Tech Stocks are Down – Wall Street

 

Tech Stocks

Tech Stocks After a very strong 2017 for tech stocks they are now in a downturn. President Trump has attacked Amazon’s business practices. Facebook has declined amid backlash from revealing a misuse of user data. Tesla is dealing with a self driving car that killed a person.   Tech stocks showed positive growth in 2017 Facebook gained 53%, Apple gained 46%, and Alphabet gained 33%. This year the stocks have slipped respectably 12%,1.4%,and 4.3%. The Nasdaq, which is comprised of many tech stocks, has followed suit. The Nasdaq has dropped 9.9%. This number is approaching a market correction for the index. 10% is defined as a correction.

Facebook

Facebook is under scrutiny from other CEOs in the tech industry. Apple’s CEO, Tim Cook, spoke out against Mark Zuckerberg. Mr. Zuckerberg is the CEO and founder of Facebook. Time Cook is angry with the way Facebook has mishandled user data. Cook’s comments and the stories of Facebook mishandling user data has led to a lack of investor confidence in the company. It has fallen sharply since March.   The company fell another 3.07% as of 2:49pm Monday.

Amazon

Amazon has followed Apple and Aplhabet with gains in 2017, and a loss in 2018. Amazon is down after gaining 56% in 2017. President Trump has lashed out Amazon’s business practice. President Trump has stated that each package Amazon delivers it costs the post office 1.50. Investors, worried about regulation and taxation, have sold of the stock in Amazon. Amazon is down 85.06 (5.88%) as of 3:08pm Monday.

Dow Jones

The Dow Jones is down 472( -2.68%) to 2,627.  The S&P 500 is down 62(-2.8%). The Nasdaq is down 2569.1(-2.68%)  and is nearing a correction level. The nasdaq is tech loaded with tech stocks, and is following with the companies listed. Tech stocks are in a slump because of the investor concerns surrounding the companies.

 

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Gold Could Soar Ahead – Wall Street

 

 

Gold has been an interesting commodity to watch as of late, and for good reason. While market conditions and economic conditions have been improving as of late, gold continues to fly. In fact, year to date, gold has outperformed the S&P 500 with 2.4% gains in the S&P and about 3% gains in gold.  However, the gold bugs are lighting up as many believe that we’re just seeing the beginning. In fact, some believe that gold could have a dramatically positive year as all factors seem to be aligning perfectly. Pointing to inflation, a weaker USD, and coming rallies due to jewelry and gold decoration sales, the bulls are looking for great times ahead.

Inflation Is Headed Up – A Good Sign For Gold

One of the many factors that are important to pay close attention to with regard to the price of gold is inflation. At the end of the day, increases in inflation generally lead to gains in the values of globally traded commodities.  Most recent figures show that inflation is on the rise in the United States, which is a great thing for gold. In the month of December, year over year growth in inflation came in at 2.1%. While the news caused gold prices to fall slightly at the time, strong inflation generally leads to strong gains in commodities over time, which we’ve seen from gold in the first 3 months of 2018.

Inflation on The Rise in The US

Most recent figures show that inflation is on the rise in the United States, which is a great thing for gold. In the month of December, year over year growth in inflation came in at 2.1%. While the news caused gold prices to fall slightly at the time, strong inflation generally leads to strong gains in commodities over time, which we’ve seen from gold in the first 3 months of 2018.

A Weaker USD Is Likely To Help Push Gold

Another factor that the gold bugs argue is going to push the price of the commodity through the roof is a weaker USD. In general, a weaker USD in comparison to other global currencies makes gold more accessible around the world. This is the result of the fact that gold is generally priced using the USD mixed with changes in currency exchange rates as the USD weakens.

While the USD started the year off on a relatively strong note, over the past three months, the value of the currency has weakened against others, helping gold to outperform the S&P 500 thus far this year. Many believe that Donald Trump’s Presidency will likely continue to lead to weakening in the USD. At the end of the day, Trump has been clear that a strong dollar isn’t necessarily good for the United States. Therefore, the gold bugs say that his policies will likely continue to weaken the USD, helping to prop up the value of gold and other commodities.

Now Is The Time For Gold Jewelry And Decoration Demand

On top of the data surrounding inflation and the USD, the gold bugs point to one more positive. At the moment, we’re entering a season when gold jewelry and decoration demand starts to hit tremendous highs. Pretty soon, the wedding season in India will begin, and with gold being a key piece of any wedding in the country, demand for the precious metal is going to fly in the region. In general, this starts what we know to be the “Love Trade” in the gold industry with the Indian wedding season starting in September and the season of gold demand going through the Chinese New Year in February.

