Goodbye, Summer. Let’s Make Some Money
Well it’s official…
Fall is in the air, the kids are back in school, and football season is underway.
It’s also the time when a lot of Wall Street money managers make their way back from summer vacations and start to really dive into the market’s latest investment opportunities.
I mention this because although technology allows these money managers to connect from nearly anywhere, there’s something about the first few days of September. It just feels like professional investors are ready to roll up their sleeves and get to work.
And as they get back to their desks after “summering” in the Hamptons, there are plenty of big issues that they need to catch up on.
I’m talking about the trade war, the fall in global interest rates, the unrest in Hong Kong and the strength of the U.S. economy. It’s definitely a time that these money managers need to be aware of what’s going on.
So today, I’d like to do catch you up on these important topics as well. Read on below for a quick recap on each, and my thoughts on what could happen next…
Here’s the Latest on Our Stock Market
First and foremost, I think it’s important that I start out by reiterating that our stock market is currently near all-time highs.
Certainly, if you pay attention to mainstream media outlets, you’ll be led to believe that the current market environment is much drearier.
But in reality it’s not. Most of the risks in today’s market — which I’ll get to in a moment — are rightfully being overlooked by investors in favor of the many positive aspects that don’t get nearly as much attention.
So with that being said, let’s get to the first risk.
Here’s the Latest on China-U.S. Relations
Last week, the extradition bill that has triggered so much unrest in Hong Kong was retracted. This should at least help stabilize the political climate in Hong Kong.
But keep in mind, that this concession meets just one of five demands from the protesters. And Hong Kong is set to be absorbed as a full part of the People’s Republic of China over time.
So we’ll have to wait to see how much of a difference this makes for the unrest in China.
I mention this because the Hong Kong protests are loosely tied to the ongoing trade war between the U.S. and China.
Culturally, China is a very proud country and it’s very rare that Chinese officials will show weakness in any way. So as Wall Street money managers start to analyze what this concession from China means, just know that it will likely impact their opinion on the future of the trade war as well.
The big questions are: Will China also make concessions to the U.S. and call off the tit-for-tat tariff escalation? Or is one major concession all that China can offer right now and still save face with their own citizens?
Time will tell, but I don’t necessarily expect a major breakthrough in the trade war any time soon.
Here’s the Latest on Negative Interest Rates
There is now $17 trillion in bond investments around the world offering negative rates. That’s just an insane reflection on the crazy economic state that we’re seeing in other parts of the world.
Keep in mind, while we don’t have negative rates here in the U.S. yet.
But it’s important to see that a trend is forming, and it would be prudent to adjust your portfolio accordingly.
The lower (and farther below zero) interest rates go, the more demand there is for gold. So although gold has already rallied about 20% this year, its price could easily go higher as this falling interest rate trend continues.
Here’s the Latest on the U.S. Consumer
Like I said, the news about today’s market environment isn’t all dreary. One of the biggest bright spots is the state of the U.S. consumer.
Just a few days ago, the U.S. Commerce Department released the July household spending numbers which showed that household spending ticked up once again — just the latest positive increase in a string of good reports.
The reason for this increased consumer spending is the strength of the U.S. job and housing markets. As consumers continue to accumulate wealth, they’re more comfortable spending money and driving our economy forward.
This is one of the biggest factors to watch if you’re invested in the stock market right now. And as of today, it points to stocks continuing to move higher.
I hope this quick recap helps you get up to speed on the state of today’s markets. Stick with The Daily Edge as we continue following the action.
But first, let’s get to the other bits of “Must Know” info to start your week…
Must Knows for Monday, September 9th
Earnings on Deck — There aren’t many earnings reports due out this week. But the ones that are expected should give us plenty of insights into not only the individual companies, but their industries and the economy as a whole.
On Tuesday, look for Restoration Hardware, GameStop and Dave & Busters to report earnings.
And on Thursday, look for Kroger, Broadcom and Oracle to report earnings.
Here’s What to Watch — Restoration Hardware and Dave & Busters are great companies to look at to get a sense of consumer spending. The better their earnings reports look, the more confident you should be in the state of the U.S. economy.
GameStop is the recent target of Michael Burry, the hedge fund manager portrayed by Christian Bale in the movie The Big Short. Let’s pay attention to GameStop’s conference call when they discuss Burry’s position.
And Kroger reports earnings on Thursday. Let’s check in to see if Amazon’s acquisition of Whole Foods is really crippling the grocer, or if the stock’s freefall has been overblown.
AT&T Soars — Shares of the telecom giant soared Monday morning after activist investor Elliott Management announced a “value creation” plan that could lift AT&T’s stock 65%.
Elliott, which indirectly manages $3.2 billion worth of AT&T stock — about 1.2% of AT&T’s $264.9 billion in market capitalization — said the stock is “deeply undervalued,” as the company’s “world-class collection of assets” are priced at historically discounted levels.
Apple Event September 10th at 1 PM Eastern — Tomorrow, Apple Inc. is scheduled to release the new versions of its iPhone and Apple Watch, as well as information regarding its all-important new “services” division.
Apple investors should watch for technological breakthroughs that could increase demand, as well as price increases that could boost margins.
That’s all for me today. Have a great week and stick with The Daily Edge for your up-to-date market knowledge!
Here’s to growing and protecting your wealth!