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Market Overview

Gathering Strength

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Gathering Strength

Introduction

According to a new study, the biggest reason that US earnings are strong this season is due to strong growth in the rest of the world.

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That’s right, companies that do business primarily outside of the United States have seen double growth compared to companies that are primarily domestic.

I hope that Donald Trump sees this report as well and wonder if it would make him reconsider his protectionist stance.

In the meantime, what we’re hearing from the White House is President Trump trying to secure himself a meeting with Kim Jong Un. This would put him in a very elite club with Google Co-founder Eric Schmidt and basketball player Dennis Rodman. Hmmm…. yeah, that makes sense.

Market Overview

As far as economic news is concerned, the biggest events are behind us. The Caixin PMI data confirmed that China’s manufacturing sector is indeed cooling off and the Reserve Bank of Australia left their interest rates on hold at 1.5%.

The next big news event will be coming from New Zealand this evening as the RBNZ makes their interest rate decision.

Looking at the market today, there is not a trace of concern about the upcoming elections in France and the UK. According to the French polls, Le Pen only has 41% of the vote and the markets have fully priced in a Macron victory. It’s almost as if we’ve learned nothing from the Brexit referendum or the Trump elections.

Gold continues on a slow decline.

…and the USDJPY has now broken through 112.

Markets returning from the Labor Day break are very mixed so far. So also no exception signal of risk appetite as stocks are near all time highs.

This chart was posted by @Welovetradingcom in Germany in honor of the DAX index breaking a new all time record high.

Tough Brexit

The British Pound is taking a bit of a dip this morning after a meeting between Theresa May and President of the European Commission Jean-Claude Junker kind of blew up.

So it seems that Theresa did not have a very good May Day. Junker was quoted as saying that she was on “a different galaxy.”

Here’s the GBPUSD this morning…

Still, the Sterling has made some massive leaps since the snap elections were called, so a bit of a dip could just mean that it’s gathering strength.

In this chart, we can see the cable (GBPUSD) since the referendum in June…

…and now for what you’ve all been waiting for…

The Cryptocurrencies

It seems like the massive surge we’ve been seeing in the crypto world is taking a bit of a breather. The total market cap of all coins did break a new high yesterday but not by much and at the moment, we’re a bit off the high.

The pullback in Ethereum is actually quite small compared to the surge that we saw. We’ve been seeing exponential growth over the last two months. At the beginning of March it was trading at just $15 a coin, now it has breached the $80 level. So a small pullback actually makes sense.

Remember in 2013 when bitcoin went from $5 to $1200 in a few months? Well, even bitcoin had some significant pullbacks on that path.

In the meantime, bitcoin is still surging and has now broken a new all time high of $1425.

It seems that the tipping point will indeed come from Japan. Just today it was announced that 10 new companies will be opening exchanges in the country. Think about it like this. The Japanese Government is actively trying to devalue the Yen in order to discourage people from saving money. On the other hand, they’ve just made bitcoin a legal currency for savings and transactions.

If you lived in Japan, what portion of your savings would you choose to invest in Bitcoin?

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Mati Greenspan

Mati Greenspan

https://www.etoro.com/

Senior Market Analyst at Etoro.com.

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Ethereum Regular readers will recall that I suggested yesterday morning…