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Trade Wars and Recessions: What Should Investors Do?

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  • (0:30) - Trade War Continues: Auto Industry Tariffs
  • (8:50) - Small Cap vs. Large Cap Stocks: Where Should you Invest?
  • (12:00) - Recession Indicators To Watch
  • (19:20) - Millennial Generation Impact On Annualized Growth
  • (25:45) - Tracey and Johns Top Stock Picks
  • (32:45) - Are Chinese Stocks On A Negative Trend?
  • 36:00) - Episode Roundup: UNH, CNC, CVS, SOHU, YY

Welcome to Episode #137 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by John Blank, Zacks Chief Equity Strategist, to discuss what impact the trade wars and possibility of a recession will have on investors. How should you invest in this uncertain market?

Trade and Tariffs

The trade wars seem scary but, so far, there have been $26 billion in tariffs in an $18 trillion economy.

Will it matter? Or is it just a drop in the bucket?

John discusses the bull and bear scenarios for the trade war.

Trying to Time the Recession

Recently, there have been endless articles and worries about the inverting yield curve, which would likely mean a recession is coming.

Should investors care?

The average amount of time of a recession, once the inversion happens, is at least 18 months.

What would you do in the meantime?

Should investors spend all their time trying to “time” the next recession, which the stock market will try and price in ahead of time anyway?

And then what happens afterwards? Will you know when to get back in?

John and Tracey discuss the difficulties of investing “for” recessions but they still believe that stocks are a place to be.

Here are some areas that they’re investing in in their portfolios.

Big Cap Stock Picks for Uncertain Times

1.       CVS (CVS - Free Report) is about to acquire Aetna. Shares are cheap, with a forward P/E of just 9.7. Yet earnings are expected to rise 18.5% this year. The recent weakness is a buying opportunity.

2.       Centene (CNC - Free Report) remains an attractive large cap with a forward P/E of 18.3 even though shares have soared to 5-year highs. Earnings are expected to jump 40% this year. Could shares continue to go higher?

3.       UnitedHealth Group (UNH - Free Report) is another large health insurer whose fundamentals also look good. While it’s slightly more expensive, with a forward P/E of 20.1, it is expected to grow earnings by 25%.

Chinese Stocks: To Invest or Not?

For those willing to take on more risk, there are always the Chinese stocks. Many have sold off on worries about Chinese trade wars and the tariffs.

Tracey used to own YY (YY - Free Report) in the Value Investor and now owns (SOHU - Free Report) in the Insider Trader.

Want to know what they think about owning the Chinese stocks in this environment?

Tune into this week’s podcast to find out.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

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