The Beatings Will Continue Until Trade Talk Improves

By Greg Guenthner

If you’re searching for relief this day, you won’t find it in the stock market.

Futures are pointing to a lower open following yesterday’s drubbing. The Dow has shed as many as 200 points early this morning as recession and trade war jitters linger.

Trump even fired off a series of tweets following yesterday’s 800-point Dow slide in what appears to be an attempt to calm the markets’ reaction to the administration’s most recent trade war shenanigans and the escalating tensions in Hong Kong:

Trump might be able to sweet talk the masses on trade at some point. But he’ll have a more difficult time convincing investors to ignore the inverted spread between the 10-year and 2-year Treasury notes.

“Combined with fears of a weakening economic backdrop in Europe and a trade clash between Washington and Beijing, the markets took the inversion as cause to deeply reduce their holdings of assets perceived as risky, leaving few companies unscathed in the carnage,” MarketWatch notes. “In fact, of the roughly 505 companies that constitute the broad-market S&P 500 index, only three closed in positive territory Wednesday…”

As far as positive news goes, Walmart Inc. (NYSE:WMT) reported strong earnings earlier this morning (we’ll have more on Walmart’s numbers after the market digests the news). We’ll see if the retail giant’s domination can help stem investors’ recession fears as stocks lurch toward the opening bell…

When we last checked in on the crypto space earlier this month, I quipped that gold and bitcoin had emerged as a safety trade as stocks took a beating.

Bitcoin had snapped back to attention after briefly sliding below $10,000 in late July. In typical crypto fashion, bitcoin rocketed higher by more than $2,000 in just seven days and was quickly approaching $12,000 for the first time in nearly four weeks.

Yet while gold has continued to find higher ground as stocks sink, the bitcoin rally has run out of steam. In fact, bitcoin is looking much more like a speculative stock than a safe hiding place from the market carnage.

Bitcoin failed to hold the $12,000 level — and promptly gave back its $2,000 rally. Over the past five trading sessions, bitcoin has retreated toward its July lows. It’s rallying approximately 2.5% this morning as it attempts to hold the line at $10,000.

%d bloggers like this: