It was a week for the record books for Mr. Market. First, it tumbled 10% between last Wednesday and this Tuesday, wiping out more than $2 trillion in investor wealth.
Then the markets soared so much Wednesday and Thursday that the Dow Industrials set a two-day record, adding nearly 989 points. (Its prior record was 905 points in 2008.)
We saw another record Thursday when oil futures soared more than 10% on a report that Venezuela has asked OPEC to hold an emergency meeting. West Texas Intermediate crude ended the day at $42.56 per barrel. It was the best percentage gain for crude since 2009.
Oil continued its climb Friday, adding 6.2%, but unfortunately the stock surge didn’t stick going into the weekend.
The good news is that stocks managed to gain for the week. But the worst may not be over yet — something each editor in your Uncommon Wisdom Daily newsletters has been warning about since the Dow first tumbled 1,100 points on Monday morning.
Brad Hoppmann in particular has been warning that Sept. 16, 2015, is the day he’s been watching as having the potential to send shockwaves through the U.S. markets. And it could make this week’s action look like a bullish day at the beach.
Keep an eye on your Cash Flow Kings and Global Trend Trader issues for more about this pending market event. In the meantime, if you’re in Erika’s path like Uncommon Wisdom Daily headquarters is, please stay safe because the storm is heading our way this weekend.
The U.S. markets saw not just their worst week in 2015 so far — but their worst week since 2011.The Dow has already dropped 1,000 points in August. All 10 S&P 500 subsectors are in the red. And West Texas Intermediate crude slid below $40 in today’s trading (for the first time since 2009).
Overseas, things were pretty much the same, as global stocks plunged on widespread economic growth concerns. On top of that, China got the “no confidence vote” heard ’round the world when the International Monetary Fund said the yuan won’t be included in its basket of world reserve currencies this year. Specifically, it will be “at least a year” before that could become a possibility.
And in Greece, Prime Minister Alexis Tsipras said he was stepping down after just a little more than half a year on the job. Elections are set a few weeks from now; at this point whoever steps up will be responsible for making sure the nation meets the terms of its third bailout. (We have a couple dozen presidential contenders over here … maybe we can make a suggestion or two?)
It was a good week for gold, though, as the December futures contract gained $46 (4.1%) this week.
In Thursday’s trade alone, gold gained 2.2%, although JR Crooks’ subscribers were able to grab two triple-digit-plus gold gains thanks to the yellow metal’s move up.
Privately held Bank of Georgetown in Washington, D.C., just did something unusual. It voluntarily reported quarterly results, and announced plans to keep doing so — in good times or bad.
Earnings were good, in case you were wondering. And no, the company doesn’t appear to want to go public.
I’ll be watching this one. Maybe we all should …
The IRS says the amount of Social Security numbers that could be in the hands of cybercriminals could be close to 700,000. More than 300,000 taxpayer accounts were originally affected; that number was revised upward by an additional 390,000.
Have you had your sensitive data stolen? How would you even know?
For my part, I’m checking my bank statements every day. And my credit card statements. I am also going to sign up to check my credit score. I think Experian is the most-accurate but I’m not a fan of the monthly recurring charge. (Of course, I’m also not a fan of having my credit score in jeopardy — I have crazy neighbors and need to move again soon!)
If the IRS contacts you, it says it will not request any personal info from you. So, if you get any calls asking for anything out of the ordinary, I suggest asking to take down their number and call them back. (And don’t call them back. Call the Better Business Bureau instead.)
Also, if you do need a copy of an old tax form, the IRS has shut down its online Get Transcript service. However, they do have a mail service that you can use.
Goldman: “Flat is the New Up”
The stock market is apparently like your diet. No movement on the scale is considered to be a good day.
Go on. Have a cookie. If stocks stay flat through year-end, as several people are predicting, we can hope the same can be said of our tummies!
This week we saw a surprise devaluation of the Chinese yuan. Many investors and traders were caught off-guard by this sudden movement.
This rocked U.S. stocks on Tuesday and Wednesday, although equities managed to regain their footing late yesterday and continue their recovery today.
The question we have to ask now is whether there is more to this than we anticipated.
We believe there are many reasons for China’s recent actions, but we do know one thing for sure.
China has been known on many occasions to put out economic reports that tend to be a “little gray.” Their way of doing things is much different than the U.S. when determining economic policy. To wit, some economists have suggested that the logical path to stimulating their economy should have been to lower rates.
