The US stock market ended September in the green amid signs of ease in trade tensions with China and monetary policy moves from the Fed in line with expectations, which distracted investors from a new wave of political uncertainty marked by House Democrats launching a formal impeachment inquiry against President Trump. At the beginning of the month, China and the US agreed to hold a fresh round of negotiations in early October and China extended an olive branch by first exempting 16 American products from higher tariffs and then adding some agricultural products to the list, including soybeans and pork.
At the same time, on September 18, the Fed reduced the federal funds target rate by 25 basis points to 1.75% – 2.00%, marking the second cut in a row. During the press conference after the FOMC decision announcement, Fed Chair Jerome Powell said the central bank expects the economy to continue moderate growth, but uncertainty over trade and Brexit remains. On the other side of the Atlantic, the European Central Bank also cut its deposit rate by 10 basis points to -0.50% last month. It also announced a restart of Quantitative Easing (a monetary policy that involves purchasing of government securities from the market in order to increase the money supply and inspire more investing and lending) from November 1.
Amid these two main developments, the S&P 500 gained 2.42% in September, while the Dow Jones Industrial Average appreciated by 3.06%. At the same time, the NASDAQ Composite lagged behind with 1.59% growth.
The US stock market was also impacted by economic data. The August ISM Manufacturing Index fell into contraction zone to 49.1 versus expectations of 51.3 and previous month’s figure of 51.2. The non-farm payrolls showed the addition of just 130,000 jobs in the previous month, lower than the consensus estimate of 160,000 and the unemployment rate was 3.7%, in line with estimates.
Financial Advisors continued to focus on large-cap stocks for the most part. According to TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors (you can subscribe here), the second most-searched ticker last month was Apple Inc. (NASDAQ:AAPL). The company captured the attention of Financial Advisors as it released a new iPhone and announced other products. The iPhone 11 went on sale with many analysts suggesting a soft demand for the smartphone. AT&T Inc. (NYSE: T) landed on the third spot amid reports that the company is considering the split of DirecTV. The fourth and fifth most searched tickers last month were Visa Inc. (NYSE: V) and Amazon.com, Inc. (NASDAQ: AMZN).
However, the stock that gained the most attention from Financial Advisors last month is Ignite International Brands Ltd. (OTC: BILZF). Ignite is a $186 million cannabis company co-founded by Dan Bilzerian, an Internet personality known for his Instagram posts that show off his lavish lifestyle. In September, Ignite International Brands gained 31% and saw a significant increase in trading volume. However, the reason behind the volatility in the stock is unclear and even the company itself issued a press release saying that it is not aware of any development, news or material changes that would affect the trading of its stock. On September 19, the stock was upgraded to the highest tier of the Over-the-Counter market, the OTCQX, which also prompted an increase in momentum. Other pieces of news released by the company last month involved the appointment of John Schaefer as Senior Vice President of Operations, Sam Sarullo as Chief Digital Officer, Linda Menzel as General Counsel, and Gene Bernaudo as Global Head of Cannabis.
In addition, some attribute the increased interest towards Ignite International Brands to Dan Bilzerian discussing his company in several social media posts. Given Bilzerian’s large following, it can be assumed that many people were buying the stock simply to own shares of his company. Canada-based Ignite is engaged in branding, marketing, licensing, sales and distribution of legal CBD and cannabis products in the US, Canada, UK, and Mexico.
The interest in Ignite International’s stock does not only highlight the interest of investors in the surging cannabis industry, but also the hype that surrounds it and which may attract many inexperienced investors, most of whom are likely to lose money. It also highlights the importance of doing research into cannabis companies, especially those that are trading on OTC markets that are less regulated and have more lax rules regarding transparency and accuracy of information.