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A Claim Too Far: The Market’s Line in the Sand

A Claim Too Far: The Market’s Line in the Sand

With 36 million jobless claims and the China trade deal in the hot seat, Wall Street may have finally realized the enormity of the U.S.’s economic situation.

Batten Down the Hatches

I struggled with sugarcoating things for you today, but then I remembered … this is Great Stuff, we don’t do that here!

For the past couple of weeks, the market has idled in the eye of the pandemic storm. For all the volatility, the market has made little headway since early April. Wall Street spent the past two months digesting the U.S. economy’s reopening and hints of progress in treatments and vaccines for COVID-19.

This week, it seems that the situation’s enormity may have finally set in. The market is exiting the eye, heading back into stormy waters.

This morning, the U.S. Labor Department reported another three million unemployment claims were filed last week. The eight-week total for unemployment claims now stands at 36.5 million. Apparently, we finally crossed a line that makes Wall Street uncomfortable.

Adding to the situation, tensions continue to rise between the U.S. and China. This morning, the FBI and the Cybersecurity and Infrastructure Security Agency (CISA) accused China of targeting organizations researching COVID-19.

“China’s efforts to target these sectors pose a significant threat to our nation’s response to COVID-19,” the agencies said.

Furthermore, President Trump ratcheted up his China trade deal rhetoric.

“They should have never let this happen,” Trump said in an interview on Fox Business. “So, I make a great trade deal and now I say this doesn’t feel the same to me. The ink was barely dry, and the plague came over. And it doesn’t feel the same to me.”

The administration has hinted in the past week that the U.S.-China phase 1 trade deal could be used as leverage against China for the COVID-19 pandemic.

As a result, the Dow has plummeted more than 5% in the past three days. The blue-chip barometer now threatens to break below its 50-day moving average.

This is a crucial technical indicator for the Dow that could give you an edge on when to sell those speculative bets you’ve played with during the recent rebound.

A close below this key level is a sign that it’s time to get out. Time to batten down the hatches and prepare for another major market sell off.

If this has caught you off guard, don’t put off preparing any longer. If this didn’t catch you off guard (I mean, you’re reading Great Stuff after all!), you can never be prepared enough.

Before you read another line: Please click here to make sure you’re prepared for what may lie ahead.

Great Stuff Reader Feedback

Now for something just as unprecedented as these employment figures … we’re diving straight into Reader Feedback!

I holler, you holler, he/she/it hollers…

It’s Reader Feedback time! This week, we’re talking tech and deflation, deflation and tech. I’ll stop my yappering, and let’s get right to it:

Teeny-Tiny Tech Trades

I’m a little confused. Are you saying Vuzix is worth buying or something to shy away from?

H.A.J.

For those just joining in, we talked about high-tech and augmented reality (AR) glasses with Vuzix Corp. (Nasdaq: VUZI) last week.

Most of Vuzix’s customer base — pre-pandemic, at least — are scattered across the manufacturing sector, logistics chains, emergency response teams and so on throughout the industrial world. Nowadays, you or I could even go buy a pair of smart augmented-reality glasses … if you really want your neighbors social-distancing from you and your cyber eyes.

Now we’re adding in telemedicine, which gives Vuzix a massive market opportunity in front of it. But it’s not one that will skyrocket tomorrow. With so many companies just trying to get payroll sorted out, I doubt many managers will shell out the cash to don their fleets in $1,000 smart glasses anytime soon.

For these reasons (and other reasons that won’t fit here), VUZI isn’t an official Great Stuff pick that we recommend. But I will say this…

Trading these microcaps isn’t something I recommend if you’re just getting your feet wet with investing. What you need is a guide to walk you through the tech market’s nooks and crannies and tipping-point trends. You can find your guide by clicking here!

Cheaper by the Case

Deflation is not cured by interest rate increases! Not even by the Fed! Josef, please correct your comments. The fear of Deflation is that people won’t buy because it will be cheaper later.

Everett S.

I … come again? You can’t trick me with that deflation deja vu, Everett!

Here’s what I wrote last week about deflation, word for word. Note the similarities:

“Higher interest rates mean higher minimum debt payments. And no one wants that right now. But the alternative is equally unappealing. Continued deflation leads both consumers and businesses to delay purchases as they wait for lower prices. This leads to economic stagnation.”

Good try, though, trickster. My memory may be foggy, but at least it’s not foggy.

Now on to our next email:

My case of Gallo or Sutter Home Wines just Shot UP! From $6.88 to 8.89 per 1.5 LITRE BOTTLE, that’s a $1.15 a Glass. I’m living on 458 ss. That’s 20⬆ percent markup!

James J.

I, for one, admire the dedication of anyone buying bulk wine by the case, but James! You’ve been had! That’s actually a 29% markup … for Shudder Home, no less! At least you aren’t drinking Boone’s Farm.

Oh, and Everett from above? Here’s your example of the consumer stagnation threat…

If you have more on your mind, let er’ rip in our inbox. We love to hear from every single Great Stuff reader worldwide. (Yes, this includes you right there! I see you scrolling!)

Send us an email at GreatStuffToday@BanyanHill.com. You might just find your email in next week’s edition of Reader Feedback.

That’s a wrap for today, but if you still crave more Great Stuff, check us out on social media: Facebook and Twitter.

Until next time, be Great!

Regards,

Joseph Hargett

Editor, Great Stuff

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