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Explorer stocks put in a solid performance this week as Federal Reserve Chairman Jerome Powell was on Capitol Hill for two days of testimony. His remarks were parsed as if he were an oracle, but the takeaway seems that we are moving towards a rate cut dependent on labor markets cooling off a bit more.

I really don’t like paying too much attention to macro issues like interest rates and would rather focus on new ideas that most investors are not following closely. Right now, in a market so dependent on a small number of leading stocks, you can reduce your portfolio’s overall risk profile by adding some stocks in countries and sectors where expectations and downside risk are low.

Japan is back as a place to invest some capital for a number of reasons.

Japanese retail investors have cash positions above 50% versus about 15% for Americans.

Japanese corporates have long been criticized for hoarding cash on their balance sheets and low capital expenditures due to cross-shareholdings with sister companies. But over the past 12 months, share buybacks are on track to increase 96% year-over-year, and the reduction in cross-shareholdings has increased by 75% in the last fiscal year.

All this leads us to consider today a second Japanese stock as an Explorer recommendation.

For investors who would prefer a one-stop shop for dividend growth investing, dividend ETFs are an efficient way to do it. Here are two that look good.

We just had a week that I believe is indicative of this market over the next month or so. There seems to be too much headline risk for stocks to make a substantial move higher.

In Peter Brimelow’s column, MarketWatch quotes Cabot Market Letter’s Defensive Advice.

This week I’m in Cebu, Philippines. While in a shopping mall I spent a couple of hours analyzing a fascinating situation whereby Samsung, Apple and Huawei stores were right next to each other.

I’m not technically proficient enough to tell you which company and product offer the best value, but Huawei’s lower end smartphone was only $450 and seemed to offer everything anyone would need. Its high-end leader was just slightly cheaper relative to Apple’s most recent model, with all the bells and whistles. The store was very polished and in no way seemed to be of lesser quality to Apple or Samsung.

I’m in Japan this week as Warren Buffett indicated that his Berkshire is raising its stakes in Mitsubishi, Marubeni, Mitsui, Itochu and Sumitomo. Berkshire’s average holding across the five stocks increased by just over one percentage point to about 9.3%. This comes as financial pundits continue to determine the meaning of why Berkshire has accumulated a massive cash position.

Perhaps Buffett is betting that America’s share of global equity indices may be close to peaking at almost 70%.

Before we get to an update on my journey through Asia, let me offer a few thoughts regarding recent market weakness and volatility, driven by rising economic and political uncertainty. Sea Limited (SE) bucked the trend with another strong quarter while American Superconductor (AMSC) shares had another tough week after a great run, down 15.8%.

The tariff on-and-off news is creating some turbulence as are the pivotal Congressional spending and tax negotiations.

Explorer stocks gained ground this week as market sentiment improved along with the odds of a Fed rate cut this fall.

I’ve been encouraging you to lighten up on some of the Magnificent Seven stocks over the last month or so. In just the last two weeks, these stocks have lost over $1.6 trillion in market value as market enthusiasm has waned and insiders have sold some stock.

What’s behind this trend?

Here are three possible reasons why big tech is facing a tough market.

Closely watched Nvidia (NVDA) reported its first-quarter earnings yesterday, beating expectations nicely on revenue despite restrictions on shipments of its H20 chips to China. The company posted revenue of $44.1 billion, up 69% from a year ago, but Nvidia expects to miss out on roughly $8 billion in sales of H20s to China in the second quarter.

As markets weigh tariff and trade risks, we will continue our efforts to protect assets through portfolio rebalancing while remaining alert to trading opportunities. Our diversified and global Explorer stocks are doing well.

International investors will be important at the margin since they account for 18% of U.S. stock ownership.

The retreat of the U.S. dollar, down 10% in the last six months, and the emerging premium for U.S. bond markets is leading to higher yields (interest rates).

This was a good week for Explorer stocks with Agnico Eagle Mines (AEM) up 6.2%, Alibaba (BABA) up 5.9%, Banco Santander (SAN) shares rising 6.2%, and BYD (BYDDY) shares surging 8.1% this week.

It was a painful process with America’s most valuable ally, but a trade/investment deal was finally reached with Japan, which buoyed markets. Frameworks for deals with the Philippines and Indonesia were also agreed to, sending the S&P 500 to a new high. The market seems mostly concerned with China. The reason is that annual S&P 500 revenue from China is $1.2 trillion, roughly four times the U.S. trade deficit with China.

This was a good week for the Explorer portfolio as all our positions advanced, led by NovoCure (NVCR), Sea Limited (SE) and Virgin Galactic (SPCE), which jumped 25% this past week. We now head into the fourth quarter, which may bring some turbulence as the election approaches. We will take what the market gives us but will be on guard. Our emerging markets timer (EEM) is still positive.

Today, we have a new recommendation in emerging markets that we hope will benefit from the biggest shopping day in the world.

The market has deteriorated over the past couple weeks. The S&P 500 fell into a bear market on June 13th. The combination of continuing high inflation and a more aggressive than previously expected Fed has led to widespread expectations of recession over the next year.

Recessions are bad for stocks for obvious reasons. But there is something worse than recession, looming recession. Stocks generally recover during a recession. Because the market anticipates, it tends to rebound before the economy. The worst environment for stocks tends to be prior to recession, upon expectation, to part of the way through it.

Markets are choppy, which is normal considering uncertainty is high and we’re less than a week from the presidential election. Today I look at what history can teach us about politics and markets and why it might be a bit different this time. The Ant Technology giant IPO moves forward as China flexes its muscle, and it’s a signal for coming events. Today’s new idea is an electric vehicle play from Canada that is under the radar of even the trends of most avid supporters.

The market rallied strongly off the lows last week, moving 6% higher on the week.
Is the bottom in?


I doubt it. The market has behaved this way all year. There has typically been a rally after intense selling and a new low. But stocks have difficulty generating any lasting upside traction in the face of high inflation, an aggressive Fed, and a slowing economy.

Current Market Outlook


The major indexes have been pulling back in recent days, and many are now back to their 50-day moving averages after a nice snapback for the second half of December. The question is whether the recent wobbles have more to do with year-end/start-of-year positioning (this portion of the calendar is notorious for crosscurrents creating volatility), or a renewed wave of selling that would basically be a continuation of what we saw in early December. We’re still optimistic, but we’re knocking our Market Monitor down a couple of notches today, and if all’s well, buyers should appear very soon as many stocks test support.

This week’s list has a larger-cap, steadier feel to it as the market favors “defensive growth” names most of all. Going along with that theme, our Top Pick is Whole Foods Market (WFM), whose stock is firmly in a turnaround phase.

Stock Name	Price	Buy Range	Loss Limit
Whole Foods (WFM)	0.00	48-50	44-46
Visa (V)	0.00	255-265	240-242
Virgin Airlines (VA)	0.00	40-43	36-37
PPG Industries (PPG)	0.00	219-230	209-211
O’Reilly Automotive (ORLY)	0.00	186-193	175-178
CarMax (KMX)	0.00	62-64	58-59
KLA Corp. (KLAC)	158.80	68-70	65-66
Jones Lang LaSalle (JLL)	0.00	145-149	139-141
Electronic Arts (EA)	0.00	45.5-47.5	43-44
Cirrus Logic Inc. (CRUS)	0.00	22-23.5	19.5-20