The Dow Jones Industrial Average (DJI) started the week off on a high-note as it surpassed the 22,000 mark for the first time since it’s initial dip. Most of the positive gains were propelled by the technology sector as Nvidia (NVDA), AMD (AMD), and Micron (MU) all surged in the opening hours Monday morning. It looks like our speculation last week about an overheated semiconductor industry might have been misplaced, or at least ill-timed.
Tesla (TSLA) issued $1.8 billion worth of high-yield junk bonds rather than issuing newly minted tesla stock which is an interning divergence from Musk’s traditional form of raising money for the company. But one man’s junk could be another man’s treasure.
The Fed’s minutes were published on Wednesday and were supposed to give the country some guidance on how soon the unwinding of our nation’s $4.5 trillion balance sheet would start; unfortunately, we’re still left with ambiguity. Fed members are still split over when exactly to hike rates. They’re agreed to hold the target rate between 1-1.25% but also expressed concern that inflation might remain below 2% for longer than expected. What does that mean? It means nothing will happen and will see a continuation of the status quo.
Bitcoin surpassed $4,000 over the weekend as it continues to outpace the returns of active investments globally. At some point, we’re either going to see a bubble pop and speculators flee the cryptocurrency frenzy or a paradigm shift where bitcoin is adopted more, becomes far less volatile, and improves liquidity.
One of Amazon’s e-commerce rivals, Alibaba (BABA), posted above-expected earnings and revenue this past quarter which prompted the stock to rise another 6% after already climbing over 70% this year. Obviously investors are getting excited about the growing number of Chinese citizens purchasing more home goods online.
What really mattered to investors this week was the tragedy in Charlottesville and how Trump’s insincere and incorrect remarks exacerbated racial and political tensions. Without diving too much into the politics and expressing personal disdain for our President’s remarks, we can see that the markets descended into free fall; the S&P posted its biggest one-day percentage loss in about three months and all the major market indices are on track to post their worst monthly performance since October.
Gold rose about 2.5% this week along with a basket of other precious metals as investors were left doubting Trump’s ability to legislate a pro-growth agenda; several more prominent CEOS left Trump’s business advisory council and the dollar hit a four-month low this morning as investors grow pessimistic. Investors also fled into bonds as expectations of a Trump tax cut faded.
With that said, this push into safe-haven assets could be short-lived as investors quickly return to earnings calls next week.
US consumer sentiment is at multi-month high and there’s yet to be a substantial dialogue regarding an impeachment which is really where we’ll see a break in the market’s bull run.