Tech Week Warning Signs 💻 Fed Weighs On Emerging Markets 😓

by | 28 Jan, 2019

 

1. Tech Week Warning Signs

It’s all eyes on Silicon Valley this week as some of the big tech names announce their earnings, and to say investors are feeling skittish would be the understatement of the year!

Four of the five most valuable companies on the planet – Amazon, Apple, Microsoft and Facebook – are set to post their earnings this week, but the traditional feelings of optimism are nowhere to be found. And the week doesn’t end there.

Even though President Trump has managed to re-open government for the next three weeks, a great deal of damage has already been done and what is to come this week is extremely uncertain. Investors will be looking for concessions from both sides of the equation to see whether the shutdown will continue after February 15th or whether the stalemate will continue. Never a dull day in Congress!

The Fed is also scheduled to speak this week regarding short-term rates. The expectation is that Powell will stick to his ‘patient’ approach and allow the economy some more recovery time before announcing more rate hikes to come. So we can all breathe easy….for now.

Asian markets opened mixed ahead of the big week with many investors holding off to see what develops in the Tech earnings saga. Apple is the first behemoth on the chopping block and will likely set the tone for the week. With slowing growth in China affecting all of the big names, this week is going to be one heck of a spectacle.

Brace yourselves for some serious volatility, people!

 

2. Fed Weighs On Emerging Markets 

Fitch ratings has dropped a bomb on emerging markets, saying they will face more ratings downgrades than upgrades this year if the Fed decides to increase rates. Ouch!

A strong Dollar, high foreign debt levels and hawkish Fed are all serious headaches for emerging markets and could be the source of many growth-related issues this year.

Latin America, the Middle East, Emerging Europe & Africa will suffer extensively from ratings downgrades thanks to their large US Dollar-denominated debt piles. Nations, such as Turkey and Argentina who were battered by currency crises will also feel a severely amplified effect of any adjustments by the Fed as the relative cost of their Dollar debt goes through the roof.

Argentina in particular holds roughly 83% of its debt in foreign currency. If that’s not over-exposed, we’re not sure what is!

Argentina aside, the outlook on emerging markets is mixed for now with the Fed committed to its pause in the rate hike cycle. However, strong fundamental signs from the US economy may force Powell to hop back on the rate-hike train sooner than emerging market investors might like.

Today we are watching…

1. Caterpillar (#cat)

Caterpillar’s earnings will attract a great deal of attention today as a measure of the effects of the US-China trade war. It will also act as an important benchmark in the global heavy equipment market. Analysts have been upgrading their estimates in the lead up to today, but the jury is still out as to whether it will beat earnings or not. The consensus EPS estimate is $2.98 (+38%) on revenue of $14.37bn (+10.9%). Don’t miss this one!

2. Gold (#gold)

Gold slipped slightly this morning after news of a brief respite from the US shutdown sent investors out of the safe-haven asset. However, it managed to hold above the important $1,300 level on the high likelihood of a continued pause in the rate hike cycle by the fed. Poor results from the big tech names posting earnings this week could send risk-averse investors flooding back to gold. So keep an eye on it.

 

 

 

 

 

 

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:

Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.

Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

Brokerage services of US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth, LLC a registered broker-dealer and member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. 

DriveWealth provides no tax, legal, or investment advice of any kind, nor does DriveWealth give advice or offer opinions with respect to the nature, potential value, or suitability of any securities transaction or investment strategy. DriveWealth acts as the clearing firm for securities transactions entered on the Invstr mobile platform. DriveWealth is not affiliated with Invstr. Invstr does not participate in DriveWealth’s decision-making.

There is no minimum initial deposit required to open an investing account with DriveWealth. Expenses and Fees associated with the DriveWealth platform in conjunction with Beanstox includes either a monthly membership fee of $4.99 with a commission charge of $0.01 per share* or, in the event the membership fee is not paid, a commission charge of $0.0125 per share applies, subject to a minimum of $2.99 per transaction. There are no monthly minimum fees, or required ongoing minimum account balance. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost). View a full list of our fees at http://bit.ly/DWFees

The monthly subscription charge is four dollars and ninety-nine cents (US$4.99) per month plus one cent (US$0.01) per share traded (as examples, for a Transaction of 0.90 shares, the per share traded charge is one cent (US$0.01), and for a Transaction of 1.6 shares, the per share traded charge would be two cents ($0.02), and the quarterly subscription charge is fourteen dollars and ninety-nine cents (US$14.97) every 3 months plus one cent (US$0.01) per share traded. The monthly and quarterly subscription charges may be greater or less depending on additional services offered by a DriveWealth partners as part of the subscription model offering, or based on any subsidies provided by a DriveWealth partner as part of the subscription model offering. For non-resident aliens, there is a one-time tax verification fee of $5.00 (representing Form W-8BEN pass-through processing cost).View a full list of our fees at http://bit.ly/DWFees

This communication is not an offer or solicitation to purchase or sell securities. Investing in securities carries risk, including the loss of principal. Past performance is not indicative of future returns, which may vary. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country's currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises. Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. ETF prospectuses are accessible within the mobile application via a link under each company’s “Description.”

A fractional share is a share of equity ownership that is less than one full share. Fractional share investing has certain limitations and restrictions that investors should understand prior to purchasing fractional shares: ownership of less than one full share does not give the fractional share owner the right to vote on company matters; fractional shares are non-transferrable, meaning they cannot be transferred to another brokerage firm; and fractional share orders will be accepted as market orders only. For more information and details on fractional shares, and any associated limitations or restrictions please visit: https://drivewealth.com/fractional-shares-disclosure

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