Semiconductor Stocks Are Hot — Time to Invest
If there’s one thing people are always looking for in times of volatility, it’s ways to profit from that disruption.
And here at Bold Profits, that’s always our goal — to bring you the best ways to ride the market’s dips to huge profits.
While this kind of investing can be hard to see amid the U.S.-China trade discussions, I’m here to tell you about one industry with the potential to bounce back the highest from its recent dip.
In this week’s Market Talk, Amber Lancaster, Ian Dyer and I join our newest Bold Profits analyst, Hudson Cashdan. We discuss:
- Why the best way to benefit from the U.S.-China trade war is investing in semiconductor stocks.
- How the trade discussions are likely to have little impact on the United States gross domestic product.
June 3, 2019
Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly, Ian Dyer and Hudson Cashdan. Each week we look forward to sharing our viewpoints with you, our readers, and giving insight into what’s on our radar. Today’s outlook is for the week of June 3, 2019. I’ll begin by sharing with you what I’m watching and then we’ll hear from Paul, Ian and Hudson.
But first, today we have some exciting news. From now on, Hudson is joining our weekly Market Talk. He comes to us with a wealth of experience. He ran a top 50 ranked hedge fund on Wall Street and we are thrilled that he is now sharing his knowledge with us. Welcome, Hudson.
Today I’ll cover three topics. The first will be economic releases and what’s on the earnings front. The latest performance numbers on the Disruptification Index. Lastly, a behind-the-scenes look at recent economic releases that may have a potential impact on the U.S.-China tariff war and upcoming GDP information.
First, looking forward to this week’s economic releases, here are the most significant. As you can see in this graphic, on Tuesday April’s final numbers on durable goods orders and April’s factory orders will post at 10 a.m. On Wednesday, ADP employment change data for May will post at 8:15 a.m.
On Thursday, the trade balance report for April will post at 8:30 a.m. Finally, on Friday, May’s unemployment rate will release at 8:30 a.m. and the final print for wholesale inventories will post at 10 a.m.
Now where earnings are concerned, check out this list of some of the top U.S. securities reporting earnings this week per Bloomberg. There will be a total of 28 releases. These companies include Campbell Soup and Kraft Heinz.
Now turning to our Disruptification Index, this chart shows it continues to outperform major indices year to date. It’s up 19.7% versus 14% on the Nasdaq and 11.3% on the Dow.
Now for my behind-the-scenes look at recent economic releases. Notwithstanding the ongoing uncertainty with the U.S.-China trade dispute, on Thursday, May 30, U.S. GDP second reading for the first quarter release was better than economists’ expectations. In all, the first quarter economic growth estimate clocked in at 3.1%. Slightly higher than a consensus survey number of 3%.
This reading points to continued maintainable strength in the U.S. economy. If you look at this historical GDP chart, it’s a look back to where GDP was in the fourth quarter of 2008. At that time, it sunk to a low of 8.4%. Since then it has rebounded to 3.1%. It’s important to note that GDP has stayed in positive territory since the second quarter of 2014.
If we zoom in farther into this chart, you’ll see the GDP quarter-over-quarter movement since 2015. As you can see, GDP’s trending direction has stair-stepped higher. Though some analysts may see hints of concern with the latest 3.1% reading, we must keep in mind that just recently at the end of 2018 the final three-month period has a reading of 2.2%. So 3.1% is a marked improvement despite the undercurrents of the U.S.-China trade dispute.
What’s supporting this GDP rebound for the first quarter in 2019? One of the main factors continues to be the low unemployment rate and the overall healthy labor market. With more people employed, consumer household spending continues. This is evidenced by the latest results in the consumer confidence numbers.
The May consumer confidence number posted on Tuesday, May 28, and it rebounded sharply higher from a year-to-date low of 21.7 to 134.1 — a 10.2% increase. Overall, consumer confidence increased to the highest since November 2018 and we are sitting at a 19-year high. Let’s face it, we’re dealing with a trade war right now. What will be the potential impact on GDP in the worst-case scenario?
