If oil goes to $40 a barrel, something is “very, very wrong with the world.” -Jeff Gundlach
— Jesse Felder (@jessefelder) August 21, 2015
Updated throughout the day.
August 21
Ouch. Good thing everyone can head to the beach on a cheap tank of gas this weekend, because stocks and oil were hit hard Friday, finishing a rough week on a low. The Dow fell 531 points, or 3.1% Friday, after stumbling out of the gate and falling even lower. The S&P 500 had its biggest one-day percentage drop since November 2011, dropping 3.2% and wiping out 14 months of gains. The Nasdaq fared no better, falling 3.5%. The last time the S&P 500 and Dow were in correction territory was between April 29, 2011, and October 3, 2011. They fell 19% and 17% respectively during that time. Oil tanked hard Friday, falling below $40 a barrel for the first time since 2009. Problematic? That’s probably an understatement. Investors had hoped earlier this year that oil would recover by the second half of 2015, but that clearly hasn’t been the case. Oil barely scraped up to $40.31 at market close. The purchasing managers’ index dropped to 52.9 from 53.8 in July. China lost double-digits this week despite the support of Beijing. The big question here: Will all this change the course of Federal Reserve policy? Every time the Fed seems set to raise rates (probably by a mere quarter percentage point), the markets tumble or China reveals once more just how much everyone fears a slowdown there. It’s the most widely debated interest rate move of the decade and is beginning to feel like the prelude to Waiting for Godot.
Here’s what else you need to know:
ISIS leader killed in drone strike. Haji Mutazz, second in command for ISIS, died earlier this week in Iraq. Mutazz was allegedly in charge of ISIS operations in Iraq, and managed the financial operations of the terrorist organization. CNN
U.K. reopens Tehran embassy. Britain announced that it will reopen its Iran embassy, four years after it closed. The Iranian embassy also closed in London in 2011, when relations hit all time lows. BBC
Nearly 7 million Americans aren’t paying their student loans in 2014. That means almost 17% of all federal loan borrowers are severely delinquent. Exclude the borrowers currently in school, and that percentage is even higher. On the upside (maybe) credit card, mortgages, and other debt delinquencies have fallen. Wall Street Journal
Apex, North Carolina, is best place to live in U.S. Money magazine named the 42,150 person-Apex to best place to live in the U.S. With a median income of $88,558 and 15.5% job growth, the little town has a big tech-industry without the price and hassle of San Francisco. The median home price is only $243,125, below the national average. TIME
Foot Locker earnings impress. The athletic company reported earnings of $0.84 per share and a net income of $119 million, compared with $0.63 per share and income of $92 million last year. Total sales have increased 3.3% this year. MarketWatch
Deere cuts earnings outlook despite beating forecasts. The Illinois-based farm equipment company reported weak sales, and dropped its 2015 outlook from $1.9 billion to $1.8 billion. But for the quarter, Deere beat estimates, reporting $1.53 per share on revenue of $7.6 billion, surpassing the expected $1.44 per share on $7.17 billion. Business Insider
U.S. threatens to withhold Pakistani aid. Pakistan has to step up its game in targeting militants, or Washington will withhold $300 million in military assistance. Critics have long accused Pakistan of playing a double game, giving lip service to the U.S. for money while protecting Afghan insurgents. Wall Street Journal
Mrs. Cruz is Ted’s top fundraiser. Heidi Cruz, a top Goldman Sachs exec on leave, is her husband’s top campaign fundraiser. Heidi is reportedly responsible for raising a huge chunk of the $14 million backing the Ted Cruz presidential campaign. The campaign chairman says Heidi uses her career experience to make cold calls and work the phones for donors. CNN
Invisible hands keep China index above key level in miserable week. As everyone seems to have expected, there was just no way that the Shanghai Composite was closing below 3,500 points today. In the last five minutes of trading, the index pulled back from 3,490 to 3,507.74, leaving the index down 4.3% for the day and down 11.4% for the week. Here’s how the others fared:
- SZCOMP – day: -5.4% week: -11.9%
- Hang Seng – day: -1.5% week: -6.7%
- Nikkei 225 – day: -3% week: -4.9%
You won’t believe this:
Vacation where dreams go to die. Does “It’s a small world” make you want to punch someone in the face? Us too. Fortunately graffiti artist Banksy has opened a 2.5 acre seaside resort known as Dismaland, a major reality check for the modern world. The park’s boat pond isn’t romantic, it’s full of asylum seekers. A dead Cinderella hanging from her pumpkin coach photographed by paparazzi seems to allude to Princess Diana. The park is “kid friendly,” but will leave you with a heavy feeling. Huffington Post
Movie forces Dr. Dre to apologize for abuse. More than 20 years too late, music mogul Dr. Dre publicly apologized to the women he hurt in his past. The new movie “Straight Outta Compton,” a biopic about Dr. Dre’s hip-hop group N.W.A., brought new attention to old allegations of Dr. Dre’s physical abuse of three women, which he has long swept under the rug. New York Times
The U.S.-Mexico border is actually just a volleyball net. Sorry, Donald, some people really like hanging out at the wall. Naco, Arizona and Naco, Sonora, Mexico host an annual “Wallyball,” or volleyball across the border fence. Wallyball began in 1979, and has inspired other volleyball matches across the border, plus, of course, some bi-national love. Quartz