The Death of Fake Meat?

All’s quiet on the trade war front.

But some not-so-great news is beginning to creep into the picture. Apparently, Donald Trump’s tariffs are backfiring for some U.S. companies.

One victim is United States Steel Corp. (NYSE:X). The company plans to temporarily lay off up to 200 workers at its Great Lakes Works plant in Michigan, according to Business Insider.

Originally, the goal of Trump’s steel tariffs was to even out the market and allow American companies to remain competitive. Unfortunately, this plan has apparently failed and has driven demand and prices for steel way down, leading to less work for companies like U.S. Steel — and more layoffs.

One look at the numbers tells you all you need to know. Steel coil prices have dropped by a third since last year, reports Business Insider.

In a vague statement (probably so as not to incur the wrath of our nation’s Trade-Warrior-in-Chief), the company claims “These additional adjustments in operations at Great Lakes Works are related to ongoing challenging market conditions.”

Of course, I didn’t need to read about U.S. Steel’s struggles on a financial news site. A quick glance at its chart reveals everything about the company’s prospects right now:

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Shares of U.S. Steel have fallen nearly 75% from their early 2018 highs. I don’t care if you want to blame tariffs or not ­— that’s not a chart I want to buy right now.

Speaking of challenging market conditions, stocks once again wandered into the red on Tuesday.

The major averages couldn’t maintain their Monday momentum and slid into the red during Tuesday’s session. The losses weren’t steep. But each of the major averages went out at the lows.

We’ll see if the premarket strength we’re witnessing right now can carry make up for yesterday’s sluggish performance.

Meanwhile, we can’t seem to escape more fake meat news.

Beyond Meat Inc. (NASDAQ:BYND) continues its post-IPO PR blitz, announcing another partnership. This time, Beyond is teaming up with the meal prep firm HelloFresh, according to CNBC.

If you aren’t familiar, HelloFresh is in direct competition with Blue Apron Holdings Inc. (NYSE:APRN) (and Blue Apron is also a Beyond Meat co-conspirator).

Unfortunately, the fake meat craze has not been able to prop up Blue Apron stock. Shares have gone nowhere but down since the first quarter when the company priced an offering of 15 million shares at a steep discount.

But the Beyond effect can be quite powerful — at least temporarily. News of the partnership ignited a powerful new rally, launching APRN shares higher by 60% back in July when the two companies partnered up.

But the gains didn’t last. As of this week APRN has given back its Beyond Bump — and then some.

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It’s also worth noting that Beyond’s insane rally has finally started to cool. The stock continues to retreat from its July highs, and some analysts and pundits are viewing its endless new partnership announcements as nothing more than an attempt to prop up the stock’s slowing momentum.

Beyond’s arch-nemesis, Impossible Foods, is likely going to end up on store shelves soon to compete with Beyond’s grocery store offerings, thanks to recent FDA approval.

The FDA just approved “Heme” the soy-based protein that gives Impossible Foods the “meaty” taste, texture, and color. We’re still waiting to hear updates on Impossible’s impending IPO. I still suspect the company will attempt to go public by early next year.

Finally, some strong earnings are hitting the wire this week.

Home Depot (NYSE:HD) shares gapped higher Tuesday and finished the day up more than 4% after announcing strong profits. Following yesterday’s rally, the stock is now just a couple bucks shy of its all-time highs.

There’s just one catch: Overall, HD’s earnings weren’t that great.

“Home Depot’s fiscal second-quarter sales missed analysts’ expectations,” CNBC reports, “and the company lowered its sales outlook for the year amid fears that the trade war will slow consumer spending.”

Yet the stock still managed to rally.

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How does Home Depot stay on top—even with Amazon swallowing up every other retailer in the country?

Home Depot has avoided Amazon’s wrath by ignoring online shopping carts and focusing on stuff you load into the back of a pickup. It’s a solid strategy for continued success in this tough retail environment.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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