Here’s where I found some research to support this. According to the Organization for Economic Cooperation and Bloomberg, the greater China region would face the brunt of the tariff impact with the greatest exposure. This comparison map that I mocked up shows that China exports to the U.S. is triple that of U.S. exports to China — 3.85% versus 1.21% respectively.
Per Bloomberg, if no trade truce is realized, the tariff’s impact could shave just 0.2% GDP by mid-2021, with the worst-case decline being just 0.4%. These forecasts help us keep our focus. We’re in this for the long term and we aim to ride any waves of volatility and market rebound that may come our way.
We should continue to be cognizant that disputes do happen, but its potential impact can be manageable and absorbed over the long term.
That’s what I’m watching. Ian, tell us what’s on your radar.
Ian Dyer: Thank you, Amber.
Today I want to go over a possible way we can benefit from the trade war by making a huge profit in the market. As everybody knows, the trade war has been going on for a while but it just recently was ramped up again. It’s really taken its toll on the broader market. The S&P 500 is down about 7% just from the highs it made in late April.
The Nasdaq, which is a way to gauge tech stocks, is down 11%. It’s really taken its toll on the markets overall, but it’s had a bigger impact in some specific areas of the market. The one I want to talk about is semiconductors. Semiconductors are tiny chip products that go into every electronic device we use.
They also happen to be China’s number one import. They spend the most money out of everything they bring into their country on semiconductors. The U.S. is the top producer of semiconductors across the world. Of course, the trade war has had a big effect on these semiconductor companies because there’s a lot of uncertainty and fear.
As a result, the market makers have really dropped down the prices. It’s basically like a markdown that you’d see on any other product where people are unsure if it’s going to hold its value. We believe this move is largely done so big buyers can get in at cheap prices. These huge investment banks are always looking to find deals.
We believe that this is a great investment right now. Another reason we believe that is because China is dependent on us for semiconductors. They are the top robotics manufacturers in the world, they are one of the biggest cell phone manufacturers and they are also up there in computers and various other electronics.
They need these for every single electronic they produce. The biggest cell phone producer in China and the second-biggest in the world is Huawei. Recently, four U.S. semiconductor companies, including Intel, have said they are going to stop shipping and supplying Huawei with semiconductors.
We’re already seeing this starting to have real tolls on the Chinese economy and their production. We believe there is going to be a deal worked out soon. They don’t want their economy to collapse because we stop supplying them with a bunch of things, including semiconductors.
We believe this drop in semiconductors is temporary and it’s a great way to profit from a market rebound. That’s how I’m seeing this trade war play out.
Hudson, over to you.
Hudson Cashdan: Thank you, Ian. Hello to the audience. It’s exciting to be part of this team and this first Market Talk. I spent a lot of my career in asset management in Asia. I ran an Asian emerging markets portion of a global portfolio. I’d go there a lot and Ian is exactly right. Even the numbers he cited are a little overstated because what China is bringing in from the U.S. is actually things they need.
They bring in these products that are high value like Intel chips and other products from Japan and Taiwan. They stack them together in China using cheap labor and export them. It’s counted as an export in the economic numbers. But the percentage of that export that’s value-add from China is very small.
They really need all of these high value-add products. They are trying to move up the chain but they haven’t yet been successful doing that. Companies can relocate their supply to places like Taiwan, who is more than happy to take business away from China. Vietnam is also more than happy to take business from China.
It will take some time, but there’s been a well-flagged shift in policy from this administration for a couple years now. I have to assume the smart companies have been making that shift in advance. I think that’s a great point by Ian. Over to you, Paul.
Paul Mampilly: Thanks, Hudson. Welcome to the team. I’m unbelievably excited to have you join us. To have all your great experience. I know you will be phenomenal addition to Bold Profits Daily on Monday and also when you get started with the IPO service.
I just want to put all this together. We put this Market Talk together because we can sense there is a growing panic even though when we get together and chat we don’t think it computes. The panic is actually greater than the facts. Hudson brought out this analogy when we were chatting. He said China is a country that takes Lego blocks and puts them together into structures.
