Thursday is shaping up to be a continuation of the bleeding that took place in the markets earlier this week. Janet Yellen, Chairwoman of the Federal Reserve, made comments on Wednesday that included a particularly dismal comment on the economy as part of her testimony before the House Financial Services Panel: Financial conditions have “become less supportive to growth”.
Ouch. This is the woman who controls one of the largest banks in the world and has the power to help or hurt the implementation of monetary policy in the US. As the world’s only remaining superpower, the monetary policies in the United States have a ripple effect around the globe. When Yellen says anything that isn’t absolutely positive and upbeat, hold your breath because the markets will react.
This is exactly what we’ll be seeing today after Futures plunged overnight. E-Mini S&P 500 Future (ESH6) is down 1-.67% as of market open based on overnight trading. Currently trading at just $10 above its 52-week low, this could mean serious trouble.
Combine dismal futures today with the horrible performance by the Dow Jones Industrial Average (DJI), which is currently at $15,914.74, and you end up with a depressing market outlook. That’s more than 7.2% down from its opening price ($17148.94) on January 1 of this year.
Looking at a few big players, Amazon (O:AMZN) is up 1.74% since market open, a testament to the global online retailer’s reach. Honeywell International (N:HON) is stumbling this morning with a tiny dip of -.12% (tiny bumps might be okay news in these rough seas). Unfortunately for Apple (O:AAPL) the slowdown overseas spells doom after recent bad news about iPhone growth. They’ve dropped down to $94.27 this morning, just $2 above their 52-week low.
Big Banking Fears
One of the indicators to look at when assessing the health of an organization is to look at the cost to insure that organization against loss. In Europe there is growing concern over the health of one of its largest and most admired banks, Deutsche Bank (DE:DBKGn) (DB).
Deutsche Bank (DB) on Life Support
Alarm bells on this side of the Atlantic began to go off after Deutsche Bank’s stock fell more than 30% from its New Year’s debut.
On Friday, at close of business, DB’s stock sat at $17.16 a share. This Tuesday its shares hit a low of $14.71. Geronimo! That’s a $2.45 plunge, or 14% dip in less than 3 trading days. Analysts see this as a combination of continued jitters after the bank posted its first full-year loss since the Great Recession, and the continued anxieties surrounding low oil prices and struggling developing economies.
Some experts have been quoted as stating “…the country’s [Germany’s] entire banking system would have to be redesigned in order to save its standard-bearer.” Deutsche Bank’s insurance costs are up more than 182%.
Bitcoins You Say?
As traditional global markets struggle with low oil prices, plummeting home ownership and global unrest, alternative investments (and even currencies) are beginning to see some gains. Trading on today’s fears, Bitcoin is currently trading at $376.36; within $6 of its 52-week high. Over the past year, Bitcoin exchanges and markets have been popping up like crabgrass in the lawn that is the green world of USD.
Bitcoin markets even allow users to trade binary options with Bitcoins. Regardless of how the economy fairs in the coming weeks, months and year, it’s likely cryptocurrencies like Bitcoin will continue to hold their own and develop in an exciting world that is yet uncharted.