More turmoil surrounding Turkey brought negative market sentiment. The Dow opened down more than 300 points but made some gains back leaving it down 137 points and closing at 25,162. Turkey fought back against the U.S. raising tariffs on a number of items. Alcohol will now have a 140% tariff, cars will be at 120%, tobacco and cosmetics at 60%, and rice was raised to 50%. It’s interesting that there is so much concern as 31 other countries receive more U.S. imports than Turkey. Concerns regarding China have been understandable but this seems kind of odd. Clearly the markets are reacting to uncertainty, and the uncertainty of the unknown of how much of the economic issues in Turkey will affect Europe and China, and then ultimately the U.S. News reporters are now referring to this relationship as a “contagion” – as in will the U.S. catch the virus from these other countries?
Global stocks are really struggling and China took another hit today as they halted approval of video games. This is a major problem for Tencent, one of their most popular stocks, considering that 40% of their revenue is from gaming. Adding insult to injury, Tencent reported its first quarterly loss in 10 years. The “BAT” companies (Baidu, Alibaba, Tencent) have seen bearish declines since the beginning of the year as each of them have dropped at least 20% since their highs in January. On the news today, a Chinese large cap ETF was down another 4%.
Macy’s reported better than expected earnings. Net income was up almost 50% and well above analysts’ expectations. Revenue was down 1% but again above analysts’ expectations, and one reason for the revenue decline for the quarter was because Macy’s moved their spring friends and family shopping promotion to the first quarter – had this been in the second quarter like it normally is, they would’ve had revenue growth of 2.9%. Executives are now more optimistic about their performance for the year and are raising guidance on sales and net income. Investors heard all the good news and decided the stock was worth 16% less. Amazon fear is real!