Category: Politics

DJT Stock Soars 20% After Trump’s Controversial Madison Square Garden Rally

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– DJT shares soar on investor optimism around Trump’s 2024 election chances.
– Rally at Madison Square Garden and support from figures like Elon Musk bolster stock.
– While stock rises, Trump Media’s underlying financial challenges could impact long-term performance.

Donald Trump’s Trump Media & Technology Group (DJT) stock has seen a surge following his rally at Madison Square Garden, as market excitement and the election’s proximity drive interest. Over the weekend, DJT shares rose by as much as 20%, boosted by investor anticipation surrounding the former president’s election chances. The stock now trades at its highest point since July, marking a substantial 235% increase from September’s lows.

This surge wasn’t limited to DJT stock alone. Related companies like Phunware (PHUN), which provides mobile advertising services connected to Trump, and conservative video platform Rumble (RUM) also experienced gains of over 3% and 6%, respectively. Market analysts suggest that DJT’s stock performance hinges largely on the election, making it highly volatile in the face of public opinion shifts.

Investors betting on DJT stock see the upcoming election as a major catalyst. If Trump wins, the stock is likely to benefit from positive sentiment and speculation around Truth Social, his social media platform under Trump Media & Technology. Trump’s recent rally, while controversial, has further stoked investor sentiment as prediction markets shift more favorably towards his presidential bid. Betting markets, such as PredictIt and Kalshi, have shown Trump gaining ground against Democratic nominee Kamala Harris, adding to the optimism fueling DJT’s stock momentum.

However, experts warn of potential volatility. With a highly polarized market reaction to Trump’s campaign, a loss in the election could drive DJT’s stock down dramatically. Investment fund CEO Matthew Tuttle, who currently holds put options on DJT stock, predicts that a Trump loss could send the stock’s value tumbling to zero. Analysts advise caution, citing a “buy the rumor, sell the fact” approach for DJT stock tied to the November results.

The uptick in DJT’s value comes after a volatile period that included a drop in share price following the end of a lockup period for some early investors. Trump’s presence on Truth Social, which he launched post-2021 after being removed from traditional platforms, has continued to fuel speculation on the stock. Elon Musk, a known supporter of Trump, attended Trump’s rally alongside other influential figures, creating a spectacle that resonated with supporters and media alike. Trump and Musk’s association has generated media buzz, with Trump even suggesting a potential cabinet position for Musk, though the Tesla CEO’s involvement remains unofficial.

Despite recent stock performance, Trump Media’s fundamentals raise concerns. For the quarter ending June 30, DJT reported a $16.4 million net loss, with revenue down 30% year-over-year to $837,000. Half of these losses were linked to expenses associated with the company’s SPAC (Special Purpose Acquisition Company) deal. DJT also disclosed earlier in the month that its COO had stepped down in September, indicating potential instability within its management team.

As Trump Media gains attention in the market, its financial landscape remains a key factor for investors who are looking beyond the election.

Assassination Attempt on Trump Sparks Uncertainty in Markets Amid Unusual Election Cycle

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– An assassination attempt on former President Donald Trump adds to the volatility surrounding the 2024 U.S. presidential election.
– Investors fear increased political instability, which could impact market sentiment, particularly in small and micro-cap stocks.
– Market movements highlight the fragile balance between politics and economic confidence as election tensions rise.

The recent assassination attempt on Donald Trump, the Republican presidential nominee, underscores a key theme in this year’s U.S. election cycle: rising political tensions and their impact on financial markets. On Sunday, Secret Service officers thwarted an apparent assassination attempt at Trump’s West Palm Beach golf course, shaking both political and economic spheres. The event further exacerbates an already turbulent election year, where unpredictable developments have consistently affected investor sentiment.

Political uncertainty is a well-known driver of market volatility, and this incident amplifies the existing concerns. With both parties engaged in heated battles, any threat to a high-profile candidate like Trump has a significant ripple effect on investor confidence. The attempted assassination, while fortunately thwarted, introduces fears of escalating political violence, which could weigh heavily on market behavior, particularly as the election draws near.

In fact, political instability tends to trigger risk aversion among investors, who seek safer assets in uncertain times. The U.S. stock market’s reaction to political events often involves a flight to quality, with investors moving toward bonds, precious metals, or large-cap stocks, while small and micro-cap companies tend to bear the brunt of the volatility. These companies, which rely more heavily on investor confidence and market stability, can see exaggerated price swings during periods of uncertainty.

Small and micro-cap stocks are especially vulnerable in uncertain political environments. These companies often have more limited access to capital and are more sensitive to market fluctuations. Historically, political risks, particularly those involving threats to major candidates, have led to a pullback in smaller stocks as investors pivot toward safer, more liquid assets.

If market anxiety continues to rise over the course of the election season, small-cap stocks could see increased volatility. Investors may start to question how the election’s outcome, influenced by these dramatic events, will impact regulatory frameworks, tax policies, and economic growth. This is especially true for sectors tied closely to government policies, such as healthcare, energy, and technology.

The 2024 election cycle has been unusual, marked by extraordinary levels of polarization, political violence, and uncertainty. The July assassination attempt on Trump in Pennsylvania, coupled with Sunday’s incident, only serves to escalate concerns. Political violence, if it continues, may raise questions about the security and stability of the election process itself, further unsettling markets.

While the S&P 500 and other major indices have shown resilience so far, the small and micro-cap sectors remain more fragile. Any further threats to political figures or destabilizing events could drive more dramatic responses from these stocks. The next few weeks are likely to be crucial as investors digest the implications of these incidents alongside expected changes in monetary policy and global economic developments.

