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Trade War Negotiations Provide Hope for Boeing and GM
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Boeing (BA - Free Report) slipped 2.7 percent, and General Motors (GM - Free Report) fell 7 percent, after their respective earnings reports. However, both companies beat profit expectations in the reported periods. So what was the issue? It’s simple: unpromising outlooks for the rest of the year caused by rising costs, tariffs, and trade worries.
Though Boeing beat analysts’ estimates on both the top and bottom line, its post-earnings slump pulled down the Dow Jones Industrial Average.
Boeing said its sluggish earnings guidance can be attributed to the rising cost of the KC-46 Tanker. This isn’t very surprising, considering how, due to trade tensions, input costs have been rising for many companies that use steel or aluminum.
General Motors’ guidance didn’t seem to be too promising looking either—also due to higher costs. General Motors didn’t specifically mention tariffs in its press release, but it is highly likely that some of the rising costs it was referring to have to do with the tariffs.
GM also said it expects higher commodity costs and the dollar rally to be hinder its financials as the year moves along. Of course, rising input costs and ongoing trade disputes are also a big factor for such an auto giant—especially as auto tariff issues crop up.
However, after this bad news for Boeing and GM, some good news came along that can potentially change the situation in the near future. Yesterday, President Donald Trump and European Commission President Jean-Claude Juncker extended an olive branch to these intensifying trade tensions.
Mr. Trump agreed not to impose tariffs on European autos as long as negotiations keep on coming along. In response, the EU said it would try to move away from not purchasing U.S. natural gas and soybeans entirely. However, steel and aluminum tariffs will remain in place.
Keep in mind, although this shed some positive light on the aforementioned companies, nothing is set in stone. This hopefulness will still take a long time to get consolidated, and the threat of escalation is still present.
It will be interesting to see how such an agreement will affect companies like GM and Boeing. Although the trade war between China is still there and seems to be the biggest factor to a lot of American companies, investors should remain cautious.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Trade War Negotiations Provide Hope for Boeing and GM
Boeing (BA - Free Report) slipped 2.7 percent, and General Motors (GM - Free Report) fell 7 percent, after their respective earnings reports. However, both companies beat profit expectations in the reported periods. So what was the issue? It’s simple: unpromising outlooks for the rest of the year caused by rising costs, tariffs, and trade worries.
Though Boeing beat analysts’ estimates on both the top and bottom line, its post-earnings slump pulled down the Dow Jones Industrial Average.
Boeing said its sluggish earnings guidance can be attributed to the rising cost of the KC-46 Tanker. This isn’t very surprising, considering how, due to trade tensions, input costs have been rising for many companies that use steel or aluminum.
General Motors’ guidance didn’t seem to be too promising looking either—also due to higher costs. General Motors didn’t specifically mention tariffs in its press release, but it is highly likely that some of the rising costs it was referring to have to do with the tariffs.
GM also said it expects higher commodity costs and the dollar rally to be hinder its financials as the year moves along. Of course, rising input costs and ongoing trade disputes are also a big factor for such an auto giant—especially as auto tariff issues crop up.
However, after this bad news for Boeing and GM, some good news came along that can potentially change the situation in the near future. Yesterday, President Donald Trump and European Commission President Jean-Claude Juncker extended an olive branch to these intensifying trade tensions.
Mr. Trump agreed not to impose tariffs on European autos as long as negotiations keep on coming along. In response, the EU said it would try to move away from not purchasing U.S. natural gas and soybeans entirely. However, steel and aluminum tariffs will remain in place.
Keep in mind, although this shed some positive light on the aforementioned companies, nothing is set in stone. This hopefulness will still take a long time to get consolidated, and the threat of escalation is still present.
It will be interesting to see how such an agreement will affect companies like GM and Boeing. Although the trade war between China is still there and seems to be the biggest factor to a lot of American companies, investors should remain cautious.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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