Cover story: The biggest worry about the recent stock market drop is that the past eight months or so have been a matter of “pricing up a recession,” and that the market has already peaked—thought the yield curve hasn’t inverted and leading indicators such as jobless claims and credit spreads have held up.
Features: 1) Selling stocks and bonds while holding cash and assets such as gold might help protect a portfolio in today’s market, but investors shouldn’t let turbulence derail their long-term asset allocations, which may only need tweaking; 2) The recent market rout could present an opportunity for investors to buy some of the most beaten-down cyclical names, which could perform well in a rising rate environment, says Savita Subramanian of BAC/Merrill Lynch; 3) Cautious on DVMT: Michael Dell’s $21.7B offer for the tracking stock “may be a deal too far”; many holders are upset that Dell wants to buy them out for cash and newly minted Dell stock at a steep discount to the value of VMW.
Tech Trader: “The pressing question coming out of the Nasdaq Composite’s two-day 5.3% selloff is whether anything has fundamentally changed for tech—or was the selloff just a passing moment of fear?” Cautious on NFLX, PYPL: Upcoming earnings reports “will provide early commentary on key developments in Internet, semiconductor, and financial-technology landscapes” for an industry facing fallout from privacy concerns and trade wars.
Trader: The excitement surrounding momentum stocks has faded as the boost from the GOP tax cuts runs off and the economy slows again—though a shift back to momentum may already be starting to happen.
Interview: Nobel Prize-winning economist Joseph Stiglitz discusses bitcoin, the future of the euro, China’s options in the trade war with the U.S., and why globalization is under threat.
Profile: Eli Pars is lead manager of the Calamos Market Neutral Income fund, which was one of the first liquid alternatives available to mutual fund investors wanted access to hedge fund strategies—though Calamos doesn’t use leverage to juice returns (top 10 convertible securities: MU, NOW, WDAY, LGND, BKNG, TAL, AMD, JOBS, SRPT).
European Trader: Positive on Bayer: German healthcare and chemical giant got a temporary reprieve from a huge jury award that held Roundup liable for a plaintiff’s cancer, and there is likely to be more good news for long-term investors.
Emerging Markets: The market’s enthusiasm for Brazilian presidential candidate Jair Bolsonaro stems from the fact that he isn’t a member of the Workers’ Party, whose corruption and profligacy analysts blame for Brazil’s woes.
Commodities: Supplies of natural gas are nearly 18% below the five-year average for this time of year, which could presage elevated, volatile prices as temperatures begin to fall.
Streetwise: Short sellers have produced some of the most diligent research on TSLA, and as negative information gets into the market it blends with bullish information and helps the stock price move towards its real worth.