However, the value is largely making the Lego block, which is what we make in the United States. They put it together because they have cheaper labor and a lot of people. They put it together and ship it back to us. They’re dependent on us by a factor of three, five, seven or 10 times than we are on them.
The impact on our economy is fairly small, which is what Ian and Amber were talking about. You look at semiconductors where they need us. This is a real opportunity to make money. If you go back and look, since 2009 you have seen a series of these kinds of crises. Why have you seen this?
In my judgment, these are manufactured. They are manufactured for a reason. They are manufactured because Wall Street insiders and market makers, how do they get their shares to sell them to you? They get them out of you on the cheap when you panic in these crises. The trade war is just the latest example of it.
Remember the panic around the euro, Brexit, sovereign default, I can’t even remember because there’s been so many of them. At Bold Profits we are always looking to see if we can turn the tables on those guys. Those guys go on CNBC and Fox Business and claim they are speaking for you or what they are saying is in your interest.
However, they speak with a forked tongue. They are really in it for themselves. I told you that. I made video after video in 2018 telling you that. We’ve taken it a step further now. We have come up with a strategy to take advantage of what we understand of the insiders and market makers. The media now transmits this information out as it’s real.
Really, they should be providing balance. Instead they tell you to panic and sell all your shares. We have created a strategy that looks to take advantage of it. Essentially, we’re buying just like the insiders are. You can benefit from it. Like Ian laid out, semiconductors are a great example of this.
Right now, you could put on certain trades knowing those markets are going to come back. You are making the same bet the market insider and market makers are doing. We created an entire strategy that I have always wanted to do. We worked out the dynamics of how the market makers and insiders manipulate both the market and the media to do it.
Who benefits? They do. But we have a strategy now where you can benefit. I believe this is a strategy that’s perfect for this time and all these crises that seem to come and then they are forgotten about. It’s also perfect for single stocks like Tesla, which is also highly manipulated. Or other companies that are in the news that the media dumps on.
Who’s buying that stock? I can tell you, it’s the market makers. Then when it’s marked up later, you’re on the outside looking in and you gave up your stock on the cheap. I wanted to focus on the trade war because I know a lot of you guys are worried about this. I believe, and our team believes, that this is just one of a number of things that have been thrown at people and the markets since 2009.
We’re tired of it. We’ve decided that we want to take things a step further and look to take advantage of it for you. We’ve got this product called Rebound Profit Trader. Ian has some unbelievable trades that will take advantage of this situation. Check into Rebound Profit Trader and look out for Ian’s trades.
That’s all I have. Back to you, Amber.
Amber: Thank you, Paul. Thank you, Ian. Thank you, Hudson. Great insights, gentlemen. Thank you to our readers, listeners and watchers. We appreciate you so much. We want to wish you a wonderful week. Until next time, take care.
Semiconductor Profits Are Ripe for the Taking
Stocks linked to the semiconductor industry are among the hardest hit during the U.S.-China trade war, mostly because semiconductors are China’s No. 1 import from the U.S.
With the U.S. being the top semiconductor producer in the world, it’s clear that the value of this industry comes from what other countries stand to gain by manufacturing with U.S. semiconductors.
And since the market is currently marking down stocks that relate to the semiconductor industry, now is the best time to buy in and ride the industry’s rebound back to the top.
In our brand-new service, Rebound Profit Trader, we use this strategy to buy into stocks that are victims of temporary market dips and reap the benefits of massive rebound gains.
For more info on how you can benefit from these rebounds, just click here.
We also talk about:
- Hudson Cashdan is an experienced hedge fund investor, as well as being well-versed in the Asia markets. He’s confident that the smartest technology companies are not only prepared for these China trade discussions, but have strong backup plans for future growth.
- With so many widespread market panics in the last few years, it begs the question: Are all of these panics backed up by fact? In reality, market makers love to play up government discussions and other outside factors so you sell your shares. But there’s a way to combat the panic so many investors feel.
Editor, Profits Unlimited