Summing Up The Week

The week was actually uninspiring for most of the week with reports indicating the possibility of a global economic slowdown and a lot of government cross-talk between the Fed and Trump.

Then, on Friday, the banks reported earnings and demonstrated that, yes, they do still know how to make money.

Good – we were definitely worried. /sarcasm

Read on to the learn the news that moved the markets!

Market News

NEWSFLASH: Banks Make Money! /sarcasm

JP Morgan reported record profits and revenue on Friday, kicking off the earnings season with a bang. Profit rose 5% to $9.18 billion with revenue also rising 5% rising to $29.9 billion, reported CNBC. Earnings-Per-Share (EPS) were $2.65 versus $2.35 expected.

Since American banks have their fingers in every pie of the global economy, this start to 2019-Q1 earnings indicates that at least the American economy is doing fine.

How’s the global economy, on the other hand? Read on…

Is The World is Slowing Down?

Well, maybe just the global economy is slowing – not the actual planet – as the International Monetary Fund (IMF) released a report on Tuesday predicting slowing global economic growth. The markets reacted as you might expect, pulling back substantially in reaction to the news.

The Fed is Fed Up with Trump

The Fed took to the airwaves on Monday to dispute Trump’s claims that Quantitative Tightening (QT) has been damaging the economy when the St. Louis Fed published a paper saying QT will have no noticeable negative impact on growth, reported CNBC.

Although entertaining to watch, the battles between Trump and the Fed have become so commonplace that there was really little to no effect on the markets in either direction due to the news.

On Wednesday, the minutes of the Fed’s monthly meeting showed Fed officials haven’t taken rate hikes off the table.

Granted, the Fed also said a rate hike would only be prudent if economic conditions improve, and that isn’t happening if the IMF report we talked about earlier is accurate.

The Next Financial Crisis? College Loans & Shadow-Banking

Bank CEOs presented to Congress on Wednesday where House Rep. Jim Himes (D-Conn.) asked each of them to tell him what risk is greatest to the financial system.

Jamie Dimon, JP Morgan Chase’s (JPM) CEO, answered without skipping a beat: “(1) Leveraged lending and (2) student lending.”

Leveraged lending is where nonbank institutions – nicknamed “Shadow Banks” lend money to less-than-qualified candidates. According to a report by CNBC on Thursday, Shadow Banking represents a $52 trillion industry and could potentially cause another financial crisis.

To make matters worse, the student loan market is only getting bigger with one significant difference to other loans – no real collateral. As college costs increase, the loans follow suit.

Worse yet, even if college grads pay their loans, loan-holders likely won’t be able to afford to buy homes, dragging down the housing market, postponing having families, and generally damaging the economy in every way. We always knew higher education would doom us all.

Interested in hearing more about what the bank CEOs see as our potential doom? Click here for CNBC’s summary.

The Housing Market Giveth and it Taketh Away

A sharp spike in interest rates led to a 5.6% decrease in mortgage application volume last week according to the Mortgage Bankers Association, CNBC reported on Wednesday. In our experience, application volume isn’t as significant an indicator as housing starts and existing home volume.

We don’t lend much credence to the weekly figures of mortgage application volume as so many factors affect this number.

Is Boeing Destroying the U.S. Economy?

Boeing’s (BA) announcement from last week that BA will be substantially decreasing 737-MAX production as they continue to determine the cause of the two plane crashes that killed more than 350 people in the past six months is taking the entire aerospace sector with it.

Boeing is the U.S.’s biggest exporter and the construction of its jets provides an enormous amount of jobs to the U.S. economy. A cut to BA’s production is a cut to the American economy as demonstrated when the Dow Jones reeled from Boeing’s stock dropping.

Next Week’s Gameplan

With the market working ever-higher, we’re adjusting our gameplan to incorporate scenarios for pullbacks of 2.5%, 5%, 10%, 15% and even 20% – adding accordingly should we see any kind of market weakness.

Avoiding any feeling of FOMO is key at this point – if you don’t have money working in the market, remember to be patient – Buy on Red Days and Sell on Green Days.

Know Your IPO – Avoid Uber & Lyft

With 2019 slated to be the biggest year for Initial Public Offerings (IPOs) – ever – there are many interesting and lucrative opportunities on the horizon, however investors need to be especially wary, speak with a financial adviser, and do their due diligence before buying any brand-new stock.

Take recently offered Lyft (LYFT) or upcoming Uber (UBER) ride-sharing companies. Both companies have blatantly stated that they have no path to profitability with Lyft going so far as to say the company doesn’t know if it will ever make a profit.

That should have been a warning sign to investors, however when Lyft opened trading at $86.75 – a 17% premium to its IPO price – only to subsequently collapse more than 30% in less than two weeks with a low of $57.66, investors should have known better.

Get Irked expects Uber (UBER) – which filed its IPO paperwork this week and is expected to go public in the next several weeks – will fare no better than Lyft, as Uber has also admitted no foreseeable path to making a profit.

Investing in IPOs can be exciting and lucrative, but it is absolutely imperative that any interested investor do their research and make sure they know what they’re buying up-front.

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

If you only get your Bitcoin news from Get Irked, it might look like nothing much happened during the week, however Bitcoin hit a weekly high of $5,488.00 on Wednesday before pulling back to $4,901.99 in one of its trademark near-10% sell-offs starting very early Thursday morning and continuing from there.

The crypto markets have been consolidating since the last selling downdraft which happened around 7:00 p.m. (PDT) on Thursday evening.

From here, speculators around the world are HODLing their breath to see if the next move is up higher or down lower.

Crypto in the News

No $100M order after all?

Reports came out throughout the week refuting the claims that a $100M Over the Counter (OTC) order for Bitcoin was responsible for the surge.

Now, with no explanation to why Bitcoin suddenly charged up 20% in price, analysts are divided on the price action with half suggesting Bitcoin has seen the bottom of this cycle and is headed into a two-year Bull Market while the other half expect to see Bitcoin retest its December lows (with a few even suggesting a crash to lower lows than the previous $3128 mark).

China says – “No More Mining!”

Everyone knows that crypto-mining is incredibly expensive as the huge server farms use an absolute ton of electricity which results in an equally abhorrent amount of pollution.

However, the potential fallout hit its peak this week as reports stated (including this one from Engadget) that China is considering a ban on crypto mining due to the wasted resources.

Analysts believe China’s participation in the crypto space may account for 87% of the entire world.

Will a ban on mining in China cause a price drop as participation wanes? Will a Chinese ban cause mining elsewhere to roar and raise the price of crypto?

We’ll have to wait to see.

Even MORE crypto exchanges?!

We know what you’re thinking – we need another cryptocurrency exchange like we need another fork in Bitcoin Cash, but that’s exactly what happened this week.

New crypto-trading exchanges are racing for approval in New York State this week, according to TheStreet.com’s report on Wednesday.

Maybe last week’s 20% surge in Bitcoin’s pricing is motivating the exchanges to get their applications in? Hopefully, they know something we don’t about crypto’s future growth potential…

Bitcoin Gameplan

With no real explanation to Bitcoin’s sudden surge, its current overbought levels, and its testing of The Line That Shall Not Be Crossed, we continue to remain in No Man’s Land with no fundamentals or positive news suggesting a bull case.

For the next week, we’re waiting to see either confirmation that “The Line” has become support with further upside or a potential drop to the Support of Last Resort if not even lower.