Summing Up The Week

The markets roared into Thursday’s Independence Day holiday thanks to a relatively positve result from the G-20 summit between Trump and President Xi where Trump promised no new tarriffs while also rolling back the ban against U.S. companies selling to China’s tech conglomerate, Huawei.

Later in the week, private job reports seemed to indicate the Fed would have to cut rates, but this was all thrown on its head following a positive job report from the U.S. employment agency on Friday, causing the markets to pull back from their near record-highs made Wednesday before the holiday.

Let’s look at all the news that moved the markets this week…

Market News

U.S. and China Agree to No New Tariffs

The week kicked off with the results of the G-20 summit meeting where Trump and President Xi agreed to hold off on new tariffs, as reported by CNBC on Saturday.

Trump also indicated that he would consider reversing the government’s decision banning American companies from selling products to Huawei, China’s main technology conglomerate. Confirmation that Trump did decide to reduce the restrictions on American companies selling to Huawei, reported CNBC on Sunday.

With market rising into the G-20 summit predicting how the news would affect the markets was tricky; some analysts suggested that if Trump and Xi simply announced openness to future talks would be enough to maintain the market’s rise while other pundits argued that anything short of a full deal would cause the markets to drop.

Initially, the markets soared during Monday’s trading and then…

Companies Warn: We’re Cruisin’ for a Bruisin’

More than 75% of companies issuing pre-announcements on Monday warned that their quarterly earnings will be worse than what Wall Street analysts might be expecting, reported CNBC.

Naturally, the news send the markets tumbling despite the Trade War news with the tech and health care sectors seeing the highest amount of negative announcements.

OPEC Extends Oil Supply Cuts

OPEC reached a deal to extend existing production cuts into early 2020, reported CNBC on Monday evening. The U.S. is not part of OPEC and while maintaining high oil prices supports oil producers in the U.S. – now the world’s top producer – oil prices hurt the American consumer at the pump. 

Trump has repeatedly called on Saudi Arabia to supply more oil, so the OPEC decision will likely not be looked at on favorably by the U.S. administration.

Mixed Signals for the U.S. Jobs Market

Wednesday seemed to bring bad news for jobs and the U.S. economy with the private payroll report rising less than expected in June, indicating fewer jobs being created in the private sector than what was desired, reported CNBC.

However, almost at the same time, the U.S. weekly jobless claims report showing the number of Americans taking unemployment benefits dropped more than expected, typically a strong sign for the economy, CNBC reported also Wednesday morning.

On Friday, the market reverted back to “good news is bad news” as a strong jobs report means the Fed has no reason to cut interest rates, reported CNBC. Accordingly, the markets sold off despite the report showing a strong U.S. economy as the markets love cheap money and lower interest rates is the path to that goal.

Nearing Record Highs for the Indexes

The markets closed for the July 4th holiday with the Dow and Nasdaq approaching record highs thanks to continued expectations for the Fed to lower rates despite the positive unemployment report, reported CNBC on Wednesday.

The S&P 500 closed just 0.1% below 3,000. It’s worth noting that round figures have more weight psychologically than in actuality, but their value for those watching the market can actually have effects on market movements from time-to-time.

Market analysts remain mixed about the market’s future movements. Bullish pundits believe the market is set to take on new highs as many sectors have lagged behind the high-flying tech stocks. Bears believe the market is overbought and has baked in the news of a Fed interest rate cut, suggesting that the market will go down even if the Fed cuts rates and could potentially collapse if the Fed decides to leave rates as-is.

Next Week’s Gameplan

With the G-20 Summit behind us, we’re back to watching for Trump tweets and actions from the Fed to drive the direction of the markets. With the next Fed meeting scheduled for the end of July, the market’s price action will be driven by unexpected news events, company earnings and surprise tweets from Trump-in-Chief.

This Week in Play

Stay tuned for this week’s episodes of our Investments in Play and Trades in Play coming online later this weekend! 

Crytpo Corner

Bitcoin Price Action

As we mentioned last week, it looked like Bitcoin had returned to its wily ways, retreating more than -30% from its recent $13,868.44 high to a weekly low of $9651.00. However, as if to keep traders and investors on their toes, Bitcoin bounced unexpectedly off its low, returning to the $11,000s in an unusual move for the asset.

Whereas traditional asset classes (like stocks) rise to new levels and retreat slightly to build up strength before heading higher, Bitcoin and other cryptocurrency typically rocket skyward, overshooting any reasonable relative strength before plummeting back to Earth, sometimes overshooting previous lows substantially.

In the 2019 Bull Market so far, Bitcoin now seems to act more like a traditional asset than its historical price action as a cryptocurrency. The altcoins, however, continue to get smacked which is why Get Irked advises those interested in the space speculate with Bitcoin and only Bitcoin.

Bitcoin Gameplan

While Bitcoin’s new price action is somewhat reassuring, the looming specter of a possible drop up to -80% will always affect our trading plan for the crypto sector. In other words, we always have a plan in place for what to do if (when) the bottom drops out.

While other speculators are experimenting with the altcoins including majors like Ethereum (ETHUSD) and Litecoin (LTCUSD), Get Irked is sticking solely to Bitcoin as it continues to maintain market dominance for the crypto space.