As the FBI continues its investigation into the latest assassination attempt, the political climate will likely remain in focus for investors. While larger companies with diversified portfolios may weather the storm, smaller and more speculative investments will require greater scrutiny. In an unpredictable election cycle like this, market participants may look for safer opportunities and hedge against the risks of political violence or upheaval.

Ultimately, the intersection of political drama and market dynamics this year serves as a reminder that investors should stay agile and informed. Whether these assassination attempts will influence the broader market remains to be seen, but in this highly charged environment, investors will be watching closely for any signs of escalation as the election unfolds.

How the Trump vs. Harris Debate Could Impact the Stock Market

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Investors are watching tonight’s Trump-Harris debate closely for insights on future economic policies and potential market movements.
– Trump Media stock surged ahead of the debate, signaling possible volatility in political-adjacent companies.
– The debate could influence market sectors like tech, healthcare, and energy, depending on the candidates’ policy discussions.

As former President Donald Trump and Vice President Kamala Harris prepare to face off in tonight’s highly anticipated debate, investors and market watchers are gearing up for potential shifts in stock prices. With both candidates proposing different economic policies, the outcome of the debate could have significant consequences for the U.S. stock market. Investors are particularly interested in how the candidates will address pressing economic issues like inflation, interest rates, and taxation.

In a notable development, Trump Media stock saw a surge of over 10% ahead of the debate. The stock, which is tied to Trump’s social media company Truth Social, often acts as a gauge for Trump’s political fortunes. This sudden rise in value demonstrates how political events can trigger movements in individual stocks, particularly those closely tied to the candidates. For investors, this surge could signal increased market volatility, especially for companies that are either directly influenced by politics or considered riskier assets.

Beyond Trump Media, broader sectors of the stock market may be affected depending on how the debate unfolds. Technology stocks, which tend to react strongly to policy changes, could see immediate shifts. Major players like Amazon, Alphabet, and Meta have experienced volatility during election seasons, and tonight’s debate may reignite similar trends. Investors will be paying close attention to how both Trump and Harris propose to regulate Big Tech, particularly in areas like data privacy, AI regulation, and antitrust issues.

The healthcare and energy sectors could also experience fluctuations based on the candidates’ policy positions. Harris is expected to focus on expanding healthcare access and pushing for environmental reforms, while Trump is likely to emphasize deregulation and lower taxes. How these policies are presented could impact sectors like renewable energy, oil and gas, and healthcare providers.

From an investment standpoint, clarity in economic policy is crucial. Both Trump and Harris have been rolling out proposals in the lead-up to the debate, but tonight’s event offers a platform for more detailed discussions. Investors will be looking for any indication of how each candidate plans to handle inflation, interest rates, and fiscal stimulus—topics that directly affect market stability. As inflation continues to be a hot-button issue, any hints at future federal rate cuts or spending plans could sway market sentiment.

In particular, the debate takes place as the stock market has been navigating heightened volatility. The S&P 500 recently experienced its worst week of the year, and uncertainty around inflation and economic growth has left investors anxious. With polling showing Trump and Harris in a tight race, the outcome of the debate could introduce new dynamics into the market, particularly if one candidate clearly outshines the other in terms of their economic vision.

It’s important to note that while debates can influence market sentiment, they do not always lead to long-term market shifts. However, the candidates’ positions on fiscal policy, corporate taxes, and economic growth will be critical for long-term investors. If Trump signals a return to policies that focus on corporate tax cuts and deregulation, sectors like technology, energy, and financials could see positive momentum. On the other hand, if Harris pushes for increased regulation and green energy initiatives, renewable energy stocks may experience a rally.

Regardless of tonight’s outcome, investors should approach the market with caution in the days following the debate. Political uncertainty often leads to short-term market volatility, and traders may reposition themselves based on perceived shifts in the political landscape. However, the debate is only one factor influencing a complex global market, and long-term investors should weigh broader economic indicators before making any major decisions.

For those tracking the stock market, tonight’s debate offers more than just political theater—it’s an opportunity to gain insights into the future direction of the U.S. economy and its potential impact on market sectors. Investors should remain vigilant and keep a close eye on how both candidates articulate their economic policies, as these discussions will likely shape market expectations moving forward.

Elections and the Stock Market: Navigating the 2024 US Presidential Race

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– The 2024 US election may increase market volatility
– Policy proposals could impact various economic sectors
– Long-term investment strategies remain crucial despite short-term political events

As the 2024 US presidential election approaches, investors are keenly watching how the political landscape might influence their portfolios. With election day set for November 5, 2024, understanding the potential impacts of this specific election cycle on the financial markets is crucial for informed decision-making.

The 2024 election is particularly significant as it follows a period of economic uncertainty, including high inflation and interest rates. Investors are closely monitoring how candidates’ policies might address these issues and shape the economic landscape moving forward.

Several key policy areas are under scrutiny. Proposals for corporate tax rates and capital gains taxes could significantly impact company profits and investor returns. Potential changes in regulatory frameworks, especially in sectors like technology, finance, and energy, may affect industry leaders and emerging companies alike. Government spending plans, including infrastructure initiatives, healthcare reforms, and climate policies, could influence various sectors of the economy. Additionally, stances on international trade, particularly regarding relationships with China and other major economic partners, may affect global markets and supply chains.

As we move closer to November, expect increased market volatility. The VIX index, often called the “fear gauge” of the market, typically rises during election years, and 2024 is likely to follow this pattern. However, it’s crucial to remember that while short-term fluctuations can be unsettling, they often have little bearing on long-term market trends.

Current polls and predictions should be taken with a grain of salt. The 2016 and 2020 elections demonstrated that unexpected outcomes are possible, and markets can react swiftly to surprises. Investors should be prepared for potential market movements in either direction as election day approaches and results unfold.

