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Market Overview

Riding the Hog into the Sunset

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Hi Everyone,

Hope you’re having a fantastic day so far. Writing to you today from sunny Amsterdam where I will be attending the Blockchain Expo over the next two days.

Today, I will be making good on a debt that is owed…

Will post a picture with @pipatel and my Heineken later in the day on social media.

If you’re in the neighborhood, let me know and I’ll be glad to meet up. 🙂

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trade War Intensifies (Again)
  • Ride that Hog
  • Crypto Eyes Emerging Markets

Please note: All data, figures & graphs are valid as of June 26th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

So far, the protectionist policies of Donald Trump have yet to hurt the international markets too badly, although this week has certainly been an exception to that.

Trump’s announcement that he is considering a limit on Chinese investment in the USA tech firms, as highlighted in yesterday’s market update, seems to have caused some tension within his own cabinet.

Treasury Secretary Steven Mnuchin has apparently downplayed the possibility of these investment controls but Trump’s Trade Advisor Peter Navarro was quick to rebuff by saying that America needs to be tough on China.

Tech stocks in the United States have been the worst hit as the Nasdaq declined more than 2%. Asian and European stocks are also feeling the losses so far today.

Riding the Hog

In war, there are no winners. Even though Donald Trump has made some progress in showing how “unfair” trade has been so far, yesterday he took a big blow when this headline hit the news cycle…

The European Union has reportedly raised the tariffs on America’s iconic bike maker from 6% to 30% in response to Trump’s new policies, which is causing the motorcycle maker to take their show on the road.

Shares in Hog where hit hard yesterday.

Trump supporters were quick to point out that the company was already in the midst of restructuring their production methods and that the timing here is simply a matter of convenience.

Still, the Financial Times reports that…

Crypto Eyes on Argentina & Iran

Economic protests have popped up today in both Argentina and Iran, which is notable given that these are two countries that we have been watching closely as possible hotbeds for increased adoption of Bitcoin.

As if by some twist of fate, I happened to spot another traveler on Reddit today, who happens to be in Argentina at the moment and was able to use Bitcoin Cash in order to withdraw some local currency following an issue with his bank…

He even included a picture of the homemade BCH ATM: https://imgur.com/a/oy548Zu

Bitcoin was created in 2009 to provide an alternative to the fiat monetary system. Especially in places where mass inflation is a prevalent issue, a new form of digital asset is very useful for providing a stable currency outside the control of governments and banks.

Here we can see a graph of bitcoin against both the Argentinian Peso and the Iranian Rial over the last year.

For those, asking me “when will bitcoin go back up again?” I really can’t say. It’s still not clear whether the demand from these countries is enough to sustain the support at $6,000 alone.

Certainly, if Japan and South Korea step in on the buy side it would drive prices upwards as would new institutional flows into this market. But as long as the price is traveling South, it’s difficult to see any of these players stepping in too heavily.

What is clear is that once the momentum does build again on the buy side, there are a lot more interested parties waiting on the sidelines now.

Wishing you an amazing 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

Connect with me on….

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

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 143 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

European Stocks Decline as China’s Economic Growth Hits 28-Year Low

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European stocks traded lower on Monday amid news that China’s economic expansion reached its slowest pace in nearly three decades, casting a dark shadow over the health of the global economy.

Europe Sees Red

All of Europe’s major stock indexes traded lower in the afternoon session. The pan-European Stoxx 600 fell 0.3%, reflecting weakness across the continent.

Germany’s benchmark DAX Index fell 0.6%. In Paris, the CAC 40 Index languished 0.2%. Spain’s IBEX 35 Index also dropped 0.2%. The FTSE 100 Index in London pared losses to trade flat.

The weak European session followed strong gains in Asia, where traders remained optimistic about China’s new stimulus plan. Last week, the Chinese government pledged to lower taxes and increased federal expenditures in 2019 as a way to shore up economic growth. Meanwhile, the People’s Bank of China (PBOC) said it will make monetary policy easier to gauge moving forward.

Drama surrounding Brexit also weighed on European stocks as British Prime Minister Theresa May prepared to unveil a new plan to withdraw from the EU. May’s Brexit bill was shot down in British parliament last week. A parliamentary bloc tried to oust her from power by forcing a no-confidence vote that the prime minister subsequently survived.

British lawmakers will vote on May’s Plan B on Jan. 29. According to early reports, the new plan is unlikely to be much different than the previous bill tabled to parliament.

