Markets across the globe – and particularly in the U.S. – dropped like a stone on Thursday following the Trump administration announcement of wide-ranging tariffs against nearly every American trade partner.
But as veteran analyst Josh Steiner explains in this clip from The Call @ Hedgeye, there are still several unknown factors that could affect markets further in the coming days and weeks.
“There are basically three unknowns: how much did inventory and raw materials get pre-loaded; Companies basically bringing things in, ahead of the tariffs, buying themselves basically some time so that's an unknown, and it's going to vary by company and by industry.
The second big unknown is the demand reaction function. What is going to be the response on the part of consumers, to attempt to pass through these tariffs in the form of higher prices?
And the answer there too is unknown because it's going to, again, vary by company and industry.
Finally, and maybe the biggest unknown, is what will companies and industries try to do? Will they try to pass through the increases? Will they, choose to absorb some of that in the form of lower margins, for their own business?”
Steiner concludes by saying that despite those unknowns, the Hedgeye signaling process and our models will alert investors to coming changes in advance.
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