(New York)

One of the most famous hedge fund managers just made what seems a bold and countercyclical move. That manager is David Einhorn, and the move is to ditch all tech stocks and buy retail instead. In its most recent quarterly filings, Einhorn’s Greenlight Capital bought shares of Gap, Best Buy, Dollar General, TJX Companies, and Dollar Tree, all while significantly pairing holdings of Apple and Micron Technology.

FINSUM: Retail has had a good run over the last year, but the industry is still facing some major headwinds. We think buying retail now seems like a macro bet that the US economy will stay strong.

(New York)

Dividend stocks are in an odd place right now. The yield curve looks likely to invert as short-term rates have risen and long-term yields continue to fall. This has made the average S&P 500 yield look quite weak relative to bonds. However, there are some really good picks out there. All the stocks listed here have dividends of 2.8% or more, and most have dividend growth rates of 20% or more. These stocks include AbbVie, LyondellBasell Industries, Broadcom, Regions Financial, and Starbucks.

FINSUM: What an interesting mix of companies and industries. These definitely seem worth a look. Starbucks is an interesting case for us.

(New York)

Well it finally happened. Investors had been waiting anxiously to see if the SEC would act over Elon Musk’s highly unusual way of announcing his buyout intentions last week. Musk tweeted out his plans to take the company private at $420 per share. The SEC has been looking into whether this is a violation of disclosure rules or even intentionally misleading information. The big question is whether Musk actually had the “funding secured” as he said, because if not, it could be the basis for a market manipulation charge. At least two lawsuits have been filed against Tesla since the tweet.

FINSUM: So the SEC says companies are allowed to announce material info over social media, so this case is really just about whether the statement was misleading.

(New York)

A lot of investors are worried about the potential for an inverted yield curve, and not just because of what it could mean for markets and the economy. If you are holding long-term bonds that will be yielding less than shorter-term bonds, you are likely going to be incentivized to reshuffle your holdings. Accordingly, Citigroup has come out with a first of its kind product that allows retail investors to fully redeem the principal on their bonds if the yield curve inverts. According to Bloomberg the “30-year constant maturity swap rate can sink as much as 10 basis points below the two-year rate before holders start incurring losses”. Continuing, “The products pay a coupon and return full principal as long as the spread remains greater than that level”.

FINSUM: This seems a bit sophisticated for most retail investors, but it is definitely an interesting product and potentially a good one for hedging.

(New York)

Stocks have done very well over the last month and a half. The correction—one of the longest on record—ended and stocks are back near an all-time high. But where do we go from here? One Wall Street analyst says the S&P 500 is in for major gains, with the index set to rise 12% before the end of the year. The analyst, from Cannacord Genuity, sees surging corporate earnings and rising consumer confidence as key to the market expansion. He sums up his view this way, saying “There is no doubt the unpredictable news backdrop of a potential trade war with China and a rise back to 3 percent in the 10-year U.S. Treasury yield can cause increased volatility, but the fundamental backdrop commands using it as an opportunity to add risk”.

FINSUM: The principal components of the argument seem sound, but we will admit we are a bit concerned about an earnings peak even though history tells us not to be.

(New York)

Some of the best forward looking recession indicators are in the commodities markets. Because they are generally a gauge for demand in the economy, they indicate where things are headed. Well, one of the best—copper—which is utterly ubiquitous across the global economy, is flashing some very worrying signs. Copper has had a very rough summer, but it has been worsening lately despite better share prices. The commodity just hit its lowest price in over a year. China accounts for around 40% of global copper demand. One analyst summarized the situation, saying “Copper is widely considered to be a bellwether for the global economy and so a weak price is cause for concern”.

FINSUM: Copper is partly at the mercy of the big fears in emerging markets, but that does not seem to account for the extremity of the selloff. This does worry us.

(Istanbul)

A lot of investors are worried that the turmoil in Turkey could spark a global financial crisis. In particular, Turkey’s weak position could spread to European banks, letting the situation balloon from there. However, the reality is that such fears are overblown, according to a credit analyst. Europe’s banks are actually in a strong position and can absorb losses from Turkey, so there does not seem to be any contagion to spread. Turkey’s problems are largely self-inflicted and unique as well, so it is hard to see all EMs succumbing to the panic.

FINSUM: From an American investor’s standpoint, the Turkey situation should not be very concerning as it does not seem to have much direct relationship to the US economy or markets. Hence our shares rising while Europe’s are falling.

(New York)

Any investor will already know that Tesla is locked in an interesting and precarious situation. Elon Musk is apparently fixed on taking the company private, which has pushed its share price up, but the effort looks highly vulnerable, which could send things crashing back down. Add into the mix that the SEC is investigating the fact that Musk announced his intentions via Twitter, and you have a dangerous mix. Many are wondering when the SEC might decide if Musk broke the rules with his tweet, but the reality is that it may take some time for a judgment.

FINSUM: In our view the lack of a ruling on Musk’s tweet could mean this whole deal sits in limbo for some time.

(Washington)

The White House has been demanding that special counsel Robert Mueller wrap up his investigation into potential collusion with Russia by September 1st. However, the reality is that Mueller is under no obligation to do so and can continue his closed-door investigation up and through the November 6th elections. Bringing indictments near the election would also not violate Justice Department policy meant to deter using indictments to manipulate elections, according to current and former US officials.

FINSUM: We highly doubt Mueller will acquiesce to ending his investigation in the near-term, which means Trump may escalate the situation. Fireworks seem likely.

(New York)

Market breadth has not been very good this year. In fact, it has generally been terrible. Tech stocks have delivered virtually all the gains. However, one bright spot in this uneven landscape has been healthcare shares, and that seems likely to continue. According to Barron’s, “Positives in the sector include attractive valuations, upward earnings revisions, share buybacks, and policy tailwinds”. Drug price pressure is still a concern for pharma companies, but right now things look strong, with over 90% of companies in the sector beating earnings forecasts.

FINSUM: We will be honest in saying that we do not have much expertise in the sector, but demographics also seem to be a supportive factor for the long-term investor.