Market Morning Roundup, Cryptos Crashing, Car Parts Threatening, Euro Banks Falling

Crypto Crashing Conundrum Continues as Justice Department Threatens

Bitcoin (BTC-USD), bitcoin cash (BCH-USD), ethereum (ETH-USD), and ripple (XRP-USD) are all down heavily, with the collective market cap of the entire cryptocurrency complex down to $333 billion. Post-parabolic lows are still at $247 billion, so we are still about 26% away from strong support. One reason behind the renewed selloff is news out just a few hours ago that the Justice Department is launching an investigation into bitcoin price manipulation, as reported by Bloomberg.

SEE: Cryptocurrencies Close In On Support Under Heavy Selling Pressure

What to do: Watch carefully to see if a bottom holds at a bitcoin price of about $6,150. If that level holds, we could establish a longer term trading range. If it doesn’t, the bottom may be a lot farther down.

Car Parts Now A Serious Threat To National Security

More trade war volleyball from the Trump Administration. Once again using the Trade Expansion Act of 1962, a Cold War relic that keeps being exhumed as an excuse to institute more tariffs, President Donald Trump has ordered an investigation into whether importing vehicle parts endangers American lives by making the American car industry ineffectual.

“There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry,” Commerce Secretary Wilbur Ross said, promising a “thorough, fair and transparent investigation.”

Well, yes, importing car parts would naturally lead to less car parts being manufactured domestically, no investigation needed. Nevermind that importing car parts enables Americans to spend their time doing other things in accordance with the law of comparative advantage, and that not importing them would take effort away from other industries in order to manufacture car parts that could be gotten cheaper from abroad, and how that interplay may damage national security as well.

What to do: Stocks that may pop in the wake of this news: (NYSE:GM) (NYSE:F)

Fed Minutes Extra, Read All About It: Powell Wants More Inflation

The Federal Reserve released its minutes from the May 1-2 Federal Open Market Committee meeting yesterday, and in a quote to end all quotes, most participants said that if the economy does what they expect it to do, “it would likely soon be appropriate…to take another step in removing policy accommodation.” Meaning if the economy keeps moving along, another rate hike is in the wings, which everyone already knows. More to the point though, Fed Chair Jay Powell did stress that he wouldn’t be too concerned if inflation breaks to the upside slightly above the unwritten target of 2%. Meaning, don’t expect the Fed get all worked up if the Personal Consumption Expenditures index moves to, say, 3% for a while. How long of a while is a while? This is the question that nobody knows the answer to, because it was not in the Fed Minutes, which are generally reserved for imparting, for the most part, information that is self-evident.

What to do: Gold and gold stocks may have hit a short term bottom here on the assumption that higher inflation will be tolerated and is on its way. (NYSEARCA:GLD) (NYSEARCA:GDX)

Maybe we should stop listening to European banks for trading advice

Deutsche Bank (NYSE:DB) isn’t doing too well. It didn’t get the memo about record profits for the banking industry, so it is considering laying off 1 in 10 employees in order to pick up the pace of cost-cutting. It’s the same with other European Banks, including French bank Société Générale (OTCMKTS:SCGLY) and Swiss Bank Credit Suisse (NYSE:CS). Though the jobs of these banks is to outperform the market, none of them have done so, with their owns stocks never recovering since the financial crisis of 2008.

What to do: The continued sorry state of the Eurozone financial system may continue to put pressure on these stocks. Watch Italian yields in particular, which look like they may be about to break long term resistance to the upside on electoral indigestion. If they do, European banking stocks could get hammered badly.

Businesses in Seattle Fight City Hall By Throwing A Few Pennies At Them

Amazon (NASDAQ:AMZN), Starbucks (NASDAQ:SBUX) and Vulcan (NYSE:VMC) have decided to band together, each pledging a total of $25,000 toward repealing Seattle’s new tax on jobs. Several other companies are involved in an effort to raise a grand total of $350,000. The money will be used to gather 17,632 signatures of Seattleans in order to put a repeal measure on the November ballot eliminating the tax. This is sure to upset Socialist city council member Kshama Sawant, whose initiative this tax was, who says she fights for the people, but only if they want higher taxes.

 

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