This Week’s Media Distractions & What to Focus on Instead…
As a small token of how thankful I am to you, my 10-Minute Millionaire readers, this week I’ll be releasing my full weekly assessment – which I normally reserve for 10-Minute Millionaire Insiders.
Here are some of the most important headlines to pay attention to this week, as well as a couple that aren’t worth your time…
China and Trade and Democracy, Oh My!
- A double-whammy of positive China trade news: First, Robert O’Brien, the U.S. national security adviser, told a conference on Saturday that a Phase 1 deal has made progress and is still doable this calendar year. Second, the Chinese government released a document on Sunday calling for more protection of intellectual property rights. These items were actually properly covered on most business news outlets. Today’s market lift has 80% to do with this positive news and the rest coming from the Hong Kong elections. Read on for that news…
- Hong Kong held local elections on Sunday after months of increasingly violent protests against its pro-Beijing government. It was an historic day in many ways, with the highest turnout that local Hong Kong elections have ever seen, at 71%. That’s up from 47% in 2015. It was also the first time every seat was contested, forcing the default, pro-Beijing candidates to fight for their seats. With so many more people voting on Sunday versus the 2015 elections, the results have sent a clear signal to the Hong Kong government, and to China. Almost 60% of the vote went to pro-democracy candidates, and 17 out of 18 local councils now have a pro-democracy majority. This resounding success for pro-democracy candidates who are aligned with the protesters has been well received by the markets, as it’s likely to push the mainland authorities to the negotiating table. By giving voice to the protesters, this may also calm down the violence in Hong Kong, boosting the economy. Keep an eye out for more developments out of Hong Kong, despite our media’s total focus on impeachment. That the impeachment proceedings rank as the top story on both the left- and right-leaning mainstream news outlets is not a surprise. That the Hong Kong elections got pushed way down the page is not surprising either, just disappointing.
Here are the earnings stories that are below the surface but will move sectors this week:
Earnings #1: Best Buy Co. Inc. (BBY) reports on Tuesday before the open. Best Buy is really the only game in town anymore for anyone who wants to look and touch electronics before buying them. Their niche in the retail space secure, they’ve remained strong despite a little pullback. But on Tuesday, forget about their earnings for this quarter – it’s the company’s expectations for the holiday season, and how that will be affected by the trade dispute with China that’s important.
Earnings #2: Abercrombie & Fitch Co. (ANF) also reports on Tuesday before markets open. Unlike Best Buy, the mall-centered apparel retailer Abercrombie & Fitch is struggling, and neither holiday sales nor this earnings report is going to help. Expect disappointing earnings figures, below even what the analysts on Wall Street predict.
Earnings #3: Deere & Co. (DE) reports on Wednesday before the open. This farming machinery giant has had a strong year, if volatile because of the trade dispute’s impact on farming. Despite the naysayers, Deere is still a strong long-term play because of the potential for inflation, as well as the general strength of the industrial sector. This earnings report will also be a key opportunity to see how a big, multinational industrial company views the trade war with China and its direction.
Earnings #4: Hewlett Packard Enterprise Co. (HPE) reports today after the close. HP is up this morning after rejecting an offer to be bought by competitor Xerox Holdings Corp. (XRX). Xerox may now look into upping its bid to win over HP’s board and shareholders, much as LVMH just did in order to seal its acquisition of Tiffany & Co. (TIF). That makes this a good time to put a play on HP, as the earnings report is likely to add fuel to further takeover speculations.
Great trading and God bless you,
D.R. Barton, Jr.