By Matthew Kerkhoff
What a week it’s been. Monday started out with one of the strongest rallies we’ve seen in months, cultivated by a rise in oil prices and the largest acquisition by Warren Buffett’s Berkshire Hathaway. Apparently the Oracle of Omaha is still finding value amidst what many consider to be an expensive market. He bought aerospace company Precision Castparts for $32.4 billion in cash, a 21% premium to the then-current share price.
With price action starting off on a high note, it looked as if we could be in for a short-term rally. But the chances of that deteriorated quickly when news broke Monday evening that China had devalued their currency.
We’ve become accustomed to central banks around the world adding financial stimulus, either by lowering interest rates or engaging in quantitative easing. Both these actions have a devaluing effect on the domestic currency, and tend to be warmly received by equity ... Log in or subscribe to continue reading.