Stocks were mixed to end the trading week as the NASDAQ, which is now being driven by Amazon, was higher while the Dow was lower and finished off 22 points to 25,962. Trading volume was well off and the month of August proved worthy as markets posted the best August performance in 4 years. The Dow gained 2%, the S&P 500 gained 3% and the NASDAQ gained 5.6% thanks to Amazon.
Here at Greystone we have noticed a trend in which big institutional investors are allocating less money to international markets and more money to US domestic markets. I guess we are all becoming “homies”. As a corollary to this the US dollar is up in value against a host of foreign currencies to include Russia, Turkey, Iran, India, Argentina, Brazil, South Africa and on and on. Here in the US, the economy is strong and interest rates are on the rise and most gurus expect the Fed to raise interest rates when they meet in September. Brian Wesbury, First Trust economist and member of the Westport Mafia, noted that with the US no longer importing oil we are no longer subsidizing certain nations and this, coupled with the new lower corporate tax rate the incentives for inversions and offshoring has diminished which in turn slows the flow of capital from the US to other parts of the world. The outflow of dollars is being replaced by a trend of inflow.
While trade negotiations are in full swing between Canada and the US, a judge in Texas awarded all the assets of Citco Oil company, the US division of Venezuelan oil giant PSVSA to a Canadian gold mining company. The Canadian company, Crystallex, based in Toronto, went after Venezuela through the courts after Hugo Chavez seized their gold mine. Crystallex was seeking $1.2 billion in damages and since Venezuela was not forthcoming the Texas judge apparently decided to just give Citco, which is valued at approx. $8 billion, to Crystallex. A side affect of this is that Rosneft, the big Russian oil major, had an equity ownership stake in Citco as collateral for a loan Russia made to Venezuela years earlier. Rosneft is currently trying to get the court to split Citco so they get their half, but it appears the Texas judge is not playing ball. It will be interesting to see how this plays out, but one thing is for sure is that $8 billion in value just landed in Canada! Beauty eh?
Markets will be closed on Monday so have a good, long, restful, fun, Labor Day weekend. It pays to work!