Market Preview: Tariffs and Tesla Stall the Market

Markets traded flat on Friday as they absorbed the latest in the Elon Musk saga, and as pundits began to ponder the possibility of a protracted trade war with China. Tesla (TSLA) has vowed to stand behind its embattled CEO as the SEC is leveling charges of fraud surrounding his tweet about taking the company private. In its initial thrust, the SEC is demanding that Mr. Musk be removed from the board of Tesla. The stock traded down around 14% to lows not seen since April. As the first full week of tariffs went into effect between the U.S. and China, there appeared to be little movement to resolve the differences between the two countries. The fear now is that unlike Mexico, China may take a firm stand resulting in a lengthy and costly trade war between the two global giants. Tariffs may now dominate headlines well into the fourth quarter.

Cal-Maine Foods (CALM) and Stitch Fix (SFIX) kick off October earnings on Monday. Cal-Maine is up slightly on the year. Last quarter Cal-Maine’s CEO warned that proposed tariffs were impacting feed stock for the egg producer. Analysts will be looking for the concrete impact of those tariffs on Monday. Stitch Fix has done nothing but reward investors after going public late last year. But, some worry that a new service being rolled out by Amazon (AMZN) may cut into the data driven clothing provider’s market share. Investors will want to listen closely to any clues on how competition is impacting the company.  

Monday’s economic calendar includes, the PMI Manufacturing Index, ISM Manufacturing Index and construction spending. Construction spending is expected to rise .1% for August. The number is being closely watched as it is a key component in GDP, and economists fear rising prices may be impacting growth. While the FOMC was the focus this week, there are several economic numbers being released next week as the fourth quarter of 2018 gets into gear. Tuesday we’ll see Redbook retail numbers. New mortgage applications, ADP employment, the PMI Services Index and ISM non-manufacturing data will all be released on Wednesday. Jobs will be the focus on Thursday with both the job cuts report and jobless claims being released. We’ll close the first week of October on Friday with employment situation numbers and international trade data.

Tuesday, Pepsico (PEP) and Paychex (PAYX) report earnings. Pepsico should give an update on its recently announced acquisition of SodaStream. Lennar (LEN) and Pier 1 Imports (PIR) report on Wednesday. Analysts will be watching Lennar closely for an update on costs and the lack of construction workers plaguing the industry. Closing out the earnings calendar on Thursday (no earnings are currently scheduled for Friday) are Constellation Brands (STZ) and Costco (COST). Analysts are expecting both strong earnings and an increase in membership levels from the bulk retailer.

Buffett just went all-in on THIS new asset. Will you?
Buffett could see this new asset run 2,524% in 2018. And he's not the only one... Mark Cuban says "it's the most exciting thing I've ever seen." Mark Zuckerberg threw down $19 billion to get a piece... Bill Gates wagered $26 billion trying to control it...
What is it?
It's not gold, crypto or any mainstream investment. But these mega-billionaires have bet the farm it's about to be the most valuable asset on Earth. Wall Street and the financial media have no clue what's about to happen...And if you act fast, you could earn as much as 2,524% before the year is up.
Click here to find out what it is.