Shots Fired! Tariffs Tank Stocks
China isn’t going down without a fight.
In retaliation to Trump’s tariffs, China says it too will raise tariffs on $60 billion of US goods. The trade war is on!
But the stock market isn’t taking the news very well. The major averages cratered at the opening bell and trended lower for a majority of the day. When the dust cleared, the Dow had shed more than 600 points, the S&P 500 lost almost 2.5%, and the once-mighty Nasdaq Composite crashed more than 3.4%.
The Dow and S&P are now on pace for their worst start to the month of May since 1970, per Dow Jones Market Data, while the Nasdaq is flirting with its worst start to the month since the dot-com crash of 2000.
Investors sold anything they could get their hands on throughout Monday’s session. With most of the market deep in the red, utilities were a long bright spot as traders played defense.
Unfortunately, it doesn’t look like the trade war saga is going to fall off the front page anytime soon. In fact, Trump is back at it again, attempting to juice the market this morning with some timely tweets:
Futures are sneaking higher early this morning. But we’ll have to see if buyers can sustain the bounce once the opening bell rings. If stocks are going to live and die by Trump’s morning Twitter rants, it’s going to be a long week…
Speaking of defensive trades, gold snapped out of its funk and is attempting to gain some traction this morning.
Yesterday’s market turmoil helped boost gold back above $1,300 for the first time in more than a month.
Despite gold’s scorching start to 2019, the Midas metal couldn’t build on its first-quarter momentum. After topping out near $1,350 back in February, gold has trended lower for the better part of the last three months. It finally settled back above $1,300 as stocks melted down yesterday, only to give back some of those gains early this morning.
This week’s move puts gold at an interesting inflection point. If it can build on Monday’s momentum, we could see the beginnings of a new leg of the gold rally soon enough…
But perhaps gold has lost its safety trade status in favor of a different alternative investment.
Bitcoin continues to make waves this week, easily topping my $6,500 target after breaking out of a huge base late last month.
The rally continues to accelerate this week. After topping $7,000 for the first time since September 2018 over the weekend, bitcoin soared to above $8,000 on Monday, topping off a nearly $3,000 swing since the beginning of May when the stock market began its retreat.
After spending most of 2018 in the dog house, bitcoin has more than doubled year-to-date:
The move certainly looks parabolic to me. But keep in mind, Bitcoin has been absolutely crushed since it peaked in December 2017 near $20,000. Even factoring in this year’s incredible comeback rally, the flagship cryptocurrency is still barely sneaking back to prices we saw nine months ago. An extended move higher following some consolidation near these levels shouldn’t shock anyone.
Moving beyond the market carnage, a global helium shortage is beginning to take its toll.
Everyone’s favorite noble gas is used in a wide range of applications from party
balloons to cooling the magnets in MRI scanners. That’s where the trouble comes in…
Party City is closing 45 stores this year and experiencing issues with helium supply. Execs at Party City claim that’s a coincidence (we’ll see), according to the Courier Journal.
For now, the future of the party balloon industry is looking grim. Fortunately, you don’t have worry about airships disappearing just yet. Goodyear has already released a statement on the status of its helium-filled fleet, explaining that the famous blimps are not yet affected by the helium shortage.
Most helium apparently comes from natural gas distillation and the United States and Qatar are big producers, with major sites in Wyoming and Texas. But current embargoes on Qatar have cut down on available supply.
Aside from the party balloon and lower-end MRI scanner industries, most companies aren’t too worried about the helium shortage at this moment. If only there was a way to invest helium futures…