Specific sectors to watch in this election cycle include healthcare, energy, technology, and financial services. Healthcare proposals could significantly impact insurance companies, pharmaceutical firms, and hospital operators. Energy policies on fossil fuels, renewable energy, and climate change may cause shifts in the sector. In technology, discussions around data privacy, antitrust measures, and AI regulation could affect tech giants and emerging companies. Financial services may see changes due to potential shifts in banking regulations and monetary policy approaches.

For investors navigating this election season, several strategies are worth considering. Reviewing your asset allocation ensures your portfolio is well-diversified and aligned with your long-term goals, regardless of the election outcome. While staying informed is important, avoid overreacting to polls or predictions. If you’re concerned about volatility, focusing on defensive sectors like utilities and consumer staples can provide more stability during uncertain times.

Market overreactions to political news can sometimes create buying opportunities for long-term investors. It’s also crucial to maintain a global perspective, remembering that many US companies derive significant revenue from overseas, potentially mitigating the impact of domestic policy changes.

As November 5 approaches, it’s natural to feel uncertainty about the markets. However, historical data shows that elections typically have a limited long-term impact on market performance. Regardless of the outcome, the fundamentals of sound investing remain the same: focus on your long-term goals, stay diversified, and avoid making emotional decisions based on short-term political events.

In conclusion, while the 2024 US presidential election will undoubtedly create some market waves, it’s crucial to maintain perspective. By staying informed, prepared, and focused on your long-term investment strategy, you can navigate this election season with confidence. Remember that beyond the election cycle, factors such as economic growth, corporate earnings, and technological advancements continue to be significant drivers of market performance in the long run.

Crypto’s Political Surge: A New Frontier for Investors in the 2024 Election Landscape

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Political attention on cryptocurrency is growing, potentially influencing future regulations and market dynamics.
-Trump and other politicians are making pro-crypto promises, but implementation challenges remain.
– Investors should watch for policy shifts that could impact crypto markets and related investments.

As the 2024 U.S. presidential election looms, cryptocurrency has unexpectedly taken center stage, promising to reshape both the political and investment landscapes. The recent Bitcoin 2024 conference in Nashville served as a lightning rod for political attention, with figures from across the spectrum – most notably former President Donald Trump – making bold commitments to the crypto community.

Trump’s promises were sweeping: appointing a crypto Presidential Advisory Council, ousting SEC chair Gary Gensler, introducing crypto-friendly regulations, and even establishing a “strategic national bitcoin stockpile.” These pledges were echoed and amplified by other politicians, including Senator Cynthia Lummis and independent candidate Robert F. Kennedy Jr., who proposed acquiring up to 4 million bitcoins for a national reserve.

For investors, this surge in political interest signals potential seismic shifts in the regulatory environment. However, it’s crucial to approach these promises with a healthy dose of skepticism. Many proposed actions face significant legislative and legal hurdles, even in a favorable political climate.

The crypto industry’s growing political clout is evident in its fundraising prowess. FairShake, the largest crypto Super PAC, has amassed over $200 million, positioning itself as a formidable force in upcoming elections. This financial muscle could translate into increased lobbying power and potentially more favorable policies for the sector.

From an investment perspective, this political momentum could lead to several outcomes:

  1. Regulatory Clarity: A pro-crypto administration could usher in clearer regulations, potentially reducing market uncertainty and attracting more institutional investors.
  2. Market Volatility: Political developments will likely trigger significant price movements, creating both opportunities and risks for traders and investors.
  3. Mainstream Adoption: Increased political legitimacy could accelerate crypto’s integration into traditional financial systems, opening new investment avenues.
  4. Sectoral Impact: Companies in blockchain technology, cybersecurity, and fintech could see increased interest as crypto gains political traction.
  5. Global Competition: A U.S. pivot towards crypto-friendly policies could influence global crypto regulations and investments.

However, investors should remain cautious. The crypto market’s notorious volatility persists, and political promises often face significant obstacles in implementation. The recent ascension of Vice President Kamala Harris as the presumptive Democratic nominee adds another layer of uncertainty, given her undeclared stance on crypto regulation.

Bitcoin’s price action following the conference – surging above $70,000 before retreating – underscores the market’s sensitivity to political developments. Year-to-date, Bitcoin has risen over 50%, buoyed by increased institutional interest following the launch of Bitcoin ETFs.

As the election approaches, savvy investors should monitor several key areas:

  1. Proposed legislation affecting crypto regulations
  2. Appointments to key regulatory positions, especially at the SEC and CFTC
  3. Statements from major political figures on crypto policy
  4. Progress on initiatives like a national bitcoin reserve
  5. International reactions and policy shifts in response to U.S. developments

While political attention on crypto is growing, it’s important to note that widespread adoption and understanding remain limited. As Trump candidly observed, “most people have no idea what the hell it is.” This gap between political rhetoric and public comprehension presents both challenges and opportunities for investors.

For those considering crypto investments, a multifaceted approach is crucial:

  1. Diversification: Balance crypto investments with traditional assets to manage risk.
  2. Due Diligence: Thoroughly research projects and platforms before investing.
  3. Regulatory Awareness: Stay informed about evolving regulations both domestically and internationally.
  4. Technology Understanding: Grasp the underlying technology and its potential applications beyond currency.
  5. Long-term Perspective: Consider the long-term potential of blockchain technology beyond short-term price fluctuations.

As the 2024 election unfolds, the interplay between politics, regulation, and crypto markets will likely intensify. For investors, this evolving landscape presents a unique set of opportunities and risks. Those who can navigate the complex intersection of technology, finance, and politics may find themselves well-positioned in this new frontier of investing.

