Higher tariffs and the absence of a trade deal will force investors to lower estimates for global GDP, global earnings growth and the earnings multiple associated with higher growth.
— all of which have little or no direct revenue exposure to China — are dropping along with those that do, like semiconductors, industrials and retailers."This is a much broader deal than just who has revenue exposure to China, or who imports from China," said Art Cashin, UBS' floor director at the New York Stock Exchange.trade off a multiple of forward earnings expectations.
A typical multiple for the S&P 500 is 15 to 16 times forward earnings . Refinitiv estimates the S&P will earn $171 per share in the next four quarters. With no trade deal, and much higher tariffs, global growth will clearly be lower and the markets are assigning a lower multiple to the markets, but how much is still not clear. If the S&P gets assigned a more reasonable multiple of 15.5 , the S&P could quickly drop to the 2,650 range .
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