3/21-3/25/16 Charts of the Week

The biggest pieces of news from last week were the terrorist attacks in Brussels. For the purposes of this post, we will put aside the horrendous nature of the attacks, and will focus more on the implications that they had on financial markets. Please know that by commenting on how financial markets reacted to the attacks, we are not neglecting their devastating impacts, and our thoughts are with the people of Belgium.

Often times clients ask us if events like Paris, Brussels, or even September 11th will shape markets. Our answer is no; events like these do not shape markets, however they will likely have a short-term impact on certain sectors. For example, take American Airlines, whose name was plastered all over the news as one of the locations where one bomber detonated his explosives…

american-airlines

Even with all of that negative publicity, American Airlines only dropped 1.5% intraday, and the Dow was unaffected entirely…

Dow

The precious metals sector saw a bounce higher (note 3-4am ET), which was reversed as the day went on.

gold-after-brussels

On a separate note, MarketWatch.com, with the assistance of HowMuch.net, provided an interesting motion graphic last week that showed what 30 years of trade with China looked like. Below you will see that in 1985, we had balanced trade with China at $3.9 billion…

china-trade-1

When we fast forward to 2015, we can see that we now have a record trade deficit with China. As of 2015, the United States of America is importing $366 billion more in goods than we are selling back to the Chinese…

china-trade-2

Some have argued that the strengthening US Dollar has been one to blame for this, others state cheap labor overseas is the culprit. Regardless of where to place the blame, it is this figure that helps us to understand why the US economy has been stagnant, and why the Chinese economy has been booming over the last 15 years.

If the US were to devalue the US Dollar and work on bringing corporations and manufacturing back to the US, we could see the trade deficit shrink, and millions of jobs come back to the US.

This week we will look forward to some important data from the manufacturing and real estate sectors as well as some important jobs data.

Happy trading!

Ben Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and licensed with FINRA (www.Finra.org) through Treece Financial Services Corp. The above information is the opinion of Ben Treece and should not be construed as investment advice or used without outside verification.
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