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I've been waiting for a day like Wednesday for a few weeks. The "trade war" escalated a bit further, with China retaliating, and the S&P 500 opened 1.5% lower (via SPY). Then it reversed just as quickly because we had finally reached a critical market juncture: absurdity.
That's when the size of the market correction dwarfs the size of the tariffs' impact by nearly an order of magnitude. Indeed, we're talking $2-$4 trillion vs a few hundred billion.
Most calculating investors just want it to be over with so we can focus on something more interesting. Like earnings season. But that doesn't really get rolling for a few more weeks to the point where we have enough corporate results and guidance that we know the outlook remains robust -- or that we should pack up our tents on Mt. Bull.
All Eyes on the Health of Growth
All we have right now are the earnings growth estimates of 16%, 17.9%, 19.1%, and 15.6% for Q1, Q2, Q3, and Q4 respectively (Q4 drops a bit sequentially because it has a much harder "comp" than Q3).
As long as that earnings picture remains intact (or better) -- topped-off by +5.3 growth on the top line -- then I remain a buyer of stocks under 18 times those estimates, or all the way up to S&P 2800. If the picture improves, and we shake off the mid-term election angst, 3,000 here we come.
My favorite areas for this growth are Technology and Healthcare -- the innovation sectors. And I just updated my "cheat sheet" of driving forces that should make every investor develop a long-term strategy for capitalizing on Healthcare innovation and profits...
The Permian Shale, which is spread over roughly 75,000 square miles of western Texas and southeastern New Mexico, is believed to hold enough oil to feed all the domestic refineries for 12 years. Read More »
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Cooker here for Matras the rest of the week...
