Today’s G-20 rally is no surprise.
There was no way President Donald Trump was coming out of the G-20 meeting without a win — one way or another.
And he certainly got a win. I’m not talking about the pause in the trade war — that was a given. It fits Trump’s M.O. to a T: ratchet up pressure to unbelievable levels, then make concessions when your opponent is feeling the heat.
It’s the “let me save you from what I’m going to do to you if you don’t let me save you” tactic.
So, backing down from billions in new tariffs was par for the course. Removing Huawei from the blacklist? That was a shocker.
U.S. tech companies can once again buy from and sell to China’s biggest technology firm, and semiconductor stocks are loving it. The iShares PHLX Semiconductor ETF (Nasdaq: SOXX) is up more than 3% on the news, as a raft of chip stocks surges upward.
As surprising as the Huawei about-face was, it’s not the biggest surprise rally to come out of the trade war truce.
Oil prices also soared on news that Trump and Chinese President Xi Jinping hit the pause button on tariffs. Crude futures briefly topped $60 per barrel on the news, providing a shock rally for the oil services sector.
Granted, oil had additional help from OPEC’s extended production cuts. With demand seen as increasing following the Trump trade truce, these extended cuts are juicing oil prices in a big way.
The Takeaway:
I love it when a plan comes together. If you’re following Banyan Hill expert Matt Badiali, you were already prepared for this surprise rally.
Back on June 17, Matt called for a rally in the oil services sector: “The world is going to need these giant oil service companies again soon. When that happens, investors who had the foresight to own service stocks will make a killing.”
Since Matt made that call, the VanEck Vectors Oil Services ETF (NYSE: OIH) is up more than 12%. Nice one, Matt!
If you’d like more of Matt’s stellar advice delivered straight to your inbox, click here.
Good: An Appealing Development
No more bobbing for Apple Inc. (Nasdaq: AAPL)! With the trade war on pause, Apple stock is full of vim and vigor.
AAPL shares are up more than 2.5% on the news, and rightly so.
Apple gets about 20% of its revenue from China, and it has a massive supply chain in the country that would be hard to move elsewhere.
Furthermore, the easing of restrictions on Huawei means that China is less likely to punish Apple with reprisal tariffs.
As long as peace is maintained, Apple stock should continue to rise.
Better: Pass the Chips
No need for dip today — semiconductors are full of flavor (and delicious gains!) all on their own.
The pause in the trade war has had an immediate impact on Micron Technology Inc. (Nasdaq: MU) and Qualcomm Inc. (Nasdaq: QCOM), with both rising sharply on the Huawei news.
Meanwhile, Advanced Micro Devices Inc. (Nasdaq: AMD) and Nvidia Corp. (Nasdaq: NVDA) received an extra boost to sentiment from Wedbush’s Matthew Bryson. Bryson started both AMD and NVDA at outperform.
Bryson believes that AMD will continue to win market share from Intel Corp. (Nasdaq: INTC) in PC and server chips, while Nvidia gained a strong position in networking by acquiring Mellanox.
With chips back in rally mode, this is one tasty tech boom you don’t want to miss out on! Like the idea of triple-digit tech gains? Click here to find out how to make them.
Best: The Best Around
It’s doesn’t have the biggest gain on the day. It hasn’t received much fanfare over the U.S.-China trade war pause. It’s barely making any financial headlines. But, Alibaba Group Holding Ltd. (NYSE: BABA) is the best around following the G-20 developments.
The pause in the trade war once again opens up U.S. possibilities for Alibaba, easing access to the biggest economy on the planet. As I’ve said before, Alibaba doesn’t need the U.S. for growth — just look at the expansion the company has going on in Russia.
But even race cars love a little nitro now and then. And the U.S. market could give Alibaba a major speed boost.
Trade normalization is some ways off, but this weekend’s agreement is a step in the right direction for Alibaba. If you’re looking for a big winner down the road from normalized trade talks, BABA shares are where it’s at.
If you had concerns about Amazon.com Inc. (Nasdaq: AMZN) dropping FedEx Corp. (NYSE: FDX) as a package carrier … worry no more.
According to Rakuten Intelligence: “Amazon is about 40% of all e-commerce. If they’re handling half of their own shipments, that’s 20% of the whole market. That’s huge.”
Huge indeed. If you’ve seen the Disney film Wall-E, you can see that Amazon is quickly becoming Buy n Large.
Great Stuff Rant: Siriusly?
I haven’t had a good rant in a while, but thanks to Sirius XM Holdings Inc. (Nasdaq: SIRI) … I have a good one today.
I recently bought a new car. Well, it was “new” to me, and it was a van. The car-buying experience from CarMax Inc. (NYSE: KMX) was just as wonderful as the stock … but I digress.
Like most new cars, mine came with a complimentary subscription to Sirius XM. It wasn’t my first time with satellite radio. Sirius and I have a history. I have a love/hate relationship with the company.
On the one hand, its service is leagues above regular radio: no commercials (mostly) and a variety of easily accessible channels that are nationally available.
On the other hand, the service is way overpriced in today’s streaming market, and there’s no online subscription management.
Let’s talk about value.
Sirius costs $10.99 per month for its “Mostly Music” plan with 80-plus channels. Its “Select” plan is $15.99 per month for 140-plus channels. What’s more, these subscriptions are tied to your satellite radio unless you pay an extra $5 for streaming access.
How is this business model still a thing in 2019?
I like your service, Sirius, but you’re crazy if you think it’s worth $15 or even $10 a month for device-limited access in the age of smartphones and streaming music.
If I wanted ads, I could save money and go with free access to Spotify (NYSE: SPOT) or even Pandora.
If I wanted to pay $15 a month, I have Apple Music, Google Play and Amazon Music. And these services aren’t tied to a specific radio.
Every. Time.
That’s about half an hour of my time wasted with threatening to cancel and getting passed to retention every time I call in.
It’s not worth it.
And if Sirius decides you’ve gotten too many deals, it’ll stop working with you altogether.
Here’s a tip, Sirius … either set your bottom-tier pricing to the promo rate permanently or allow customers to get those deals online.
It’s 2019. The internet is a thing. It’s a very big deal.
There’s no reason for me to have to talk to anyone to get your best pricing offer.
And you might want to get on the ball now. Once SpaceX’s Starlink comes online, your current business model is in serious trouble.
Until next time, good trading!
Regards,
Joseph Hargett
Great Stuff Managing Editor, Banyan Hill Publishing