Remember, while the potential for high returns exists, so too does the risk of significant losses. As always, it’s crucial to approach any investment, especially in the volatile crypto space, with caution and in alignment with one’s risk tolerance and financial goals.

Election Curveball: How Harris’s Candidacy Could Influence Market Sentiment

Posted on by slightbourne@noblecapitalmarkets.com

As Vice President Kamala Harris steps into the spotlight as the likely Democratic presidential nominee, following President Joe Biden’s unexpected withdrawal from the race, the U.S. stock market faces a new layer of uncertainty in an already volatile election year. Harris’s sudden elevation to presumptive nominee status introduces fresh variables into the complex equation of political influence on financial markets.

Historically, election years have been associated with market volatility, as investors attempt to price in potential policy shifts. With Harris now at the forefront, market participants are scrambling to reassess their projections and strategies.

One of the primary factors influencing market sentiment will be Harris’s economic agenda. While she has largely supported Biden’s policies during her tenure as Vice President, investors will be keenly watching for any signs of divergence or new initiatives. Her stance on corporate tax rates, regulatory policies, and government spending will be particularly scrutinized, as these factors directly impact corporate profitability and economic growth projections.

The technology sector, which has been a significant driver of market performance in recent years, may face increased scrutiny under a Harris administration. Her background as a Senator from California suggests a deep familiarity with the tech industry, but also raises questions about potential regulatory efforts. Any indication of stricter oversight or antitrust measures could lead to volatility in tech stocks, which have a outsized influence on major indices.

Healthcare is another sector likely to see significant attention. Harris’s support for expanding healthcare access could boost hospital and insurance stocks, while potentially putting pressure on pharmaceutical companies if drug pricing reform becomes a central campaign issue.

The energy sector may also experience shifts based on Harris’s environmental policies. Her strong stance on climate change and support for renewable energy could benefit green energy stocks while potentially creating headwinds for traditional oil and gas companies.

Financial markets generally prefer policy continuity, and Harris’s nomination represents a degree of continuity with the current administration. However, her potential to energize certain demographic groups, particularly younger voters and minorities, could shift market expectations if it’s perceived to increase the Democrats’ chances of retaining the White House.

On the flip side, if Harris struggles to gain traction with voters or if the transition leads to visible fractures within the Democratic Party, it could boost market expectations of a Republican victory. Historically, some investors have viewed Republican administrations as more business-friendly, although this perception has become more nuanced in recent years.

The reaction of international markets will also be crucial. Harris’s foreign policy approach, particularly regarding trade relations with China and global climate initiatives, could impact multinational corporations and currency markets.

It’s important to note that while politics can influence market sentiment in the short term, long-term market performance is ultimately driven by economic fundamentals, corporate earnings, and global economic conditions. Investors should be cautious about making significant portfolio changes based solely on political developments.

As we navigate this unprecedented election season, with a last-minute change in the Democratic nominee, markets are likely to experience periods of heightened volatility. Each new poll, policy announcement, or debate performance could trigger market movements as investors continually reassess the likelihood of various election outcomes and their potential economic impacts.

For investors, the key will be to maintain a long-term perspective while staying informed about potential policy shifts that could impact specific sectors or the broader economy. As always, diversification and a focus on individual company fundamentals remain crucial strategies for navigating market uncertainty.

In the coming months, as Harris defines her campaign and policy positions, market participants will be watching closely, adjusting their strategies in real-time to this dramatic twist in the 2024 election narrative.

Trump Media Surges As Market Reacts to Assassination Attempt

Posted on by slightbourne@noblecapitalmarkets.com

In an unexpected turn of events that has sent shockwaves through both the political and financial worlds, shares of Trump Media & Technology Group (DJT) soared over 30% as trading opened on Monday, July 15, 2024. This dramatic surge comes in the wake of a harrowing incident involving former President Donald Trump, who narrowly escaped an assassination attempt on Saturday.

The incident, which occurred during a campaign event in Pennsylvania, saw Trump grazed by a bullet. He was promptly treated at a local hospital and released later that day. As the majority shareholder of DJT and the face of its flagship platform, Truth Social, Trump’s brush with mortality has had an immediate and significant impact on the company’s stock performance.

By 6:29 a.m. ET on Monday, Truth Media shares had skyrocketed 50% in premarket trading, with more than 17 million shares changing hands before 10 a.m. This frenetic activity underscores the volatile nature of DJT’s stock, which has experienced significant fluctuations throughout the election race.

Market analysts suggest that this surge may be linked to a perception that the assassination attempt could bolster Trump’s chances in the upcoming November election. Rob Casey, a partner at Signum Global Advisors, told CNBC, “The events on Saturday, if they do anything, they strengthen the case for President Donald Trump to win the election in November. I think that’s what the markets have reacted to this evening.”

The timing of this incident is particularly noteworthy, as Trump is set to be formally nominated as the Republican Party’s presidential candidate this week. This confluence of events has thrust TMTG into the spotlight, even as the company grapples with significant financial challenges.

In its first-quarter earnings report filed in May, Trump Media posted a staggering net loss of $327.6 million, with total revenue of just $770,500. These figures highlight the uphill battle faced by Truth Social in its efforts to expand its user base and achieve profitability. The company has even cautioned investors that if Trump were to use other social media platforms, it could potentially have a “material adverse effect” on the business operations.

Despite these challenges, the recent stock surge demonstrates the inextricable link between Trump Media & Technology Group’s financial performance and Trump’s political fortunes. CEO Devin Nunes responded to Saturday’s events by calling for a thorough federal investigation and requesting additional security resources for the former president.