This being said, we think the dust will settle soon when we get a better economic picture of what is happening here in the U.S.
When it comes to stability, it is hard to beat our economy. With earnings mostly coming in higher than expected, economists and the Federal Reserve think our economy is getting stronger.
A strong U.S. is good for the global markets. We’ll find out soon enough how next quarter turns out for U.S. businesses. In the meantime, look for foreign investments to help stimulate our markets.
Does anyone else get the feeling that China devalued its yuan to improve the odds of the International Monetary Fund deciding to add it to its elite basket of currencies at its October meeting?
This elite basket is the IMF’s Special Drawing Rights, or SDR. The SDR is a kind of super-currency that central banks hold and trade between themselves.
The IMF reviews the SDR basket’s composition and weightings every five years. The last time was in 2010.
At that time, the SDR included the U.S. dollar, the euro, British sterling and the Japanese yen. The dollar and euro have the biggest weightings, together accounting for around 80% of the SDR valuation.
Considering how the “big boys” have devalued our currencies over the years, perhaps China is simply trying to haze itself to be considered for this monetary fraternity.
We’ll know in just two months whether it worked …
It’s no secret that Donald Trump got rich using other people’s money. For some big-money investors, he turned millions into billions. For others, he was the physical embodiment of “How do you make a million dollars? Start with $10 million.” And for more than he probably cares to recount, they got a nice big goose egg — and probably some legal bills — for their trouble.
But while Trump’s casino fled Atlantic City — by his account, before all the other casinos folded — no one is better at “being the house” than the undisputed GOP primary-candidate poll leader.
You don’t have to like Trump to be like Trump. You can be “the house” any old day of the week when you write, or “sell to open,” options. If you own a stock, “sell to open” some calls against it. The “worst” thing that could happen is that your shares get “called” away at a premium, in addition to the money you collect from selling the calls. If you make more than you pay in commissions, you’re a double winner.
Same goes with selling puts. “Worst” case there, you get “put” the stock at a discount. Best case? Free money (minus commissions, of course).
Granted, “The Donald” works with millions and billions, while the rest of us are building our nest eggs a couple hundred bucks at a time. But as we can learn from this presidential hopeful, the true “art of the deal” is perhaps getting more out of it than we put into it. And for a trade that takes only takes a few seconds to make and generates an instant, automatic gain, I think that’s a pretty fair exchange.
U.S. stocks were basically flat most of the morning, before some positive comments on Greece wanting to stay in the EU sent the Dow up 100 points midway through the trading session.
• Greece is about to default on a repayment to the International Monetary Fund that’s due Tuesday. Last-minute negotiations to put a deal together to extend bailout terms continue.
• New Jersey Gov. Chris Christie announced his bid for the Republican presidential nomination. The outspoken governor is the 14th GOP candidate to officially announce.
• U.S. consumer confidence jumped in June. This is according to an index released by The Conference Board. The index rose to 101.4 in June from a downwardly revised 94.6 in May, topping analysts’ estimates.
• Cisco Systems (CSCO) said it will buy OpenDNS for $635 million. With the addition of this boutique security company, Cisco plans to increase its cloud-security offerings.
• Oil futures were higher Tuesday. Traders bid up the commodity on news of an agreement to extend Iran’s nuclear program talks by another week.
• Gold futures settled lower again. The yellow metal is down about 1% through the first half of 2015.
U.S. stocks plunged Monday, with the Dow falling nearly 300 points mid-session. Today’s drubbing took place after the Greek bailout negotiations broke down. It’s starting to look like a Greek exit from the European Union could become a very real possibility.
• The Greek situation is fluid, but now Greece will likely default on a repayment to the International Monetary Fund due Tuesday. The debt-ridden country now is on the verge of fiscal collapse.
• Greek Prime Minister Alexis Tsipras announced a referendum on whether to accept terms demanded by its international creditors for this Sunday. Banks and the stock market are closed, and depositors can only withdraw up to 60 euros a day from ATMs.
• NBC Universal, a unit of Comcast (CMCSA) said it will cut ties with Donald Trump. This was due to “derogatory statements” the presidential candidate recently made regarding immigrants.
• Oil futures fell to a three-week low Monday, as fears over a Greek exit helped fuel the sell-off.
• Gold futures settled at their highest level in a week. The worsening financial crisis in Greece helped to boost the safe-haven metal.