Is the Trade War over?

By Hoda Mehr Thu, Jun 13, 2019

The mood in the stock market communities was positive for a change after the investors heard about the trade agreement between the U.S. and Mexico during the weekend. Monday came, and the market did not disappoint. The stock prices were up, and life was good again for investors. But, it seems the story is not over yet.

In a TV drama-like move by journalists, a picture of the trade agreement paper illuminated by The Sun was captured and circulated all around the web. Its content, and the White House and the Mexican Government’s reactions are now casting a shadow of uncertainty on the status of the agreement. What do the stock market investors hate the most? If you responded as uncertainty, you are right.

Politics aside, when there is uncertainty, as investors, we all have to embrace the possibility of additional volatility. The stock prices are not down sharply yet, but no one knows how this new wave of trade war uncertainties may impact the direction of the market next.

• Overall market: Earlier this week, the stock market investors breathed a sigh of relief after the announcement about the U.S.-Mexico trade agreement. But, the stock market closed today lower than it started. There are still concerns about the trade agreement, in addition to lower gas prices and softer inflation rate.
• Inflation rate report: Wednesday morning at 8:30 am the new Consumer Price Index (CPI) report was released, and the inflation rate was at the lowest we have seen in the last four months.

What do you need to know about today’s Inflation Report? 

Inflation is good. Only if it is not out-of-control, and grows steadily every month. A steady inflation growth rate is an indicator of a healthy and stable economy. Today’s Inflation Report fell short of that expectation, and the stock prices fell slightly in response.

The lower-than-expected inflation rate may force the Fed to consider an interest rate cut again. The inflation rate and the interest rate are two of the indicators investors consider to gauge the state of the economy and the future growth potential. When the inflation rate slows down, it may be an indicator of slower-than-expected growth in the economy. In return, the investors look at the Feds to reduce the interest rate to lower the cost of borrowing money and let the companies continue to borrow money at a lower rate and put that borrowed money into fueling growth.

More to come on this story in the next few days and weeks as we learn about the Fed’s response to the recent inflation rate information.

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The stock market was down today. What happened? 

The stock market closed slightly lower than it started this morning. For example, the S&P 500 index closed 0.2% lower than its opening price. The main reason for this slight decline was lower gas prices, some trade uncertainties related to both China and Mexico and a lower-than-expected inflation rate. Of course, going up and down is what the stock market does the best. While the media tends to overemphasize the fact that the stock market was down, savvy investors know that the market fluctuation is an inherent part of the nature of the stock market.

Beyond Meat’s domination plans 

When Ethan Brown, founder and CEO of Beyond Meat Inc. (BYND) talked about his company’s aspiration to replace the meat industry, many investors rolled their eyes. People argued meat substitutes have been around for many years. How is BYND different? But, after the company became public, no one is rolling their eyes anymore. The stock is up to $143.36 per share, as of today’s market close, up from the IPO price of $65.75. While the stock has had a sharp decline before today’s rebound, today’s close to 13% price increase is an indicator that the investors believe in the meat industry domination story that Ethan Brown has been telling all along.

Fastly, oh, so fastly 

In the heated market of tech IPOs, one company hasn’t been talked about much, up until several Wall Street analysts gave it a buy or outperformance ratings this week. The stock was up sharply and then down, fastly (pun intended ;-p). Fastly (FSLY) is a cloud computing platform that makes websites and apps faster in responding to customers’ requests. It IPO’d just a few weeks ago, and no one cared until the underwriters who took the company public broke their silence. The stock price is down today, but remember Fastly every time you click on a link in one of your favorite websites and the results are back before you blink. Oh, so fastly!

In other news, Amazon is failing. Not all of Amazon (AMZN), but the food-delivery group is failing. If you are among the 10 people who order their food-delivery from Amazon, by now, you must have received the cold email.

We know, we know… Most likely, more than 10 people use Amazon’s food-delivery service, but it feels great to take a jab at the “everything store” when it fails for a change. In an email to its users, Amazon’s food-delivery team informed that the company is shutting down the service. Is Amazon finally failing at something, or does the company have bigger plans? We are watching the food-delivery market every time our stomach grumbles for lunch.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card