As the political landscape continues to shift in the wake of this unprecedented event, other developments are also making waves. NATO has issued its strongest rebuke of China to date, condemning it as a “decisive enabler” of Russia’s war in Ukraine. Meanwhile, on the domestic front, senators have reached a bipartisan deal to ban stock trading by members of Congress, a move that could reshape the relationship between politics and personal finance.

The coming days and weeks will be crucial for both Trump and the company. As the Republican National Convention unfolds and the general election campaign kicks into high gear, all eyes will be on how these recent events impact both the political race and the financial markets.

For now, the surge in stock price serves as a stark reminder of the complex interplay between politics, finance, and public perception in today’s fast-paced, interconnected world. As November approaches, it’s clear that the only certainty is further uncertainty, both in the polling booths and on the trading floor.

The assassination attempt has also reignited debates about political violence and security measures for high-profile candidates. Critics argue that the incident highlights the increasingly polarized nature of American politics, while supporters rally around Trump, viewing him as a figurehead of resilience in the face of adversity.

The Department of Justice has launched a full-scale investigation into the attack, with preliminary reports suggesting a lone gunman was responsible. However, authorities are exploring all possible angles, including potential broader conspiracies.

As the nation grapples with the implications of this near-tragedy, questions arise about the long-term impact on the electoral process and public discourse. Will this event lead to increased security measures for all candidates? How might it influence voter sentiment and turnout? These questions loom large as the country moves forward, navigating uncharted waters in an already tumultuous election year.

For Trump Media and Technology Group and Truth Social, the coming months will be critical. The platform may see an influx of users seeking direct communication from Trump in the aftermath of the assassination attempt. However, the company must balance this potential growth with the challenges of content moderation and the ongoing scrutiny of its financial viability.

Middle East Tensions Move the Global Markets

Posted on by slightbourne@noblecapitalmarkets.com

The escalating conflict between Israel and Hamas has sent shockwaves around the world, with major implications for global financial markets. This past weekend, Hamas militants launched a deadly attack in Israel, killing over 700 people. Israel has retaliated with airstrikes in Gaza and a blockade, leading to rising casualties on both sides. As the violence continues, here is how the clashes could impact the stock market and oil prices.

Stocks Tumble Over 2%

Major US stock indexes fell sharply on Monday in early trading, with the Dow Jones Industrial Average dropping over 700 points, or 2.1%. The S&P 500 declined 2.2% while the Nasdaq Composite sank 2.5%. The declines came amid a broader sell-off as investors fled to safe haven assets like bonds, but stocks trimmed losses as the day progressed.

By early afternoon, the Dow Jones Industrial Average was down just 0.7% after falling over 700 points earlier. The S&P and Nasdaq posted similar reversals after opening sharply lower.

Energy and defense sector stocks bucked the downward trend, rising on expectations of higher oil prices and military spending. But the prospect of further violence dragged down shares of transportation, tourism, and other cyclical firms that benefit from economic growth. Stock markets in Europe and Asia also posted sizable losses.

Prolonged Instability Adds Downside Risks

While markets often rebound after initial geopolitical shocks, an extended conflict between Israel and Hamas could lead to a deeper, sustained selloff. Investors fear that rising tensions in the Middle East could upend the post-pandemic economic recovery. Supply chains already facing shortages and logistical bottlenecks could worsen if violence escalates. US fiscal spending could also spike higher if military involvement grows.

Surging oil prices feeding into already high inflation may spur the Federal Reserve to tighten policy faster. This risks hampering consumer spending and growth. Elevated uncertainty tends to erode business confidence and curb capital expenditures as well. From an earnings perspective, prolonged fighting dents bottom lines of various multinationals operating in the region. The potential economic fallout from persistent Middle East unrest weighs heavily on investors.

Oil Jumps Over 4%

Brent crude oil surged above $110 per barrel, gaining over 4% on Monday before paring some gains. West Texas Intermediate also vaulted over 4% to above $86 per barrel. The jump in oil prices came amid worries that supplies from the Middle East could be disrupted if violence spreads.

The Middle East accounts for about one-third of global oil output. While Israel is not a major producer, heightened regional tensions tend to lift crude prices. Oil markets fear that unrest could spill over into other parts of the region or lead oil producers to curb supply.

Prolonged Supply Issues

If the Israel-Hamas conflict draws in more countries or persists in disrupting regional stability, crude prices could head even higher. Any supply chain troubles that keep oil from reaching end markets will feed into rising inflation. High energy costs are already squeezing consumers and corporations worldwide.

Organizations like OPEC could decide to take advantage of conflict-driven oil spikes by reducing output further. Constraints on Middle East oil transit and infrastructure damage could also support higher prices. From an economic perspective, pricier crude weighs on growth by driving up business costs and crimping consumer purchasing power. Prolonged oil supply problems due to Middle East unrest would prove corrosive for the global economy.

Hope for Swift Resolution

With oil surging and equities declining, investors hope the clashes between Israel and Hamas wind down rapidly. Markets are likely to remain choppy and risks skewed to the downside in the interim. But a quick de-escalation and return to stability could spark a relief rally.

Energy and defense sectors may give back some gains while cyclical segments would likely rebound. Still, the massive human toll and damage already incurred will weigh on regional economic potential for years to come. The attacks also shattered a delicate effort to broker ties between Israel and Saudi Arabia. Hopes for a durable resolution between Israelis and Palestinians have once again been dashed. The economic impacts already felt across global markets are only a glimpse of the long-term consequences of deepening conflict.

President Biden Makes History by Joining UAW Picket Line

Posted on by slightbourne@noblecapitalmarkets.com

On Tuesday, September 26, 2023, President Joe Biden made history by joining striking United Auto Workers (UAW) members on the picket line in Wayne County, Michigan. It was the first time a sitting president had ever joined an ongoing strike.

