donald Trump’s steel tariffs got debated on the weekend political talk shows; government officials from overseas blasted Trump; and now we sit back and wait for Trump to officially make the announcement … whenever that may be. As we wait, the market will continue to price in the impact of the tariffs on companies ranging from airplane-maker Boeing (BA) to Wilbur Ross’ favorite soup company. Campbell Soup (CPB) . A few more outrageous claims from Trump about trade wars may be all that’s needed for the market to go beyond just pricing in higher steel and aluminum prices, and begin pricing in a harsher global business environment. Look to hot tech names like Netflix (NFLX) and Action Alerts Plus holding Amazon (AMZN) to crumble should the market grow increasingly worried about countries working together to achieve common goals. True fears over global trade wars are good for at least a 10% haircut in the S&P 500 from current levels. Regarding the Italian elections, be honest: Your eyes are glazing over when reading about it. It’s unlikely the market will care much unless the streets of Italy descend into catastrophe and chaos.
Speaking of Hot Tech Stocks
All the attention for tech investors is the remarkable run that Netflix shares have been on this year, up a mind-blowing 50%. Shares of the streaming king are up more than 1,000% in the past five years, despite competition heating up in the space and rising costs to develop unique content. At this point, the market has stopped betting on Netflix simply posting strong results for as far as the eye can see. No, the market is betting the company is acquired within the next year for an astronomical premium. How else can you explain Netflix’s stock trading at 240 times forward earnings and continuing to gain ground during a full-blown market correction in February? But for as hot as Netflix’s stock has been this year, Action Alerts Plus holding Apple’s (AAPL) stock has almost managed to keep pace over the past 30 days (up 13% vs. up 18% for Netflix). Apple lately hasn’t made a ton of new news (it’s reportedly working on a cheaper MacBook Air to launch this year) to support the run in its stock. Instead, this move looks like investors positioning ahead of a spring cash giveaway from Apple thanks to the tax reform package. The update on how Apple intends to spend its billions of cash is expected in early May when fiscal second-quarter results are delivered. Before you go, here is TheStreet’s Chris Nolter explaining why Apple won’t be hurt by Trump’s steel/aluminum tariffs.
Who doesn’t love listening to a good podcast on the way into work? We have two new ones to get your day started right. First up is a discussion on women on Wall Street featuring TheStreet’s brilliant female minds. Listen here. Another is a chat with Harley-Davidson (HOG) scion Bill Davidson about the future of the motorcycle legend. Listen here.
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