There’s a collective sigh of relief in the markets.
Days after Trump threatened to cut off Huawei on August 19, 2019, he’s changed his tune.
In fact, the Trump Administration just extended a reprieve to Huawei, allowing it to buy supplies from US companies so that it can continue servicing existing customers. An extension will renew an agreement set to lapse on August 19, continuing the Chinese company’s ability to maintain existing networks and provide software updates to Huawei handsets, says Reuters.
This will now extend the agreement another 90 days out to late November 2019.
“There is another 90 days for the U.S. telecom companies, some of the rural companies are dependent on wild ways,” Wilbur Ross said, as quoted by Fox Business. “So, we're giving them a little more time to wean themselves off.”
All of this follows the Administration’s news that it would delay the 10% tariff on $300 billion worth of consumer goods in what appeared to be a panicked response to the market's vicious selloff. Now, instead of going into effect on September 1, 2019, those tariffs won't start until mid-December if at all at the moment.
Going forward, Trump did say he has a call scheduled “very soon” with China’s President Xi Jinping over trade. There’s hope the latest Huawei news will help ease some tensions. “We’re talking by phone and we’re having very productive talks. They would like to do something, I will tell you that,” said the President as quoted by the South China Morning Post.
While it’s all a wait and see at this point, the market like what they’re hearing.
Bank Stocks Likely to Recover from Easing Tensions
Trade war fears created sizable fears of a recession. It’s also part of the reason the 2/10 yields inverted the other day, which sent bank stocks down. However, with tensions apparently cooling with the latest news, the yield curve is no longer inverted, and excessively oversold bank stocks are beginning to recover.
Some of the most oversold bank stocks to consider at the moment include:
- Bank of America (BAC)
- BB&T Corporation (BBT)
- Wells Fargo & Co. (WFC)
Even the Financial Select Sector SPDR (XLF) is excessively oversold, and worth a look.
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