UBS compiled its list of companies "most at risk from President Trump's trade war."
I entirely agree that the present trend toward protectionism puts the listed companies at serious risk. But, my, we're only talking the tip of the iceberg here!
To get a true feel for the macro risk we're dealing with we can take a list like UBS's, then consider the supply chains for each company featured; as there's to be no doubt that the hit would ripple through each company's network of suppliers, as well as customers.
Let's take the top name on the list, for example, Rockwell Automation: UBS states that ROK's "exposure to global capacity build-out, autos" fuels its risk. Suffice to say that if ROK is dangerously exposed to a trade war, it's suppliers may find themselves hurting big time as well. Here are its top 14 suppliers (out of a total of 19):
SMART Global Holdings
Sealed Air Corp
How about one more from the list? Here are Deere & Co's (John Deere) top 14 suppliers (out of 179):
Cie Generale des Establissements Michelen
Anhui Zhongding Sealing Parts
Now imagine if I took the suppliers and looked at their respective supply chains! In fact, let's do it with Micron Technology. Here are its top 14 suppliers (out of 52):
ASML Holding NV
Hiroshima Gas Co
Simmtech Co Ltd
Of course we could take the suppliers of the suppliers, and suppliers of the suppliers of the suppliers, and the suppliers of the suppliers of the suppliers of the suppliers, and the (just kidding), and do the same search for them as well (oh, and I'm completely leaving out each firm's main corporate customers).
Bottom line, we're talking thousands upon thousands (if not all) of companies (the world over) that are/will be negatively impacted by actions that some folks incredibly claim will by some miracle enrich U.S. industry and consumers.
Here are the other 30 names on UBS's list:
ILLINOIS TOOL WORKS
PIER 1 IMPORTS
BED BATH AND BEYOND
CANADIAN PACIFIC RAILWAY
CANADIAN NATIONAL RAILWAY
EXPEDITORS INTERNATIONAL OF WASHINGTON
ADVANCED MICRO DEVICES
So we're still waiting for cooler heads to prevail! Imagine, if/when they do, the potential for a huge upside pop in the market. Whether or not the resulting upside move is sustainable, however, will depend upon general conditions at the time.
For now, this is still a bull market.
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