(Washington)

The markets had a scintillating day yesterday. The Dow surged almost 400 points. Why? The reason was simple—the market stopped worrying so much about a US trade war with China. The two countries are planning further high level talks on trade and that alleviated the market’s fears. Barron’s proclaimed that “This is what happens when the market’s not worried about trade”, obviously referring to the strength of the economy and earnings. The market was also more optimistic on Turkey.

FINSUM: There does seem to be a lot of upside that has been stifled by geopolitical worries. Perhaps there is a nice run to be had if the US and China can come to an agreement.

(Istanbul)

Most sources, including FINSUM, have been concluding that the emerging markets flare up centered on Turkey, would not develop into a correction or financial crisis for developed markets. Today that position is looking weaker, as stocks fell sharply across the world yesterday, and commodity markets got routed. Emerging market stock indices have fallen back into a bear market. While EMs fell big, global markets saw share plunges exacerbated by a dismal earnings report for one of China’s big tech companies, which then seeped into tech shares globally.

FINSUM: The narrative here is that Turkey sparked a big selloff and now fears over China will continue to drag EMs down. This could be the start of a global recession, but perhaps it will not be accompanied by huge losses in developed markets.

(Houston)

For those paying attention, the metals market is sending some very worrying signs. Copper and other metals have been going through a rough patch, but yesterday seemed to really spell doom. Copper plunged into a bear market, zinc plummeted, and even gold took a big hit despite the panic across markets. Industrial commodities are a good bellwether for economic activity, and while the markets are partly plunging on worries over the Chinese economy, the big drops signal that the whole world could be in for a recession.

FINSUM: We are growing increasingly concerned about the message that metals markets are sending. The big drop across the board in industrial commodities is quite worrying. Hopefully it is a short-term overreaction to the trouble in emerging markets.

(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.