Precious metals proved their resilience as the stock market tanked and USD fell below the important 1.00 level. This is why it is important to own precious metals, especially in a scenario where global risks and uncertainties prevail.
Despite the stock market falling, most of the mining stocks and inverse ETFs gained. They are the best hedge against a falling stock market.
But what did actually happen?
Some reports pointed to the coming House vote on the repackaged Obamacare (ACA) on Thursday as a catalyst. There were only some minor changes on the original ACA and a group of the conservatives among the Republicans did not like the repackaged version, rather they wanted a full repeal of it.
Without this group support, the repackaged ACA will not likely be passed as the Democrats will also vote against the repackaged ACA.
Not only that, even if the House passes the bill on the ACA, it will be DOA (Dead On Arrival) at the Senate.
This is Trump's first and major hurdle. If he fails to get it passed by both House and Senate, it means a failure on his part to get the support he wanted and this could also affect and derail his tax reform and infrastructure plans.
Which let to the market finally waking up to the fact the Trump will not have it easy.
On top of that the Fed has been proven to be clueless with regard to the economy, hiking rate into a weakening economy and where wage growth is falling behind inflation.
We also have the debt ceiling where the US Government has just enough cash to last another two months (or less) as the suspension of the debt ceiling expires. And until today, nothing has been done to raise it. This adds to the risk of a government shutdown and more uncertainties in the market.
The recent fall could be the straw that finally breaks the camel's back and we could see further weakening in the stock market.
No comments:
Post a Comment