The market giveth, and the market taketh away.
Stocks rallied for most of the week on trade war optimism after President Trump said he would let a trade agreement with China “slide.”
Unfortunately, the rally was short-circuited on news of a 1.2% retail sales decline for December, according to the U.S. Commerce Department. That’s the biggest drop we’ve seen since 2009, as we were recovering from 2008 subprime fallout.
We don’t believe there’s much cause for concern, though.
Despite retail sales numbers, we still have a very healthy jobs market, as well as steady wage gains. For example, in December 2018, we added 312,000 jobs. In January, we added another 304,000 jobs – which was better than the 165,000 jobs anticipated by analysts.
Average wages were up 3 cents, or 0.1% to $27.56 an hour.
We must also consider that December 2018 was a disastrous month for markets. The Dow Jones had just plunged from 26,000 to 21,792. The NASDAQ fell from 7,500 to 6,200. And the S&P 500 dropped from 2,800 to 2,350. That’s part of the reason consumers were not spending. Well that, and the 35-day government shutdown didn’t exactly help.
In our opinion, the retail sales plunge is temporary, as markets regain lost ground.
As usual, investors are overreacting, failing to see the forest for the trees – again.
Despite recent doom and gloom, here’s where we’re spotting opportunity.
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Opportunity No. 1 – Green Thumb Industries Inc. (OTC:GTBIF)
Retailers are racing to be a part of the explosive cannabis market.
DSW for example has been running tests in its stores with CBD. Neiman Marcus is pushing ahead with CBD sales at stores. Even Simon Property Group just partnered with Green Growth Brands to open 108 stores in its malls this year.
As more retails rollout plans for cannabis products, we believe GTBIF could benefit nicely.
GTBIF is a vertically integrated company that manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles, and topicals. It also owns and operates a national chain of retail cannabis stores called RISE dispensaries.
Opportunity No. 2 — Ceragon Networks (NASDAQ:CRNT)
The 5G story is just beginning to hit the headlines.
Incredible to note, 5G is expected to be a $1.3 billion story that’ll provide us with speeds 100x faster than 4G. It’ll also help revolutionize the Internet of Things (IoT) and autonomous cars. By 2035, nearly $12.3 trillion of global economic output, notes Verizon.
One of the most inexpensive ways to trade 5G is with Ceragon Networks (CRNT), which provides wireless backhaul solutions that enable cellular operators and other wireless service providers to deliver voice and data services worldwide. Its wireless backhaul solutions use microwave radio technology to transfer telecommunication traffic between base stations, small sells, and the core of the service provider’s network.
Opportunity No. 3 — VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
With trade war concerns increasing again, one of the better ways to protect your portfolio is with a long bet on volatility. One of my personal favorite ways to do so is with the TVIX, which rises and falls with the fear gauge, or the Volatility Index (VIX). At the moment, TVIX is sitting at support dating back to October 2018.
When and if volatility spikes again, TVIX might be a safer bet.