Psst … It’s NOT Just Coronavirus Driving these Markets!

It finally happened. This was the week the coronavirus finally got to Apple (AAPL, Rated “B”).

The mega-capitalization, technology stock that’s in virtually every major U.S. stock index, ETF, mutual fund and investor portfolio warned the Chinese bug would hurt results.

More specifically, Apple said it would miss its current-quarter target for sales, which is between $63 billion to $67 billion. The smartphone company blamed supply chain problems tied to virus-driven factory shutdowns and weaker sales due to the closing of Chinese stores.

Naturally, the stock got hit on the news — albeit briefly and not very hard. It also dominated the day’s press coverage. But I hope you didn’t let the hype blind you to the more important news of the day ...

I’m talking about the warning released from Walmart (WMT, Rated “B”).

You see, the retail giant warned that same-store sales rose just 1.9% year-over-year in the all-important holiday quarter. Not only was that far less than the 3% gain it had forecast, it was also the smallest gain since mid-2018.

Walmart’s warning came on the heels of various others from the likes of Target (TGT, Rated “B-”) and Macy’s (M, Rated “D+”). It also follows bankruptcy filings from several retailers, including Pier 1 Imports and Forever 21.

Why is this so important? What pushes this news to the top of your investor meter?

Because it actively flies in the face of the narrative that many on Wall Street keep peddling: Most, if not all, of the market’s woes are due to the coronavirus.

Walmart, along with the other retailers ringing the warning bell, prove this to be false. And history does, too. Before the outbreak, the same people on Wall Street said the same thing about the U.S.-China trade and tariff tiff.

Now, I don’t want to downplay the very real human cost of this deadly virus. Nor am I saying it’s having absolutely NO impact on the global economy. It definitely is, in the very short term, at the least.

But there are more — and much more important — events occurring now that will impact the markets long term.

We’re seeing a significant turn in the underlying economic and credit cycles. It’s one I’ve been discussing since the first quarter of 2018 — long before anyone heard of this virus, and before the worst of the tariffs were enacted.

Think about it. Coronavirus isn’t driving the stagnation in domestic auto and truck sales. That stems in part from a rollback in reckless auto lending that dates back several quarters.

It also isn’t ...

  • Driving the weakness in U.S. retail spending that Walmart and Target just warned about.

All of that was going on before anyone ever heard of coronavirus.

Meanwhile, look at the interest rate and precious metals markets! The yield on the 30-year Treasury Bond just traded with a “1-handle” again. It’s only a few basis points away from an all-time low.

Gold is also within a few bucks of breaking above $1,600 an ounce. That would put the precious metal at a seven-year high.

This isn’t happening in a vacuum. It’s happening because savvy investors can see the writing on the wall. They’re buying all the “Safe Money” investments I’ve been pounding on the table telling you about for several quarters now.

Why? Because they can see something much more serious is going on here.

My advice? Follow their lead! You can find specific recommendations and strategies in my Safe Money Report. Many of them are hitting paydirt — with substantial open profits!

Or at the very least, look at sector and asset class ETFs or mutual funds that give you exposure to Treasuries, precious metals and defensive, yield-oriented, late-cycle stocks with solid Weiss Ratings.

As I noted last week, they’ve been winners for some time now and they should continue to win in the rest of 2020 and beyond.

Until next time,

Mike Larson

About the Income & Dividend Analyst

In an era of high-risk exuberance, Mike Larson stands out as a leader in conservative investment strategies that outperform the market overall. Using the safety-oriented Weiss Ratings as a guide, he has a proven history of guiding investors to stocks and ETFs that provide asset protection, consistent dividends and excellent growth.

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