[Market Madness] Edition 0094
Let's Take the Weekend
Into the weekend
Well folks, retaliation came today in the form of a closure of a U.S. consulate in Chengdu. The WHO has taken a swing at Secretary of State Pompeo for his comments regarding China and their relationship with the WHO. A good guess would assume Donnie will take to Twitter about the consulate closure as well as possible retaliatory actions in response to their retaliation. And so the cycle continues.
This rise in tensions has led about to a decline in stock prices this morning. Rising case information has also continued to weighed heavily on the markets, the economic data released yesterday about the labor market in particular. The current drop in market falls in line with the change of sentiment, which continued throughout the day and carried into the close. Overseas, the major indices followed suit. Elsewhere, gold and volatility are up.
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Fundamentals
Friday’s Close:
Dow Jones: -0.69%
S&P 500: -0.62%
NASDAQ: -0.94%
US 10 YR: 0.584%
Crude OIL: $41.20
Market Madness Portfolio: -0.58%
COVID 19 Global Cases: 15,594,551
Indices Overseas:
FTSE 100: -1.21%
Nikkei 225: -0.58%
Hang Seng: -2.21%
TEDRATE: 0.16
LIBOR (3 month): 0.24450%
Of course, it’s all connected (an editorial of sorts)
I’ve been looking at different sites and sources of information and everything continues to point in the same, bleak direction. I do my best to reserve the politics and drama from the finance and economics, but they’ve become like bubble gum in long hair — a complete and intertwined disaster. The politics used to, the way I see it, be in parallel conjunction with the economics. Each worked in tandem with and benefitted the other. Within the past years, we’ve approached a divergence that places a divide between global economic conditions and actions taken from political ambition.
Complicating matters further is the fact that we are approaching a breakeven on the year, at least for the S&P 500. The spread we are seeing between performance in the major indices is drastic, with the NASDAQ clearly leading the way, and the Russell 2000 bringing up the rear.
It may be safe to assume that at least for the near-running future that discussions regarding the trade deal between the U.S. and China are no longer on the table. From many angles, each side has begun sparring with one another for one reason after another. The push from the White House to move to ‘made in America’ has not been fully realized, not even close, companies still manufacture goods in Asia, and we are still importing a lot of goods from China. The short of the long is that we still need the trade relationship because we cannot yet do everything ourselves. On top of that, we should not have to do it all ourselves. We’ve looked at and talked about comparative advantage and specialization with respect to the flow of goods, services, and money globally. We know that this is vital in increasing internationalization and globalization from an economic perspective. To that end, whether anyone is left, right, or indifferent it is important to facilitate and foster global relationships because of the severe cost incurred on a nation’s citizens by doing it all oneself.
On top of that, the current rhetoric pushes in the direction of putting corporates in the positions of making the U.S. do it all itself. With the mass of deteriorated supply chains, corporate cost-reducing behavior, and the economic downturn among us, there is little victory indicators in sight. With such a gloomy outlook, it appears uncertain and unlikely that the financial markets are recovering with such gusto. And for many reasons, it is uncertain and unlikely, but then again it is 2020 and a lot of unlikely things have happened.
The fundamentals are still not fully presenting themselves, particularly amid what is turning into a rocky earnings period and a reduction in forward guidance. The bipolarity of investors continue to rear their heads between optimism and pessimism regarding vaccine developments and case risings and closures.
On top of everything comes back the politics. Divisive leaders swing between taking matters into their own hands with a disregard for the science out of a political stance and then changing stance because Donnie changed his stance too. Between the beginning of mask mandates to now, nothing has materially changed aside from the increase in case numbers and more deaths. Furthermore, politics continues to play with the anticipation of further fiscal stimulus. Depending on what you hear and who you read, you get different numbers and different rumors about the details of the next bill. Leaders on Capitol Hill say its coming close, so I’ll believe it once I see it.
Quick Takes
China orders closure of U.S. consulate in Chengdu. (via CNBC)
More on the rising COVID 19 cases. (via NY Times)
Opening day for the MLB. (via NY Times)
Individual investors were a big part of recent market activity. (via CNBC)
WHO speaks out against Secretary of State Pompeo. (via CNBC)
AMEX posts $1.6 billion in provisions for potential credit losses.
Reader’s Corner
The reader has taken the weekend to clear mind and find some positive, good news outside of the troubled financial, economic and political news. Have a great weekend to everyone!
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