Donald Trump, Trustbuster

If you own a portfolio of boring Dow stocks, Monday’s session was a total snooze fest. The DJIA eked out a gain of just 5 points, while the S&P 500 closed lower by just a quarter of a percent.

But if it’s carnage you’re after, take a quick peek at your favorite tech stocks. The Nasdaq Composite completely fell apart to kick off the new trading month, sliding lower by more than 1.6% to close in “correction territory” — a popular Wall Street term reserved for an average that’s dropped at least 10% from its highs.

The culprit? Uncle Sam isn’t happy with our social media overlords at Facebook Inc. (NASDAQ:FB). Reports of a Federal Trade Commission antitrust investigation into Mark Zuckerberg’s company triggered another wave of selling throughout a tech sector that was already vulnerable following reports over the weekend of a similar Justice Department investigation into Google parent company Alphabet Inc. (NASDAQ:GOOGL).

Alphabet shares had already gapped lower at the opening bell. But the new antitrust revelations involving its tech brethren put a lid on any possibility of a relief rally. When the dust settled, Alphabet had dropped more than 6% on the day. Facebook closed lower by 7.5%. Other mega-cap tech shares fell in sympathy, with Microsoft Inc. (NASDAQ:MSFT) slipping more than 3% and Amazon (NASDAQ:AMZN) retreating nearly 5%.

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It’s difficult to sort out how the market’s reaction to these investigations will evolve following yesterday’s selloff. After all, President Trump has played the role of trustbuster since the election, amassing countless jabs at Amazon and other big tech firms, implying he has plans to level the playing field in Silicon Valley.

So is it really that surprising to see the DoJ involved at this point? Will anything come of these investigations? It could be a very long time before we get the answers we’re looking for.

Speaking of political games, Trump’s threatened Mexican tariffs could raise the price of your next burrito.

Guacamole was always extra. But new tariffs could might soon send avocado costs through the roof.

If Trump’s proposed tariffs on Mexican imports goes through, it would cost Chipotle a cool $15 million more per year to import everything needed to keep the business running smoothly, CNBC reports.

CFO Jack Hartung floated the idea of price increases if tariffs take a toll on the restaurant chain. Customers would have to pay an extra nickel per burrito if Chipotle can’t figure out how to offset costs.

Chipotle stock fell more than 2% on the news, dropping shares below an important support level:

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If an impending avocado crisis doesn’t crush millennials’ spirits, the death of Burning Man might do them in.

The Bureau of Land Management says the popular Burning Man festival is getting too big and the nearly 80,000 attendants are negatively impacting the Black Rock Desert in Nevada, according to Bloomberg.

Due to these concerns, Burning Man’s land permit might not get renewed — not a great look for an event that supposedly has a “leave no trace” policy.

If you aren’t familiar with Burning Man, you can Google it for some of the wilder images of the festivities. But to give you an idea of how the event has grown over the years, here’s an aerial shot of its desert location:

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The BLM’s concerns involve issues with pollution, crime, and problems revolving around how to manage tens of thousands of people lighting things on fire in the desert.

All valid concerns…

Apparently, safety and trash management are not in the spirit of the festival, per Marian Goodell, CEO of the non-profit that runs Burning Man. The non-profit already pays $3.5 million in annual fees to the BLM in addition to 3% of total earnings.

“We won’t do Burning Man if it has to have dumpsters at the gate, cement barriers, or searches by third-party security forces,” she says.

It looks like the litterbugs might have to settle for their annual Coachella outing instead…

Sincerely,

Greg Guenthner

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Stocks got clobbered yesterday… the Dow began the day weaker as forecast by early morning futures… opening lower by about 300 pts – but then couldn’t find its footing… it continued to get weaker as 9:30 turned to 10 and 10 turned to 11 falling 1000 pts by 1:30 pm… before ‘recovering’ – and it wasn’t really that much of a recovery as the Dow ended the day down 650 pts or 2.3%.

Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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