Dow Jones plummets as Cisco cuts 4000 jobs + Wal-Mart sales disappoint + Unrest in Egypt grows … World markets follow

Posted: August 16, 2013 in Dow Jones, Economy, Fiscal Cliff Course 101, Investment 101, Stock & Bond Market
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Captain Rick: The Dow Jones plummeted 2.4% during the past month, attributed in part by the news of Cisco cutting 4000 jobs and Wal-Mart sales falling short of expectation. This combined with the growing violence in Egypt caused major world markets to follow the Dow’s decline.

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The above chart shows the significant, recent decline of the Down Jones, down 2.4% in the past month. It is the largest dive in values in 2 months and one of the top 5 declines since the market crash of 2008. I break down the issues affecting this loss…

Cisco, the worlds largest network company providing services to most of the largest companies and government entities announced it is cutting 4000 jobs.  Cisco touches all parts of the networking process, and the company’s success is largely tied to sentiment about the world’s economy. Many large businesses and government agencies are Cisco customers, and they’re unlikely to buy up networking equipment when they’re worried about the economic situation. I see this as a major signal that the world economy is in much more dire shape than what we are being led to believe from the typical ‘show business hype’ on the evening news. World markets are echoing the concern.

Wal-Mart, the world’s largest retailer, reported lower than expected sales for the second quarter. When the world cuts back on purchases at Wal-Mart, it raises a red flag for me.  It makes me wonder how healthy the recovery from the Great Recession really is.

Disturbance in Egypt has caused over 400 deaths and 3500 injured. While most of financial market ‘gurus’ did not mention this as one of the causes of the recent market plummet, I believe it played a role.

The major economies of the world continue to tread on very shaky ground. There has been lots of news about our ‘improving economy’. I suggest that much of this is based on unfounded news ‘hype’. Our world’s economy is like a train riding on fragile rail, heading for the edge of the ‘Global Fiscal Cliff’.

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