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Market Roundup
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Dow
18,355.00 (+41.23)
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S&P
2,163.79 (+6.76)
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NASDAQ
5,159.74 (+22.00)
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10-YR Yield
1.54% (+0.01)
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Gold
$1,356.80 (-$8.90)
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Oil
$41.88 (+$1.58)
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A funny thing happened on the way to Brexit – the global
economy didn’t crash. After much hand-wringing and swooning by the
markets, investors quickly regained their composure and basically
ignored the vote, bidding up financial assets, assured in their
confidence that the eurozone wasn’t about to fracture.
Of course much of the reason has to do with the Brits themselves.
Much like mainstream GOP voters, who are now mortified at the prospect
of Trump, the U.K. populace woke up the next morning with the single
horrifying thought – “What have we done?” Ever since then, U.K.
politicians have been scrambling to mitigate the fallout from the vote.
U.K.’s new Prime Minister Theresa May, who
herself campaigned on the Remain side, has made all the right noises
about following through while actually doing everything she can to make
sure that Article 50 is never invoked. Remember that until the U.K.
actually invokes Article 50 — to formally give notice — the country
remains a full-fledged member of EU. And it’s business as usual for all
concerned.
 Little wonder that the British pound has stopped falling.
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Little wonder then, that the British pound has stopped falling. The
pound has basically hovered above the 1.3000 level to the dollar for
more than a month, despite some horrid U.K. data that saw business
sentiment drop at its sharpest rate on record. The basic line of
thinking among traders right now is that Brexit is bull: U.K.
authorities will somehow figure out a way to undo the vote, keep Great
Britain in the union and preserve London’s coveted position as the
finance center of the world.
| “The basic line of thinking among traders is that Brexit is bull.” |
Tomorrow, the Bank of England meets and all signs point to a rate
cut. But, there is a debate as to how deep the cut will be. Right now,
U.K. rates stand at 50 basis points. The BoE could take an ax and chop
rates down to zero essentially as a preemptive move to keep the country
from falling into a recession. Or, it can move gradually and slice just
25 basis points off the rate and preserve its options for further easing
down the road. Either way, the market focus will be on the central
bank’s assessment of the current state of the U.K. economy.
For now, the country appears to have avoided financial Armageddon,
and the capital flight that so many investors feared would take place
has not materialized. Of course, that could all change in a flash if
U.K. authorities actually decide to pull the trigger on Article 50. But
until that happens, Brexit is looking more and more like a tempest in a
teapot and the currency could see a rebound as more investors breathe a
sigh of relief.
Happy trading,
Boris
Schlossberg
| Other Developments of the Day |
|
Payroll processor ADP estimates that American companies added 179,000 jobs in July, reports
U.S. News & World Report.
A survey by ADP indicates that the services industry added 185,000 jobs
and manufacturers added 4,000 jobs. However, construction companies
slashed enough workers to significantly negate those gains. Still, the
July job estimate affirms a wobbly upward trend that includes 144,000
new jobs in April, 11,000 in May, and 287,000 in June.
Advertising
executive Kevin Roberts has agreed to leave the Publicis Groupe after
he triggered a firestorm by making dismissive, sexist remarks about
gender diversity in the advertising industry, reports
The New York Times. In an interview with
Business Insider,
Roberts reportedly suggested women were happier in non-leadership roles
and stated that the discussion over gender diversity was “all over” on
Madison Avenue.
For the first time in history, the U.S. government has approved a plan by a private company to fly to the moon, reports
CNN.com.
The company, called Moon Express, has stepped up to compete for the $25
million Lunar XPrize. The jackpot has been put up by Google for the
first privately financed expedition to reach the moon before the end of
2017.
Hulu – the streaming TV service – is worth $5.8 billion, reports
CNN.com.
That’s based on Time-Warner shelling out $580 million for a 10 percent
share of the service, which offers TV content via numerous platforms,
including computers and smartphones. Time-Warner joins three other
companies that own parts of Hulu. They are Disney, Comcast, and 21
st Century Fox.
The
Money and Markets team
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