U.S. fund managers brace for trade war with focus on pricing power | Reuters

A trade war between the two countries would lop 0.7 percent off of the U.S. GDP and push inflation up 0.1 percent, according to estimates from MSCI. That, in turn, would sink U.S. stocks by

about 5 percent, the firm estimates, a fall it says may already be priced into the market. Should other countries also raise tariffs, then U.S. stocks could drop by another 10 percent.

In the “Beige Book,” a survey of current U.S. economic conditions released Wednesday, the Federal Reserve noted that it had received scattered reports of companies successfully passing on prices in the manufacturing, information technology, transportation, and construction industries.

DOMESTIC NICHE
Lamar Villere, a portfolio manager at New Orleans-based Villere & Co, said that he has been reducing his exposure of small and mid-cap companies with international revenues and is focusing more on those that dominate their domestic niche in order to offer protection from the effects of tariffs.

He has been adding to his position in companies such as Pool Corp (POOL.O), the country’s largest supplier of residential pool supplies, in large part because it has few competitors that will be able to undercut it on prices, he said. Shares of the company are up 12.5 percent for the year to date.

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U.S. fund managers brace for trade war with focus on pricing power.