Barron’s: “Dow Rides Higher, Damn the Tariff Torpedos”

Excerpt from Barron’s latest article quoting DataTrek co-founder Nick Colas:

…. “The Dow has surged 0.6% to 24,925.53. The S&P 500 has risen 0.3% to 2792.95, while the Nasdaq Composite has gained 0.2% to 4468.62. Trade-war concerns seem to be shrinking in the rearview mirror, but they aren’t entirely priced in, according to Nicholas Colas, co-founder of DataTrek Research.

“The Dow remains firmly tethered to the trade-war narrative. In a narrow sense, this means that markets have not yet fully discounted a ‘worst-case scenario’ here,” he wrote. “Names like 3M, Walmart, and Caterpillar are the canaries in this coal mine given their international exposure. Only when the Dow trades more independently of these names can we say “trade war risk” is fully incorporated into stock prices generally.”

3M (MMM) and Caterpillar (CAT), based on Colas’s correlation analysis, have a 0.8% correlation to the Dow based on the past 30-day price returns, compared to their 0.5% correlations in 2017. Meanwhile, Walmart (WMT) now has a 0.6% correlation compared with 0.4% last year.”….

Read the whole article here on Barron’s!

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