Currently on vacation until 8/20, but the world economy never takes a vacation!
DJIA: Down 0.15%
S&P 500: Down 0.24%
NASDAQ: Down 0.21%
All three major indicies were down slightly today. The market has been relatively flat on lower volume as of late, and that could be due to Wall Street being on vacation until early September. I doubt they trust the junior traders to be executing as many trades with many executives out on holiday.
In other news, things are heating up with North Korea even more. There is more drama associated with their missile programs. President Donald Trump warned the North Korean government against making any more threats to the U.S. In North Korean fashion, they made its most specific threat against the U.S. yet. Through official media, they said the government was considering firing missiles at Guam ( a U.S. territory). Their comment was that it would make the US “the first to experience the might of the strategic weapons of the DPRK”—the Democratic People’s Republic of Korea. Yes, threats against the United States are not new. However, North Korea usually makes vague threats that do not materialize to anything, whereas this threat was blunt, specific, and could pose a legitimate to United States territory.
These fears are being reflected in the global markets. In a relatively low volume, sideways summertime market, there has been recent stock profit-taking and a rush to the yen. This is widely considered a safe haven asset in todays market. With each passing day we are seeing global conflicts escalate, and that is being reflected with higher risk premiums in the equity and currency markets. Basically, since investors are taking more risk by participating in a more volatile market, they are being compensated with higher premiums for these market risks. Equity markets are decaying slightly and assets are being rotated into safe haven assets such as bullion and Yen.
Governments agreed not to recognize Venezuela’s new constituent assembly, saying that it represented a breakdown in the country’s democratic order. Countries are finally recognizing the Venezuelan government for what it is. “What we have in Venezuela is a dictatorship,” Peru’s Foreign Relations Minister Ricardo Luna said. Other Latin American countries in agreement include: Brazil, Mexico, Chile and Colombia. In a declaration, foreign ministers and other top officials from 12 countries, said the decisions by Venezuela’s 545-member constituent assembly will be considered illegitimate.
As stated in a previous news flash, the President Maduro created a fraudulent assembly to rewrite the constitution. On Tuesday, it passed a decree saying that its decisions will override those of all other government branches. The assembly agreed to convene for the next two years, which the opposition fears will result in the suspension of the 2018 presidential election. This is clearly a dictatorship, as it is getting rid of the checks and balances in place in order to keep the current administration in power. The executive branch used military power and death/jail threats to get this far. No group was powerful enough to stop this run of power, and it took over 10 South American governments coming together to finally oppose this brutal leader. This is a regional conflict that could have greater global consequences, as there are many North American investors in Venezuela/South America in general. We already have conflicts in Russia, China, North Korea, and the Middle East, as well as internal African conflict. The last thing we need is political unrest near our southern border.