Delta price cuts, China-based ETFs fall: Trending Tickers

00:00 Speaker A

Today, we are taking a look at Delta Airlines and China ETFs following Trump’s tariffs. First up here, TD Cowen analysts cutting their Delta Airlines price target to $45, down from 82. Still maintaining a buy rating on the stock. Bank of America also trimming its Delta price target to 56 from 65, maintaining a buy rating. This comes days ahead of Delta earnings on April 9th in March. Delta lowered its first quarter sales and profit outlook, expecting limited domestic travel demand to weigh on its upcoming results. Rom is still with me on set here. Rom, these airlines just getting hammered by TD Cowen this morning in terms of ratings, but they’re not the only ones. And I wonder what it takes, they’re still at an overweight rating, what’s it going to take to get that moved down?

01:08 Rom

Well, the broader theme is that consumers are pulling back. So, Delta provided a warning about a month ago that they’re seeing softer consumer demand. And why is that? Because travel is a discretionary spend item. You’re also seeing weakness in restaurants as well. So, what’s going to take to get this turnaround is restoring psychology, giving confidence to consumers who are in their turtle shell, improving CEO confidence, CEO confidence is at lows, so business travel is also declining. Uh, so that’s what you really need to see. And, uh, we still don’t see evidence that uh, that psychology is improving.

02:37 Speaker A

Yeah, that is certainly a challenge for a lot of these stocks here. And as we were just talking about with Kevin O’Leary, some of these airlines potentially getting hit by a lack of travel over these tariffs for a lot of reasons. I do want to move on to China though. We have news that China has responded to President Trump’s sweeping tariffs with a retaliatory tariff of 34% on all US goods. IShares China Large-Cap ETF down nearly 7% in trade so far today. Other China-based ETFs, including IShares MSCI China ETF as well as the CraneShares CSI China Internet ETF, also trading lower as the trade war heats up. Now, my big question here because throughout the beginning of the year, when the tariff uncertainty was bubbling, we were hearing Europe and China as good hedges to the US stock market. Is that still the case with China right now?

03:54 Rom

Well, I think tariffs are the ultimate own goal. So, this correction started when the White House rolled out aggressive tariffs. And China also has rolled out tariffs which hurts their own local market, because tariffs are a sales tax on businesses. So you’ve seen Alibaba’s down 10% today. It’s a few, a form of mutually assured economic destruction. Uh, and we need to see a de-escalation of tariffs to create clarity and long-term visibility so that businesses can plan and make decisions. Nike has 500,000 employees in Vietnam across 100 plus factories, earning below minimum wage work. You can’t move that supply chain with a two-month warning. And you can’t invest in advanced robotics. Robotics can not even hold an egg. How are they going to do fine stitching on athletic sneakers? That’s going to hurt their earnings for Nike, and that’s going to mean higher prices for consumers. That hurts inflation, and that hurts markets.

05:43 Speaker A

Yeah. And we are certainly see it hitting markets today with stocks continuing to sell off here as the trading day kicks up.