Latest / Best of Business / Sam Trethewey: Milford Asset Management Portfolio Manager on the Trump tariffs starting to impact corporate earnings

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Sam Trethewey: Milford Asset Management Portfolio Manager on the Trump tariffs starting to impact corporate earnings · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B follow
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  Speaker 2: Time to Chicken on the Market. Samtrathui is from Milford
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  Speaker 2: Asset Management.
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  Speaker 3: Hey, Sam, Good evening, Heather.
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  Speaker 2: Okay, Sam. So we're starting to see the signs that
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  Speaker 2: Trump's tariffs are impacting the corporate earnings and whatnot. What
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  Speaker 2: are you seeing coming through? What are the initial impacts?
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  Speaker 3: Yes, we certainly are. I think there's indications both locally
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  Speaker 3: and from the large US listed companies that these tariffs
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  Speaker 3: are real and they're starting to buy it. So the
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  Speaker 3: current earning season underway in the US has been dominated
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  Speaker 3: by a few concerns from a pretty diverse list of
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  Speaker 3: companies that these tariffs are coming through. It's the first
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  Speaker 3: time that many of these businesses have spoken publicly since
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  Speaker 3: Trump's Liberation Day. So to give you a flavor of
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  Speaker 3: it at the very headline level, the port of Los
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  Speaker 3: Angeles was out overnight, and that's the busiest port in
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  Speaker 3: the US, indicating that pandemic style shipping issues are coming back.
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  Speaker 3: So imports from China down thirty percent in the past
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  Speaker 3: week or so, as many retailers ground to a halt,
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  Speaker 3: and it's a matter of weeks before inventory starts to
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  Speaker 3: inty out on many shelves across the US. Elsewhere, you've
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  Speaker 3: got the likes of Delivery Giant or courier ups indicating
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  Speaker 3: that it's going to cut twenty thousand jobs to lower
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  Speaker 3: costs and response. And more broadly, it's a variety of
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  Speaker 3: companies from airlines to large car manufacturers having to either
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  Speaker 3: slash or pull back their outlook statements for the air ahead.
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  Speaker 3: So that's globally. Locally, our companies haven't been immune either.
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  Speaker 3: Those with material US exposures have also reported impact. So
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  Speaker 3: at the very pointing end of it, caravan operator Tourism
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  Speaker 3: Holdings indicated in a recent update a sharp drop of
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  Speaker 3: over fifty percent and inbound bookings for its US business
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  Speaker 3: and elsewhere, Wind Exported Delegate signaled that there is real
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  Speaker 3: uncertainty and it's forward orders from the US distributors. So
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  Speaker 3: tariffs are becoming real and are beginning to impact earnings.
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  Speaker 2: And so how is this changing what companies say about
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  Speaker 2: their outlook?
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  Speaker 3: What is driving I think the large US companies to
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  Speaker 3: really slash or walk away from their guidance or the
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  Speaker 3: typical outlook statement is the real uncertainty around the situation.
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  Speaker 3: So these management teams are sitting there either seeing very
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  Speaker 3: weak demand all of a sudden turn up, or having
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  Speaker 3: to put through very material price likes to their products
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  Speaker 3: and wondering what's that going to do to consumer demand.
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  Speaker 3: So with their prior outlock comments unlikely reflecting anything like
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  Speaker 3: what has played out in that announcement earlier this month
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  Speaker 3: on Liberation Day, it is really causing that uncertainty. So
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  Speaker 3: at the extreme end of it, as an example, you've
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  Speaker 3: got the US airline industry, and demand in that sector
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  Speaker 3: has been very quick to respond. So every major US airline, Delta,
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  Speaker 3: American Airlines, etc. Has pulled guidance and in the case
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  Speaker 3: of United they have provided a recession scenario where it's
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  Speaker 3: consistent with very sharp weakening demand for domestically to travel.
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  Speaker 3: So ultimately huge uncertainty. No one has a clear view
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  Speaker 3: of where we're going to end up, and it's delaying
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  Speaker 3: businesses making decisions to they see how the situation plays out.
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  Speaker 2: Okay, So Sam, put this all together, do you think
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  Speaker 2: the market is interpreting the weekend earnings because we had
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  Speaker 2: a decent recovery in the last week or so haven't we.
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  Speaker 3: That's right, Yes, certainly the market has recovered quite materially
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  Speaker 3: in the past week after that initial tariff shock at
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  Speaker 3: the extend of the tariffs earlier in the month. So
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  Speaker 3: I think it's fair to say the market is taking
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  Speaker 3: a glass hufful approach to earnings at this stage, so
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  Speaker 3: reflecting essentially that it hopes trade deals will be done
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  Speaker 3: quickly and the impacts that we are seeing coming through
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  Speaker 3: at the moment will be pretty short term live. So
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  Speaker 3: if you look at the S and P five hundred
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  Speaker 3: index headline indicts and the US is an indication it
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  Speaker 3: is not far below the level it was prior to
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  Speaker 3: that Liberation Day tarif announcement, its' roughly two percent below
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  Speaker 3: that level. So the risk is really that Trump and
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  Speaker 3: his negotiation team cannot get the appropriate deals done quickly
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  Speaker 3: enough and the consumers we have to will continue to
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  Speaker 3: pull back and hence the outlet for corporate endings continues
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  Speaker 3: to weekend. So hopefully a solution is found soon.
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  Speaker 2: Brilliant stuff, Sam, Thank you as always appreciate it, Sam Trathu.
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  Speaker 2: We have Milford Asset Management.
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