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Market Overview

Why We’re Not Drowning in Cash?

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Investors have a lot to be thankful for this year. Both the traditional markets and alternative markets are outpacing all expectations and those of us lucky enough to be involved should take a moment to reflect.

Many markets will be closed this evening as Wall Street takes a much needed night off. Check out the Market Hours Page for the specific assets that you’re trading on.

For you cryptotraders, I’ll save you a click. There will be no downtime. Crypto is traded 24/7!

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of November 23rd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

The people in charge of the money flows, released their thoughts on the economy and stock markets yesterday. As we know, the US Federal Reserve Bank has had more influence on the economy than any single institution or person over the past decade. The FOMC minutes from their meeting on November 1st did contain a few surprises.

It seems that the Fed Head Janet Yellen has completely changed the language she’s using about inflation. The word she was using before was “transitory”, meaning that the Fed feels this low inflation period will pass shortly. A word that she used more recently is “guess,” stating that we ‘think’ that inflation will rise. Now it seems they’re just not certain so they’re going to ignore it.

Let’s back up…

The Federal Reserve, along with the other central banks of the world have been pumping the global economy with cash injections known as Quantitative Easing (QE). Currently, the total amount of QE from the top five countries is about $19.5 Trillion. Not a small amount of change.

but it doesn’t stop there…

In our economy, only a small portion of money is created by the central banks. In fact, every Dollar that is held at the Fed is then lent out to other banks within the country who in turn lend each and every dollar to many different clients. This is called fractional banking and what it means is that a bank only needs to own a fraction of the money that it lends out.

Like any other asset, prices of currencies are usually determined by supply and demand. However, with the amount of QE that’s been poured into the system it’s a real mystery that we haven’t seen hyperinflation on a massive scale.

Why are we not drowning in cash???

This question is now being pondered by virtually all economists in the world at the moment and nobody seems to have any good answers.

One of the biggest effects that we can see are global stock prices that tend to benefit from all this cash floating around the system.

The question of hyperinflation or lack thereof is a hot topic in the financial world and no doubt will be discussed by some over turkey and cranberry sauce this evening. For some of the more normal people, the much bigger topic of discussion will be about cryptocurrencies and how we can replace all of the above with a much better system.

Crypto Market Tops $250 Billion

There have already been several articles published about how to speak about Bitcoin at your Thanksgiving dinner. Some of them are pretty good too. But I’m sure most of my readers are already somewhat familiar with this world and what we’re trying to accomplish with it so I’ll just dive right into the price movements for you.

It’s now been two weeks since the Segwit2x hard fork was called off (orange circle) and the action has been intense. It seems that every day one crypto or another is seeing monstrous gains. Here I’ve put together all the cryptos that are traded at eToro in one chart.

Bitcoin itself is up 10% in two weeks, which is amazing if you think about it but somehow just doesn’t seem impressive at all given some of the other advances.

The best performer by far has been Bitcoin Cash (Green). I actually had to cut off the top of the spike on the chart above just so we could see the moves more clearly. Some believe that Bitcash’s bigger blocks and new ‘difficulty adjusting mining formula’ make it an excellent alternative to Bitcoin. However, the crypto markets are all about consensus. And lately, especially since B2X coin never happened, this new bitcoin is gaining traction.

As of this writing, Bitcash is up 36% in the last 24 hours and 148% in the last two weeks. Beware the volatility though!!

The second best performer has been Dash, which we discussed in yesterday’s update and though Ripple saw a big spike (purple circle) on the announcement that they will be partnering with American Express, they’re two-week performance is now mostly inline with the rest of them.

Trying to guess which crypto is going to perform the best is a lot like playing roulette. The odds that you’re going to guess the exact right one are pretty slim. However, this is not a zero-sum game. So spreading your bets out and diversifying into many different contenders is probably the best strategy.

New Milestone

The total value of all digital assets in the world has now passed $250 Billion, up 25% in the past two weeks and 1471% since the beginning of the year.

My best guess is that many cryptotraders looking at their portfolio right now might see the ‘lagging’ performance of bitcoin and try to reallocate some of their BTC into higher risk tokens to try and chase those bigger returns. However, this doesn’t necessarily mean that bitcoin will go down.

