EsAround three-quarters of firms have held 3Q earnings conference calls, Panjiva’s analysis of 5,811 transcripts from S&P Global Market Intelligence shows, and it appears the proportion that are preoccupied with tariffs or Brexit has fallen from 2Q. In total 15.2% of calls since Oct. 1 have discussed tariffs compared to 17.8% in the Jul. 1 to Sept. 30 period. Similarly Brexit was discussed in 8.2% of calls from 9.9% previously.
In aggregate the two topics were discussed in 20.9% of calls from 24.7% in the prior quarter, marking the lowest level of mentions since 2Q 2018. That may reflect the prospect of a phase 1 trade deal between the U.S. and China – though that is faltering as discussed in Panjiva’s research of Nov. 13 – while Brexit has been delayed to the new year. The two developments may have calmed investors’ nerves.
Source: Panjiva
The only major sector tracked by Panjiva that saw an increase in mentions of the two topics was Aerospace / Defense, with an increase to 25.9% from 22.2%. The fastest decline was in retailing with a drop to 28.8% from 37.9% despite the imposition of tariffs on imports from China for the apparel industry during September.
The capital goods industry remains the most preoccupied with tariffs – which apply to components as well as assembled products – with 48.6% of electrical engineering firms and 46.4% of mechanical engineering firms discussing trade policy. Both were lower than the prior quarter though.
Source: Panjiva
Among aerospace and defense companies it appears to be suppliers rather than assemblers that had faced trade policy challenges. Aluminum component maker Arconic’s CEO, John Plant, has stated that the firm has seen “slightly lower rolled products, aluminum coil sales due to a quarter of inventory correction by distributors following their overly imported product from Europe to cover the market shortfall emanating from the Chinese tariffs“.
That illustrates how second order effects from tariffs have reverberated through supply chains as well as the direct effect of cost increases.
Panjiva data shows that there are still signs that Arconic’s U.S. seaborne imports are in decline at the start of 4Q. U.S. seaborne imports linked to the firm fell by 15.4% year over year in October. That included a 29.2% slump in shipments from China not being entirely offset by a 26.7% rise in shipments from the EU. The wider decline in imports may suggest the firm is facing a weaker market as well as tariff-related challenges.
Source: Panjiva
