Break through the Clutter

The news cycle has been thick and heavy lately with updates about so many different major stories flying from the press. Sometimes it’s hard to keep on top of all of it.

The markets have been hyper-focused on the US interest rate decision coming today from the new Fed chair Jerome Powell but at this point, I’m not even sure that this is going to be the biggest market mover right now.

Trump’s trade war could easily overshadow the Fed as it now seems likely that the US will be smacking China with $60 Billion in annual tariffs, possibly by the end of the week. We can only anticipate how President Xi will respond.

On days like this, it’s usually best to just skim the headlines and try to determine which of them are going to affect the markets most.

For example, this story about a major crypto exchange delisting 82 alt-coins from their service might be rather valuable. This is interesting because it could cause alternative investors to actually shift funds around in order to get their money out of the affected alts. That type of re-valuation could have a consolidating effect as most people would rather shift those funds to more stable coins.

Always look for another angle. Always look for the positive side and the opportunity.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Expected Announcement
  • Fed Dots
  • Clearer Crypto Market

Please note: All data, figures & graphs are valid as of March 21st. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The main event today has been one that the market has been anticipating for several months already.

The adjustment in interest rates in the United States from 1.5% to 1.75% at today’s meeting has been expected by the market for several months already. So when they do pull the trigger at 18:00 GMT, the market will be more focused on the FOMC’s Statement that will be released at the same time.

Thirty minutes later, we’ll get a special press conference with the new Fed Chair Jerome Powell, which could be particularly interesting.

The main focus on the minds of many investors is where interest rates will be by the end of the year. Will we see an additional 2 hikes or will he go for 3?

Here we can see the market’s current expectation of the Fed’s interest rates in the meeting on December 21st. The perception of 2 more hikes (yellow line) has been dominant for most of the year so far, but the blue line (3 more hikes) is certainly gaining fast.

What’s even more important than that is the long term outlook of the Fed, which will be displayed in the famous dot plot. Below we can see the dot plot that was released at their last meeting. Each dot on the chart indicates the expectations of each of the 16 voting Fed members.

At that time, the outlook for 2020 and beyond was to be at an interest rate of about 3%.

Crypto is Clearer

There is a growing feeling in the crypto community that the bear market we saw so far this year may finally be over. After a very successful debut at the G20 cryptocurrencies are increasingly being seen in a positive light.

Having legendary VC investor Peter Tiel come out as a bitcoin bull is extremely reassuring. This headline on CNBC is huge a relief as well.

Thomas Lee of Fundstraat is generally accepted as an authority on crypto market movements so his word certainly carries weight with alternative investors.

There are also whispers that the new Governor of the People’s Bank of China is a lot more crypto-friendly than his predecessor. This isn’t an indication of anything yet, but just the thought of getting Chinese volumes back to their former glory is stimulating enough.

If this is indeed the bottom, and that is a huge IF, my hope is that on the next big crypto run we will see a flight to quality. With knowledge about the industry growing, we should see a much greater level of understanding from investors who now have greater tools to evaluate individual coins and decide what they should be worth.

Let’s have an awesome day ahead!!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan

Author:
Senior Market Analyst at Etoro.com.

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