July 2, 2018
What is typically a slow and uneventful holiday week - is a little weird this year. The holiday falls right in the middle of the week with markets closed on Wednesday and closing early (at 1pm eastern) on Tuesday. There are no speeches planned from members of the Federal Reserve and NYC-based hedge fund managers would normally be in the Hamptons already… if not for Chinese tariffs slated to be put in place on Friday the 6th.
China stock markets were pummeled overnight with the Shanghai composite down 2.52%. Other Asian markets didn’t fare much better with Japan off 2.32% and South Korea off 2.35%.
The Chinese currency will be something to watch in the near-term. China doesn’t buy enough goods from the USA to fight a trade war with tariffs alone – they will need to devalue their currency and maybe they will finally earn the title of “currency manipulator” from the President.
In Mexico, they elected a new president who as far as I know is best known by his initials – AMLO. I don’t follow the Mexican politics too closely but, by all accounts this person could bring some serious fireworks to the NAFTA discussions. Mexican stocks are down along with the Peso on the news.
According to US Secretary of Commerce, Wilbur Ross, Mr. Trump doesn’t care so much for the stock market reactions to trade talk and will not be backing off the tariffs for that reason, while speaking on CNBC this morning.
Elon Musk said late last night that Tesla made 7000 Model 3’s in the final week of the quarter, beating their goal (finally) of 5,000. They originally were to produce that many Model 3’s per week last year and managed to do so last week, using an outdoor “tent” production line in California. I can only imagine the “quality control” aspects of this “burst” production.
US Markets are under a bit of pressure this morning (the first day of the new quarter) with World Cup matches between Brazil & Mexico (8am MTN) and Belgium & Japan (12noon MTN).
Shane Fleury, CIO
Elevate Capital Advisors
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