00:00So no matter what negotiations happen going forward, we're still looking at, I believe
00:06you had put out a 10%, oh, 10% tariffs are likely to be an inflationary, we'll get to
00:13inflation.
00:14Let's go back to the piecemeal comment that you made, because we've been talking a lot
00:18about the tariffs that could affect the auto industry.
00:22But as you look at what was announced yesterday, what do you see as the economic sectors in
00:27the US that are most vulnerable right now?
00:31So the market was focusing attention on a pretty short list of sectors that are most
00:38vulnerable in the context of a trade escalation.
00:42As you correctly mentioned, auto parts were one of the clear examples.
00:49But it's not the only one.
00:51We're seeing a meaningful hit to sectors like discretionary consumer goods, where you
00:58import a lot of those goods.
01:00And those prices will be impacted by the tariffs that were announced.
01:05Similarly, within the industrial complex, quite a number of, for example, chemical products
01:13could be imported into the US.
01:16Also we're seeing pressure on companies where supply chains are international in nature,
01:22and they can be impacted quite hard by what's been announced yesterday.
01:28So there are clearly a number of sectors that have been disproportionately hit.
01:35But we also know that these sectors were pretty well telegraphed.
01:39So when we're looking at the performance of fixed income instruments from those sectors
01:47in recent months, we've already seen underperformance of those trade sensitive sectors manifesting
01:55itself in anticipation of the announcements that we've seen yesterday.
02:00So as far as we're concerned, actually, in case of those most impacted sectors, probably
02:06most of the price adjustment has already occurred.
02:10And our attention is actually switching to other topics, like, for example, the overall
02:16strength and resiliency of the US consumer, whether that will remain in place.
Comments