Here's the problem: Some companies will have their numbers cut this week despite having just reported excellent quarters.
Others won't have them cut, but are suspect even if they are domestic.
So you don't know where the landmines are. Nor do you know if they will go off.
We know that the industrials that do business worldwide, not just China, will feel the pain of a trade war that will now reverberate around the world -- especially in Germany, where auto exports to China will be slowed, perhaps dramatically. That makes the autos pretty un-investible. But that's been the case for some time.
Almost all retailers will be hit. So many import from China and a cheaper yuan won't offset the costs.
Tech will be innocent until proven guilty. The hardest-hit techs will be the ones with the most market cap -- which means Facebook (FB) , Apple (AAPL) , Amazon (AMZN) , Alphabet (GOOGL) and Microsoft (MSFT) .
The second round will be the cloud kings like Workday (WDAY) and Adobe (ADBE) .
The third round will be the semis with anything related to cellphones, which is pretty much what is left. These have to be left alone to fall some more, because they are nowhere near where they were before the last round of tariffs, as they ran so much when it turned out the 25% didn't hurt that much after all.
Remember that Apple had a terrific quarter, but we heard that China weakness was just around the corner. As Apple goes, so goes the semis -- again, right or wrong.
Remember always, right or wrong, stocks go down and then you pick among the wrongly judged on the fifth day: We are on the lookout for these today, but there won't be many given the height we are falling from.
Financial firms are frequently hit when China goes bonkers and the relationship is completely questionable. Should JP Morgan (JPM) really plummet here with all of that stock being bought back and such an excellent quarter. Should Bank of America (BAC) be punished? Can you buy Wells Fargo (WFC) , betting it will still have a CEO? Should the big brokerages be hit even as this volatility might be the best thing for them?
Drugs have become problematic. First, few yield over 3% so have little yield protection. Second, they are easy targets of the Democrats. Same goes for the managed-care companies which are getting cheaper and cheaper. Bristol-Myers Squibb (BMY) is in the throes of a good merger with Celgene (CELG) , but no hurry because of antitrust review.
Fossil fuels are simply persona non grata here, as is anything based on industrial construction.
When you take out retail and pharma and banks and industrials and tech and fossil fuels, what's left to buy? Isn't that a swath of no fly zone companies?
Here's my list of what makes for safer havens, if not places of opportunity:
1. Utilities: Dominion Energy (D) , PPL (PPL) , Verizon (VZ) and AT&T (T) . That's a nice blend of 5 percenters, given or take 0.25 basis points. I wish American Electric Power (AEP) were yielding more, but 3% doesn't cover you.
2. Domestic restaurants or ones that have no exposure to China -- or at least have held up spectacularly well: Especially the ones that have delivery abilities because of Doordash, which is incredibly aggressive, or Grubhub which will try to blunt Doordash's aggressiveness -- including the purchase of Caviar last week, which was a brilliant Doordash consolidation move ahead of an IPO.
Easiest? Yum Brands (YUM) . It just reported excellent earnings that are accelerating worldwide. You have a separation between Yum China (YUMC) and YUM with Yum growing faster in many markets.
Chipotle Mexican Grill (CMG) is a double digit grower that is accelerating. No Chinese exposure.
McDonald's (MCD) and Starbucks (SBUX) will be questioned, so better to wait on those. Restaurant Brands (QSR) has 1000 locations in China and keeps building them. Tough call.
3. The fintech plays everyone loves may have moved too high, but they will come down with the rest of the market. And I think they, again, will be great places because they don't have JP Morgan like exposure.
4. Defense stocks, naturally work. I like L3Harris (LHX) because it is the highest tech of the defense companies. It's up a lot but it was misvalued to start.
Lockheed Martin (LMT) has moved too much to buy, sorry.
5. Gold stocks can work: Barrick Gold (GOLD) is the value play, and Agnico Eagle Mines AEM is the growth call. I like them both, the latter especially after last week's interview on Mad Money with CEO Sean Boyd.
6. Housing is a beneficiary of dramatically lower interest rates. My faves are those with starter home capability: DR Horton (DHI) and Lennar (LEN) .
7. Worldwide food and beverage stocks can be purchased. I believe Coke's (KO) yield will protect you.
I will have more as they come down, but I reiterate there is no hurry because these will all go down with the S&P -- and until they do they aren't worth touching.
