China took a shot at the world economy in a surprise three percent devaluation of its currency in an attempt to boost exports. China has been in a slow growth environment over the past year and decided a less valuable Yuan would mitigate the nearly 9% plunge in exports in July from a year ago. Companies doing big business in China will suffer the most with blog candidates Deere, Johnson & Johnson, Colgate-Palmolive, Dow Chemical, Kimberly-Clark and QUALCOM high on the list. The market tumbled early in the week, but stabilized as the trading sessions moved ahead providing for small gains by Friday. All market sectors were in the green led by energy with a 3% gain, despite another blow to crude prices sinking to a six-year low below $42.00/bbl. on Thursday; recovering a bit to close the week at $42.50. News on Friday of a possible lifting of a forty year-old export ban on U.S. oil softened the blow for oil and gas stocks. Interest sensitive utilities and telecom stocks were also in positive territory up an average of 2.5% and 1.3%, respectively. On the economic front, retail sales data rebounded in July and employment figures have been encouraging. The Federal Reserve will release minutes from its July meeting on Wednesday and may indicate how much labor-market improvement is needed before a rate increase. However, the Fed now has the Chinese currency issue to add to their equation. Despite all this, I think that stocks can hold their own, as historically low interest rates make alternative investments unappealing and the long-term fundamentals for equities has not changed.
Here is the answer to last week’s trivia question: MGM, and its legendary roaring lion logo, was formed in April 1924, by theater magnate Marcus Loew, who orchestrated the merger of Metro Pictures Corp., Goldwyn Pictures and Louis B. Mayer Productions to form Metro-Goldwyn-Mayer. Privately held MGM owns which other legendary studio brand? Universal Studios; Warner Brothers Pictures; Columbia Pictures; or United Artists? Answer: United Artists. The studio was founded in 1919 by D.W. Griffith, Charlie Chaplin, Mary Pickford and Douglas Fairbanks. United Artists Media Group no longer produces motion pictures, but serves as a TV show distributor (such as “Survivor”). MGM owns the rights to United Artists’ post 1952 legacy films (“Rocky”, “One Flew Over the Cuckoo’s Nest”, “Annie Hall”) and may bring back the iconic Hollywood name for future productions.
Today’s Trivia Question: HSBC Holdings is one of the world’s largest financial institutions. From what do the letters “H S B C” originate? Home State Banc Corp.; Hongkong and Shanghai Banking Corp.; Hague Staat Bank Co.; or Halifax, St. John and British Columbia, Ltd.?