T is for “tout” and that ends in “t” and that spells in Music Man’s world a volatile stock market that signals a looming inflationary period. Crony capitalists are profiting as the economy resembles that moment when the vehicle goes out of control despite the lane proximity sensors. It depends what time on the cross it is.
The Dow Jones has been in existence for 133 years and of the 20 days where the Dow has suffered its greatest single-day points drop, nine of them have occurred this year alone.
Stocks went into free fall on Monday, and the Dow plunged almost 1,600 points -- easily the biggest point decline in history during a trading day.
Buyers charged back in and limited the damage, but at the closing bell the Dow was still down 1,175 points, by far its worst closing point decline on record.
The drop amounted to 4.6% -- the biggest decline since August 2011, during the European debt crisis. But it was nowhere close to the destruction on Black Monday in 1987 or the financial crisis of 2008. Still, for investors lulled to sleep by the steady upward climb since Election Day, it was alarming.
And the rout in U.S. markets continued to ripple around the globe. Japan's Nikkei index plunged 4% in Tuesday morning trading while the S&P/ASX 200 in Australia dropped 3%.
The White House said in a statement that President Trump was focused on "our long-term economic fundamentals, which remain exceptionally strong." The statement cited strengthening economic growth, low unemployment and increasing wages for workers.
The problem with the glass half-empty/full metaphor is that the glass may be the structural problem and the liquid is polluted. “Remember, bulls make money, bears make money, but only pigs get killed.”
Economic growth delivers earnings, and it’s here the debate gets most heated. Significant metrics show the American economy is kicking. The glass-half-empty view holds that growth has peaked and recession won’t be far behind.
- BULL CASE: Stocks will rally as GDP stays robust, inflation steadies and unemployment holds at record lows. Odds the U.S. will fall into a recession in the next year stand at 15 percent, according to Bloomberg’s U.S. Recession Probability Forecast index.
- BEAR CASE: Trouble looms as the housing market wobbles, the consumer shows signs of tiring and the Federal Reserve teeters on the brink of a policy mistake.
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Tariffs have raised costs across industries, threatening to upend profit forecasts and slow the economy. In about 90 days, the levies could get more onerous or China and the U.S. may have an agreement to cut them.
- BULL CASE: The 90-day truce provides a chance to make strides toward a deal that could remove one of the market’s biggest headwinds. China signaled a willingness to ease tensions, and both countries see the economic benefits of a detente.
- BEAR CASE: A stalling in the trade spat just elongates the volatility and bluster for equities. With little detail emerging, companies that have seen tariffs up to this point take a toll are left with more uncertainty and confusion regarding what lies ahead.
www.bloomberg.com/...
Pork fat rules… with a spice weasel... Bam!
An exchange-traded fund (ETF) is a security that tracks an index, commodity, or basket of assets that resembles an index fund but trades like a stock on an exchange.
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Since the financial crisis, ETFs have played major roles in market flash-crashes and instability. Problems with ETFs were significant factors in the flash crashes and market declines in May 2010, August 2015, and February 2018.
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“Energy, coal, gold and consumer spending are good ways to bet on Trump's agenda.”
With investor passion running high for ETFs, mistakes are being made. Take millennials who are more risk friendly than their older brethren. According to a Bloomberg report, millennials took a page from Trump, the self-proclaimed “king of debt,” by pouring investment dollars into EFTs that rely on leverage to boost returns. Another area of focus for millennials ETF investors after the election: gold. While those two made sense based on what the consensus said the markets would look like with a Trump victory, they ended up being the wrong calls.
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