Monday Business News: Truth Social, Dovish Fed, and China

Truth Social is going public. Launched in early 2022 in response to social media sites banning Trump on major sites, the shareholder approval will value DWAC stock with a $5.7 billion market capitalization. Trump’s net worth will increase by $3.3 billion.

This easily created money for the former President may change in value. The SPAC merger is similar to other SPACs that eventually lost up to 99% or filed for bankruptcy. Nikola (NKLA) is one example. Its stock peaked at over $60 during the pandemic bubble in 2020. It closed at 66 cents.

Last Wednesday, the Fed’s highly dovish tone refueled the market’s bullishness. The S&P 500 (SPY) gained over 2.2% while the Nasdaq added 2.87%. Markets are forward pricing at least three interest rate cuts of 25 bps each. They continue to ignore Fed Chair Powell’s warning that rate decisions are primarily dependent on economic data. Markets must parse through inflation and job hiring data every month.

The Dow is highly likely to trade above 40,000 within days. It closed at 39,475, down by 305.5% points last Friday.

In the Far East, China’s yuan slid into an unexpected four-month low. State banks quickly stepped in to prevent a currency collapse. Markets are anticipating the Chinese government will introduce monetary easing and interest rate cuts. Despite already cutting rates and buying stocks to support the index, the stock market continues to underperform compared to the rest of the world. Be wary of Baidu (BIDU), (JD), and Alibaba (BABA) while China’s economy struggles.

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