The week began with global equities and markets mixed, but kept moving down as the week progressed. This was the result of a number of factors beginning with Japan reporting domestic manufacturing contracting, at the fastest pace since 2013. China also stated that factory activity edged down last month, indicating to investors a further weakening of the world’s second largest economy.
Japanese stocks fell 3% on Monday extending the loss of 5% from the week before on their main index. A percentage fall of this magnitude, has not occurred on the Nikkei since 2008. Analysts attribute this result from the lack of action by the Bank of Japan to expand their stimulus efforts.
China reported a further dip in the manufacturing sector last month. The domestic economy is being hit with overcapacity and weaker external demand for Chinese goods.
On Friday morning, global markets and in the United States were waiting on the United States jobs report for April. There was a forecast of 202,000 new jobs created. The report came in at 160,000 with official unemployment remaining at 5%. U6 unemployment is still at 9.7%. Labor participation dipped to 62.8% as 362,000 workers left the job market. Investors reacted negatively to the news.
The United States has posted results for GDP (Gross Domestic Product) growth for the first quarter of 2016. The provisional rate is only 0.50%, when 0.7% had been expected. This follows the 1.4% reported for the 4th quarter of 2015. There is increasing concerns among investors that the United States economy may be heading for a recession later this year.
In related news, Puerto Rico missed a $422 million USD (United States Dollar) this week that was due to its Government Development Bank. It is the largest default ever for the American territory. An additional $2 billion USD, will come due over the summer.
A federal bailout is becoming increasingly likely for the troubled island.
The largest economies in Europe continue to grown albeit slowly. However, despite the availability of cheap loans and negative interest rates (-0.40%) offered by the ECB (European Central Bank) private sector growth remains sluggish and inflation likewise.
The increase in monthly bond and now corporate purchases from $68.65 billion USD to $91.54 billion USD has had limited impact as well.
Total Euro-zone growth for quarter 1 is now listed at 0.6%, when only 0.4% was expected. GDP is forecast to be only 1.6% in 2016, down from 1.7% last year. Still, Europe is now growing faster than the United States.
The Transatlantic Free Trade Agreement has reached a major impasse. Differences over environmental issues seem to be the most challenging. European standards are somewhat more stringent.
Tensions are rising between Germany and the ECB. Mario Draghi as head of the central bank has implicated the Germans as being complicit in the global excess in savings, which has led to the present ultra low interest rates.
Germany has stated that bank policy is punishing savers in Northern Europe, while benefiting the profligacy of spending in Mediterranean Europe.
Unemployment in Germany as expected, remained at the all time low of 6.2% in April. The number of jobless continued to decline for the 7th consecutive month.
The King of Spain has called for new elections to take place on June 26th. It has become necessary because the major parties have been unable to form a governing coalition, since elections held last December.
The Prime Minister of Turkey resigns in political struggle, as President Erdogan moves to consolidate his power even further. Developments there will complicate relationships between Europe and the United States. Foreign investment in Turkey is going to taking a hit.
Embattled Brazilian President Dilma Rousseff may end up supporting the call for new elections later this year. She is likely to support the idea, if her chances of surviving an impeachment vote in the Senate become unlikely. There will be major legislative hurdles to overcome, in changing the constitution of Brazil to permit such an event.
In a related event, the top Brazilian prosecutor has requested that the Supreme Court permit an investigation of former President Lula da Silva and a bevy of other politicians. They are supposedly all linked to the massive corruption probe, concerning the giant state owned oil company Petrobas.
Australia has joined the club in cutting interest rates. The central bank of the country has reduced the cash rate by 25 basis points, to a historic low of 1.75%. The last cut was in May of 2015. The lower outlook on inflation, provided impetus to bank officials in making the decision. The Japanese yen surged in valuation against the Australian dollar on the news.
Precious Metals all decreased in price this week after hitting highs of $1,300 USD for gold and over $18.00 USD for silver. Gold reached its highest price since January 2015 and has increased a total of 23% in 2016. The reluctance of the American Federal Reserve Bank to raise rates and the weakness of the USD, can be attributed to the rapid rise in precious metal prices.
The international price for gold was at $1,281.90 USD by Friday morning, which is still a small increase over last week. Silver experienced an slight decline. By the end of the week the price had dipped to $17.43 USD, which equates to a $0.20 decrease.
Crude oil began the week with a retreat from the 2016 highs, as rising production in the Middle East surpassed cuts in output in the United States. Total output from OPEC (Organization of the Petroleum Exporting Countries) has now risen to 32.64 million barrels a day near a record amount.
On Friday morning, American West Texas Intermediate (WTI) oil decreased -0.50% to $44.10 USD, $2.00 below where prices stood last week. International priced Brent is also down by -0.64% at $44.28 USD. This is nearly a $4.00 decline in valuation.
There is also the rising threats to Libyan exports of crude. The fighting between factions in the ongoing civil war could reduce production by 120,000 barrels a day.
