Assets don’t usually rise or fall in unison
Gold has gained following terror attacks in the U.K. Photo: neil hall/Reuters
Stocks, bonds, gold and bitcoin—assets that rarely move in unison—have all been surging this spring, an everything rally that leaves investors confounded about how to play the plodding U.S. expansion and vulnerable to sharp reversals in fortune.
Major U.S. stock indexes have soared to records this month, reflecting some investors’ confidence in the continued U.S. economic recovery along with expectations that large technology firms will accrue further market-share gains. At the same time prices of bonds, which often decline when stocks are rising, have risen lately, as U.S. inflation readings cooled off alongside a slowdown in some key industries.
Gold has gained following terror attacks in the U.K., and turmoil in U.S. politics centering on the administration’s legislative prospects and a key congressional hearing this week featuring former FBI director James Comey.
The simultaneous gains have begun to concern some investors. Many point to a wave of money that is driving up asset prices, tied in part to lower bond yields and a lower dollar—a confluence of events they say feels good while it lasts but can’t go on forever.
“We do think there are distortions” in the markets, said Iman Brivanlou, who oversees high-income equities at asset manager TCW Group Inc.
The Dow Industrials this month have posted two record closes, their first since March, and the 30-stock index remains just 0.33% below its all-time high despite a decline Tuesday of 47.81 points to 21136.23.
Gold is quickly becoming the new cocaine in Colombia. The precious metal is now the currency of choice for individuals and groups engaging in illicit trade in the South American country. That’s because unlike cocaine, it’s perfectly legal to carry gold, and unlike money, it’s virtually untraceable. But there are some major side-effects of Colombia’s new gold rush that locals are curiously quiet about: erectile dysfunction and brain damage.
VICE News correspondent Monica Villamizar travelled to the Antioquia, Colombia, a hotbed of illegal gold mining, to investigate an unprecedented surge in impotence and neurological problems that experts are attributing to mercury, an essential gold-digging element.
Watch “Blood Diamonds and Religious War: Diamonds and Division” – http://bit.ly/1zYdmRq
Travel and leisure stocks fall sharply, while haven assets like gold tick higher
The Dow Jones Industrial Average slipped 31 points, or 0.2%, to 17592. The S&P 500 declined 0.1%, while the Nasdaq Composite added 0.3%.
The Stoxx Europe 600 initially fell more than 1.3% in morning trade before paring losses to 0.5%
Travel and leisure stocks fell sharply after explosions hit Brussels’ international airport and a subway station near European Union institutions. Belgian officials shut down the entire public transport network in Brussels and immediately raised the terror alert across the country to its maximum level. Shares in Air France-KLM and Thomas Cook Group PLC fell about 4%.
In the U.S., travel and leisure stocks were among the biggest laggards in the S&P 500. Cruise operator Royal Caribbean Cruises dropped 3.9%, while competitor Carnival fell 3%. Delta Air Lines shares fell 2.1%, while American Airlines Group dropped 1.6%.