23 Apr Beware this stock trap that’s not as defensive as you think
(This is a wrap-up of the key money moving discussions on CNBC’s “Worldwide Exchange” exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for ways to play the market volatility, and a former Tesla executive lays out the challenges ahead for the company as Elon Musk pledges to focus more on the EV maker. Navigating the volatility Lizzie Evans of Evans May Wealth said investors should look at premarket rallies like the one on Wednesday as an opportunity to adjust portfolios that are overweight in certain sectors. “You should use the rallies to sell and rebalance into an appropriate asset allocation,” said Evans. She added that the secular bull market is intact and believes the megacap tech trade will return. “Longer term, I do think that technology leads the market and financials are set up to do well especially if the economy does not deteriorate materially,” Evans added. Amy Wu Silverman of RBC said investors may want to rethink a defensive play that has gained popularity: consumer staples. “One thing we have been looking at is consumer staples, ticker XLP. … Folks have been flocking there as a safe haven and what our research analysis has actually been very concerned about is you are going to see further cuts in this area as the consumer gets hit more,” Silverman said. EU trade official on China ‘de-coupling’ Valdis Dombrovskis, European commissioner for economy and productivity, discussed recent comments from EU officials that the trade bloc will focus on “derisking” from China rather than “decoupling.” “There are a number of concerns we share with the U.S. on China on its industrial overcapacity, on its non-market policies and practices. So we are ready to work with the U.S. to see how to best address those issues… but slamming the tariffs on us is not the best way to get the allies on board,” said Dombrovskis. He added that the EU is actively working on deals with India, Indonesia, Thailand and the Philippines as it derisks. “The focus right now is on Asia to hold more trade agreements to provide more opportunities to the EU Economy to European companies and will be mutually beneficial.” Former Tesla VP talks Musk increasing focus on EV maker Karim Bousta, a former Tesla vice president, said Elon Musk committing to reduce his role at the so-called Department of Government Efficiency and focus more on Tesla is pivotal for the future of the company. Bousta said Tesla is facing three imminent challenges: increasing EV profitability, releasing new models and accelerating production of the Robotaxi. “Having the CEO back focusing on these two major initiatives is great news for the company, but it doesn’t reduce the nature of the challenge,” said Bousta. “With regards to the Robotaxi, we shouldn’t underestimate the magnitude of the challenge to make this new line of business work for Tesla.” “They first have to solve for good the autonomous vehicle challenge. They are running behind, that’s the reality,” he said. “Once you solve the self-driving challenge … you have to create a real business out of it. That takes time, it takes a lot of capital, it takes a lot of effort. And again, there are people who are already there.”