Meanwhile in the United States, 59 oil and gas companies have now gone bankrupt. The number of American energy bankruptcies, is now approaching the record 68 filing that were seen for the telecom collapse in 2002 and 2003.
Worldwide corporate mergers have declined from the record set in 2015. It is down 22% registered last year, for the same time period in dollar valuation and 13% in the number of dealings. Reasons for the decline include expectations of higher interest rates and more regulations. It could also reflect the dropping investor confidence in the weakening United States economy and the increasing vulnerability of the American stock market for 2016.
In major corporate news, Halliburton has abandoned its $28 billion USD attempt to acquire rival Baker Hughes following intense opposition from both European and United States antitrust regulators. The former will be forced to pay a $3.5 billion USD termination fee. The deal would of merged the 2nd and 3rd largest oil service companies globally.
Apple experienced the longest losing streak in stock valuation this week in 18 years. The plunge was the result of the first ever decline in iPhone sales in the first quarter.
Iron miner Samarco and its owners BHP Billiton and Vale, have been hit by a civil claim coming from Brazilian prosecutors. The $44 billion USD lawsuit caught investors by surprise. Brazil is seeking damages resulting from the deadly collapse of a dam last November, which led to 19 deaths and massive pollution of a river.
This is separate from the $5.6 billion USD settlement made with the Brazilian government, which will be paid out over 15 years.
Japanese based Takata, an auto parts maker is recalling 35 to 40 million more airbag inflators in the United States. This action more than doubles, what is already the largest recall in the United States auto industry.
Stock Fills For The Previous Weeks
April 29, 2016 ——–5 Target Fills
April 22, 2016 ——–5 Target Fills
April 15, 2016 ——–0 Target Fills & 3 Early Target Fills
April 08, 2016 ——- 5 Target Fills
April 01, 2016 ——- 0 Target Fills
Mar 25, 2016 ——– 2 Target Fills
Mar 18, 2016 ———0 Target Fills & 2 Early Target Fills
Mar 11, 2016 ——– 2 Target Fills & 3 Early Target Fills
Mar 04, 2016 ———1 Target Fill & 2 Early Target Fills
Feb 26, 2016———- 2 Target Fills
Feb 19, 2016———- 0 Target Fills & 2 Early Target Fills
Feb 12, 2016 ———05 Target Fills
Feb 05, 2016 ———05 Target Fills & 4 Early Target Fills
Jan 29, 2016 ———01 Target Fills & 2 Early Target Fills
Jan 22, 2016——— 08 Target Fills
Jan 15, 2016 ———09 Target Fills
Jan 07, 2016 ——– 10 Target Fills
Dec 31, 2015 ——–1 Target Fill
Dec 24, 2015 ——–0 Target Fills
Dec 18, 2015 ——–4 Target Fills
Dec 11, 2015 ——–2 Target Fills
Dec 04, 2015 ——–4 Target Fills
Nov 27, 2015 ——- 1 Target Fill
Nov 20, 2015 ——- 6 Target Fills
Nov 13, 2015 ——–6 Target Fills
Nov 06, 2015———5 Target Fills
Oct 30, 2015——— 2 Target Fills
Oct 23, 2015 ——– 2 Target Fills
Oct 16, 2015 ——– 2 Target Fills
Oct 09, 2015 ——- 1 Target Fill
Oct 02, 2015 ——–5 Target Fills
Sept 25, 2015 ——-1 Target Fill
Sept 18, 2015 —— 2 Target Fills
Sept 11, 2015 —— 1 Target Fill
Sept 04, 2015—— 2 Target Fills
August 28, 2015 6 Target Fills
August 21, 2015 – 2 Target Fills
August 14, 2015 –-1 Target Fill
August 07,2015 —2 Target Fills
July 31, 2015 ——1 Target Fill
July 24, 2015 ——1 Target Fill
July 17, 2015——-3 Target Fills
July 10, 2015—— 1 Target Fill
July 03, 2015—— 0 Target Fills
June 26, 2015—– 3 Target Fills
June 19, 2015 —- 2 Target Fills
June 12, 2015—–2 Target Fills
June 05, 2015—–4 Target Fills
May 29, 2015 —- 5 Target Fills
May 22, 2015—– 2 Target Fills
May 15, 2015 —–2 Target Fills
May 08, 2015 —–1 Target Fill
May 01, 2015 —- 3 Target Fills
April 24, 2015—- 2 Target Fills
April 17, 2015 —-5 Target Fills
April 10, 2015 —-3 Target Fills
@ 2014 The Day Trading Academy. All rights reserved. This work is based on SEC filings, interviews, corporate press releases, and extensive research done across investment articles, current events, and investment expertise. It may contain errors, and you shouldn’t make any financial decision based solely on what you read here. It’s your money and your responsibility. As with any investment, there is no guarantee against potential loss. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. This publication’s sole intended purpose is to provide investment-related information as well as education and opinions to subscribers and the recommendations and analysis presented to members is for the exclusive use of members.