China’s Economic Headwinds

The Chinese economy is coming off its slowest year of growth since 1990, a warning sign for investors banking on continued global expansion. The world’s second-largest economy grew 6.6% in 2018, in line with expectations but a substantial drop compared with previous years.

China’s economic grew 6.4% annually in the fourth quarter, which is an extension of a downtrend that began to emerge roughly five years ago.

Retail sales grew 8.2% annually in December, slightly higher than the November rate. During the same month, industrial production picked up to 5.7% annually, up from 5.4% in November. Annual fixed asset investment was unchanged at 5.9%.

Beijing is prepared to make big concessions in its ongoing trade negotiations with the United States. As CCN reported Friday, China has offered to completely eliminate its trade surplus with Washington by purchasing an additional $1 trillion in American-made goods. The additional purchases will be made over a six-year period.

Last year, China’s trade surplus with Washington amounted to $323 billion.

Talks between the two superpowers are expected to continue over the next six weeks as negotiators look to get a deal done during the 90-day truce period. President Donald Trump and Chinese Xi Jinping agreed to de-escalate trade hostilities during a face-to-face meeting in Argentina in early December.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

Crypto’s Hollywood Disruption

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Hi Everyone,

As if the world of crypto isn’t entertaining enough already, it looks like Hollywood is about to dramatize it even further.

At a Bitcoin conference in Miami, Kevin Connolly who plays Eric Murphy in Entourage made a surprise appearance on stage and announced that he’s developing a new show called “Cryptos.”

What’s even more interesting is that the producers of the show, Sords and King, who are both big blockchain advocates, seem to have modeled the plot after their own aspirations to take on Hollywood by using decentralized ledger technologies.

Despite the current memefest on Twitter, this kind of show on Netflix or Amazon Prime can do wonders for mainstream awareness of cryptoassets and their power to disrupt centralized industries.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Shutdown: Day 31 | Days to Brexit 67
  • China Hard Landing
  • Crypto in Wyoming

Please note: All data, figures & graphs are valid as of January 21st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Little or no progress has been made in the UK or USA. Prime Minister May is apparently ceasing cross-party negotiations and instead re-focusing on the issue of the Irish backstop, previously a deadlocked issue. An increasing consensus that the odds are now rising for either a time extension on Brexit negotiations or even a 2nd referendum has the Pound Sterling Rising this morning.

No such serendipitous optics have been presented for President Trump, however. The Democrats rejected a proposal from the White House that would compromise on DACA in order to fund the border wall. Now we’re back to square one. It’s been more than a month since the shutdown began and many government employees and contractors are already feeling the pinch.

Today the US markets will be partially closed in honor of Market Luther King Jr. Day. In the good words of the great Reverend…

“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”

China’s Challenge

As was widely expected, the growth figures out of China this morning were extremely disappointing.

There were some sprinkles of positivity buried under the headline though as both industrial output and retail sales came out strong. The feeling is though, that no matter what happens to the economy, the People’s Bank of China will be there to inject further stimulus if needed and prop up the markets.

Asian stocks did experience a tad bit of volatility at the time of the announcement (purple circle) but overall are taking this in good stride.

European stocks, on the other hand, have not been performing particularly well today, and at the time of writing, indices are slightly in the red.

Wyoming Crypto Country

Even though there are only about half a million people living in Wyoming the square state is quickly becoming a leader of bitcoin and blockchain legislation.

A new bill has now been introduced to clarify the status of bitcoin and other crypto assets. The highlight, of course, is that bitcoin and other cryptocurrencies will be given the same legal status as money.

The state has also clarified the definitions of cryptoassets, very similar to the way the Swiss regulator Finma has almost exactly a year ago and divided them into three categories: Currencies, Securities, and Digital Assets (Utility Tokens).

At this point, though the news is exciting the effects are rather limited. Wyoming is a small state and it’s still not clear how the federal government will react to this. Certainly, if other states follow in their footsteps this can turn into something bigger but we’re still very much in the early stages of the game.

Nevertheless, this small step is a huge win for bitcoin and blockchain as it sets a great example of supportive legislation for the entire country and the entire world.

Let’s have an amazing week ahead.

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

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

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

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan |Facebook:MatiGreen

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 143 rated postsSenior Market Analyst at Etoro.com.




