I saw a lot, listened a lot, talked quite a bit and learned a lot in NYC over three days.
I tried to get a pulse on the economy there and on the vibe (can you get a pulse on a vibe?) on Wall Street amongst longs, shorts and analysts.
The fact is that pretty much all of the major factors that I’ve talked about for ten years that have been contributing to the Bubble-Blowing Bull Market that we’ve been riding for the last decade now remain in tact: Very low interest rates (both real and historical), extremely corporate-friendly Republican Democrat Regime policies, an expanding global middle class, Internet/Smartphone/App efficiencies and opportunities, a steady financial system and so on.
The big threat to this economy and its coinciding Bubble-Blowing Bull Market is the escalating Great Trade War. My concern about the potential for The Great Trade War to derail all of this is the first time in the last ten years that warned of possible derailment. That’s not to say that I’m anticipating a crash here. Obviously, as I just outlined all the factors that are likely to keep the Bubble-Blowing Bull Market going.
That said, the semiconductor industry is one of most exposed to China. Last week Texas Instruments provided the latest confirmation that China’s downturn (and the Huawei ban), while impacting demand, isn’t collapsing it. In the last couple weeks, most of the semiconductor companies, including my favorite Taiwan Semiconductor TSM, have talked up the demand cycle.
That said shorting it/buying puts on the SMH (a semiconductor ETF) are a good risk/reward way to get some hedge my long positions in TSM and Nvidia and other tech names — in case the market decides to freak out about China again (and/or if the impact of all the China tension/decline does start to really impact fundamentals in a meaningful way in the next few months). Recall that last week, I shorted some SMH and bought a few more SMH puts after TXN’s report and am holding those steady.
Two notes on big movers from last week: Tesla’s earnings report was fine, fundamentals in tact, etc. That said, I hate seeing the CTO JB Straubel move from executive to advisory role. That bothers me a bit, but I’m still thinking TSLA looks good risk/reward long-term.
T-Mobile popped as it looks like its got the green light to merge with Sprint. There’s no way the 13 states still supposedly suing to keep this deal from going through are going to stop the merger now. I’m sitting tight on my TMUS common and calls for now. If you have big gains in the call options and/or if the exercising the calls would make you too big in TMUS, you might consider trimming down some.
Here are a couple trades I’m making today:
I’m going to trim a little bit of my SNAP.
I’m nibbling a little more TSM.