Sector Funds - EISTrading.com

1 Sector Funds THE WILLIAMS' Sector strength strategy 2018 . Fidelity Select Defense and Aerospace (FSDAX). After last month's weakness for Chinese goods. Nonetheless, the Defense and Aerospace Sector President Trump is still brimming resulting from trade tariffs being with confidence that implemented and with the first denuclearization of North Korea meeting between the President will forge on but expects to hit and North Korea leader Kim Jong- more bumps along the way. Un a success, the environment changed for this Sector during Trump's heated rhetoric regarding July.

2 Weak military spending by other NATO members spurred traffic to Talks with North Korea faced a aerospace & defense stocks. The snag with the country referring to President increased pressure on negotiations with the as a NATO members to hike military "unilateral and gangster-like spending. Trump called on all demand for denuclearization. members to increase spending to 2% of each country's GDP. North Korea has constructed two immediately, calling the current new buildings at a missile facility situation unfair.. in the northern suburbs of A potential crisis inside NATO will Pyongyang and appears to be likely prompt European countries actively continuing production to increase spending as they can there, according to an analysis of no longer rely on the heft of the newly available commercial In turn, demand for weapons satellite imagery, the latest sign of will surge.

3 Continued progress in the country's nuclear and missile The Bipartisan Budget Act of program. 2018 , approved in February brought important developments Finally, President Trump said for followers of defense spending. China may be exerting negative The framework provides for a pressure to hinder the minimum 15% increase in denuclearization process in modernization funding for fiscal reaction to the latest tariffs on 2018 , with a lesser 3% boost for Copyright 1997 Educational Investor Services. All rights reserved fiscal 2019. This means the Navy should have even more spending is front-loaded, which is ships.

4 Although it's not clear that good for near-term revenues. he'll have his way, momentum continues to build for defense Additionally, the framework spending. includes significant increases for equipment procurement and R&D, Although trade tariffs still have the the two most important drivers of largest effect on FSDAX, rising revenue for defense contractors. geopolitical tensions and an It's hard to overstate the excellent business outlook should importance of this turn of events, result in more upside for this as the has essentially been on Sector . FSDAX had its best month a procurement holiday since the of the year during July, rallying end of the Cold War into the early FSDAX remains 1990s.

5 Recommended. One area that is receiving overdue Returns attention: the number of fighter jets is projected to increase July: for the first time since 1985, 2018 YTD: (which was during the Reagan 20 Year Average: administration.) From 50 jets in 2014, we are expecting to have 125. by 2023. President Trump has gone on record as stating that the Copyright 1997 Educational Investor Services. All rights reserved THE WILLIAMS' DIVERSIFIED Sector strength . strategy 2018 . Fidelity Select Defense and Aerospace (FSDAX). Fidelity Select Leisure (FDLSX). Transfer Fidelity Select Energy (FSENX) to Fidelity Select Gold (FSAGX).

6 The remaining two Funds of the supply swamping demand. The Diversified Williams' Sector Reuters survey released on strength strategy were also Monday showed that OPEC. positive for the month. increased production in July by 70,000 barrels per day (bpd) to A handful of one-day losses is million bpd, a high for the putting the oil market on pace for year. its worst month in two years. Big swings in oil prices this month The original plan to impose have often correlated with sanctions on countries that bought headlines emanating from the oil from Iran after November 4th White House, which included July has been extended.

7 There are 2nd --Trump tweets about Saudi rumors that China will buy oil supply pledge; July 5th -- Crude from Iran, ignoring US sanctions. stockpiles rise and Trump tweets The extra oil Iran would supply to at OPEC; July 11th -- Libya and China may result in a supply glut Saudis provide relief, Trump slaps of oil on the market. tariffs on China; and July 16th -- Treasury Secretary eases Iran Finally, peak driving season ends supply fears. in July, and from August through November demand for oil Herein lies the danger for this declines. Sector . Before the mid-term elections the GOP will try Although FSENX gained everything possible to reduce gas during July, EIS recommends prices at the pump.

8 Transferring FSENX to Fidelity Select Gold (FSAGX). OPEC's output hit a 2018 high in July, reigniting concern about Keeping in mind the goal of historically weak months of Copyright 1997 Educational Investor Services. All rights reserved August and September is to add a Fast forward to June, although hedge to all portfolios. resort stocks were flat, casino and cruise line stocks as a group rallied The price of gold has been in a 5%. Starbucks, the second largest downtrend, sinking roughly 11% stock holding for FDLSX, which since April and hasn't really was down 15% last month, reacted to the current trade war, regained some of its losses, the exploding budget deficit or rallying over 5% during July.

9 This even the recent uptick in inflation. stock also doubles as the top stock With inflation on the rise and pick of the Widely Held Stock government borrowing insanely strategy . high, you'd expect precious metals to become more popular. That brings us to McDonalds (MCD), the largest holding of We may have entered the single FDLSX. MCD had better than best time of year to bet on gold. expected earnings during the 2nd All else being equal, it's better to quarter only to be hit by a have these seasonal patterns on potential contaminated food scare, your side than to fight against which put pressure on the stock.

10 Them. Taking a long position gold MCD has struggled the entire year on July 24 and holding it through as it revamps its stores. This stock Sept. 6 has been profitable in 13 of was a standout during 2017, the the last 15 years and the gains majority of store remodels is tend to be large. nearing completion and most of the downside of this stock has Big-money speculators are very already occurred. negative on the commodity with the number of short positions FDLSX gained during July outnumbering the long positions. and as an overall Sector it The last time the numbers got this performs best during the third low was December of 2015, right quarter.