The New Red Scare
Here we are…
Another Thursday, another weekly initial jobless claims report … and another stock market rally?
Some 2.4 million Americans filed for first-time unemployment claims last week. The nine-week total of continuing claims now stands at nearly 39 million.
Despite Main Street’s pain, Wall Street’s song remains the same. The new claim rate is in decline. The economy is reopening. Federal Reserve Chairman Jerome Powell is on the case with his unlimited stimulus utility belt. Everything will be just fine.
If you were paying attention, however, there was a crack in Wall Street’s armor today. Stocks struggled for direction, but it wasn’t jobless claims that made investors blink … it was China.
For the second day in a row, President Donald Trump went on a scathing Twitter rant about China. He called out China’s “disinformation and propaganda” attacks on the U.S. and Europe concerning the coronavirus.
Now, we’ve seen this before from the president, but this time he took aim at Chinese President Xi Jinping: “…It all comes from the top. They could have easily stopped the plague, but they didn’t!”
The president’s bluster would’ve been easy enough for Wall Street to ignore as it has many times before. But U.S. Senate action underscored the anti-China rhetoric.
Specifically, the Senate passed a bill that could block Chinese companies from listing on American exchanges and possibly delist companies already trading there.
The bill, which still needs to pass the House and get President Trump’s signoff, would require overseas companies to follow U.S. standards for audits and other financial regulations. It would also force companies to disclose if they are government owned or controlled.
Honestly, it seems like these rules should’ve already been in place — maybe then we wouldn’t keep hearing about frauds and cooked numbers scandals.
Regardless, Wall Street is starting to worry about the rising anti-China rhetoric and how it may impact the U.S.’s tenuous phase 1 trade deal.
That is the real reason Wall Street faltered today. Not jobless claims. Not the U.S. economy. The threat to U.S.-China trade relations. It’s nice to know Wall Street has its priority straight, right? So, what can we do when the anti-China rhetoric gets rough … and the tough are looking for any and every way to keep playing the investing game? (Psst, I’m talking about you!)
Well, we look toward the companies that will have a part in rebuilding the United States back to full strength — China or no China, trade deal or bust.
Jeff Yastine has the edge here. He recently found a way to play the U.S.’s steer away from China. And in light of today’s events … you and I both know there’s more anti-China pushing to come.
That’s why Jeff is focused on Trump’s “Re-Declaration of American Independence” — his mission to bring manufacturing and growth back to American soil from overseas. He says that “investors who recognize what’s taking place stand to make a fortune in the months ahead.”
Judging from your feedback, it seems that the president isn’t alone when it comes to Chinese concerns.
So, that’s where we’re starting off with today’s Reader Feedback. Your fellow Great Stuff readers have come in from two main fronts in this battle of trading rhetoric…
China’s Changing Chances
OVERWEIGHT CHINA — I have positions PDD mid-20s, BABA 195, BIDU 198 just last week, TENCENT AT 45 … I have also taken small positions in China ETF. Valuations are about 50% cheaper. And let not forget they still have their eye on being the currency of the world. First trying to get a basket currency then go from there.
— Will H.
Where there’s a Will, there’s a … Huawei, perhaps?
Either way, I’d be watching what comes out of the Senate bill. I’d hate for you to not be … Luckin’ out.
China stocks — If the company in question can be considered connected in any way to national defense or health care, then it is probably an unsafe investment. Because the U.S. government will try to prohibit our dependence on it.
— Thomas B.
For reference, time traveling Tom over here sent this email on Tuesday. He must’ve read the future earlier this week … or the tea leaves on the wall, to mix metaphors.
You called it, Thomas. Nothing else to see here, folks. Carry on.
Something to Believe in
My largest interest lies in option trading. I believe in patterns to perform as expected to some extent. This makes Mr. Carr and Mr. Shoop some of my favorites at Banyan Hill. However the market is being run by the stupid money today. With that fact can traditional patterns be relied upon?
I realize the fed is driving much of what is happening in the market today, however you still have to have idiots buying stocks for them to go up. I want to stay away from calls and buy puts so bad and have been burnt by this in the recent past. At the beginning of this mess I made a killing.
— Lance W.
Lance, my man! Thanks for writing in again. I’m glad to hear you’re still keeping the faith with options trading. We’ll help you find a better way to get back in the fray. (And if any of you out there are looking for a strategy with an extra scoop “secret sauce” amid the volatility, listen up!)
I know it can be daunting to jump into the options market when everything in the world seems topsy-turvy, and it’s hard to figure out a direction.
Since you mentioned my home skillet biscuit, Mr. Chad Shoop, I want to point out that he’s a master of finding opportunity in any kind of market. Why? Because with his particular blend of options wizardry, he can both:
- Get solid stocks at bargain-basement prices when they fall.
- Or get paid to hold an option while stocks rise.
See, the right thing to do may not involve buying calls or puts … but instead selling puts. I’m going to keep this short for the moment, so if you don’t know what put-selling is, click right here!
Basically, Chad and his team use this method of “1-Minute Windfalls” as a smarter way to play an undecided market. Over the past seven years, his readers had 199 1-Minute Windfalls — and an astounding 195 were winners.
I’m going to tell you straight up that you can hardly find a better track record than this.
(I promise … you don’t need to be an options expert to be able to follow along with Chad’s strategy. He’s like the … the Bob Ross of options trading.)
Odds and Ends
What are the answers
— Rosa H.
To seek the Holy Grail, of course! Blue. 42. The capital of Assyria was Assur. Istanbul was Constantinople. (Why did Constantinople get the works? That’s nobody’s business but the Turks.)
Am I getting any closer?
Just yanking your chain here, Rosa. What are the questions? We want to join your quest, so write us back!
I’m cleaning out our junk drawers, weeding the bookshelves — experiencing some creative stirrings, finally! So maybe I am feeling better…
— Jennifer P.
We hear you, Jennifer! I don’t know what you’ve been growing in your bookshelves that they need weeding … but we’re glad you’re feeling better. Keep on weeding Great Stuff!
If you wrote in this week and we didn’t get to you, it may because your quarantine romps and raves took a turn for the explicit. (By the way, Gerald C., you keep living your best life over there in [redacted]. You give me hope … even if I can’t air your emails out here. Oh, and Lance W., one more thing … go easy on the cattle prod there would you, buddy? Thanks!)
If you’ve been up to no good or just feel like speaking what’s on your mind, keep writing in! We love hearing from you. GreatStuffToday@BanyanHill.com is where you can reach us.
Until next time, be Great!
Editor, Great Stuff