Biden’s visit came as the UAW was in its 12th day of a strike against General Motors, Ford, and Stellantis, demanding better wages, benefits, and job security. The strike had caused significant disruptions to the auto industry and had put thousands of workers out of work.

Despite the risks, Biden was determined to show his support for the UAW and for working families. He arrived at the picket line early in the morning and was greeted by cheers and applause from the strikers.

“It’s an honor to be here with you today,” Biden said to the strikers. “You are fighting for the middle class. You are fighting for the soul of this nation.”

Biden went on to praise the UAW for its long history of fighting for the rights of workers and their families. He also pledged his support for the union and said that he would continue to work to create an economy that works for everyone.

“I want to be clear: I stand with the UAW,” Biden said. “I will always stand with workers who are fighting for a fair deal.”

Biden’s visit to the picket line was a significant show of support for the UAW and for labor unions in general. It came at a time when unions are facing increasing attacks from corporations and anti-union politicians.

Biden’s visit was also a reminder of his commitment to working families. He has repeatedly said that he will fight to create an economy that works for everyone, not just the wealthy few.

Biden’s visit to the picket line could have a number of positive consequences for the UAW and for labor unions in general.

First, it could help to raise public awareness of the strike and the union’s demands. This could put pressure on the auto companies to settle the strike on the union’s terms.

Second, Biden’s visit could help to boost morale among the strikers. It could show them that they have the support of the president and that they are not alone in their fight.

Third, Biden’s visit could help to strengthen the labor movement as a whole. It could show that unions are still a powerful force and that they can win when they stand together.

Biden’s visit to the picket line was also significant for its historical implications. It was the first time a sitting president had ever joined an ongoing strike. This sent a powerful message that the president stands with working families and that he supports the right of workers to organize and bargain collectively.

Biden’s visit to the picket line was a courageous and important act. It showed that he is a president who is not afraid to stand up for working families, even when it is politically difficult.

The UAW strike is a critical test for Biden’s presidency. If the union is able to win a fair contract, it will be a victory for working families and for the labor movement as a whole. It will also be a sign that Biden is delivering on his promise to create an economy that works for everyone.

The strike is also a test for the Biden administration’s commitment to industrial policy. Biden has repeatedly said that he wants to revitalize the American manufacturing sector. The UAW strike is an opportunity for Biden to show that he is serious about this commitment.

The Biden administration can support the UAW strike in a number of ways. First, it can put pressure on the auto companies to settle the strike on the union’s terms. Second, it can provide financial assistance to the strikers and their families. Third, it can use its regulatory authority to make it easier for workers to organize and bargain collectively.

The UAW strike is a critical moment for working families and for the labor movement. The outcome of the strike will have a major impact on the future of the American economy. Biden’s visit to the picket line was a significant show of support for the UAW and for working families. It is now up to the Biden administration to follow through on its promises and to ensure that the UAW strike is a victory for working families.

Looming Government Shutdown Tests McCarthy’s Leadership

Posted on by slightbourne@noblecapitalmarkets.com

Washington braces for its first potential government shutdown under House Speaker Kevin McCarthy’s speakership as the fiscal year-end nears on September 30. The high-stakes funding clash represents an early test of McCarthy’s ability to lead a fractious Republican majority.

The face-off caps months of growing friction between McCarthy and the hardline House Freedom Caucus that helped install him as Speaker in January. To gain their votes, McCarthy pledged he would not advance spending bills without “majority of the majority” Republican backing.

That concession has now put McCarthy in a bind as the shutdown deadline approaches without a funding agreement in place. The Freedom Caucus is demanding McCarthy leverage the must-pass spending legislation to cut budgets and advance conservative policies, like defunding the FBI.

However, McCarthy knows Senate Democrats would never accept such ideological provisions. And a prolonged government shutdown could batter the fragile economy while eroding public faith in governance competence.

With only days remaining, McCarthy weighs risky options without easy solutions. Scheduling a vote on a stripped-down continuing resolution to temporarily extend current funding would break his promise to the Freedom Caucus.

Yet refusing to hold a vote risks blame for an unpopular shutdown. McCarthy also considers putting a Senate-passed funding bill to a House floor vote, prompting Freedom Caucus warnings that doing so would incite calls for his ouster.

The Speaker urgently needs to unify Republicans behind a way forward. But McCarthy must balance the Freedom Caucus’ demands against the consequences of failing to avert a shutdown.

Navigating these pressures will test McCarthy’s ability to govern a narrow 222-seat majority. It will also gauge whether he can effectively steer the party into the 2024 elections amid internal divisions.

With only 18% of Americans supporting shutdowns over policy disputes according to polls, McCarthy likely wants to avoid a disruptive funding lapse. A 2013 closure lasting 16 days is estimated to have shaved 0.2-0.6% from economic growth that quarter.

From furloughing 800,000 federal workers to suspending services, even a short shutdown could batter public trust in leadership. The military’s over 1.3 million active duty members would see pay disrupted. National Parks could close, impacting over 297 million annual visitors.

The high-risk brinkmanship highlights the difficulty McCarthy faces satisfying the party’s warring moderate and Freedom Caucus wings. Finding a solution that keeps government open while saving face with hardliners will prove a true test of McCarthy’s political dexterity.

Past shutdowns under divided government have tended to end once public pressure mounted on the blamed party. While Republicans control the House, most fault would land on them for manufacturing a crisis.

Yet McCarthy cannot disregard the Freedom Caucus, whose backing enabled his ascension to power. The days ahead will reveal whether McCarthy has the savvy to extricate the GOP from a crisis partly of its own making.

