World Peace is Bearish
Trump and Chinese President Xi Jinping decided to give the tit-for-tat trade war a rest over the weekend, agreeing “to restart trade consultations between their countries on the basis of equality and mutual respect,” whatever that means.
As far as I can tell, the trade war ain’t over. Trump and Xi have kicked the can again — and Wall Street is celebrating. The weekend agreement removes the threat of surprise tariffs from interrupting our regularly-scheduled summer rally, giving traders the green light to recklessly buy their favorite speculative stocks.
The trade truce wasn’t the only big political story breaking over the weekend. Trump also became the first sitting U.S. president to set foot on North Korean soil when he held a brief meeting with Kim Jong Un on Sunday at the DMZ. After a few handshakes and some back-slapping, the two sides have agreed to restart nuclear talks.
World peace is bearish for the markets, of course. Stocks prefer a steep wall of worry to help fuel an extended rise. Luckily, U.S. officials are still jawing with Iran over the mysterious oil tanker attacks and ongoing nuclear tensions. There’s still plenty of fodder for the bears as we begin a fresh quarter — and a new push to all-time highs.
Futures are soaring following a busy (and bullish) weekend.
The major averages are surging in the afterglow of the trade truce. The Dow Jones Industrial Average is set gain more than 250 points at the opening bell, while the tech-heavy Nasdaq could jump as much as 1.7%.
July is certainly off to a hot start following the market’s historic June performance. The S&P 500 gained nearly 8% last month, CNBC notes, marking its best June performance since 1955.
That’s not all. With the first half of the year in the books, we can look back and admire a remarkable comeback rally. It’s easy to forget how the stock market was on the brink of annihilation right before the calendar flipped to 2019. But with the S&P rally of more than 17% in the books, CNBC notes the index just posted its best first half in more than 20 years.
I’ll be closely monitoring the market this morning to see if the averages can follow their resilient June performance with a push to new all-time highs. If this gap holds, we could see some strong follow-through.
Finally, a bitcoin update to kick off the new trading month.
When we last checked on the flagship cryptocurrency, bitcoin was dipping into the red after streaking toward $14,000 for the first time since falling from its all-time highs after the bubble burst in early 2018.
But after rocketing higher for eight straight days, the bitcoin rally began to waver. After tagging $14,000, bitcoin quickly shed $2,000 late last week. It has yet to recover following some volatile weekend trading. This morning, one bitcoin fetches a little more than $11,000.
After a powerful 3-month rally, even a dyed-in-the-wool crypto bull should expect bitcoin to blow off some steam here.
But volatility can be tough to handle. In fact, crypto is even making some folks physically ill.
“Health officials are asking Americans to take precautions over reports that ‘crypto,’ a fecal parasite that can be transmitted via swimming pools, is on the rise,” notes a CNN health scare report that’s quickly going viral. “The parasite is cryptosporidium, or crypto for short. It causes cryptosporidiosis, and it can leave healthy adults suffering from ‘profuse, watery diarrhea’ for as long as three weeks.”
OK, maybe cryptocurrency isn’t the culprit this time. But if I had bought bitcoin near $14,000 last week, I’d probably feel more than a little queasy right now.