Can BMW Stock Withstand The Trump Effect
A month ago, BMW (BMWYY) suffered a substantial setback in Germany when €4.5 billion was erased from the market value of the company. Of course, it was then President-elect Trump’s tough talk on imposing a 35% border tax on all automobiles imported into the US. That BMW stock suffered a shock drop is notable, but it wasn’t the only German automobile manufacturer that depreciated sharply. Daimler AG and Volkswagen AG were also subject to sharp losses of 1.27% and 0.64% respectively. Unfortunately, for BMW bulls that trend has continued to the present day. Over the past 1 month, BMW stock is down 0.22%, and for the year to date the stock is down 2.72%. As a binary options trader, the trend is your friend and put options make sense. So why is this stock reacting to Donald Trump’s protectionist rants and threats of a 35% border tax?
BMW Put on Notice: It’s Never Politics as Usual with Donald Trump
The media likes to downplay the reasons why Trump was elected to the highest office in the first place. The fact of the matter is that middle America in blue-collar states like Michigan, Ohio, Wisconsin, Illinois, Iowa, Nebraska and the like were tired of business as usual in Washington DC. The concerns of low income earners, and middle-class Americans were often put on the back burner by the Democrats – to their detriment. Trump heard them and they elected him to the Oval Office. Now, the left is crying foul that somebody’s actually fulfilling election mandates, and not simply going about business as usual. This is where Trump’s border tax of 35% is something that must be taken seriously. The fact that he’s talking about placing controls on imports into the US is significant. He is a man of his word, as the media and his opponents are quickly finding out.
‘Shock Drop’ for German Automakers January 16, 2017
In fact, Trump’s exact words to German newspaper BILD were as follows: ‘I would tell BMW that if you’re building a factory in Mexico and plan to sell cars to the USA, without a 35% tax, then you can forget that.’ Comments like this hit home with a vengeance for BMW, and despite the German automaker’s near universal popularity, the US market is especially important to BMW’s bottom line. The problem, according to Trump is that BMW is one of several car manufacturers that is heavily invested in Mexico. The Germans did not take lightly to Trump’s comments and the Deputy Chancellor & Minister for Economic Affairs, Sigmar Gabriel cautioned that the US car industry would be significantly worse off if it decided to tax imports of German vehicles.
What Should BMW Binary Options Traders Look Out for?
On 21 March 2017, BMW will be announcing its annual report for 2016 and its sustainable value report for 2016. On the same day, the annual accounts press conference will be held. These are important events on the calendar for BMW shareholders, and you should mark these on your calendar when trading the stock as a binary option asset. The 1-year low of the stock was reported on 6 July 2016 when BMW was trading at €65.10 per share, and the 1-year high was reported on 3 January 2017 when it was trading at €90.83 per share. Clearly, the stock is trading near its 52-week high despite a slight pullback. Here are some key metrics to reinforce the strength of BMW stock versus the DAX, the S&P 500 and the EuroStoxx:
- Over the past 1 week, BMW ordinary shares are up 4.23% versus 1.85% for the DAX, 1.41% for the S&P 500 index and 2.12% for the EuroStoxx
- Over the past 1 month, BMW ordinary shares are down 1.74% compared to a 2.24% appreciation in the S&P 500 index, a 1.15% appreciation in the DAX, and a -0.60% decline in the EuroStoxx.
The short-term trends are reversing, and put options might be worth considering with this stock.
Disclosure: None.