uploads/2019/01/trump-1822121_1280-3.jpg

Will Trump’s ‘Great Earnings’ Tweet also Backfire?

By

Updated

Great earnings

Last week, President Trump tweeted, “Great earnings coming out of Stock Market.” However, he also lamented that, “Media doesn’t devote much time to this!”

Today, NVIDIA (NVDA) and Caterpillar (CAT) gave weak guidance. Both companies cited China’s slowdown as the cause behind their weak guidance. Earlier this month, Apple (AAPL) also lowered its revenue guidance, citing China’s slowdown. Elsewhere, automakers (SPY) like General Motors (GM) and Ford (F) are also feeling the heat from China’s slowdown.

Article continues below advertisement

Tariffs

Last year, several US companies blamed Trump’s tariffs for poor earnings. The Section 232 steel and aluminum tariffs raised input costs for several downstream metal users (GE). As companies weren’t able to pass higher input costs on to consumers, they took a hit on their margins. Fast forward to 2019, and China’s slowdown seems to be taking a toll on US companies’ profitability. To be sure, Trump’s tariffs aren’t the only reason for China’s slowdown. But it would be fair to say the trade war has further aggravated the situation.

China’s slowdown

Now let’s circle back to Trump’s “Great earnings” tweet. China’s slowdown seems to be taking a toll on companies that have significant exposure to China. This week, we have earnings from companies like Amazon (AMZN), Microsoft (MSFT), Tesla (TSLA), and Boeing (BA). Will Trump’s tweet backfire? We’ll have to wait to see as more companies report their quarterly performance.

Having said that, though, we can see that even last year, several of Trump’s tweets appeared to have misfired. See Some of President Trump’s Misfired Tweets in 2018 to learn more.

Advertisement

More From Market Realist