Do I have your attention now?

Well, I can’t speak for the administration, but reports are circulating that China will completely erase the $323 billion trade surplus with the United States reducing it to zero by 2024.  The offer suggests that one trillion dollars will be used to buy additional American goods and services.

The report is sending the market higher with groups like semiconductors enjoying outsized gains.  The Philadelphia Semiconductor Index (SOX) was rocked back in March when the trade war became official, then rallied back to form a double top in June, but thereafter, stumbling big time.

This news coming on the heels of reports the United States might pull tariffs ahead of the big meeting between the United States and China at the end of the month. 

I will say this, part of the deal was always going to be great; although, this is an eye-popping number, which I’m sure nobody anticipated.  But there is still the harder part of the negotiation, including forced transfer of technology and theft.

Message of the Market

Beyond today’s optimism, I continue to like the action in dull sectors that underperformed last year.

Material and industrials are the biggest winners today, in part to reports the administration plans to promote an infrastructure plan during the State of the Union.  Apparently, the plan will mimic Eisenhower’s great highways plan of the 1950s and 1960s.   Back then, the $25 billion plan went into effect and lasted 13-years.  Adjusted for inflation, that would be a $234 billion plan.  Something tells me if it happens, it will be a lot more money.

Even without it, I think there are deep pocketed value investors looking for value and mitigated risk.

On that note, stocks like JB Hunt (JBHT) are great proxies for the economy, and the best performer in the best sector today.  The company saw revenue growth in all its business segments.

• Intermodal $1.26 billion +15%
• Dedicated contract services $596 million +25%
• Integrated capacity $345 million +7%
• Truck $118 million +21%

While I think communication services will be the biggest winner of 2019, I think big money will be made in old and boring, too. 

The markets are closed on Monday for Martin Luther King Day. Have a great long weekend.