Bitcoin is a gateway cryptocurrency. Most newcomers in the market and there are a lot of newcomers, first get into bitcoin before trying out some of the others and it still represents the biggest holding of most crypto-investors.

Let’s have an amazing day ahead!

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.

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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Market Overview

Market Update: Dow Drops Nearly 300 Points on Trade War Threat

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U.S. stocks extended losses Tuesday, with Dow industrials registering their fifth consecutive decline after President Trump signaled to his administration that an additional round of Chinese tariffs could be on the way.

Stocks Tumble

All of Wall Street’s major indexes headed for losses as trade and political risks kept equity investors on the sidelines. The Dow Jones Industrial Average plunged 287.26 points, or 1.2%, to 24,700.21. Boeing Co (BA), Caterpillar Inc. (CAT) and DowDuPont (DWDP) were among the biggest decliners, falling at least 2.6%.

The broader S&P 500 Index headed for a loss of 0.4% to close at 2,762.57. Six of 11 primary sectors contributed to the declines, with industrials and materials each falling more than 1.8%.

The technology-driven Nasdaq Composite Index declined 0.3% to 7,725.58.

The CBOE Volatility Index, commonly known as the VIX, surged to its highest level in about three weeks. Wall Street’s preferred measure of investor anxiety jumped 8.5% to 13.35 on the scale of 1-100 where 20 represents the historic mean. The fear index touched a session high of 14.68.

Trade War Threat Escalates

U.S. President Donald Trump has warned China not to retaliate to Washington’s first round of export tariffs, which target up to $50 billion in Chinese goods.

Trump has asked his administration to prepare an additional list of $200 billion in Chinese goods that could be subject to tariffs should Beijing follow through with its threat to tax U.S. exports. This so-called second tranche of goods would be taxed at a rate of 10%. The first round of levies, which was confirmed Friday, will subject Chinese goods to a tax of 25%.

“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship,” the U.S. president said in a statement.

China has vowed to implement a tariff policy of equal force and measure to the one Washington announced last week.

Earlier on Tuesday, the Senate passed a measure reinstating a ban on purchases of U.S. components by Chinese telecommunications giant ZTE Corp. that nearly shuts down the company. President Trump had sought to overturn the ban.

Cryptocurrencies Show Poise

Digital currencies continued to hold gains after prices jumped $13 billion in one hour of trading Monday afternoon. At the time of writing, the combined value of all crypto assets in circulation is $291.4 billion, according to CoinMarketCap.

Five of the top-ten coins by market cap are reporting gains over the last 24 hours, led by Tron’s more than 8% surge.

Bitcoin reached a high of $6,843.03, its best levels in a week. The largest cryptocurrency by market cap was last trading at $6,776.

Ethereum peaked at $542.35, its strongest showing in more than a week. Ether prices were last up 3.7% at $537.

The digital currency market has rebounded $27 billion from last week’s swing low. Much of the recent gain has been attributed to New York’s approval of a crypto trading app on Monday. The Department of Financial Services has granted Square’s Cash app a virtual currency license, which gives state residents the opportunity to buy and sell bitcoin on platform.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.6 stars on average, based on 458 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: Stocks Extend Losses on Next Round of US Tariffs

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The main European and Asian indices and US stock futures are all significantly lower just before the Wall Street session, as Donald Trump announced that the administration will seek to extend the trade tariffs targeted at China. The extension would affect another $200 billion of products, and it would be a major escalation of the, so far relatively limited trade skirmish.

Shanghai Composite, 4-Hour Chart Analysis

Asian markets are underperforming as Chinese equities have been smashed below key support in the wake of the announcement, but the previously outperforming US indices are also close to breaking their short-term uptrends. That said, the Nasdaq continues to be relatively strong, and the Russell 2000 is the best performing global benchmarks, as small-cap stocks are benefiting from the trade tariffs.

