On the markets:
The markets are dying to go higher.
If we could get some of the trade and tariff stuff out of the way, that would be a major positive for the markets given the overall positive earnings, GDP and consumer spending numbers.
Earnings and other fundamentals are really strong. Companies are healthy, inflation is low, economy is growing. There are going to be tough comparisons going into next year. Second quarter earnings were really solid, and in line with what was expected for the most part.
Bullish on tech, but not soft squishy tech like Facebook and Netflix. More interested in the backbone of Tech like chips and hardware.
Bearish on sectors that are more sensitive to rising rates, in particular Utilities.
Heading into the fourth quarter investors should position their portfolios with some value names. Value stocks has underperformed growth stocks for almost a decade. It is now time to start moving portfolios to take advantage of the coming reversion to the mean.
Micron Technology – Chips are critical for the continued build out in data and memory demand. Micron makes chips that will go into computers that will allow technology like e-commerce, autonomous vehicles, Artificial Intelligence and streaming to advance. These things are all going to require more chips. The stock is relatively cheap and is trading at a discount to the overall market. They generate a lot of free cash flow which allows them to do other things. The company is also committed to buying back their stock
Equinix – 70% of all the internet flows through an Equinix server. When you hear Amazon and Google talking about growing their cloud business, they are essentially talking about Equinix. This company provides the hardware for the cloud to exist. This is the largest data center real estate company in the country. The investment case for this company is that the demand for the build-out for data centers is for the long term.
Nordstom’s – I’m a big fan of this specialty retailer. It is a great value play that many have overlooked. Nordstrom’s has a great multi-line approach to retail. They did not over build stores. They have a great loyalty program, in-store and online discounts at Nordstrom’s Rack and this has worked out really well for them. They also generate a lot of free cash flow that will allow them to grow their dividend and buy back stocks
I do not and family does not own any of the 3 names, but the firm does.