I am sure I am not the only one who is really skeptical about this “trade deal” with China being real. While I am sure the two parties agreed on some items, we are so far from a real deal, signed, sealed and delivered. This doesn’t even sound like an agreement in principle since the Chinese have a different recollection and their state run news service tells their own story. This saga is far from over.
The stock market was very strong on Friday in anticipation of a deal being struck. Almost too strong. I tweeted that I wished a deal would not have been announced until after the close so there could be a possible selling opportunity on a higher Monday opening. The Trump administration had other ideas. The Dow Industrials dropped 200+ points on the announcement to close near the lows for the day. That’s not exactly comforting and my gut says we could see some short-term weakness to give back all of those gains.
I still really, really like the action in semis, something I have discussed here over and over and over for most of 2019. There are a lot of things people can say about my opinion, analysis and forecasts, but being unclear on semis isn’t one of them. Nor is my call for Dow 28,000 this quarter. I may not get them all right, but I never, ever run or hide from any flops.
Finally, I am keeping a close eye on REITs as they seem to be the most constructive of the defensive sectors. As you know, I have been talking about a “barbell” approach for the past few quarters with semis, utilities, staples and REITs. Own the aggressive and conservative sectors. Leave the rest alone.
