Market Recap 08-10-2018

| August 10, 2018
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Turkey’s currency, the lira, dropped by more than 14% on Friday as their President instructed citizens to sell the dollar and gold and buy the lira. President Recep Tayyip Erdogan said that “This will be in response to those who have declared an economic war.” He blamed the “interest rate lobby” that wants Turkey to raise interest rates.

Trump later tweeted “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency…slides rapidly downward.” Combined, the dual Presidents comments led to a sell-off around the world.

In recent years Turkey appeared to have a strong economy. But that was a disguise, as the economy was boosted by taking on heavy debt denominated in foreign currencies. Now the bill is due and as the lira falls, the pain increases.

US stocks did not suffer much, finishing just about even for the week. The damage was overseas where international equities dropped by 2% and emerging markets were down 2.3%.


As US stocks were close to records on Thursday, traders were wagering big on a continued bull run. Bullish call options, which cash in on higher prices, have increased in volume on the S&P 500. At the same time, bets on low volatility have hit the highest level since November, according to the Commodity Futures Trading Commission, indicating that traders expect the market to move slowly higher.




Provided by:

Bruce Konners, CPA, CFA, PFS

Download the full PDF here.

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The purpose of this commentary is to provide readers with a summary of recent market and economic news. It is not intended to provide trading advice. Investors should have a long-term plan and should consider working with a professional investment advisor. The statements and opinions expressed in this article are those of the presenter(s). Any discussion of investments and investment strategies represents the presenter’s views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true. Economic predictions are based on estimates and are subject to change.

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