4 Doomsday Tips (Just in Case) — Plus, 5 Must Knows for Monday, June 3rd
Yes, on Friday I did announce that I’m changing my opinion on the future of this bull market.
There are just too many risks in the stock market right now. (I’ll get to those in a moment.)
But let me be clear!
Now is not the time to start panicking. In fact, now is the time to get your “game plan” in place in case the market does sell off.
And that’s exactly what I want to share with you today…
Here’s What We Need to Watch Out For…
Unfortunately, over the last several weeks the trade war has escalated considerably.
After it once seemed like a deal between the U.S. and China was just days away, we’re now in a situation where no negotiations are currently scheduled and the White House is threatening another 25% tariff on an additional $300 billion of imports.
And there’s a similar situation brewing with our neighbors to the south…
Last week, President Trump threatened tariffs of 5% — rising to 25% by October — on all Mexican imports unless the country takes action to halt the flow of migrants into the U.S.
Combined, the tariffs on China and Mexico impact a huge portion of U.S. multinational companies — the same companies we talk about here at The Daily Edge!
That’s why I’m urging you to protect your hard-earned money. And I’ve got 4 ways to do it…
Your Game Plan to Prepare for the Worst
Own Companies that Make Money in All Environments — During uncertain times like this, it’s important to own stock in businesses that won’t slow down during a pullback. These are called non-cyclical companies, and they include sectors like healthcare, consumer staples and utilities.
Just think about it, people aren’t going to stop buying medicine because Trump added another tariff on U.S. imports. And they surely won’t be forgoing AC this summer or consumer staples like food, soap and toothpaste either.
Avoid Expensive Stocks — How do you know if a stock is expensive? The most common way to tell is by looking at its price to earnings ratio (PE ratio). We’ve talked about this metric a lot recently.
In short, PE ratios are a lot like the price per pound labels you see at grocery stores. The lower the PE ratio, the cheaper the stock.
Stick to Domestic Companies — With the majority of today’s uncertainty surrounding trade tensions, it’s important to allocate your hard-earned money away from companies that do business with China or Mexico.
This means looking more toward steady stocks that operate domestically. Utilities fit this description.
Have Cash Ready — If the market does pull back, you’ll have the opportunity to buy quality stocks at cheap prices. That’s why it’s important to plan ahead now, so that if the time does come, you’ll have cash ready to deploy.
Bottom line: although the U.S. economy is still strong, the mounting uncertainties surrounding trade pose too high of a risk in the short term.
That’s why I’m recommending all readers protect their hard-earned money with these 4 tips.
Now let’s get to to the 5 “Must Knows” to start your week…
5 “Must Knows” for Monday, June 3rd
Earnings on Deck — There are plenty of earnings reports on deck this week. On Tuesday, Tiffany & Co., Cracker Barrel, Salesforce, GameStop, Ambarella and Lands’ End report earnings.
On Wednesday, American Eagle Outfitters, Cloudera, Campbell Soup Company, Stitch Fix, Five Below and MongoDB report earnings.
And on Thursday, Ciena, Guess, Smuckers, DocuSign, Zoom, Beyond Meat, Michaels, Signet Jewelers and Zumiez report earnings.
Here’s What I’m Watching — With so many companies reporting earnings this week, there are bound to be valuable insights into not only these individual companies, but their industries and the economy as a whole. Here’s what I’ll be watching.
Did the “tale of two retailers” continue over the last three months, where brand names like American Eagle, Zumiez, and Guess Inc. remain stagnant while discount stores like Five Below thrive?
Cloudera is a data management company that could play a vital role in self-driving vehicle adoption, but the company just can’t seem to capitalize. Is that changing? And if not, will it ever?
Trump Calls Out AT&T — “I believe that if people stoped [sic] using or subscribing to @ATT, they would be forced to make big changes at @CNN, which is dying in the ratings anyway.” Get ready to see AT&T in the headlines after President Trump tweeted this thinly veiled threat this morning. As I write this, investors are not selling on the news like they once did.
Trade Talks to Resume — The on again, off again saga of these trade talks continues. Over the weekend, both China and Mexico signaled willingness to negotiate with the White House over escalating trade issues. “We’re willing to adopt a cooperative approach to find a solution,” said Chinese Vice Commerce Secretary Shouwen on Sunday. While Mexico, meanwhile, rushed a delegation to the U.S. to begin immigration talks.
Wealth Effect Check Up — The first Friday of the month is just a few days away. That means the U.S. Labor Department is scheduled to release its jobs report from the previous month. Right now, economists are currently expecting that the economy added 180,000 jobs in April, down from the 263,000 jobs added in April.
Have a great week!