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The Fragile Bull Market Keeps Cracking Thanks to Trade Disputes, Interest Rate Hikes and a Strong Dollar

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Asian stock prices are at a 20-month low, and European stocks are bleeding red. European bank and tech stocks are trading at a two-year low. In fact, global stock declines are setting up a rough ride on Wall Street. Some investors say they should have invested in Bitcoin five years ago instead of hanging around the bull market. A $1,000 investment in Bitcoin five years ago is $6,400 today. But Warren Buffett and Mark Cuban think jumping into the cryptocurrency market makes little sense. They say that market is unstable because Bitcoin has no underlying rate of return. Buffett has been selling stocks for more than a year and investing in the gold market. Cuban likes the tech industry even though tech stocks are going through a value adjustment.

Investors who live to buy stocks say all the talk about a bear market comes from nervous investors who don’t understand how the stock market works. But when Amazon and Google’s parent company, Alphabet, reported lackluster earnings for the third quarter, those investors started to smell the bear market. Amazon forecast is the weakest revenue gain in two years. And Alphabet’s earnings aren’t much better, according to financial experts. Trump’s trade war with China, the Feds quest to continue to raise interest rates and a strong U.S. dollar has some investors running for the bond market. But the experts say that’s not a good idea either.

The dwindling impact of tax cuts and the Feds interest rate hikes as well as Trump’s global economic and financial policies will continue to hurt corporate earnings even though Gross Domestic Product growth will hit 3.3 percent in the third quarter. Fed Chairman Jerome Powell said there’s a 70-percent chance the Fed Board will raise the interest rate again in December.

Powell made that announcement after President Trump put Powell in his “you’re fired” crosshairs. Powell’s interest rate increases have impacted bond yields. U.S. Treasury 10-year notes are trading at 3.17 percent and two-year notes are at 2.88 percent. That’s 10-points lower than they were at the beginning of October. And Global oil prices are falling thanks to a buildup in U.S. crude inventory, and the Saudi’s increased output of crude. Oil stocks are showing how fragile that sector of the economy can be.

When all of those issues come together and it appears they are coming together sooner than later, the stock market will turn into the bear no investor wants to see or feel, according to the experts who know what a bear market feels like.

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