On Thursday, President Trump announced he will sign an order to levy a 25% on imported steel and 10% on aluminum despite protests from Republican lawmakers and members of his cabinet. The announcement sparked market fears of a trade war because U.S. trade partners will likely retaliate against American exports.

Trump intends the tariffs to protect the U.S. steel and aluminum industries. However, the tariffs will increase the cost of the commodities and will likely have negative impacts on other domestic industries. A study estimates that the last steel tariff imposed under President George W. Bush cost about 200,000 U.S. jobs.

That said, the direct impact of these new steel and aluminum tariffs alone on the U.S. economy probably won’t be great. But if these tariffs snowball into broader tit-for-tat protectionist measures, then the consequences could be very serious.

Need to Be More Selective

At this time, with an unorthodox president in charge, policy will be more difficult to predict. In turn, the remarkable market calm investors enjoyed in the many months preceding 2018 will likely give way to more ups and downs. However, this doesn’t mean that the market will collapse. The U.S. economic backdrop still looks solid. More volatility just means investors should be prepared for a return to more normal market behavior and be more selective about what stocks to buy.

We believe our strategy of following Wall Street’s best money managers’ high-conviction buys will work even better when investors have to be more selective. After all, these heavyweights have the resources that most investors don’t have. Given the amount of money involved, we can bet that they do a ton of work before committing millions of dollars to a stock.

Stock Updates

On Thursday, two of our recommendations had a good day thanks to strong quarterly reports. Itron (NASDAQ: ITRI) gained 4.9% while Sotheby’s (NYSE: BID) rose 10%.

Itron earned $1.01 in the fourth quarter on sales of $550.8 million, both were above expectations.

Looking ahead, Itron guides to first-quarter revenue in the range of $575 million to $600 million. This compares favorably to The Street’s consensus expectation for about $577 million.

For the full year, the revenue and earnings guidance ranges were a bit soft compared to consensus, but investors nevertheless shrugged it off. The company expects full-year revenue of $2.33 billion to $2.43 billion and earnings per share of $2.95 to $3.35—compared to consensus expectations of $2.4 billion and $3.19, respectively.

Booking Growth and Cost Savings

Bookings growth remained strong. The company had $931 million in backlogs over the past 12 months, which represents a 22% jump over the previous 12-month period. This bodes well for continued steady revenue growth ahead.

The company also reaffirmed that it’s on pace to achieve a run rate of $50 million a year in synergetic savings by the end of 2020, by way of the integration of Silver Spring. The deal just closed in January and integration costs will temporarily drag on first-quarter earnings.

Itron also announced restructuring plans (subject to regulatory approval) that is expected to save at least $45 million per year by the end of 2020, though this will come with a one-time pre-tax charge of about $100 million. In the long run, between Silver Spring and the restructuring, Itron could achieve savings of around $100 million a year by 2020.

Overall, a solid quarter and the outlook remains good. After two weeks in our portfolio, ITRI has now exceeded our initial suggested buy-up-to price of $72. Today we bump it modestly to $75. Our readers should already have shares at lower entry prices.

Sotheby’s Gathers Momentum

Sotheby’s enjoyed even a stronger day than Itron. Prior to the earnings release, investors had sold off shares on fear of poor quarterly numbers. However, the results were actually pretty good. Revenue grew 2.2% year-over-year while adjusted earnings per share increased 7.1%.

For the full year, the auction house sold more than $5 billion in art and other high-end items, up 12% over 2016, which supports the notion of improvement in the industry. CEO Tad Smith said he expects an even better year in 2018. The company’s 2017 revenues were up 23% compared to 2016.

Private Sales Success Indicates Good Execution

One figure in the results jumped out for us. Sotheby’s enjoyed a 28% jump in private sales during 2017—these are sales made behind closed doors, not auctioned. By contrast, Sotheby’s main rival, Christie’s saw a 35% drop in private sales over the same period.

Private sales tend not to be one-off deals, because a successful deal sets up the same client for potential repeat private purchases as well as participating in future auctions, so Sotheby’s momentum in the area compared to Christie’s struggles speaks well to Smith’s leadership in focusing more on private sales—Sotheby’s has a dedicated private-sales team; Christie’s does not.

Sotheby’s set a number of company records in the past year for sales in different categories and the momentum appears to have carried over into 2018. For example, this week it just auctioned off a Picasso painting for the equivalent of $69.2 million in London. This is the second-most expensive work ever auctioned off in Europe.

We bump our suggested buy-up-to price to $53 today. But here, too, our readers should have shares already.