The real challenge the market faces now is the ability to project which sectors or, were we to heighten our resolution, stocks, can be impervious to the U.S.-China trade spat. With Trump boasting that he could bring on the heat with $200 billion more in tariffs and some, the question is whether he is truly a masterful dealmaker or whether he’s digging a deeper and deeper pit. It’s sort of a catch-22. With the Fed hiking rates now – the projection being we’ll see 4 this year – the attractiveness of stocks has lessened. While Buffett will say time in and time out that even with the geopolitical uncertainty and bond yields rising, there’s no safer place to be than in the market, it’s hard to really know whether to go all in, even for the duration of a day. With so many shifting winds, shifting rhetoric, and the pomp and circumstance in the Oval Office, how do you know how to hedge your bets?!
Simply put, it isn’t getting easier. Speculation rampant, it’s hard to know which sectors will be immune to the trade rift, a rift that Trump seems to be fast-tracking to get the upper hand. Whether Trump has miscalculated the Chinese is another story, but it is clear that certain industries are feeling the hit. From car makers, the stocks of luxury items, and retailers the likes of Walmart, the question now is less, “Who will be hurt but rather, who will be least hurt?” Even the best day trading course has little to say about a dilemma the likes of our own; the going wisdom is still to follow the trend, keep your eyes on the ball and watch the momentum!
Apple for one seems to be somewhat impervious, the NY Times reporting that Trump had told Tim Cook that he’ll spare Apple’s suppliers. By the same token, we have no inkling into whether or not these reports are true, and even if they are, what would prevent another Trump about-face or change of course? Ford (F), has taken a hit, China delaying shipments. Walmart (WMT) as mentioned could be very very badly hurt with a huge number of its products coming from China; a visit to any retail store will make that evidently clear.
Barron’s, though, has written that Walmart and Costco (COST) are the companies best positioned to survive a trade war given their supply chain flexibility: “Retailers with global sourcing, effective tax and trade management processes and access to multiple markets could come out of a trade war relatively well off. That, according to new research, could mean Costco Wholesale and Walmart are best-postponed.” Some of the strengths noted included “global sourcing capabilities, sourcing teams who are adept at managing transfer pricing to limit tariffs, access to multiple markets, and a strong position against competitors with the same capabilities.”
Market Summary: The Russell recorded a new high, the Dow falling for its 5th straight day, the S&P 500 also slipping slightly. The NASDAQ ended flat for all intents and purposes.
Live trading today will certainly focus on the continued twists and turns in the ongoing wrangling between the U.S. and its major trade partners, primarily China.
Hot Stocks: AMC, TELL, FMC, MAT, BIIB
Have a great trading day!
Today’s Picks – Day Trading!