Gold Is Poised For Growth

Moving forward, there are several points of support for gold. With strong signals coming from inflation, the USD, and jewelry demand, we could see strong gains in the value of the precious metal ahead!

March 29, 2018 at 10:02pm
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What Is Going on in Equities Markets Around the World

 

Global stock markets are agonizing through some of the worst selloffs in recent history. The performance of the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 has been nothing short of disastrous heading into the month of love. Equities traders, speculators, economists, and media talking heads have used every conceivable adjective in the book to describe the torrid time that markets are enduring. Equities traders have used terms like writhing convulsions to meteoric drops, bearish markets, corrections, and worst multi-year performance.

This begs the question:  Where are markets headed?

It’s important to take a step back from the current grim reality before simply weighing in on the otherwise lackluster performance of global markets. If we look at the following major indices, we can appreciate how well they have performed, and how significant the current market movements are:

  • The Dow Jones Industrial Average is currently down 6.58% over 1 month
  • The S&P 500 Index is currently down 6.05% over 1 month
  • The NASDAQ composite index is currently down 5.75% over 1 month

When we extrapolate further, we can see that the Dow Jones has a 52-week trading range of 20,061.73 on the low end and 26,616.71 on the high-end. Clearly, the current level of 23,715.44 (Friday, February 9, 2018) is firmly in the middle. The S&P 500 index has a 52-week trading range of 2,296.61 on the low end and 2,872.87 on the high-end. The current level is 2,583.74 – again right in the middle. The tech heavy NASDAQ composite index has a 52-week trading range of 5,685.15 on the low end and 7,505.77 on the high-end. It is currently trading at 6,744.55, 1,000 points above its 52-week low.

Why Are Markets Convulsing Right Now?

Major investors, and everyday folks are scared that runaway inflation and rising interest rates could hurt stock market investments. It must be remembered that the fundamentals of the US economy are sound – there is no questioning that. According to Olsson Capital trading guru, Edward Bronstein:

 

‘We have to appreciate the bigger picture here. The Fed has been pushing to raise interest rates ever since the US economy turned the corner. By December 2015, we started to see incremental increases to the federal funds rate in 25-basis point intervals. Come Wednesday, March 21, 2018, we are likely to see yet another rate hike if stock markets stabilize and employment numbers continue to shine and inflation keeps rising.

 

According to the CME Group FedWatch tool – a great barometer of sentiment for interest rate movements, there is a 71.9% likelihood of a rate hike of 25-basis points in the region of 1.50% – 1.75% in March. Unfortunately, stock markets don’t like rate hikes, especially when they are part of a series of ongoing rate hikes. When the monetary authorities decide to raise interest rates, the value of stocks declines. The thinking is that consumers have less personal disposable income, companies are paying more in interest, and naturally this is going to lead to lower demand for company products and services, and ultimately to lower prices.

 

So, to be safe, investors take their money out of stocks and put it into safe-haven assets like gold, gold ETFs, treasuries, and interest-bearing accounts. They are also going short on derivatives trading options like CFDs and spread betting. Is the stock market going to continue its massive selloff? Probably not. But for now the safe money is on a market correction before the value-investors jump back into the markets to pick up bargain deals on top stocks.

 

While the year to date gains have been erased from major bourses around the world, we should take pause and see what US inflation figures will be before determining whether Fed action is warranted. Meanwhile, German, US and UK bonds have reacted with high volatility to current economic conditions. Oil is down, gold is down, copper is down, and the USD is down. The current trajectory of financial markets is attributed to bearish sentiment.

 

 

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ROBOS and Banks: The Dawning of a New Time

Will Banks Use More Robots

The use of Robo advisors is gaining prominence in mainstream banking circles. Clients have several options available to them when picking investment products. These include the go-it-alone approach where individuals are responsible for the management of their own portfolio of stocks, bonds, cash, indices, commodities etc. This option is best suited to professionals, or investors who understand the intricacies of the financial markets.

The other option is a choice between using traditional banks and investment gurus on the one hand, or the modern-day upgrades with things like discount brokerages. While there is certainly merit in all of these options, many investors are not totally sold on either option. A fusion of these investment possibilities which encompasses online advice with a self-directed brokerage is increasingly preferred by clients.

