The Dow Jones Industrial Average will lose more than 240 points today as investors fret over the latest round of U.S. tariffs on China.
While markets continue to monitor earnings and the Trump administration's trade policies, I expect a lot of chatter about tariffs and negotiations. However, there are several other key stories that too many people are ignoring this morning. Let's dive into those and find ways to profit on Tuesday morning.
But first, here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
Tuesday morning's news cycle is completely off the rails. Geopolitical tensions and recession warnings around the globe continue to rattle markets. Argentina's economy continues to crater; no resolution between the United States and China is in sight. And Italy's banking crisis has deepened. But no story is bigger today than the drama unfolding in the United Kingdom. This morning, the British pound crashed below $1.20 after Brexit opponents submitted a proposal to stop a "No Brexit" deal. That is the lowest level for sterling since October 2016. According to reports, several conservative MPs are lining up to support a resolution that would stop Britain from crashing out of the European Union. In response, Prime Minister Boris Johnson has threatened snap elections two weeks before the planned Brexit and to expel rebel members from his party. Brexit is scheduled for Oct. 31.
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No one is reporting this with much alarm, but interest rates are falling so low that it's creating an even greater crisis for savers. According to new Bloomberg data, more than $17 trillion in debt around the globe yields "negative" interest rates. That's right; people are paying the government and companies money in order to hold their debt paper. The 2019 bond rally has spurred an incredible flight to safety as concerns about a global recession rattle economic outlooks and sentiment. Here's the thing: Rates are about to go even lower. The European Central Bank is expected to cut rates deeper into negative territory while introducing new stimulus. Meanwhile, markets have completely priced in a rate cut this month by the Federal Reserve. This is truly uncharted territory for the global markets and presents a new host of risks unfamiliar to many mom-and-pop investors.
Finally, given the fact that I'm sitting here in Southwest Florida, I'm keeping a very close eye on Hurricane Dorian. The storm decimated the Bahamas over the weekend with winds topping out above 120 miles per hour and a storm surge higher than 20 feet. Even worse, the storm has settled over the region and is moving at a snail's pace. The storm is now inching toward eastern Florida and is expected to make its way up the U.S. seaboard during the week. Expect a lot of chatter about insurance and reinsurance stocks this week as analysts assess the damage from the hurricane in the coming weeks.
Stocks to Watch Today: GOOGL, AAPL, BA, GE, CONN
Two weeks ago, President Trump ordered U.S. companies to ditch China (despite his lack of authority to do so). However, many companies have already departed the nation's manufacturing sector. The latest is Google parent Alphabet Inc. (NASDAQ: GOOGL). According to reports, the tech giant has transferred the manufacturing of its Pixel phone to Vietnam. It's not just Trump's policies that are pushing Alphabet and Nokia there. The firm is attempting to keep the cost of its products as low as possible, and it doesn't have a significant manufacturing presence in China. Rival Apple Inc. (NASDAQ: AAPL), however, manufacturers about 90% of its phones in China.
Boeing Co. (NYSE: BA) is facing longer delays before its 737 Max jet can get back into the skies. According to reports, regulators are upset by a lack of information about the company's proposed fixes to its software. In addition to the delays, the company is facing another round of order cancellations from major airlines. Meanwhile, Boeing's ongoing fiasco is hurting many of its suppliers like General Electric Co. (NYSE: GE), which manufactures engines for the 737 Max jet.
Today is a rather dull day on the earnings front. But a report by Conn's Inc. (NASDAQ: CONN) caught my eye. The retailer's stock popped 12.5% in pre-market hours after it topped Wall Street earnings expectations. The firm reported EPS of $0.62, which beat estimates by $0.11. But while it also beat revenue expectations, the firm saw a 2.3% decline in same-store sales. We are witnessing wild swings in stock prices for retailers this quarter. This trend is important as earnings season continues for this sector all through the week.
Look for additional earnings reports from Coupa Software Inc. (NASDAQ: COUP), HealthEquity Inc. (NYSE: HQY), and Safe Bulkers Inc. (NYSE: SB).
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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.