February 21, 2018 Market Outlook

Third Wave of Market Correction is Likely

Chris Watling, the chief executive of financial advisory firm Longview Economic, said that the recent sell-off and volatility in global equities is not yet over. He said the market models point to the coming of a “third wave” of market correction. Watling told CNBC on Wednesday that based on market analysis and historical data, sell-offs tend to happen in three waves.

He explained the typical pattern. The first vicious wave of sell-off occurred after the  high on January 26 in the U.S., followed by the typical wave two relief rally which the market experienced last week when the S&P 600 went up by 6%. That was the index’s best weekly performance since 2011. The coming third wave will either be new lows or testing the lows from the first wave of the sell-off.

Rise in U.S. Production may Result in Oil Glut

With U.S. oil production surging, oil prices are struggling and raises the threat of a global oil glut. Leading oil producers like Saudi Arabia and Russia have been working double time to cut production and rid the market of the excess supply.

The U.S. dollar is strengthening while oil prices are dropping. This scenario is adding to the industry’s pressure. Demand could be affected since oil is priced in dollars and a rise in the U.S. currency makes it more expensive for buyers.

Apple Negotiating with Miners to Buy Cobalt

Bloomberg reported on Wednesday that Apple Inc. (AAPL) is sourcing cobalt directly from miners. The company wants to secure long-term contracts and ensure steady supply of cobalt which is to be used as batteries for their iPhones.

The volume requirement of the iPhone maker for the next five years or longer is about several thousand metric tons. The prices of cobalt have soared recently due to an expected growth in demand for electric vehicles powered by lithium-ion batteries.

Japan to Buy More F-35A Stealth Fighters from Lockheed

With China developing advanced aircrafts and North Korea pushing its ballistic missile programs, Japan is looking to keep up with its potential foes in East Asia. The U.S. ally plans to buy at least 20 additional F-35A stealth fighters over the next six years. Some, if  not all, may be purchased directly from Lockheed Martin Corp. (LMT) in the United States rather than assemble them locally.

According to Reuters sources, Japan will save nearly $30 million per aircraft should they buy the complete aircraft worth $100 million each from the U.S. Their previous order of 42 fighter jets are being constructed at the “final assembly and check out” plant in Japan which is operated by Mitsubishi Heavy Industries, the country’s leading defense contractor.

Crypto Mining Rigs is the New Lucrative Business

The biggest electronics bazaars in Asia are becoming overflowing with customers from around the globe. They are the so-called miners traveling to Hong Kong’s Sham Shui Po and Singapore’s Sim Lim Square to buy the latest piece of technology: cryptocurrency mining rigs. The rigs are built by the stores’ hardware geeks and business is booming.

Some of the visiting miners only buy components: a motherboard, graphic processing units, fans, power adapters, a display card and a memory card. The vendors then assemble them on-store for a fee. The finished product is comes out as a real bargain. The price of the equipment in Hong Kong is about 30% to 50% cheaper to than in Europe.

Leave a Comment

Your email address will not be published. Required fields are marked *