|Analyst Greg Guenthner says: “Facebook was the big winner Wednesday, blasting higher by more than 8% to help lead the Nasdaq to a gain of 1.75%.
“The moves we have seen in these ‘FANG+’ stocks are absolutely incredible,” Greg continues. Incredible, yes. But… “I still think the market (especially the Nasdaq) will need to blow off steam sooner rather than later.”
Not to say the tech-heavy index doesn’t have some legroom. “Here’s an interesting stat from market technician John Krinsky: The NDX is 28% above its 200-day moving average. That’s its widest spread since 2000.
“The kicker,” Greg says, is “the NASDAQ-100 made it to 60% above the 200-day moving average at its peak.
“So can it go higher before correcting? Absolutely! But we are getting into some nosebleed levels here…
“Bottom line” — especially when it comes to the Nasdaq — “We have to be prepared for a spike in volatility in the near future,” says Greg.
To the market on this lazy summer afternoon, where the Nasdaq is blowing off steam… down — meh — just 15 points to 11,650. Meanwhile, the Big Board’s surged 250 points to 28,580 and the S&P 500 is up 13 points to 3,490.
Commodities have taken a hit today: Oil’s down 1.15% to $42.89 for a barrel of WTI and gold’s lost $15.10 to $1,937.40 per ounce.
And this just in: “Kevin Mayer has quit TikTok just months after becoming chief executive of the Chinese video app accused by the Trump administration of threatening national security,” the Financial Times reports.
In a letter to employees, Mr. Mayer said: “In recent weeks… the political environment has sharply changed… Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company.”
The “resolution” — or the sale of TikTok’s U.S. business — is still up in the air. And Walmart’s entered the bidding war alongside Oracle and Microsoft…
For our weekly update on unemployment, the chart is kinda moving in the right direction…
Courtesy of the wonks at the Bureau of Labor Statistics, we learn the number of Americans filing for unemployment last week dropped from the week before.
Celebrate good times? Not really. That number’s still above the 1 million mark, and above analysts’ best estimate. It also means weekly initial claims have been above 1 million for 22 out of 23 weeks.
Four more weeks and that equals stratospheric unemployment for half of 2020…
For Election 2020 coverage, Jim Rickards says: “The Biden campaign is already measuring the windows in the Oval Office for new drapes.” But that might be premature…
A CNN poll conducted Aug. 12–15 — of registered voters living in 15 “battleground” states — shows Trump with 48% of the vote and Biden with 49%. The margin of error? Plus or minus 5.4%.
Does this signal Trump’s gaining some traction? “Things have been moving steadily in Trump’s direction for about two weeks,” Jim says, who claims the president’s gotten a boost recently from dwindling coronavirus fatalities and record highs at the stock market.
“We still have about 70 days to go and the race will be tight,” says Jim. “But Trump is finally getting some good news.”
For some bad news…
“Inflation is [already] beginning to appear throughout the financial system,” says Graham Summers at Money & Crisis.
First, the Fed’s “monetary policies have been much more aggressive than they were in response to the 2008 crisis.” Let this sink in: $15 trillion in six months versus $12 trillion in eight years.
Another telltale sign of inflation, according to Graham, is the “breakdown” of the U.S. dollar. “The USD has lost 4% of its value… this year,” he says. “However, that number is somewhat misleading since the USD spiked during the March COVID-19 crisis.
“Peak to trough, the USD is down a whopping 12%…
Graham says: “During weak USD/higher inflation regimes, real assets outperform. So it’s no surprise that inflation hedges are breaking out to the upside,” he says. “Gold was the first. Now copper is joining in. Energy might be next.
“In simple terms, higher inflation will mean real assets soar.”
Finally today, a reader finds a flaw in my unicorn/pegasus argument Wednesday: “Well, as you probably know, the unicorn is a mythical species, whereas Pegasus is a singular mythical flying horse.
“There can only be one Pegasus, just as there’s only one Emily Clancy, while there are many unicorns or editors (although few as witty and adept).
“Similarly, we may never see even one Pegasus company, if we mean this in the same sense as ‘unicorns,’ because a unicorn is a billion-dollar private company.
“By extension, a pegasus would have to be a trillion-dollar company that has not gone public… and that would be rarer than, oh, a flying horse.”
The 5: Touché. Our reader makes an astute observation regarding privately held companies. I overlooked that distinction.
But… since Pegasus is a creature of myth, can’t we replicate it ad infinitum? If not, why do most standard dictionaries include the plural form pegasi? (We even saw the unwieldy pegasuses.)
And don’t get us started on if the word should be capitalized or not…
The 5 Min. Forecast
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