Trump Victory May Spell Higher Costs for SharkNinja (SN); Lock in Gain; Sell UL Solutions (ULS)
Well, we have our answer.
The market is up on a Trump victory. And most of our stocks are up very nicely too (FTAI, LOAR, OS, KVYO, to name a few), though there are some outliers. We’re dealing with those right now.
During these transitional periods, my primary goal is to maintain a portfolio centered around the stronger performers, trim on the fringes, and then add exposure (next Issue is 11/20/24) based on what’s working.
One side note first. While this morning’s market rally is nice, one thing that has me concerned is the rise in the 10-year yield, even though the Fed is widely expected to cut by 25 bps tomorrow (99% probability).
The read-through is that a Trump administration and Republican Senate will spend more than it saves/cuts, driving up national debt and interest payments. If the Fed lowers rates too far into this scenario and people start spending, this could cause inflation to come back. That would be bad.
It would be good for the market if the Democrats retained control of the House (some gridlock is generally good for the stock market). We may not know how the House goes for a few days.
To be clear, the inflation return scenario is not a given. But this is something the market is “worried” about, so it is something I’ll be monitoring too.
On to our stuff.
One of the talking points on SharkNinja’s (SN) recent earnings call was a strategic shift to move some manufacturing out of China. This was likely to appease rising concerns that a potential Trump administration would jack up tariffs on China, thereby increasing costs to SharkNinja. While nothing has been done just yet (and may not ultimately happen at all), this dynamic has shares of SN selling off today, even in the face of a broad market rally. Time to lock in our gain of 45%+ on our half position. SELL
I mentioned yesterday I’d be keeping a close eye on UL Solutions (ULS) following its volatile moves post-earnings. Today the stock is weak, while the market rallies. We don’t have any wiggle room here, so moving to sell. SELL
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