Wkly Market Round-Up Thru 05/10/19 – Danger in Denial

Hey everyone! Very interesting and volatile week for the markets. As we go into the summer months we have Mother’s Day weekend and soon thereafter Memorial Day here in the US. Clearly the markets are seeing more tension in the US – China Trade talks. So there will be many opportunities to either be on the right or wrong side of the market depending upon your focus. I feel the markets are still a bit too much optimistic on a trade deal outcome in the next 60 days but only time will tell.

This week’s Sound bites:

• Danger in Denial – This past week we saw Global markets shred about $2 Trillion in value or about 3%…Let the Trade Conflict and resulting tariffs begin…Trump fired off the first round with an additional 15% on $200 billion in Chinese Imports bringing this total up to 25%…and he threatened an additional 25% on the remainder of Chinese imports of about $325 Billion…the next scheduled meeting of Trump and Xi will be in June at the Group of 20 meeting in Osaka, Japan…China has indicated they will retaliate to this initial tariff increase but may be subdued in their approach…however, if an accord cannot be reached between the 2 countries China is expected to take more aggressive measures…

• Analysts mostly still feel this trade tiff will be resolved and have not changed their 2020 revenue and earnings forecasts…should a trade deal not materialize there will be downward revisions on many companies forecasts and we’ll see a large downward move in Global markets…

• Currently the markets are not too hot nor too cold which will puts us, more or less, in a Goldilocks environment…with the Feds on pause and the Bond market predicting a rate cut vs a rate hike we will see how all of this plays out in the summer months…and perhaps this summer selling in May and Going away make bear fruit…generally, in a market environment where investors are not worried about higher rates and with growth slowing then those stocks performing the best tend to be centered around Technology as we’ve seen with the FAANG stocks…

• FB, AMZN, AAPL, GOOGL, MSFT are accountable for over 15.87% of the S&P price movement each day so when this group of stocks has a great day, in general so do the markets and we also see the opposite is also true…however, for the NASDAQ 100 Futures these same companies account for over 44.6% of the day to day movement….and for the DOW two stocks, BA and AAPL account for over 14.54% of the daily movement and both of these stocks are highly sensitive to where China’s Economy goes (i.e. trade talks go bad and these stocks will have further to fall) dragging the DOW down with them…

• Based upon the Q1 Earnings we are seeing the share buybacks are up over 12% from the previous Qtr. so this trend of rising dividends and share buybacks continues…

Enjoy this Week’s Video Update;

Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra!
Trade Smart !!

hpb