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T3's Take 3: Extreme Market Volatility Brings Back the Ecstasy of Gold


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

TechStrat report strategist Sean Udall covered his short position in Netflix (NFLX) locking in a 10 point gain. He initially shorted NFLX around $125.40 and covered at $115.53. He also added positions in GoPro (GPRO), and SanDisk (SNDK) today.

Click here to learn more about the TechStrat Report

World Equity Markets

Chinese markets slumped again today, with the Shanghai Composite and Shenzhen finishing down more than 3%. The drop pulled down surrounding Asian markets as Japan's Nikkei fell 0.9%, and Hong Kong's Hang Seng tumbled 1.8%.

Kazakhstan devalued its currency today, allowing it to free float, following China's yuan devaluation. The currency fell nearly 28% against the USD.

The return of volatility in China and extreme currency move added to a host of existing market concerns, including confusion over the Fed and the persistent downtrends in emerging markets and crude oil.

US markets dropped further today, led by the NASDAQ, which fell 2.8% as risky stocks fell completely out of favor.

Biotechnology and cybersecurity stocks were on the receiving end of enormous beatings, with each group down over 4%.

The S&P 500 closed down 2%, and the VIX rose over 25%. The VIX curve is now inverted, an indication that traders are very cautious about near-term market conditions.

European markets were also weak. The German DAX finished down 2.34%, while the French CAC lost 2.06%.

US Economic Data

Existing home sales data for July was released this morning, beating expectations to hit the highest pace since before the 2008-2009 economic collapse. Strong sales in single-family properties helped push up the numbers. Sales increased 2%, totaling 5.59 million, with notable strength in the South and West.

Economists attributed the jump to limited inventory, which drove prices up. First-time buyers declined to 28% of all buyers, it's lowest number since January. Rising rents are also having an effect on people, looking to put down payments on houses.

Initial jobless claims were 277,000, missing the 270,000 consensus.

The Return for Gold

Yesterday's Fed minutes showed that officials are looking for more clues to see how stable the US economy, and appeared unsure of when to hike rates.

According to Bloomberg investors now estimate a 34% chance of a rate hike next month, down from 48%.

Since investors are less sure that the Fed will raise rates soon, the dollar has dropped. This, combined with the extreme burst in market volatility, is lending support for precious metals.

Gold futures rallied 2.2% to $1152.40/oz, while silver rose 2.3%.

Friday's Financial Outlook

US economic data for tomorrow will include Markit US manufacturing PMI and the Baker Hughes rig count.

Overseas economic data will include Canadian CPI, British Cental Government NCR, and German GfK consumer confidence survey.

Deere (DE), and Foot Locker (FL) will announce earnings tomorrow before the open.
No positions in stocks mentioned.
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