McCarthy’s handling of the funding impasse will set the tone for his entire speakership. At stake is nothing less than his ability to govern, deliver on promises, and prevent self-inflicted wounds entering 2024.

U.S. National Debt Tops $33 Trillion

Posted on by slightbourne@noblecapitalmarkets.com

The U.S. national debt surpassed $33 trillion for the first time ever this week, hitting $33.04 trillion according to the Treasury Department. This staggering sum exceeds the size of the entire U.S. economy and equals about $100,000 per citizen.

For investors, the ballooning national debt raises concerns about future tax hikes, inflation, and government spending cuts that could impact markets. While the debt level itself may seem abstract, its trajectory has real implications for portfolios.

Over 50% of the current national debt has accumulated since 2019. Massive pandemic stimulus programs, tax cuts, and a steep drop in tax revenues all blew up the deficit during Covid-19. Interest costs on the debt are also piling up.

Some level of deficit spending was needed to combat the economic crisis. But years of expanding deficits have brought total debt to the highest level since World War II as a share of GDP.

With debt now exceeding the size of the economy, there is greater risk of reduced economic output from crowd-out effects. High debt levels historically hamper GDP growth.

Economists worry that high debt will drive up borrowing costs for consumers and businesses as the government competes for limited capital. The Congressional Budget Office projects interest costs will soon become the largest government expenditure as rates rise.

Higher interest rates will consume more tax revenue just to pay interest, leaving less funding available for programs and services. Taxes may have to be raised to cover these costs.

Rising interest costs will also put more pressure on the Federal Reserve to keep rates low and monetize the debt through quantitative easing. This could further feed inflation.

If interest costs spiral, government debt could eventually reach unsustainable levels and require restructuring. But well before that, the debt overhang will influence policy and markets.

As debt concerns mount, investors may rotate to inflation hedges like gold and real estate. The likelihood of higher corporate and individual taxes could hit equity valuations and consumer spending.

But government spending cuts to social programs and defense would also ripple through the economy. Leaner budgets would provide fiscal headwinds reducing growth.

With debt limiting stimulus options, creative monetary policy would be needed in the next recession. More radical measures by the Fed could introduce volatility.

While the debt trajectory is troubling, a crisis is not imminent. Still, prudent investors should account for fiscal risks in their portfolio positioning and outlook. The ballooning national debt will shape policy and markets for years to come.

Blackrock Checked “No” on 93% of Environmental and Social Proxy Votes

Posted on by phoffman@channelchek.com

Blackrock’s Support for ESG May Have Been Unsustainable

Blackrock, a firm with a reputation for strongly supporting ESG resolutions, having voted yes on 47% of them in 2020, voted down 93% in the past year. The company provided the reasons for shunning 371 proposals out of 399 in its annual Stewardship Report released on August 23rd. With $9.4 trillion under management, investors pay attention to the investment manager. This gives it the power, whether it likes it or not, to create trends as others follow its lead. Should the company’s adjusted position on ESG be taken as something others want to mimic? The reasons given leave that in question.

BlackRock is the world’s largest asset manager. As such, the funds it manages own significant amounts of shares of a broad array of public companies. The Blackrock funds vote on important matters related to the underlying companies if a corporate resolution requires a shareholder vote. Think of the ETF or mutual fund as a trust, and the fund manager, Blackrock, gets to vote on behalf of the assets in the trust. Whereas if an investor owns individual shares of a company, they get to decide and vote themselves, either at a board meeting or more likely, through a proxy statement. Certainly, the amount of control over the decisions of corporations worldwide given to an asset manager of this size is immense.

Each year, the company files a report on its voting during the proxy season. It broke records by voting down 91% of all shareholder proposals and against 93% of those focused on environmental and social issues during the 2023 proxy year. The 7% of ESG proposals that BlackRock supported this year is down sharply from 2022, when BlackRock’s investment stewardship team supported 24% of such proposals, and from 2021, when it supported 47%.

BlackRock’s Investment Stewardship team, makes the voting decisions on both management and shareholder proposals on behalf of BlackRock’s clients. It said the large number of “NO” votes this year is partly related to a huge influx of shareholder proposals. These were described as “poor quality” by the BIS team, either because they were “lacking economic merit,” were “overly prescriptive” and “sought to micromanage a company’s strategy,” or were simply redundant, asking a company to do something it had already done, the Stewardship Report said.

BlackRock’s support for management proposals (not shareholder proposals), which accounted for more than 99% of the roughly 172,000 proposals voted on by BIS, remained high at 88%.

BlackRock’s trend of voting against shareholder proposals is largely in line with other fund managers. The median shareholder support for environmental and social proposals in the U.S. fell sharply from 25% in 2022 to just 15% in the 2023 proxy year.

The firm has backed away from ESG as a term if not a concept. The most recent CEO newsletter did not include the acronym at all, and during a June interview, CEO Larry Fink said he does not use the term, he gave this reason, “I’m not blaming one side or the other, but it has been totally weaponized,” Mr. Fink said. “In my last CEO letter, the phrase ESG was not uttered once, because it’s been unfortunately politicized and weaponized.” He now has a reluctance to have his firm associated with the term ESG after a wave of backlash from both sides of the political spectrum.

In December 2022, Florida’s chief financial officer announced that the state would pull $2 billion worth of assets managed by BlackRock, the largest such divestment by a state opposed to the asset manager’s environmental, social and corporate governance (ESG) policies. BlackRock also lost some of its business of oil rich Texas from its government pension funds because of its ESG policies. Louisiana and Missouri, have also taken steps to divest from BlackRock.