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Analysis

5 Things To Watch Next Week + ChartBook

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ECB Faces Tough Task as Eurozone Continues to Slow

DAX 30 Index CFD, 4-Hour Chart Analysis

This week’s G20 meeting in Tokio for finance ministers and central bankers was eclipsed by the trade-war-related developments, but next week, the European Central Bank will surely be at the center of attention. The ECB is lagging behind the Fed in the normalization of its monetary policies, and we doubt that it will ever reach hiking rates before the next recession strikes Europe.

Economic numbers alarmingly deteriorated in recent months, the Euro is among the weakest major currencies, and with the Brexit process still looking uncertain, it’s hard to see how Mario Draghi &. Co. will navigate through the next months. While the current risk rally might make bulls think that all is well, the major European indices are still in deep technical trouble, and the as the economic cycle is turning down, we don’t think that the ECB has too many options.

The recent dovish shift could mean that the ECB will also sound the alarms, and we will see further weakness in the Euro and a possible extension of the counter-trend move in the European indices as well. That said, the ECB’s position is desperate from a broader perspective, as its only ammunition is more quantitative easing in the case of a deeper economic downturn.

$1.5 Trillion of Earnings Out after Trade-Fueled Surge on Wall Street

S&P 500 Futures, 4-Hour Chart Analysis

Following a mixed weak of financial earnings, with strength in the core businesses and weakness in trading performance for the most important players, this week we will have a more balanced mix of quarterly earnings reports in the US. Johnson & Johnson (JNJ), Procter & Gamble (PG), IBM (IBM), and Intel (INTC) will be the most important, and although the dollar’s Q4 strength could weigh on global revenues, the domestic numbers should be still fine.

With that in mind, the reports could still boost stocks after the December plunge, but we think that the fuel is running out, and investors shouldn’t get excited about the historic short squeeze. Also, we have doubts about the Chinese plan to reduce the US trade deficit, as even the Asian giant is serious about it, implementing such a plan seems to be more borderline impossible, let alone in a few short years. So while the rally could still go on, at these levels, short positions could already be opened on US equities.

EUR/USD Falls Despite Risk Rally as Treasury Yields Hit 3-Week High

EUR/USD, 4-Hour Chart Analysis

We saw signs of technical weakness this week in the most traded forex pair, as it completed a failed break-out pattern above the 1.15 level and dipped clearly below 1.14 towards the end of the week. US Treasury yields continued to rise, on the heels of the strong rally in stocks, and the relatively stable economic numbers from the US added to the pressure on the common currency.

With the ECB’s monetary meeting coming up, we could see wild swings especially in the second half of the week, but for now, the direction looks clear, and new lows are likely in the coming months. Given the technical weakness even a quick test of the 1.12 level and a sharp sell-off to new lows is possible, should risk assets turn south next week.

AUD/USD, Our Canary in the Coalmine, Showing Weakness

AUD/USD, 4-Hour Chart Analysis

The Aussie, which has been rising together with other risk assets showed relative weakness this week, despite the rise in commodities and the positive news concerning the US-Chinese trade talks. The AUD/USD pair has been a very good indicator for the risk-on/risk-off shifts in recent months so this weakness should be closely monitored by investors.

From a technical standpoint, the pair is trading in a crucial price range between 0.7150 and 0.72 following the post-flash-crash rally. The bounce was distorted by the flash crash, as it wiped clean several important stop-loss zones, causing pain for bears and bulls alike. With the declining long-term trend clearly being intact, we would once again favor short positions here, even as the short-term trend could still take time to top out.

Chinese GDP, Eurozone PMIs, and Rate Decisions Highlight Economic Calendar

Besides the ECB and the Bank of Japan we will have key economic indicators coming out almost every day next week. The week will kick off with the quarterly Chinese GDP print and Industrial Production, but elsewhere the economic calendar will be empty on Monday, with US markets being closed oin observation of teh Marting Luther King Jr. day. Europe will be in focus on Tuesday, with the British Employment Report and the German ZEW Sentiment number coming out, while on Wednesday, the BOJ’s monetary meeting and the Canadian Retail Sales Report will likely make waves.

The last two days of the will likely be the most active in traditional financial markets, with the Eurozone Manufacturing and Services PMIs and the ECB’s monetary meeting being scheduled for Thursday. Given the pace of the recent slowdown, which usually precedes recessions, another set of negative surprises could hurt the Euro and European equities alike.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 444 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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