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The Fed Ignites an Emerging Markets Rally

The stock market continues to quietly hover near its highs as Independence Day approaches.

The NYSE is closing today at 1 p.m. in preparation for the holiday — and I suspect trading activity will be light this morning and Friday.

But that’s not stopping our income expert Mike Burnick from prepping for the Fed’s impending July rate cut.

“Lower interest rates are basically a done deal. In fact, the odds of a rate cut at the Fed’s next confab at the end of July improved dramatically, signaling close to a 100% chance of lower rates,” Mike explains.

What’s the one asset class Mike’s stalking for big post-Fed gains? Emerging markets.

“EMs have been out of favor recently due to trade war fears as well as the stronger dollar this year,” Mike says. “But as you can see, the dollar and EM assets, both stocks and bonds, have a very strong inverse correlation.”

Dollar Index

Mike has a fresh emerging markets recommendation lined up to capitalize on the Fed’s impending cut. Get all the info by clicking here.

Meanwhile, robots continue to steal our jobs — but not in the way you might think.

Instead of paying an incompetent middle manager to lead employee evaluations, Walmart Inc. (NYSE:WMT) is leaving this grueling job to the machines. Everyone’s favorite dystopian retailer is now testing out virtual reality assessments for some employees, The Wall Street Journal reports.

The assessments run workers through different virtual reality scenarios that mimic what they might see over the course of a shift. The employees are then given scores based on how they perform and answer questions.

So far, Walmart is using the VR training only to see possible strengths and weaknesses in employees who take the assessment. But Walmart wants to eventually rely on the VR tools to spot “potential” in current employees, as well as assigning its best workers pay raises.

The WSJ notes that 10,000 employees have already taken the assessment. Their jobs are safe (for now). Walmart HR manager Beth Nagal said VR assessments won’t get employees fired. But I don’t think it’s a stretch to imagine lower scoring employees getting the axe. After all, Walmart is already experimenting with robots in their stores to lower the employee count.

As we reported back in April, Walmart plans to have nearly 2,000 autonomous floor scrubbers in its stores by early 2020, as well as inventory scanning robots in the aisles at 350 locations. While locations across the country are raising minimum wage, Walmart says the move towards automation will save the company money and allow custodians and shelf stockers to focus on other jobs, mainly interacting with customers.

Future Walmart employees may have to flail around a bit in VR to keep their jobs — even as shelf-stocking robots continue to replace the company’s flesh and blood employees.

Of course, Wall Street loves the prospect of better productivity and employee layoffs. So it should come as no surprise to find shares hovering near all-time highs this week:

WMT

You’re sitting on open gains of more than 12% since we jumped on our Walmart trade back in April — and I don’t see this momentum slowing down anytime soon.

Finally, the latest outrage in our nation’s never-ending culture war is boiling over.

If patriotic sneakers make you emotional, you might want to skip our final story of the day.

That’s right — If you needed more proof that 2019 is the most insane year ever, people are getting mad about sneakers.

Nike Inc. (NYSE:NKE) complied with a demand from Colin Kaepernick to pull the new Air Max 1 USA shoes from retailers, according to The Wall Street Journal. Nike officially de-listed the shoe, but a few pairs showed up on sneaker resale sites for outrageous premiums.

Why the recall? Because the shoes featured a Betsy Ross-style American flag with 13 stars. The former NFL star complained to Nike brass that the flag was somehow offensive.

I’m still not sure why…

Kaepernick’s backlash against the shoes is already receiving its own backlash. Arizona governor Doug Ducey announced in a tweet that his state will withdraw all incentives offered to Nike for its new factory scheduled to be built in Goodyear, Arizona.

Either way, the controversy doesn’t seem to be affecting Nike shares. As I noted immediately after Duke superstar Zion Williamson’s shoe explosion earlier this year, I love to see stocks react positively after getting hit with bad news. Nike management has done a great job at mitigating the damage from bad publicity.

Now the stock is fighting back toward its April highs:

NKE

Nike’s chart is telling us to ignore the bickering playing out in the media right now. A close above $86 should trigger the next leg of Nike’s rally back to all-time highs.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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