This Is the Song That Never Ends
Yes, it goes on and on, my friend.
Some countries started singing it, not knowing what it was. And they’ll continue singing it forever, just because…
Boy howdy … we had one heck of a weekend. It started off with President Trump’s backlash against increased tariffs from China and ended with a pair of phone calls from Chinese trade representatives.
After the market closed on Friday, Trump detailed his retaliation on boosted China tariffs on U.S. imports. The president said he would lift current tariffs on $250 billion of Chinese products from 25% to 30% on October 1. The remaining 10% tariffs on $300 billion in Chinese goods would rise to 15% on September 1.
Trump also declared that he could force U.S. companies to leave China entirely, citing the Emergency Economic Powers Act of 1977. The president then appeared to express regret over his heated rhetoric early on Sunday, but clarified that his only regret was not lifting tariffs further.
Futures on the Dow plunged more than 300 points late Sunday, as Wall Street played catch-up to the whirlwind of tit-for-tat trade “negotiations.”
Now, the market is rallying. Wait … rallying?
Yes. This morning, President Trump said that the U.S. received two “very good calls” from Beijing indicating that they were ready to “get back to the table.”
And the song goes on…
The funny thing about those very good calls to the U.S. is that China’s foreign ministry says it isn’t aware of them.
So, to recap, we have two substantiated escalations in the U.S.-China trade war — tariff hikes from both the U.S. and China — and one unsubstantiated claim — aka two phone calls — that the process is moving forward.
What’s more, China was already coming back to the table in September. A Chinese trade delegation was scheduled to arrive next month even after China’s tariff announcement on Friday.
And yet, the market is rallying. It’s the Pavlov’s market scenario all over again.
The White House says a trade deal is practically done … the market rallies.
The very next day, the White House levies 10% tariffs on Chinese goods … the market plunges.
Ring the bell once — rally. Ring the bell twice — sell-off.
Once again, there’s really only one thing you can do, and that’s idiot-proof your portfolio.
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The Good: To Chicken and Beyond
Attention vegetarians: No longer will you be left out in the cold when it comes to gobbling down delicious nuggets of chicken!
Beyond Meat Inc. (Nasdaq: BYND) has come to your rescue. The meat-alternative (I always cringe a bit when typing that) company announced a partnership with KFC to start selling Beyond Chicken nuggets this week.
The restaurant formerly known as Kentucky Fried Chicken will roll out the chicken-free chicken on August 27 in Atlanta, Georgia.
Customers will be able to choose between nuggets or boneless wings (they’re meatless, so they’d better be boneless!) with Nashville Hot, Buffalo or Honey BBQ sauce — spicy!
BYND shares have been in a nosedive since peaking in mid-July, but today’s news is helping to boost the shares. Yum! Brands Inc. (NYSE: YUM), KFC’s parent company, is also gaining ground on the news.
The Bad: Minor Shrinkage
What’s that? It’s just the cold water? I’m not buying it.
The competition that analysts have warned about for years is finally here, and Netflix Inc. (Nasdaq: NFLX) is feeling the pressure. According to eMarketer, Amazon Prime Video and Hulu are starting to cut into Netflix’s market share.
Riding the strength of shows such as Stranger Things and Orange Is the New Black, Netflix is expected to remain the top streaming service worldwide. However, its market share has steadily dropped from 90% back in 2014 to 87% this year. Both Prime Video and Hulu are taking up the slack and luring viewers away from the big red behemoth.
And then there’s The Walt Disney Co. (NYSE: DIS). According to eMarketer: “While there is no true ‘Netflix killer’ on the market, Disney’s upcoming bundle with Disney+, Hulu and ESPN+ probably comes closest.”
The launch of Disney+ in November will be the true test of how loyal Netflix subscribers are. Will it be Netflix that takes the hit, or Amazon Prime Video?
The Ugly: Hasbro on Death Row
In what has to be one of the most bizarre acquisitions of the year, toymaker Hasbro Inc. (Nasdaq: HAS) is now the proud owner of Death Row Records.
If you’re not up to speed, Death Row Records is famous for artists such as Tupac Shakur, Snoop Dogg and Dr. Dre.
These storied artists are now under the same umbrella as My Little Pony, Peppa Pig and Mr. Potato Head.
Hasbro was clearly after the Peppa Pig brand when it bought Canadian firm Entertainment One Ltd. (OTC: ENTMF). We can count Death Row as an odd bonus.
HAS shares plunged more than 9% on Friday following news of the acquisition, but the shares are recovering today.
I wish this was a tongue-in-cheek graphic. But it’s surprisingly accurate for what we’ve seen since the U.S.-China trade war began.
The cycle usually takes a couple of weeks to play out. However, we flew through the “trade war fears” and “hints at resolution” steps over the weekend. I’ve conveniently marked where we are currently in the cycle. I would like to tell you that the “no progress is made” step won’t occur until the Chinese delegation comes to Washington, D.C., in September … but Twitter exists.
Do you have any comments on the U.S.-China trade war? Thoughts on Wall Street’s whipsawing activity? Feel free to let me know, or just vent, by dropping me a line at GreatStuffToday@banyanhill.com.
Great Stuff: There’s Still Time to Get High
Cannabis stocks haven’t exactly blown the doors off the market lately.
Canopy Growth Corp. (NYSE: CGC), Aurora Cannabis Inc. (NYSE: ACB), Tilray Inc. (Nasdaq: TLRY) … all have struggled to find positive ground.
It’s led many investors to believe that the best days of marijuana investing are over. That they’ve somehow missed the boat.
That sentiment couldn’t be further from the truth.
We’re still in the early days of cannabis investing. And while you may lament not buying these companies when they were dollar stocks, you can still get in on the big gains yet to come.
Banyan Hill expert Matt Badiali recently compared cannabis companies to a similar industry: energy drinks. They’re not as dissimilar as you might expect.
“My point is, cannabis is a brand-new market. Remember, it has only been legal in Canada since October 2018 — that’s less than a year. These stocks are just building out sales and brands. There is a long way to go,” Matt said in his latest article, “A Critical Moment In Cannabis Stocks — Why You Need to Get in Now.”
To get the best advice on investing in the accelerating cannabis market — including five pot stocks you must own before more states legalize — click here now!
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing