News Flash: Monday 7/31/17

Foreign Policy:

The United States is taking action against the Venezuelan government saying that President Nicolas Maduro “abused human rights and organized an illegitimate vote while threatening opponents with jail time.”  The US Treasury froze all Venezuelan assets in the United States, joining North Korea, Zimbabwe, and Syria.  We are basically targeting a rogue leader and waging economic warfare against him at this point.  We are fighting against an assembly that voted to write a new national charter, which we fear will give the government unchecked power.  The United Nations are ramping up the fight against Venezuela, attempting to protect it’s democracy from a borderline-dictator in Maduro.

 

The Cold War round 2 is heating up, as Congress devised a few possible plans to supply Ukraine with military supplies (antitank missiles and other weapons).  They are supposed to be for defense, and to deter the Russians from pursuing aggressive action.  Others comment that some of the weaponry we are supplying is clearly for offensive purposes and will be used on Kiev.  The chess match between Russia and the United States continues.  This decision is not final, and Trump will make a call within the coming months.   If the plan went through, we are clearly choosing sides against Russia, and will further degrade an already deteriorating relationship with Moscow.

 

While we have been focusing on domestic issues this summer, foreign policy has taken a backseat to health care.  The world is growing exponentially more dangerous by the day, as North Korea’s weapons program is going rogue.   The nation currently has missiles within firing range of the US, we expect them to test more missiles within the week, and underground nuclear tests are on the horizon.  Ties with Russia are at their worst since the Cold War, and Trump’s relationship with China is slowly but surely degrading.  International affairs are playing out on all fronts right now, as we are dealing with issues in China, Russia, Syria, Iran, Ukraine, and North Korea (to name a few) simultaneously.   It will be interesting to see what Trump has planned, and the effects it will have on the United States citizens.


 

Business:

The supermarket industry has become too bug for it’s britches.  There is an abundance of retail floor space, and not enough demand for the products as consumer shopping habits are changing.  Retail shelf space per consumer is 30 times higher than it was in 1950 (4.15 square feet per capita) while sales are flatlining.  Experts are speculating that this combination will lead to closures and consolidation within the industry and/or a hike in already rising food prices.  This seems like a normal economic business cycle.  Too many firms = no profits = some firms exit until they reach normal profits.  Especially with the addition of Amazon into the supermarket space, the ever growing amount of grocery stores had to end at some point.    Americans are consuming less food overall, and as the baby boomers and millennials age out of their prime eating years, we should see a steady decline in supermarket profits.


 

Markets:

DJIA: Up 0.28%

S&P 500: Down 0.07% (Flat)

NASDAQ: Down 0.42%

 

Second quarter earnings were strong and have boosted the Dow to record highs, while FANG stocks start to correct and are bringing the NASDAQ down with it.  The S&P 500 (500 biggest stocks by market capitalization) is remaining relatively flat, which is not surprising for late July into August as trading volumes usually drop off of a cliff.

 

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