(New York)

The stock market is rich, with prices sky high and valuations closing in on their historical peak. The conundrum, though, is that while there is a lot risk, there may yet still be a long way for the market to rise before falling. How to play it? The answer is the options market. Because the incredibly long period of low volatility, options prices are very low, which means if one uses a solid options strategy, there is a potentially inexpensive and effective way to play the market.

FINSUM: This seems like a smart way to play further upside, while keeping costs down, especially if you are already long stocks to a major degree and want to take some chips off the table.

(Washington)

While all the focus is on a possible trade war between NAFTA countries, and possibly, with China, there is another area where President Trump is trying to counter the rising power of Beijing. That area is in technological development. New reports out of the White House indicate that the president and his team consider the development of a 5G mobile data network of critical importance to combating China’s investments in the same area. The White House considers its development so crucial that it likened the need to the US’ effort to build the interstate highway system in the mid-20th century.

FINSUM: The scope of why the administration feels this way is not immediately clear, but what is clear is that America’s telecom industry is poorly suited to developing 5G because of its oligopolistic structure and lack of domestic manufacturers.

(New York)

Any stock investor, especially those who have been investing over the last twenty years, has noticed that there is a dearth publicly traded companies these days. Years of mergers and acquisitions, combined with a lack of IPOs, means there are many less publicly traded companies these days. Now, in what seems a strong move to change that, the SEC is considering making a new rule that would bar shareholders from suing companies, with all claims moving to arbitration instead. Doing so would eliminate one of the headaches of going public for companies, and would move the relationship between shareholders and companies to something more akin to clients and advisors, where arbitration is the norm.

FINSUM: This is an interesting move, but we do not think it is enough to push companies over the edge to IPO. It might also prove poor from a corporate governance perspective.

(San Francisco)

In an eye-opening piece of data, Apple is about to break its own record for profitability. The company is about to report fourth quarter earnings, the first quarter which will include the new iPhone X, and revenue growth is supposed to be in the double digits for the first time in years. Apple is supposed to have sold 81m iPhones, boosting revenue 11%.

FINSUM: So what we like about these forecasts is that (if they come true) they are a profitability record and not a valuation record. They will help reinforce the stock’s price.

(New York)

Goldman Sachs has a taken a lot of hits lately. After the Financial Crisis the bank decided to go against the direction of its rivals and keep its large trading and fixed income businesses robust. The logic was that the market cycle would return and Goldman would mint money as they would have the only major division intact. The short story is that it never happened, as FICC revenues have plummeted. Goldman still sticks to their mindset on trading, which has hurt the stock. The but the truth is that the business is much more diversified than ever before and profits are rising, hitting an almost 11% return on equity in 2017. “If they can do almost an 11% return on equity in a bad year, I’ll take that”, says a major fund manager.

FINSUM: The gloom over Goldman’s weakness in fixed income is helping create a good buying opportunity for what is a thriving bank.