The Truth Comes Out

We often hear stories about how corrupt politicians are but it’s quite rare that we get to see such a clear example as the one exposed by local activist Lissa Lucas.

In this video, we can see Lissa being dragged from a hearing for exposing the substantial contributions made by the gas and oil companies directly to the politicians who are trying to pass a bill that would allow drilling on private property without the consent of local residents.

She made some excellent points and accomplished what she set out to do which was to shine a huge spotlight on an atrocity that would usually go unnoticed by the general public.

Perhaps the one comforting thing is that this dirty industry is likely to soon be replaced anyway. Not by way of politics but by natural selection, as clean energy is now cheaper to produce than fossil fuel based sources.

eToro, Senior Market Analyst

Today’s Highlights

Markets Bounce

German Woes

Crypto Stabilization

Please note: All data, figures & graphs are valid as of February 12th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Financial headlines will tell you that the markets are in recovery mode but in fact, nothing could be further from the truth.

We are seeing a bit of a bounce in the global stock markets since Friday and indices in Asia and Europe are having a great day, except for Japan who is out celebrating a local holiday.

These three charts show the bounce from the bottom on three of the world’s favorite stock indexes.

The truth is the markets are in “wait and see mode.”

The recent sell-off is largely being attributed to expectations for a tighter policy from the Federal Reserve. This policy now hinges very delicately on the inflation situation in the United States.

Therefore, the market is now focused on the CPI inflation reading that will be announced on Wednesday.

Because so many people are now focused on this single bit of data, the impact could be some wild gyrations from the market at the time of the announcement.

However, since the announcement is still two days away we could see the markets enter a holding pattern or “buy the dip” mood until the time of the announcement.

Of course, if we do see the selling continues after Wall Street rings the bell, all bets are off and we return to massive uncertainty as to the cause of the selling.

Meanwhile in Germany

Even though the German DAX Index (featured as the center stock index above) is going along with the rest of the world’s stock markets, we should be aware of a developing political situation.

Last week, it was looking quite likely that the political deadlock in the country would be broken by a grand coalition between Angela Merkel and the SPD party.

This week that scenario is looking considerably less likely as the head of the SPD, Martin Schultz, has declined the position of Foreign Minister that he was expected to take.

Some SPD members have taken to the streets to campaign against the coalition ahead of a referendum that if passed will seal the deal.

At the same time, Merkel’s own party is yelling bloody murder at their Acting-Chancellor for making too many concessions trying to put this deal together.

As Germany is the largest economy in the Union any breakdown in their government could have a direct impact on the Euro, which is already significantly higher than the ECB (European Central Bank) would like it to be.

In this chart of the EURUSD we can see that the Euro could potentially fall another 250+ pips before reaching its long term trendline (blue).

Cryptos Also Stabilizing

Bitcoin and the others have shown some serious signs of strength over the weekend. Hopefully, I’m not speaking too soon but it does seem as if the wide pullback from late December to early February may have run its course.

The pullback in bitcoin has brought the digital currency as much as 71% from peak to trough, which compared to some of her previous pullbacks is actually not all that bad.

Since the long-term graph of bitcoin always looks a bit like a hockey stick, we can also look at the log scale chart to visualize the overall growth in percentage terms.

For emphasis, I’ve circled the 87% correction featured at the center of the graph above. This was quite possibly the longest pullback for the asset thanks in large part to the collapse of the Mt. Gox exchange in February 2014.

Back to now, there are two more positive signs that we can see for the crypto-market.

Number one, we can now see a clear division between the “safer” cryptocurrencies and the riskier ones.

Number two, the volumes in Japan seem to be stabilizing and have held up well throughout the month of February so far.

As always, please feel free to contact me directly with any questions, comments, or feedback. Wishing you 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.

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.