This week’s note will begin by reiterating our bullish theme on the Natural Gas market. We hav...
Market Summary: Fintech, Biotech Picks. Why We Avoid Europe, Most Asia
08/31/2018 6:00 am EST
We like fintech companies such as Mastercard (MA), Visa (V), and PayPal (PYPL), medical services/equipment and selected biotechs such as United Healthcare (UNH) and Celgene (CELG) and those growing their dividends, says Monty Guild, who's presenting at MoneyShow Dallas.
The U.S. economy, GDP growth, consumer income, employment statistics, and corporate profits are very good.
U.S. consumer spending is strong, and corporate profits for almost all economic sectors, including the consumer sector, are booming. Real GDP growth for the second quarter of 2018 was just revised upward slightly to 4.2%, and the stock market is reflecting the past and expected future wave of good news by continuing to move ahead aggressively.
We continue to be bullish on U.S. stocks, especially disruptive sectors such as cybersecurity, social media, cloud computing, software as a service, and travel services.
Europe: Avoid European stocks and bonds
In our view, Europe is in deep trouble; many European banks have not improved their capital to become more stable. The problem of Turkey and the prospect of a re-acceleration of mass immigration mentioned above is a real concern for economic policy.
Will Europe have to engage in massive borrowing to support new immigrants? Will southern European countries leave the EU now that the subsidies and support they have enjoyed will be lessened as wealthier northern European countries have to use more resources at home?
Emerging Markets: Not much of interest
South America remains under pressure due to the weakness of commodity prices. The strong U.S. dollar (USD) is the main reason that commodity prices remain weak. We do not see inflation growing. The U.S. and Indian economies remain very strong (with India growing at above 6%) and the Chinese economy continues to grow at above a 5% rate.
China is growing much less rapidly than in the past few years. The Indian market is slowly advancing in U.S. dollar terms, and the Chinese market is in a bear trend.
Clearly, as we have been stating for months, money from all over the world is seeking a safe haven in the U.S. dollar and U.S. stocks as an alternative to problematic markets in Europe, Latin America, and parts of Asia.
We remain bearish on most of Asia, with the exception of India. Even India has a hard time doing well in U.S. dollar terms with a rising dollar trend.
As it has on many investment areas, the rising dollar has put pressure on gold. The pressure has been exacerbated by the need of some badly managed countries, such as Turkey (TRY) and Argentina (ARS), to sell gold to provide liquidity in their economies.
Bakkt will be a game-changing development for digital assets. Other platforms follow. Expertise that ICE brings to digital assets, and the significance of their entrance into the crypto arena, are an early sign that cryptos are maturing with a revival for bitcoin itself. Full cryptocurrency commentary August 30 here.
Please note that principals of Guild Investment Management, Inc. and/or Guild’s clients may at any time own any of the stocks mentioned in this article and may sell them at any time. Currently, Guild’s principals and clients own CELG, MA, PYPL, and UNH.
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