" He added these comments:

“What can this all mean to investment opportunities? We continue to believe that seniority in the capital structure and a sharp focus on businesses able to generate strong cash flows remain paramount.

“We also believe that sectors with less impact from tariffs and the uncertainty around the macro environment—i.e., cable/telecom, healthcare, utilities/power, and technology—are preferable to those with higher potential negative impact, such as industrials, energy, and consumer/retail (Exhibit 24).

“If, for example, one were running a long-short trading strategy around tariffs, you could argue that they would be short those sectors to the right—consumer goods makers, retailers, even energy. Energy is generally at risk because we trade a lot of energy with different countries and tariffs will be disruptive to that trade. Industrials are also at risk. Why? Because 37% of imports from China go to industrial customers—auto parts components, airplane components, washing machine components. Why is media on the right? Because digital advertising is the first thing to decline in a recession.

“Long positions in this strategy would be on the left. Tariffs don’t really play into your need for healthcare. We will still get sick. (On the other hand, medical devices will be impacted.) Regarding cable and telecom, our mobile and internet subscriptions won’t really be affected by tariffs. (Mobile phones themselves, on the other hand, will be.)”

mauldineconomics.com - At the crossroads