Earnings and Chinese Diplomacy

Several big earnings reports are coming this week, with reports from PayPal (PYPL), AMD (AMD), Spotify (SPOT), and Chipotle (CMG) on Tuesday. On Monday evening Palantir’s (PLTR) first quarter and annual revenue forecasts exceeded expectations, boosting the company that has already seen a historic rally over the last year.

While China announced retaliatory tariffs against the U.S.A., an upcoming conversation between Presidents Trump and Jinping on Tuesday could open the door for compromise. China recently opened an antitrust investigation into Alphabet’s Google (GOOG) and designated some other US companies as “unreliable entities”, perhaps to add leverage to their negotiations.

While there is still a lot of uncertainty over the U.S. and China relationship, strong earnings results and promises of deregulation continue to bolster U.S. stocks. While strong earnings reports offer a reason to be optimistic, investors should remember downturns grant an opportunity for disciplined investors to add to their portfolios. Remember: spread risk, buy quality holdings, and let time be your friend.