Fintech Disrupting Traditional Banking

FinTech has dramatically revolutionized the investment landscape, and banking operations are front and centre. New-age investors prefer having a say in how their money is managed, and this need has not been fully satisfied with the options listed above. Instead, clients prefer hybrid options known as Robo advisors. The concept of a Robo advisor is largely misunderstood by mainstream investors. A Robo advisor does not remove the human element from investing and portfolio management.

True to form, Robo advisors do not require clients to meet with investment gurus face-to-face. It is a convenience-based element at play, and one that makes it easier for anyone to instantly initiate trades at the click of a button. Most of the communication via Robo advisors is conducted through secure online connections and chat services such as Skype, messenger, and the like.

More Control Over Financial Portfolios

The Canadian investment scene is slowly adapting to this modern-day technology, but only the Bank of Montréal has infused Robo advisor technology as part of its investments toolkit. FinTech is leaps and bounds ahead of traditional banking. It is a major disruptive force in the financial world, and it caters to a large under-banked or unbanked sector of society. In Canada, the US and across Europe, clients are looking for easier ways to manage their financial portfolios, while still maintaining control over trades that are executed.

The conventional system of entrusting all of one’s finances to a fund manager with a bias towards certain stocks, ETFs or mutual funds is losing traction. Today, investors want to have a modicum of control over their portfolio, and they don’t want the emotional component, or the bias via the investment advisor. A Robo advisor serves this purpose well. Provided the range of financial assets available to the client is all-encompassing, a Robo advisor can pick the appropriate stocks based on client specifications. Hard data is analysed instantly, and the best investment options are provided to the client.

Robo Advisors with Canadian Banks

The do-it-yourself model cannot be ignored by banks for much longer. The explosive growth of FinTech investment paradigms has already caused multiple banks like HSBC, Barclays, Standard Chartered, Goldman Sachs and others to stand up and take notice. Banks are implementing protocols to allow Robo advisors as part of their investment toolkit. One of the leading asset management companies is BMO. What many clients don’t know, is that BMO also has a robo advisor. Through use of this modern-day technology, BMO can now offer exchange traded funds across multiple portfolios.

It is the oldest bank in Canada, and also the first to adopt new-age technologies. Clients can easily synchronize their BMO online banking summary with their investment accounts for maximum functionality. A wide range of exchange traded funds is available, and the provision of Robo advisors makes it easy to use SmartFolio accounts. Account types include RRSP, TFSA, and RESP. By allowing customers to personalize their financial portfolios, it’s akin to a Robo advisor. This is the way Canadian investors are choosing to go, and many other big banks are now taking notice.

The post ROBOS and Banks: The Dawning of a New Time appeared first on Wall Street.

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Should Investors Start Worrying as the Calm before the Storm Prevail on Wall Street

 

2017 started out for Wall Street investors on a splendid note as stocks posted decent gains in a sharp contrast to the predictions of losses that had trailed Donald Trump’s unexpected victory in the 2016 elections. Investors were quick in warming up to the idea of a Trump presidency and they loved how his unconventional economic policies could spur growth on Wall Street.  The gains on Wall Street were particularly sustained through the first and second quarters as shown in the chart below.

 Stock Market And The Dow Jones

The NASDAQ Composite gained 13.10%, the Dow Jones gained 7.38%, and the S&P 500 was up 7.33% in the first two quarters of the year. In fact, investors who had exposures to small cap stocks saw decent 3.65% gains. Interestingly, the VIX Index was down 13% within the same period.

Interestingly, Tyrone Manning, an analyst at Wilkins Finance observes that “the gains in the market don’t appear to be slowing down even as stocks continue to book gains in the as third.” So far in the third quarter, the S&P 500 is up 3.23%, the NASDAQ is up 5.42% and the Dow is up 4.15%  and the Russell 2000 is up 4.07% as seen in the chart below.

 

Stock Market Volatility

More interesting is the fact that stocks have been booking decent gains in the last one month as the volatility index continues to fall in sharp contrast to prevailing geopolitical and economic developments. In the last one month, the S&P 500 gained 2.60%, the Dow Jones Industrial Average gained 2.52%, NASDAQ was up 2.79% and small caps were on soaring with 7.79% gains in the Russell 2000. In contrast, the CBOE S&P 500 Volatility Index (VIX) had crashed to about 12.0% in the last one month to indicate that investors are not anxious about the short-term direction of the market.