U.S. & China Tariff Wars, Automobile Supply Chain, and Stocks – Bernhard Koepp, CEO of C.J. Lawrence


Yeah hi there this is Bernhard Koepp from
C.J. Lawrence oh well it’s been another interesting week and we started the week
very volatile and continued to trade down given all the the the controversy
with the tariff war between the US and China
we basically ending the week here flat which is which is I think a victory a
little bit of an update on the tariff there issue the next date that we’re
looking at is the g20 meeting which is in Osaka Japan that’s on June 28th and
basically the tweet from the Trump administration has been that the Chinese
premier and Trump will meet at that date and hopefully they will come up with
something meaningful by that I mean that the news just we just got now was that
they’re a little bit of an impasse so they’re figuring out when to meet next
but you know we basically have another month here or a month an order or month
and a half to to worry about this issue on the Canada deal I mean that was
signed or agreed to today that’s that’s very promising on the on that on the the
whole tariff front basically they’ve agreed on steel tariffs and so forth
that’s very important in the car industry and it’s interesting they they
carved out cars and that in the tariff warfare where they’re saying cars are
exempt for another six months in this tariff war cars are the most impacted by
supply chains global supply chain so if you think about the typical car that is
is designed in in Detroit the parts are produced in anywhere from Canada to the
u.s. to Germany to Japan these parts are then partially assembled in the US and
then again shipped to places like Mexico where the cars again partially assembled
to you to put the dry frames together and
all these things and then for final assembly it goes to Detroit so anything
that disrupts the existing supply chains based on these tariffs is is really
damaging to the auto sector so the other data point we got today on macro was
consumer sentiment and that came in surprisingly high that was like a 102
that’s that’s a very high reading without any doubt obviously the US
economy is very much dependent on the consumer showing up we you know if you
think about the GDP number we got in q1 which was 3.2 percent there was a lot of
inventory build in that number so economists are worrying a bit are people
gonna show up to actually buy that product and a lot of that purchasing
that we saw on inventories was actually because of Karass we would argue but it
it kind of underscores that we’re not worried about a recession so that’s why
we actually like you know we like stocks a lot here low inflation productivity
growth interest rates on hold all that is great for stocks so on the sector
side we saw some interesting moves today as well technology stocks rallied big
time in the middle of the week and was a number of factors they were pretty
oversold after the last couple weeks but you also saw some evidence that actually
more non-traditional investors in technology stocks like Warren Buffett
was was it was shown that even you know his his portfolios were starting to buy
things like Amazon and we got some detail on hedge funds that they are also
buying technology for the stocks that’s actually very supportive for the idea
that we have that you know you want to stick with these large larger kind of
growth companies the other sector we would highlight is healthcare healthcare
has kind of been also out of favor given the election cycle and you know
politicians here talking about drug pricing and all these go
things interesting so healthcare did very well this week the there is a big
hematology conference and oncology conference coming up in June so a lot of
the the heavy hitters and research and development started publishing their
reports and on Wednesday so there’s a quite a bit of a buzz especially in
cancer related treatments coming out of this company so you’re seeing a bit of a
bid under healthcare stocks that we did which is a sector we like a lot i POS
was very interesting in the last week so we obviously saw uber a couple weeks ago
which was you know people say was sort of a failed IPO which is a bit of
overstatement given the how much money they raised but you know that stock is
down about 20-25 percent then today we got a Chinese IPO which was luck in
coffee which is up about 20% so it’s interesting you know how these two
companies both actually don’t make any money they have no no net income
whatsoever but the coffee business is an interesting place that we like a lot as
well we obviously like Starbucks coffee a lot if you think about global coffee
prices there they’re really at an all-time low and last time I checked I’m
still paying for four or five dollars for my coffee there and it’s an
interesting factoid so a lot of growth is obviously in China for for Starbucks
and luckin and others so the the annual consumption of coffee in China that we
learned this from the luck in IP o is only six cups of coffee per year per
person so it turns about here in the US it’s 388 cups of coffee per year so if
you think about China as a coffee market this is actually a huge growth market so
that’s it on the weak just one more thing where our team is taking part in
the future of everything conference next week this is a conference that’s that’s
being a organized by The Wall Street Journal
which has leaders from all from technology from all sorts of parts of
society really looking forward looking into the future of technologies and
what’s going on which is very important to us because if we’re gonna stay
current on growth and where to invest in the next decade or two you know we gotta
be in front of that so we’ll report on that next week have a great weekend take
care