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Goldman Sachs breaks down the damage a trade war could cause in the stock market and 2 ways investors can protect themselves

Trade disputes between the US and China have had a muted impact on the stock market so far.  However, should they worsen, Goldman Sachs estimates a 15% hit to S&P 500 earnings next year.  The firm's chief equity strategists offered two trades for investors who are worried that the trade war will get worse.  So far, trade disputes between the US and China have resulted in only brief episodes of volatility in the stock market. Some investors aren't even going as far as calling it a full-blown trade war yet. But with both countries showing no signs of backing down, Goldman Sachs' equity strategists have laid out the impact that escalating tensions could have on the market. This year, the Trump administration has imposed a 25% import tax on $34 billion worth of Chinese goods, and has also threatened to hit another $400 billion worth of products with tariffs due to China's retaliation. It has also imposed and threatened tariffs on Canada, the European Union, and Mexico in its quest for what it considers fairer trade. There are two ways that trade disputes could hurt the earnings of S&P 500 companies, according to David Kostin, Goldman's chief US equity strategist. The first is by undercutting the revenues of companies that export to China, mainly, and other countries with which the US is fighting. "The tariff impact on S&P 500 EPS through lower revenues is minimal," Kostin said in a note to clients on Friday. This is because just 2% of aggregate S&P 500 sales come from China, he added. Even if the trade war went global, with 5% tariffs on all trading partners, Goldman sees its 2019 S&P 500 EPS forecast lower by 1% to $169. The second, more meaningful impact to US companies is via lower margins, Kostin said. The flow of trade between the US and China is much heavier in the China-to-US direction, and roughly 15% of the cost of goods sold has origins outside the US. "If tensions spread and a 10% tariff were implemented on all US imports (highest rate since 1940s) our EPS estimate would fall by 15% to $145," Kostin said. Investors have shrugged off this risk for now. Kostin saw no strong link between trade disputes and the performance of industries with heavy imports, such as petroleum and coal. The S&P 500 has been stuck in a tight range and last hit an all-time high 122 trading days ago, according to Bespoke Investment Group. It's still up 5% this year. But for investors worried that the trade war will worsen, Goldman had two recommendations: Buy shares of companies that earn most of their revenues in the US. Goldman's domestic-sales basket has outperformed the S&P 500 by 130 basis points since May, and includes companies like Charter Communications, Target, CVS, and Wells Fargo, all of which have no non-US sales. Overwrite equities with S&P 500 calls expiring in December 2019, with a strike price of 2900. These will outperform if the index rises by less than 9%, Kostin said. SEE ALSO: Bank of America breaks down its top strategies for investors to profit from the market's biggest fear Join the conversation about this story » NOW WATCH: Why Rolex watches are so expensive Source: Business insider Lesen Sie den ganzen Artikel

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Parents Behaving Badly: A Youth Sports Crisis Caught on Video

Belligerent parents have caused a severe shortage of referees. Now some of them are being publicly shamed. Read the full article

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Martha Roby Won. Here’s How Other Pro- and Anti-Trump Republicans Are Faring.

One question has made and broken Republican campaigns so far this year: To embrace President Trump, or to oppose him? Read the full article

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Best of Late Night: Kimmel Calls Trump ‘a Liar’ for Changing His Story on Putin Comments

Jimmy Kimmel refused to accept President Trump’s explanation of his comments on Russian meddling in the 2016 presidential election. Read the full article

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CHIO Aachen ohne Sam und

Aachen (fn-press). Es wäre so schön gewesen. Beim Nationenpreis Vielseitigkeit beim CHIO Aachen wollte Bundestrainer Hans Melzer eigentlich noch einmal die Olympiamannschaft von Rio an den Start bringen. Daraus wird allerdings nichts. Sowohl Michael Jungs La Biosthetique Sam FBW als auch Sandra Auffarths Opgun Louvo sind kurzfristig nicht einsatzbereit. Für die beiden rücken nun Andreas Dibowski (Döhle) mit FRH Corrida und Kai Rüder (Blieschendorf) mit... Read the full article

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Galaxy S10: Fingerabdruck-Scanner im Display von Qualcomm?

Ein Fingerabdrucksensor im Display wird immer wahrscheinlicher für das Galaxy S10. Setzt Samsung dafür auf Ultraschall-Technik von Qualcomm? Read the full article

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Aggressiv: 46-Jähriger randaliert mit mehr als 4 Promille

Er verschmutzte die Wohnung und wollte sie nicht mehr verlassen: Die Polizei musste einen 46-jährigen Mann in Wunsiedel mitnehmen - er hatte mehr als 4 Promille am Vormittag. Read the full article

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Global Automotive Specialty Coatings Market Analysis & Forecast to 2025, With an Expected CAGR of 3.12% - ResearchAndMarkets.com

DUBLIN--(BUSINESS WIRE)--The "Automotive Specialty Coatings Market by Application (Engine Exhaust, Interior, Transmission, Wheels), Technology (Solvent-borne, Water-borne, Powder), Resin, Substrate, ICE, Electric & Hybrid Vehicle & Region - Global Forecast to 2025" report has been added to ResearchAndMarkets.com's offering. The automotive specialty coatings market is estimated to be USD 3.02 billion in 2018 and is projected to reach USD 3.75 billion by 2025, at a CAGR of 3.12%, from 201 Read the full article

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Trump and Russia: One Mystery, Three Theories

An agnostic's guide to our president’s strange conduct. Read the full article

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Trump’s Road to American Martial Law

For Putin, Trump is the gift that keeps on giving. Republicans may grumble over this, but they are Trump’s indecent enablers. Read the full article

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New York Today: New York Today: Will Green Roofs Get the Green Light?

Wednesday: A City Council bill addressing climate change, and the M.T.A.’s first accessibility chief. Read the full article

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Donald Trump, Barack Obama, European Union: Your Wednesday Briefing

Here’s what you need to know to start your day. Read the full article

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What Was Maria Butina Doing at the National Prayer Breakfast?

America’s Christian nationalists have been finding common cause with the Russian government for a while now. Read the full article

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How just one Republican could punish Trump for his Putin apostasy — and why no one will

Liberals want someone like Jeff Flake or Ben Sasse to block Brett Kavanaugh over Trump's Putin apostasy. Don't hold your breath. Read the full article

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Whatsapp: Update lässt Sie Chats schneller stummschalten - Werbe-Tools für Unternehmen

Ein potenzielles Whatsapp-Update lässt Sie Chats direkt in der Benachrichtigungsleiste stummschalten. Dazu kommen Gerüchte zu „Whatsapp for Enterprises“. Read the full article

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Clean Energy Launches Zero Now Financing to Put Fleets in Clean New Natural Gas Trucks for the Price of a Diesel Truck

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Clean Energy Fuels Corp. (Nasdaq: CLNE) today introduced Zero Now Financing, a program that makes the cost of leasing or purchasing a new natural gas heavy-duty truck equipped with the cleanest engine in the world, equal to the price or even lower than that of the same truck equipped with a diesel engine. In addition, trucks financed or purchased through the Zero Now Financing program will be able to purchase natural gas fuel at a fixed price significantl Read the full article

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E.U. Fines Google $5.1 Billion in Android Antitrust Case

European officials hit the internet giant with the record penalty for abusing its power in the smartphone market, the region’s latest move to rein in the clout of tech companies. Read the full article