KWCP Daily Roundup May 31 The Fade Continues…

Technology are rising again but financials falling. Same central thesis on the reconsideration of the Trump presidency continues to apply as investors find the valuations of the bloated tech giants to be 'cheap' given the rate of growth compared to other sectors. We also believe rates in the USA are not going higher when the rest of the world is at 0% or near 0%, despite the need for Yellen to hold inflation in check with threats and nominal gestures.

Again, the 'growth-ier' sectors of the market like technology seem to be the sectors raging forward like a salmon swimming upsteam. Get on that salmon. Tesla (TSLA, $339.77) is up again big with now a market cap of $55.81 Billion, up 1900% from their IPO price. While the favorable tax policies were once believed to help the smaller and medium sized businesses, now any potential tax policies have been eradicated, and investors are picking the champion that won the previous round, and that's the large tech giants.

KWCP Daily Roundup May 30 Financial Rally Fades as Reality Hits

So the euphoria after the election of lower taxes and higher interest rates for banks faces reality as the market indexes dip today. We believe the truth of the slower than advertised adoption and implementation of reforms has finally sunken into the market pricing.

One company in which this has not affected is Tesla (TSLA, $335.15) up 10.00 against the negative rally. Similar selling of stocks and buying into growing giant Nvidia (NVDA, $144.87) up 3.03 as creeping rumors of a tech bubble continue to creep in. Also of note, Amazon (AMZN, $996.70) briefly touched the magical $1000 mark today which bolsters the tech bubble chatter.

As shocking as it is for the value investors, is the investment in these giant technology companies as these valuations, the belief is that the valuation is still for these companies given the double digit financial metric growth only seen in this sector.

When will the softening occur? When a catalyst contrary to this thesis arises. In our minds, this trading pattern supports the technology, Silicon Valley based mindset of futuristic, progressive growth towards future leaning technologies and against the conservative agenda, and whether these trends are symptomatic of more in the future but Round 2 does belong to the technology gurus, and momentum is on their side.