Broker Check

OK, Now What?

First and foremost I hope everyone expressed their love and respect for the Mom that did so much to shape their lives. I think most men will admit that Mom did the heavy lifting and should be celebrated in the best possible way.

With that out of the way, we come into this week with a lot of questions about the trade war with China that couldn’t get past the finish line for a successful agreement and will now be contemplated with a more critical eye and allow all skeptics to poise longer dated questions which the global markets have not priced into their stock valuations. It appears from comments coming out of China on Sunday that the communist country is in no hurry to complete an agreement with terms that they believe shows disrespect and now is expected to announce retaliation measures following the Trump administration decision to raise tariffs to 25% from 10% on $200 billion of goods from the current tariff level. The delay and slow walk by the Chinese will be a somewhat different environment and may drive investors to reprice stocks with a lower multiple given a risk aversion scenario.

Stocks are expected to open lower Monday after the trade talk breakdown and investors will be watching for tweets and counter-tweets for signs of next steps with the regard to trade in a week with few market moving economic announcements. It is difficult to access the market risk without more evidence of sectors that will be affected by higher tariff levels but major brokerage firms like J.P. Morgan and Goldman Sachs have already pinned articles talking about lower GDP and a new world order that will be contemplated by institutional investors this week.

Therefore, a go-slow approach makes sense while seeking attractive prices in stocks within sectors with attractive long term growth prospects. I plan to seek better prices for leading stocks in sectors you have heard before like internet security, 5G wireless rollout, artificial intelligence-machine learning, gaming, and medical technology companies with innovative products and services.

Finally, there is a lot of airtime surrounding the Uber (ride sharing) IPO that was priced at $45 Friday morning. I do not think Uber is attractive at this valuation and believe there are some very real issues that will need some time and seasoning to work out. Don’t look for me to pick up Uber shares anytime soon. However, as mentioned previously, I have no hesitation to pick up some of my favorite stocks if prices come in a few dollars.

Have a great week,

Roger N. Steed

May 13, 2019

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