Facebook & Trade War Sends Stock Markets Crashing
This week the stock market tanked, driven by Facebook data leaks and the Trump Trade War.
Stock markets globally took a free fall after Donald Trump officially laid the tariffs on China, while exempting the EU and other countries until May.
Here is a look at a day by day break down of the SP500 stock market during last week:
Stock Market and Sector Overview
All stock market sectors tanked this week, trading deep into the red. (top chart below)
- Energy stocks down 0.80%
- Utility stocks down 2.47%
- Retail stocks down 3.96%
- Financial stocks down 7.17%
- Technology stocks down 7.67%
Here is an overview of key markets last week (bottom chart below)
- Oil prices were up 6.03%
- Gold was up 2.57%
- Silver up 1.29%
- US dollar down 0.79%
- SP500 down 5.71%
Facebook Stock Plummets Despite Apologies from Zuck
Facebook stock got rocked this week, down 10% from the Monday open.
News about the company selling personal user data to third parties without consent reverberated through the technology sector. There is now a consensus in government that data needs to be regulated and not left at the control of these massive companies.
Rumors swirled that Zuckerberg sold personal user data to a third company which then sold it to the Obama administration to use for campaigning purposes.
This might not sound like a huge deal, but it’s much bigger than you would think.
Where will the boundaries be drawn? Who have they sold the data to since? What access level does FB provide to data to outside vendors?
None of the answers will lead to a positive outcome for FB – and we think the stock is headed much lower before it would be a wise buying opportunity. Get out of the way – let this falling knife hit the ground before picking it up.
Julian Assange of WikiLeaks brings up a very valid point in this tweet here.
I have deleted my Facebook.
In fact, I never had one. Friends don’t put their friends into a giant intelligence database controlled by a megalomaniac who calls his users “dumb fucks” for trusting him. pic.twitter.com/4KaUwRSLMm
— Julian Assange ⌛ (@JulianAssange) March 23, 2018
Facebook continues to nose dive, and here is a look at the chart below:
How China Could Respond to the Trump Trade War
Donald Trump has imposed tariffs on over $50 billion US dollar worth of goods coming in from China.
China has since responded by reciprocating the tariffs on just $3B dollars worth of goods, but promised there is more to come.
What could they do?
The scariest outcome is if they start to sell off their US treasury holdings – which would crater the US dollar and risk the status of the US as world reserve currency.
Currently, China owns approximately 20% of all outstanding US debt.
If they decided to let loose their holdings, look out, the entire stock market can crash at an unprecedented pace. This is what traders are now calling the “nuclear option”.
While we don’t think this event is likely, if the trade war heats up this will increasing start to become a last resort move for China.
Weekly Economic Calendar
This week will be much slower in terms of scheduled economic news events. However, look for a continuation of probing into Facebook’s data breach, along with China’s response to the trade war.
Monday has no major economic events scheduled.
Tuesday we will see the latest consumer confidence stats out of the US, watch the US dollar and equity markets.
Wednesday is all about the Final GDP numbers in the US, which are not likely to cause a major move unless there is a big deviation. The weekly crude numbers are most important and they come out at 10:30AM – watch crude oil futures for an amazing trade opportunity.
Thursday we will see some data out of the UK early in the morning, and the Canadian GDP month to month number. Watch the British Pound and Canadian dollar in the currency markets.
Friday is a holiday, and stock markets are closed.
That’s all for this week, good luck and good trading. Manage your risk and trade like a TRADEPRO.
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