The Market is closed, as we witness the inauguration of President Donald Trump, today, several key developments are poised to influence the stock market and broader economy. Notably, the recent ban on TikTok and the devastating wildfires in California are events that investors should monitor closely.
TikTok Ban and Its Implications
On January 19, 2025, a federal ban on TikTok took effect in the United States, rendering the app temporarily unavailable to approximately 170 million users. This action stemmed from national security concerns regarding ByteDance, TikTok's Chinese parent company, and its handling of American user data.
In response, President-elect Donald Trump announced plans to issue an executive order extending TikTok's operations in the U.S. by 90 days. This extension aims to facilitate negotiations for a joint venture, potentially involving 50% U.S. ownership of the app. ByteDance has expressed gratitude for this opportunity to seek a more permanent solution.
Impact on the Technology Sector
The ban on TikTok creates a vacuum in the social media landscape, presenting opportunities for competing platforms to capture displaced users. Notable contenders include:
Facebook (META): As the parent company of Facebook and Instagram, Meta Platforms Inc. stands to benefit from increased user engagement on its platforms. Currently, META is trading at $612.77, with an intraday high of $625.53 and a low of $603.94.
Alphabet Inc. (GOOG): Owner of YouTube, Alphabet offers YouTube Shorts, a feature similar to TikTok. GOOG is trading at $197.55, with an intraday high of $198.80 and a low of $194.56.
California Wildfires and Reconstruction Efforts
Starting on January 7, 2025, Southern California has been ravaged by wildfires, exacerbated by strong Santa Ana winds and low humidity. The Palisades Fire and Eaton Fire have collectively destroyed over 12,000 structures and claimed 27 lives.
In response, President Joseph R. Biden Jr. approved a Major Disaster Declaration for California on January 8, 2025, enabling federal assistance for recovery efforts.
Investment Opportunities in Reconstruction
The anticipated rebuilding efforts in California are expected to significantly impact sectors such as building materials, construction equipment, and transportation. Companies poised to benefit include:
Deere & Co. (DE): A leading manufacturer of heavy machinery, essential for cleanup and construction. DE is trading at $455.44, with an intraday high of $457.09 and a low of $439.11.
Caterpillar Inc. (CAT): Specializes in construction and mining equipment. CAT is trading at $386.02, with an intraday high of $386.66 and a low of $380.90.
Lennar Corp. (LEN): A prominent home builder. LEN is trading at $141.54, with an intraday high of $143.76 and a low of $140.75.
Home Depot, Inc. (HD): Supplies building materials and home improvement products. HD is trading at $409.38, with an intraday high of $414.24 and a low of $408.60.
D.R. Horton Inc. (DHI): Another major home construction company. DHI is trading at $147.65, with an intraday high of $149.23 and a low of $145.39.
PulteGroup Inc. (PHM): Engages in home building and financial services. PHM is trading at $117.03, with an intraday high of $119.05 and a low of $116.44.
Lowe's Cos., Inc. (LOW): A retailer specializing in home improvement. LOW is trading at $261.06, with an intraday high of $262.00 and a low of $258.50.
My Thoughts
The United States continues to present robust investment opportunities. Adopting a mixed strategy of swing trading and dividend capture may prove advantageous in the current climate. Staying informed about policy changes, technological shifts, and infrastructural developments is crucial for making sound investment decisions. My views seem to be shared, which will have an impact on demand. Here is a Reddit Post I noticed, "Investing in construction companies in California".
