Page 25 - ARUBA TODAY

BUSINESS Wednesday 12 June 2019
A25

Investors should guard against tunnel vision on trade wars

By STAN CHOE lower tax rates. But analysts
Associated Press are more optimistic about
NEW YORK (AP) — Once trends later this year and
this trade-war cloud gets are forecasting growth to
lifted, investors should have accelerate to 7% in the
little to worry about, right? fourth quarter, according
Monday’s market action to FactSet. That’s key be-
makes it seem that way: cause stock prices tend to
Stocks around the world track the path of corporate
climbed after President profits over the long term.
Donald Trump withdrew a But skeptics say those pro-
threat to impose tariffs on jections are too high.
Mexico, at least for now. Barry Bannister, a strategist
That leaves investors hop- at Stifel who was among
ing for a deal to soothe the first voices on Wall Street
the more contentious and to turn cautious on stocks
complex trade dispute with last year, expects earnings
China, which helped sink in the second half of 2019
stocks last month. to fall short of analysts’ pro-
Economic trends were al- jections, particularly in the
ready signaling trouble technology, health care
before the latest round of and energy industries.
tariff-induced fear. Friday’s With the dollar’s value
surprisingly weak jobs re- In this May 29, 2019, file photo trader John Romolo works on the floor of the New York Stock strong and U.S. manufac-
port, where employers Exchange. turing slowing, he’s looking
added far fewer jobs than Associated Press for CEOs to give profit fore-
economists expected, for profit growth to accel- long as Friday’s disappoint- strategist at Morgan Stan- casts for the second half of
gave extra pause. Corpo- erate later this year. Plus, ing report doesn’t herald ley, sees a warning flag in 2019 that fall short of ana-
rate profits are also under stock prices are looking like something more lasting. falling profits for many re- lysts’ expectations, with an-
pressure. better values following their The unemployment rate at tailers. While the industry’s nouncements coming as
“If the administration fixes tumble in recent weeks. 3.6% is at its lowest since overall figures for the first soon as next month, when
the problem it created, Perhaps most importantly, 1969, and consumers are quarter may look decent companies begin reporting
I’m sure there will be a the Federal Reserve has in- feeling relatively confident. due to big gains for Ama- their second-quarter results.
short-term pop in the stock timated it may come to the That’s key when consumer zon, Nordstrom and other Companies are also paying
market,” said Rich Weiss, market’s rescue again and spending accounts for two retailers saw big declines. higher wages to their work-
chief investment officer cut interest rates if the trade thirds of the economy. That could be an early sign ers, and average hourly
of multi-asset strategies at war swamps the economy. But skeptics point to other that U.S. consumers, whose earnings rose 3.1% in May,
American Century Invest- But skeptics say optimists recent economic reports spending is such a key part which raises their costs.
ments. “However, I believe aren’t looking closely that showed weakness of the economy, may be Compare that against
it’s only short-term because enough at all the troubles in April, before this lat- less willing to spend in com- the consumer price index,
ultimately that will not rem- getting overshadowed by est round of trade worries ing months. which gives a window into
edy the underlying funda- trade disputes. Among the flared up. Among them: an- — LACKLUSTER PROFIT how easily companies can
mentals, which are just not concerns: other drop in North Ameri- GROWTH pass along price increases
strong.” — SLOWING ECONOMIC can freight shipments, slow- Companies across the S&P to their customers, notes
Of course, many along GROWTH, EVEN BEFORE THE er manufacturing growth 500 reported roughly flat Chun Wang, senior analyst
Wall Street are still fore- LATEST TRADE SKIRMISHES than economists expect- earnings for the first three at Leuthold. CPI inflation
casting gains for stocks this The bright spots for the U.S. ed and weaker business months of 2019, as they’re hasn’t been that high since
year. Much of the optimism economy are still clear: spending on equipment. no longer getting the big 2011, and it was at 2% in
rides on analyst forecasts The job market is solid, as Michael Wilson, equity boost of the first year of April.q

Private equity firm buying Shutterfly for $1.74 billion

Associated Press Shutterfly’s new chief ex- popularity waned, even as
SAN FRANCISCO (AP) — ecutive. Shutterfly became revenue grew.
Private equity firm Apollo popular during a time when Shutterfly announced it
Global Management is printing photos meant a would lay off about 260
buying online photo pub- trip to the supermarket employees, or 13% of its
lishing company Shutterfly and often a dayslong wait. staff, in early 2017.
for $51 per share. The company’s popularity Shutterfly bought school
Apollo will pay $1.74 billion swelled by selling an array photography company
for the 20-year-old compa- of photo-clad gifts includ- Lifetouch for $825 mil-
ny, which became popular ing mugs, calendars and lion last year. Apollo will
offering its users prints and canvasses. also buy photo printing
photobooks of their favor- Shutterfly bought competi- company Snapfish and
ite shots. But demand for tor’s Kodak’s online photo merge it with Shutterfly.
that type of service has business for $23.8 million Apollo has bought more
declined as people opt to This April 26, 2012, file photo shows the Shutterfly headquarters in 2012 after the legacy than 150 companies, in-
share photos online through in Redwood City, Calif. photo company filed for cluding security company
Facebook and other social Associated Press bankruptcy protection ear- ADT, entertainment res-
networks. Redwood City, on Monday — and was Ryan O’Hara, the former lier that year. But as digital taurant Chuck E. Cheese’s
California-based Shutter- trading as high as $94.28 CEO at real estate compa- photo sharing became and telecom firm Charter
fly’s stock closed at $50.25 per share a year ago. ny Move Inc., will become more pervasive, Shutterfly’s Communications.q