The major averages enter the final hour with modest gains, despite growing emerging market financial contagion. Bitcoin retests $6,000 as crypto currencies demonstrate that long on hype and short on substance makes for a volatile and risky investment. The story about Tesla going private takes another bizarre turn as Elon Musk names financial advisors that don’t seem to be on board with the process. Fake it till you make it baby or die trying.
Turkey has seen its currency the Lira plunge 43% in 4-months against the US Dollar sparking fears that a debt crisis involving some ½ Trillion Dollars could become the largest Emerging Market debt crisis in history. Some European banks have seen their share prices take a hit of late, but so far, it’s still orderly. Throw some significant trade tariffs into the mix as Trump has threatened and will see how well the Lira holds up as foreign exchange reserves dwindle.
Trade prices were essentially flat for a second month in July after import prices came in unchanged and export prices slipped .5% on weakness in imported food prices tied to a strengthening Dollar. As this series excludes trade tariffs they won’t show up in the data like the Consumer and Produce Price Indexes. That said I expect both to jump near term driven by tariffs.
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