Although not specifically stated in the report, Blackrock fund managers still support the idea that good corporate citizenship could in turn, benefit shareholders. But they will no longer be out front as though ESG factors are the most important criteria. Earlier this month S&P Global Ratings decided it would not provide ESG ratings separate from its credit ratings. Instead, S&P will factor in all of the obligors’ business practices as it relates to risk of non-payment, and assign only a credit rating.

The term has become polarizing as differing political philosophies tend to stand together in support of ESG issues being taken into investment consideration, and other political leanings stand opposed to the not fully developed concept. This has hurt Blackrock.

Republican politicians have been probing Blackrock’s business dealings and asking conservative-leaning state pension funds to divest from the company, which they say has unfairly excluded the traditional energy sector.

On the other hand, environmental activists have lambasted Mr. Fink and his company for not doing enough to stop climate change, protesting in front of BlackRock’s headquarters and heckling senior executives at public speaking engagements. In June Blackrock began providing high-level security to protect Mr. Fink and others in management.

Take Away

When you put your money into most mutual funds, you give away the power that comes with voting on important matters to the underlying shares held by the trust of which you are a part owner. As mutual funds and ETFs have grown, more of the power to guide companies has been handed to the elite running asset management companies.

The growth in popularity in “sustainability” investing caused a rush from investors to these funds, which then needed to place assets in the limited number of companies in the segment. This caused a rise in the share prices of the companies and a rise in the popularity of the funds. Many investors were indifferent to ESG, but not indifferent to making money, they also jumped in. Companies quickly caught on and adjusted their logos to include leaves and the color green, altering some business practices.

While the leadership that Blackrock provides may signal the eventual demise of the term ESG, there has always been, and will always be an interest in putting your money where your heart is. The concept will live, but with Blackrock’s lead, the acronym may transform to something that is less political and less likely to cause protests outside of his home.

Paul Hoffman

Managing Editor, Channelchek

Sources

https://www.wallstreetmojo.com/shareholder-resolution/

https://www.pionline.com/esg/blackrock-ceo-larry-fink-says-he-no-longer-uses-term-esg

https://www.ft.com/content/06fb1b85-56ba-48cd-b6f6-75f8b8eee7e1

https://www.reuters.com/business/finance/blackrock-continues-lowering-support-environmental-social-proposals-2023-08-23/

https://www.blackrock.com/corporate/insights/investment-stewardship

Candidate DeSantis’ Very Different Economic Vision

Posted on by phoffman@channelchek.com

DeSantis Thinks the Federal Reserve, Elitists, and China, Should all Have Less Power in Our Financial Lives

Federal Reserve Chairman Jerome Powell, appointed by President Trump, then reappointed by President Biden recently got a lot of attention from Florida governor and presidential hopeful Ron DeSantis – and it wasn’t the kind of attention someone in Powell’s position would welcome. This week, in his first big speech on the economy, DeSantis separated himself from the top candidates from each political party by vowing to “rein in” the Fed.

The platform DeSantis unveiled this week helps establish his position and puts a face on his campaign that is decidedly above the culture wars of other political campaigns. It also creates a clear difference in economic issues between himself and his party’s frontrunner, also from Florida, Donald Trump.

In a campaign speech in New Hampshire, DeSantis blamed the US central bank for high inflation, and its dipping a toe into social policy. He was also very critical of the Fed considering a digital dollar that would compete with private crypto, which the candidate does not oppose.

The overall tone as he began to lay out his economic agencda, was one of looking to curb the power of large corporations, limit ties to China, and stand against powerful elites. “We need to rein in the Federal Reserve. It is not designed or supposed to be an economic central planner. It is not supposed to be indulging in social justice or social engineering,” the governor said. He continued, “It’s got one job, maintaining stable prices, and it has departed from that with what it’s done over the past many years.”

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As statements that could be taken as a shot at the current Fed chairman, DeSantis said he would not likely support another term for Powell. “I will appoint a Chair of the Federal Reserve who understands the limited role that it has and focuses on making sure that prices are stable for American businesses and consumers, said DeSantis.

What seemed to be his biggest gripe with how the Federal Reserve has been run is with monetary policy. He believes that policy was kept too easy for too long after the financial crisis and pandemic. He believes this contributed to the high inflation, which forced a rapid tightening from policy makers.

The popular governor of the third most populace state, also railed against the Fed’s steps toward creating a central bank digital currency (CBDC), saying it was trying to crush financial liberty and seize more control over financial transactions.

“Why did they want this? They want to go to a cashless society. They want to eliminate cryptocurrency and they want all the transactions to go through this central bank digital currency,” DeSantis proclaimed.

The DeSantis economic vision, as described, was consistent with his reputation as Florida’s executive which is one that stands against the abuses of government power and big business. “We cannot have policy that kowtows to the largest corporations and Wall Street at the expense of small businesses and average Amerricans.” He continued, “There is a difference between a free-market economy, which we want, and corporatism in which the rules are jiggered to be able to help incumbent companies.”

He also expressed concern over loss of economic sovereignty sharply saying, “We have to restore the economic sovereignty of this country and take back control of our economy from China. This abusive relationship between two countries, must come to an end.”

Take Away

DeSantis is on the road, both showing he has an understanding of economics and unveiling a plan that is distinct from the top two candidates, both of which have already occupied the White House. DeSantis is being watched very closely by both political parties as he is a very popular governor with a lot of admiration and a large following. Florida remains a beneficiary of the large migration of businesses and families out of other states looking for a more innovative, fiscally responsible, less constricting place to live and do business.

Paul Hoffman

Managing Editor, Channelchek

Source

https://www.wmur.com/article/desantis-economic-plan-new-hampshire/44694804

https://www.ft.com/content/40cfecfb-e597-4bba-9ca6-a0fccb187184