Apple Puts Much Needed Shine on Troubled Tech Sector

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

It was just recently that the Nasdaq set a series of new all-time highs, fueled by strong earnings expectations for leading high-profile tech companies like the FAANG stocks — Facebook (Nasdaq: FB), Amazon.com (Nasdaq: AMZN), Apple (Nasdaq: AAPL), (Netflix (Nasdaq: NFLX) and Alphabet/Google (NASDAQ: GOOG).

However, in the last week, big disappointments from the likes of Facebook, Twitter (NYSE: TWTR), Intel (Nasdaq: INTC) and PayPal Holdings (Nasdaq: PYPL) caused the Nasdaq shed over 300 points in the span of just three days. Thankfully, the hemorrhaging in the tech-rich index abated after strong earnings from Apple, which just became the first company to officially reach a $1 trillion market capitalization.

Apple’s strength is causing some renewed market optimism, and this optimism has spilled over into other big-cap tech stocks that were summarily hit with last week’s sector sell-off. Trusted names in the sector have all recouped a good portion of their short-term declines.

Unfortunately, the high-tech blow off shows how vulnerable investor sentiment can be when all the earnings stars don’t line up just right. I expect that volatility will remain elevated for the tech space during August.

In other news, the trade rhetoric with China has heated up even further, as President Trump has threatened to raise the tariffs on $200 billion of Chinese imports to 25% from 10%. So far, markets have not reacted and have done a good job of digesting the dialogue. In fact, the U.S. stock market trades with an undertone of confidence that a full-blown trade war will not break out as threatened. Conversely, China’s Shanghai Composite Index (shown below) continues to tank, taking that key market average back down to test its 52-week low.

Exclusive  Give Thanks for Many Blessings, Despite Uncertainty

Chart courtesy of StockCharts.com.

Clearly, investor sentiment in China is considerably more worried about the implications of tariffs on their export-driven economy. This trade war is coming at a time when leaders in Beijing are challenged to keep gross domestic product (GDP) on its current 6.5% growth rate. From the way the Chinese market is trading, I don’t think it would surprise many global market analysts if they found that China was cuffing their data to where the actual number is well below that government’s official GDP report.

China’s total debt, now exceeding 250% of GDP, dwarfs the U.S. debt at about 100% of our GDP. Any downturn in growth could precipitate a debt crisis. Thus, China has every incentive to lie. According to U.S. Census estimates, China’s population is set to begin shrinking as soon as 2026, which will drag economic growth rates down as well.

Assuming the present course of the country holds, it’s possible that the 21st century won’t be dubbed the “China Century” after all. In any event, “fake news” is nothing new to the Chinese government, and it will be interesting to see how long China will keep its poker face on over trade.

In early August as earnings season winds down, foreign markets are trading under pressure. There are fewer market participants trading, so investors need to put in some overtime in their stock selection. Apple’s move to new highs can’t do the heavy lifting for the whole market, even if it is the largest weighting in all the indexes and most exchange-traded funds (ETFs). Also, the news surrounding the trade war is only going to intensify leading up to the next round of tariffs that are set to go into effect in early September.

Exclusive  Markets Bounce Strongly as Google Splits Its Stock

One area of notable strength during the recent bout of volatility has been the high-yield sector, comprised of several asset classes of big dividend-paying securities. One of my advisory services, Cash Machine, is specifically designed to play this strength in the high-yield sector. I’ve designed a multi-tiered portfolio that has roughly 22-25 holdings, a blended dividend yield of 8.5% and several recommendations that pay on a monthly basis.

For income investors looking for inflation-sensitive yields, Cash Machine is the go-to source for producing cash flow from an otherwise stingy fixed-income market. Conventional money markets, CDs, Treasuries, corporate bonds and common stocks, which all pay anywhere from 1-3%, simply don’t begin to keep up with household inflation and taxes. However, getting an 8.5% return on your income portfolio can help make many of your investment goals possible.

Put the power of high-yield assets to work for you in this tough time of of the year. To check out Cash Machine, click here. You’ll be glad you did.

Like This Article?
Now Get Bryan's FREE Special Report:
My Top Monthly Dividend Payer

Get paid every single month by some of the world’s biggest companies.

Get Access to the Report, 100% FREE


img
previous article

The investment term “in-the-money” refers to an option contract that is worth exercising because it has value. A call option is “in-the-money” when the market price of the underlying security is above the strike price. A put option is “in-the-money” when the market price of the underlying security is below the strike price. It is important to understand that an “in-the-money”

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE