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Mnuchin Instigates Market Stampede

Daniel Chase

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There comes a time in every person’s life when they reach an impasse. When I say, “impasse,” I’m speaking about one of life’s many obstacles that present itself to us at incredibly inopportune moments. For you cinephiles in the audience, you’ve witnessed the man/woman standing on a street corner, who just lost their job and screams at the top of their lungs, “how could this get any worse,” only to be drenched in sewer runoff following a taxicab who drives right through a puddle. For those of us less entrenched with stereotypical vehicles of slapstick in film, everyone, more or less, has a bad day. Well, suffice to say that the US stock market has had a series of rough days over the course of the last several weeks, and several analysts believe that our nation may be headed for a recession a la 2008. 

Over ten years have gone by since our country underwent an industry-collapsing recession, and, although activity measures like retail sales, industrial production, and employment are at an all-time high, a growing number of economists and financial experts believe we are due for another recession in the next twenty-four months. Market growth has shown significant signs of slowing down over the last few months, with the Dow and several other indices dropping hundreds of points every week or so. 

“Traditional signals of a U.S. recession from the shape of a yield curve to a fall in housing investment to corporate bond spreads are suggesting in late 2019, early 2020.”

Constance Hunter, Chief Economist, KPMG

According to several media outlets, all eleven sectors of the S&P 500 have received a decrease in expected earnings growth in the last few months, “led by utilities, materials, and industrials.” 

Before he even took office, President Trump made it clear that he wanted every product, service, and commodity to be manufactured in America and only America. As it relates to the oil industry, this has translated to a rush to pump oil out of shale fields around the country, most notably in West Texas, miraculously leading to record-high levels of production for black gold. Though domestic oil production couldn’t be higher, concerns about oversupply have sent oil prices every which way but loose. 

As of Monday, the Dow Jones Industrial Average dipped below 22,000 following a statement issued by Treasury Secretary Steven Mnuchin that was intended to calm nervous investors in the space. In his ill-timed statement, Mnuchin said that:

“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and businesses. With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS, and other crucial functions within the department.”

Statement from Treasury Secretary Steven Mnuchin 

Following Mnuchin’s statement, several major US indexes dropped due to the fact that his words were viewed as off-base and arguably unnecessary in the grand scheme of it all. One analyst told CNN that “this type of announcement raises the question of whether Treasury sees a problem that the rest of the market is missing.” Why else would Mnuchin call executives from every major US banking institution on Christmas Eve? In addition to Mnuchin’s bizarre statement, I can’t imagine it being helpful that President Trump shutdown parts of the federal government until further notice. Though many understand that the shutdown will have no major effects on the US economy, investors and executives across all sectors are concerned with the inability of lawmakers and the current administration to set aside their differences and approve the federal budget. 

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Stock Price Thursday Morning Update – May 30, 2019

Joe Samuel

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Defense Spending Picks Up As Security/Threat Detection Companies Like Northrop Grumman & Others Position To Capitalize

As national security threats continue to develop, security technology must as well. Every day people are left wondering if we can stop the next big mass casualty event. Thankfully, both the government and private companies are looking to do just that.

Click Here To Read The Full Article


How Is The On-Demand Economy Driving New Wealth In The Market?

Technology has evolved over the years, and so have online websites and apps. Growing food delivery apps are the newest trend, expanding revenue generation in the food-service industry by 22% or more. And this new trend has created an even greater opportunity beyond food delivery alone!

Click Here For A Full Report


A New Cannabis Trend That The Market Should Take Immediate Notice Of Is Here!

What will legalization across North America look like if the US flips the switch to turn on a massive industrial machine like legal cannabis? Two of the fastest growing industries right now in the United States are on-demand technology and cannabis. These two industries are at the epicenter of growth and investors aren’t being shy about their appetite for companies in these arenas. But one company, in particular, has developed a unique business model that services both of these massive growth industries.

See For Yourself


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Bank Stocks Hit: Barclays, Citigroup & JP Morgan Fined On Forex Rigging

Joe Samuel

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The biggest banks in the world have been under intense scrutiny ever since the financial crisis. During that period, almost all the big banks have been exposed for a range of misdemeanors. In a new development, five of the best-known banks in the world have been found guilty of having fixed the foreign exchange market.

They behaved in the manner of a cartel to make big profits on the back of their manipulation. The competition commission of the European Union found the banks guilty of manipulating the foreign exchange market and slapped a fine in excess of 1 billion Euros.

The Offense

Over the years, some of the biggest banks in the world have been found guilty of engaging in illegal practices. In the latest instance, Barclays, Mitsubishi UFJ Financial Group (MUFG), Royal Bank of Scotland, Citigroup and J.P. Morgan have been found guilty of rigging the foreign exchange market. It is a large source of revenue for large banks and by rigging a market that is worth trillions, they must have made handsome returns.

The five banks formed two separate groups and manipulated as many as 11 currencies from across the world. According to reports, the currencies involved some of the world’s most liquid currencies. They included the US Dollar, the Euro, and the British Pound. Accordingly, the EU’s competition commission imposed a fine of 1 billion Euros on the banks in question.

Collusion

While foreign currency traders might be working at different banks, they are often in contact with one another and it has emerged that traders from among these banks had unofficial chat rooms where they passed information to each other.

One of those chat rooms, which was active from 2007 through to 2013, included traders from Citigroup, J.P. Morgan, Barclays, UBS and Royal Bank of Scotland. The other one was active from 2009 to 2012 and included traders from UBS, Royal Bank of Scotland, MUFG and UBS. The first cartel was fined 811.2 million Euros. Citigroup was slapped with the highest fine of 310.8 million Euros. The second cartel was fined 257.7 million Euros. Barclays ended up with the biggest fine of 94.2 million Euros.

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Trump Administration to Postpone Auto Tariffs by 6-Month: Reports

Joe Samuel

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Ever since Donald Trump took office as the President of the United States, he has made it a mission to correct the trade deficits of the country with a range of nations. The trade war with China is a case in point but in addition to that many other tariffs are now been mulled. One of those is the tariff on autos that are imported into the country from different parts of the world.

However, it has now emerged that the Trump administration is considering holding the tariff hikes on imported cars for six months. This is due to the ongoing trade war with China, as per a report from CNBC. The deadline to impose the tariffs is fast approaching.

Auto Tariffs

According to reports, the Trump administration has decided to not impose the tariffs for now. The Saturday deadline for the tariff imposition is going to pass without the US sparking another international trade issue. The tariffs are not only planned for imported cars but also for auto parts. These are imported from different parts of the globe. As such, the European Union and Japan will be most affected if the tariffs are raised.

Report: On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market

The US has held discussion with both the European Union and officials from Japan regarding the issue and it is believed that the move is primarily a strategy to exert pressure on the two to give the US far more favorable trading terms.

Impending Trade War

While the high stakes trade war with China has dragged on for awhile now, the US is unwilling to engage in trade wars with powerful trading entities like the European Union and Japan. If the auto import tariffs are imposed then it is almost certain that retaliatory tariffs will be placed on American goods.

That could lead to another skirmish that would potentially drag on for many months. As a matter of fact, the European Union has already stated that it has a ready list of goods on which it will hike tariffs if the US goes ahead with its plans.

Due to the possibility of the tariffs being imposed by Saturday, many automobile stocks had slumped but after the news came through that the tariffs are going to be delayed, the stocks jumped and erased the losses.

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