A ho-hum week for stocks could end with a pop, thanks to hopes by investors on the trade front.
It could be the mere idea of a planned get together between POTUS and China’s top negotiator Friday that’s driving global equities higher, while talk about details of such a deal trickle out. To be sure, there’s plenty standing in the way of an amazing deal.
Global equities are moving on hopes surrounding Friday’s meeting between POTUS and China’s top negotiator Vice Premier Lieu and moving parts of a deal trickle out . (see Buzz).
There’s “lots of room underneath us” if that meeting disappoints, says Cracked Market’s Jani Ziedins, who also notes plenty of “desperate buyers and reluctant sellers” helping to put a floor under this market right now.
“There is profit potential for the most nimble traders to squeeze the last few nickels and dimes out of this rally, but anyone buying for the long-term shouldn’t feel pressured to chase because there is nothing special about these prices,” says Ziedins.
Buying the December dip https://t.co/aEqAupogHx
— Scheplick (@scheplick) February 21, 2019
That brings us to our call of the day from UBS’s global chief investment officer, Mark Haefele, who says while he remains fans of U.S. equities, he is also taking out some insurance against downward moves via S&P 500 puts, an option that gives owners the right to sell at an agreed price on or before a particular date.
Haefele is not so sure a trade deal is going to bring stocks back to the highs seen before the December crash. “I think to move up beyond the highs we saw in the fall it would have to be a really suprising deal that is really longer lasting to really change things.,” he told Bloomberg, in an interview.
He says investors should protect themselves in an environment where volatility has picked up. They also need to guard against policy mistakes, as he doesn’t think the market has “wrapped its head around” the idea of a slightly more hawkish Federal Reserve by year’s end.
As the Cboe Options Exchange points out on its website, put options are a simple bearish strategy that doesn’t require a large cash commitment. Retail investors can also make bets on exchange-traded funds that track indexes and sectors, such as the WisdomTree Cboe S&P 500 PutWrite Strategy Fund or a put on the Nasdaq-100 tracker Invesco QQQ ETF QQQ, -0.37% . But do your homework, obviously. More info here and here.
Last word goes to Michael Arone, chief investment strategist at State Street Global Advisors, who also preaching caution to clients, saying even if everything goes the way of investors this year — dovish Fed, a trade deal — stocks can’t keep up this space.
“In fact, at today’s growth rate, the S&P 500 index would reach 5,200 by year-end — more than double where it started 2019. That’s highly unlikely, said Arone.
The market
Dow YMH9, +0.49% , S&P 500 ESH9, +0.41% and Nasdaq NQH9, +0.57% futures are pointing to an upbeat day, after Thursday’s session that saw the Nasdaq COMP, -0.39% snap an eight-session winning streak, and the Dow DJIA, -0.40% and S&P 500 SPX, -0.35% also drop.
The dollar DXY, +0.08% is flat, gold US:GCU8 is dipping, and crude US:CLU8 is higher.
Europe stocks SXXP, +0.30% are also perkier, while Asia stocks brushed off a weaker start, to see a nearly 2% gain for China SHCOMP, +1.91% stocks.
The chart
Our chart of the day zeroes in on some major shareholder pain for the company that gave us cheese-powder-dinner in a box.
Kraft Heinz KHC, -0.17% shares are headed for a record low after not only disappointing with results and its forecast, but chopping its dividend and divulging an SEC probe. And analysts downgrades are reportedly already trickling in.
“Kraft Heinz = Enron 2.0”
Best quote of the day@HenryKurtzweil
— cha boi (@poop100pounds) February 21, 2019
The buzz
Also getting hammered is Stamps.com STMP, -2.00% on news it will lose its exclusive deal with the U.S. Postal Service, severely denting its financial performance. And Dropbox DBX, +0.39% is tanking after reporting margins below expectations.
There was better news from Roku ROKU, -4.03% , as the streaming company posted higher revenue and gave an upbeat performance. Baidu BIDU, +0.37% posted higher revenue, but profit fell 50%.
Over in Europe, there’s talk of massive job losses for SocGen GLE, +1.92% on a report the company wants to ease pressure from regulation costs.
With the tariff truce deadline just a week away, there’s some chatter about several agreements to be included in a bigger trade deal, such as settling a spat between chip makers Micron MU, -1.61% and Fujian Jinhua, and allowing Mastercard MA, -0.81% and Visa V, -0.50% into the country after a 20-year wait, says the FT, citing sources.
There are only two women at the table for US-China trade talks. They are the interpreters. pic.twitter.com/FKL2gUmEgP
— Kayla Tausche (@kaylatausche) February 21, 2019
It’s a big weekend for financial nerds as Berkshire Hathaway BRK.A, -0.51% BRK.B, -0.40% on Saturday releases its annual shareholder letter, which offers a window into the thinking of chairman and legendary investor Warren Buffett.
Read: The number that shows what Warren Buffett really thinks of Berkshire stock
Read: 9 stocks with dividend yields over 4% in a sector that often beats the broader market
The economy
No data, but plenty of Fed speakers on Friday, with New York Fed President John Williams, Fed Vice Chairman Richard Clarida, Fed Governor Randal Quarles, Philadelphia Fed President Patrick Harker, St, Louis Fed President James Bullard, San Francisco Fed President Mary Daly all making appearances at the Chicago Booth monetary forum.
The stat
Alfonso Cuarón/Netflix Inc.
Yalitza Aparicio as Cleo in Alfonso Cuarón’s “Roma."
32.6% — That’s how good it looks for Netflix’s NFLX, -0.82% “Roma” , the critically acclaimed black-and-white Mexican film, to win the top best-picture award at Sunday’s Oscars, according to The Hollywood Reporter. Not only the film set a record as the first foreign-language film to grab the top honors, but it would mark the first time a streaming service brought home that trophy. Roma has nine other nominations, including best picture and best actress.
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