The first week of June 2019 was one of those that felt like a head-scratcher. After all the “sell in May and go away” worries, what started out as an oversold rally on Tuesday became more exaggerated as equity investors ironically have started cheering for weaker economic readings.

The Dow Jones industrials and S&P 500 were up 5% late on Friday from Monday’s closing prices, and that was after a dismal May knocked out close to half of the year’s strong gains. It turns out that bad news ironically is being digested as good news right now. The current logic in the market is that weaker economic readings will force Federal Reserve Chair Jerome Powell to cut interest rates sooner rather than later. This also keeps the notion alive that perhaps low interest rates may become a permanent normal and not just a sort of stagnant new normal.

Even with Powell and Fed-heads talking about the possibility of lowering interest rates and that they are monitoring economic developments, it still feels strange after almost 30 years of seeing the business cycles to cheer for weaker economic growth reports. It’s almost like cheering that your effective tax rate is lower because your income got cut in half.

This weekend’s message is neither doom nor boom. Last weekend’s message noted that there are some great bargains in quality companies for long-term investors and that some companies and sectors were trading as though the next recession already has started. The economy is slowing, but things are still relatively good. Unemployment remains at 50-year lows and wages in May were up 3.1% from a year ago, and household net wealth increased by the most in almost 15 years. Consumer borrowing is also not stretched at all, and personal balance sheets are strong. Even with weaker payrolls, there are still more job openings in America than there are able-bodied people to fill them. And the impact from China tariffs is less than the media scared you about, while tariffs against Mexico may be given a delay to work issues out. The IMF talked down the economy and Mexico took a downgrade. Through all the worries, it seems businesses are discounting those tariff woes.

Here are some ideas and considerations for your money, the markets and the economy this weekend.

Friday’s top analyst upgrades and downgrades were in American Tower, Applied Materials, Exelon, Hubspot, Schlumberger, Shopify, Splunk, Zendesk and many more. Thursday’s top analyst calls included AMD, Apple, Canopy Growth, Dell Technologies, Flex, FuelCell, IBM, MongoDB, Shopify, Tilray and Whiting.

While the rally this week was stellar (5% Dow/S&P gains in four days is not normal), many investors still think that the stock market is overbought and expensive. We looked at the Merrill Lynch research database and found five somewhat out-of-favor dividend stocks that are a steal now. And five stocks under $10 may have monster upside.

Individual Analyst Ideas

Analysts have raised already aggressive targets on Beyond Meat, and Apple and Snap are somehow both viewed as cheap stocks at the same time. The Cronos canna-biz could let your speculative portfolio fly high. Did a big U.S. Steel downgrade by Goldman Sachs mark the bottom for steel stocks? Lyft and Uber saw many positive calls that could be “hopeium” on your ride home. Look at how many retailer earnings trade as if they are already in a recession.

Health, Biotech, Pharma

Wedbush Securities has a list of cancer/oncology stocks that could double based on their presentations and data from the annual ASCO (Cancerpalooza) conference that ended. The world’s most prescribed drug class ironically may be killing you. Will promising cancer data save Amgen shares?

Autos

This seemed surprising, but the U.S. auto sector sent a letter to President Trump that they can and should meet the clean air standards they agreed to under President Obama back in 2012. So what if the biggest auto merger was called off before it even started. Also, should car prices be up this much from a year ago, even before tariffs on components?

Banking and Finance

A cryptocurrency for the largest banks, but not for you and me. Are Warren Buffett and Berkshire Hathaway causing confusion in top bank/finance ETFs? Tariffs and uncertainty sure boosted gold. How about investing in a “trade war ETF” these days? With bitcoin and crypto prices back up, blockchain ETFs may get some notice.

Mergers and Rumors

There may be no Fiat Chrysler merger already, but Barnes & Noble was just saved in a buyout by Elliott Management (Paul Singer). Way beyond old merger hopes, GameStop may be a hybrid cross of Blockbuster and the Titanic. Google defies regulatory pressure with a big-data acquisition. Did Cypress Semiconductor get a fair buyout price? While there is no story here yet, get ready for more fireworks in the would-be Sprint and T-Mobile merger.

Crude oil spent some time recovering back above $53 on Friday after entering into bear market territory (−20% from highs) this week, and gold continued to surge to $1,350 on uncertainty, lower rates and technicals. The 10-year Treasury yield was down over five basis points at 2.07% midday Friday, while and the Dow, S&P 500 and Nasdaq were all up over 1% at the same time.

Sometimes opinions are a lot like … well, you know what. In these confusing times, different strategists see different directions. A quant at Nomura showed that the S&P 500 could be setting up for a 20% drop. At almost the exact same time, Canaccord Genuity’s strategist is staying bullish with S&P 500 targets of 2,950 for 2019 and 3,350 for 2020 (versus 2,880-ish). Both UBS and Goldman have warned that the financial markets are overpricing chances of a Fed rate cut right now.

Interest Rates

Let’s end on a note about interest rates. As far as how much to expect on rate cuts whenever they come, it is hard to expect today that the Fed’s future rate cuts will be extreme. The question is how much Powell overshot on rate hikes. Was it 25 basis points or 50? This week showed a more humble Powell that may look at alternatives to traditional monetary policies.

The Fed a couple of options outside of traditional policies, but both would come with risks. The first effort’s legality could be called into question as well.

1. What if Powell decided to just widen out the federal funds target range from 25 basis points to 50 and allow market forces to have more of an influence over short-term rates? The markets decide the yields on intermediate and long-term interest rates (hence the inverted yield curve), but the Fed is in almost complete control of short-term rates.
2. If the Fed wants higher rates to remain, why isn’t it a much more aggressive seller of its vast Treasury holdings into all this new bond market strength? The balance sheet did not really start shrinking much until the start of 2018, and the Fed could easily use the strength of the bond market as cover to justify more aggressive selling if it wanted to. That balance sheet is still $3.85 trillion, versus $4.4 trillion in February of 2018 (and compared to a peak of $4.5 trillion in 2015).

That’s all for now.

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