5 Low-Beta ETFs To Overcome Trade Jitters

After a short calm period, trade war fears again spooked investors leading to rough trading on Wall Street. Notably, Dow Jones fell for the fifth straight session on Jun 18 when the trade tension between the world’s top two economies flared up again.

In his pledge to punish the alleged theft of U.S. intellectual property, Trump unveiled the list of Chinese goods worth $50 billion targeted for 25% tariff, leading to retaliation from China with duties of “the same scale and strength.” The initial list of $34 billion worth of Chinese products, including nuclear reactors, aircraft engines, semiconductors, and a lengthy list of industrial and agricultural machinery, will be subject to duties on Jul 6.

Trump also threatened to impose additional massive tariffs on Chinese goods unless Beijing reverses course on its own trade actions and does not change its unfair practices. In fact, he has directed a U.S. trade representative to analyze a 10% tariff on additional $200 billion worth of Chinese goods. Should China retaliate to these additional tariffs, Trump will seek even further duties on another $200 billion worth of products, a move that would intensify the fight with China into an all-out trade war.

Aside the political ills, economic fundamentals remain sound. This is especially true given the raft of upbeat data which show that the economy is piping hot. American manufacturing is enjoying a 21-month winning streak, average hourly wages have been rising with 2.7% year-over-year growth, and unemployment has dropped to 3.8%, which is the lowest level since 2000.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose the most in five months by 0.6% in April, while consumer confidence rebounded near the 18-year high in May. Per the latest survey, consumer sentiment rose to the highest level in three months early in June. U.S. retail sales also rose the most in six months in May. So clearly, all the latest data points signal acceleration in economic growth after the slowdown in the first quarter. Further, the massive $1.5-trillion tax cut will perk up the economy and save billions for corporations, boosting job growth and earnings.

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