(Washington)

Donald Trump did something many might not have expected when he met Xi Jinping recently at the G20 conference: he told him he would dial down the criticism of China regarding the demonstrations in Hong Kong in order to get Beijing back to the negotiating table. The offer apparently echoed a previous one he had made to Xi in the week leading up to the conference. The plan worked and China has agreed to resume trade talks.

FINSUM: While many may disagree with the concession to China, we think this shows one thing very clearly: Trump does not want to let the trade war derail the US economy or markets and will likely do whatever is in his power to keep them afloat.

(New York)

The market may be way up this year, but there are still some great values out there. The average P/E ratio of the S&P 500 is 16.7, yet 67 of the companies in it trade at below 10, triple the amount of five years ago. Here are a handful of blue chips that are very cheap, but have strong market positions, decent profitability, and nice growth positions: Delta Airlines, Bank of America, Kroger, homebuilder Lennar, and BorgWarner, a maker of car components.

FINSUM: These seem like great picks, but they also appear to be the victims of the long-term decline in value investing. Investors keep thinking value investing will bounce back, but it hasn’t.

(New York)

Greedy is not usually a word associated with anything positive, but in this instance it seems fair. What we mean is that the market’s performance through the first half of this year has been so good, that investors need to double down on stocks. That likely sounds counterintuitive, but history tells us otherwise. When stocks have a good first half (and they surely have), then they are 60% more likely to finish the year strongly as well. On that basis it would make sense for investors to put more money into equities or at least don’t take any chips off the table.

FINSUM: We like this logic. While we do have some bearish reservations about the market right now, we think Trump is going to make sure to not do anything to derail stocks, as doing so might derail his re-election campaign.

(New York)

Ever since the stock market’s then peak in January 2018, bonds and stock have had a very close relationship. Equities have been tracking the performance of the investment grade bond sector. When yields rose late last year, stocks plummeted. The opposite is happening this year, and in that change lays a predicament for shares. Yields have fallen so deeply this year, and equity prices risen so high, that it appears unlikely stocks can rise much further as the benefits of lower rates have already been fully priced in.

FINSUM: While we are generally incredulous of these types of arguments, we cannot help but feel a confluence of circumstances (an earnings recession not the least of them) are coming together in such a way that equities seem likely to have a correction.

(Houston)

Oil prices are going to get some support as OPEC is planning to cut its output. That won’t be welcome news to those at the pump this summer, but it is good for the oil industry. Within the cuts, there will be winners and losers. One big worry is that the cuts won’t even work because there is still too much production from the US and because the primary fears are on the demand side, not the production side. The key is to buy oil stocks that can thrive in a low price environment and deliver improving returns to investors. These include EOG Resources, Suncor, Pioneer Natural Resources, NRG Energy, and Delek.

FINSUM: Oil stocks are deeply out of favor right now, so this is quite a contrarian call, but given the catalyst of OPEC cut they may be a solid bet.