S&P 500, 4-Hour Chart Analysis

The housing market has been in focus with regards to economic releases, and while housing starts beat the consensus estimate, the more forward looking building permits unexpectedly declined in May. As the Fed is expected to continue with rate hikes, at least until the end of the year, further cooiling of the housing market is likely as mortgage rates are steadily rising.

Dollar and Yen Shine

Dollar Index (DXY), 4-Hour Chart Analysis

Forex markets are reflecting the risk off shift as well, with the US Dollar and especially the Japanese Yen performing well, and the Euro, the Aussie, and the Canadian Dollar lagging behind. Emerging Market currencies are still under heavy selling pressure, as trade war fears sparked flight to safety flows.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

While European markets are only hitting one-month lows, the Turkish Lira and the Brazilian Real are trading near all-time and multi-year lows respectively, as the Dollar’s strength continues to hut the fragile currencies.

Treasury yields are lower, but as safe haven flows are still concentrated on the longer end of the curve, short-term yield pressures haven’t eased much while the flattening of the yield curve continues in earnest.

Gold Futures, 4-Hour Chart Analysis

Commodities are in the red across the board, as the risk-off trade spread to the segment, with gold outperforming somewhat. The precious metal is still well below the $1300 level after last Friday’s steep drop, and it briefly spiked below the $1275 level as well. We still expect gold to resume it’s uptrend so the current levels could be good for accumulating investment positions in the metal. Crude oil is also lower, as volatile trading continued as expected, with the WTI contract trading near the $65 per barrel level before the OPEC meeting.

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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4.6 stars on average, based on 277 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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Market Overview

Escalation Overflow

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Hi Everyone,

Financial markets appear to be reacting to the latest escalation in the trade war between the U.S. and China.

It now appears that the United States may have the upper hand due to the wide trade imbalance between the two nations. Indeed, it would be very difficult for the Chinese to find $200 billion worth of US imports to curtail.

Under the circumstances, I guess you could say that markets are holding up pretty well, as we’ll see below. Even though the declines are sizeable, this doesn’t come close to the volatility we saw in February.

President Trump’s approval ratings are now as high as they’ve ever been despite outrage over recent hardline anti-immigration actions that saw authorities separating more than 2,300 children from their parents.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Stocks Minor Sell-off
  • What Brexit Negotiations?
  • Crypto Off the Lows (Focus on ETC)

Traditional Markets

Looking at the financial markets today it seems there is a bit of fear creeping in.

The Chinese stock market is down 3% and the Japanese market isn’t far behind with losses of 2.5%. Though these are quite substantial movements for any stock index, by putting things in context on the long-term chart we can see that it’s not the end of the world.

Please notice how in February, before the whole trade tensions began, the stocks experienced a much sharper sell-off.

On this chart of the VIX we can also see that even though volatility spiked yesterday, it’s still way below the levels seen in early February.

What is becoming more pronounced lately is the domination of the US Dollar.
The Greenback seems to be rising against just about everything over the last few months.

Here we can see the strength of the British Pound against the Buck since the Brexit referendum in 2016. We’re testing a critical level now at 1.3200

Please don’t make the mistake of thinking that this has anything do with the recent UK government uncertainty either. No matter the level of pressure Theresa May is under, the fate of the Pound may be more reliant on what happens with the US Dollar than on anything else.

As we can see above, the Euro and the Pound have both been pretty weak this quarter. To illustrate this further, take a look at the EURGBP, which hasn’t moved much over the last year.

Crypto Bounce

Digital assets pricing is up 2% to 4% across the board as the market shows exceptional resilience to the FUD.

Bitcoin itself has bounced noticeably above the support of $6,100 per coin and is trading above $6,700 this morning.

Outperforming the market by far is Ethereum Classic, which has seen some remarkable progressions lately in usability and liquidity. ETC is up 8% over the last 24 hours, which is more than any other widely circulating cryptocurrency.

For the first time ever, we can see that Google searches for Ethereum have surpassed those of Bitcoin Cash, the other famous hard fork coin.

Most interesting is the search trends in South Korea, where ETC now trumps BTC.

Looking at the long-term graph, we can see that at $15.33 per coin we’re well off the lows of $12.50, yet nowhere near the highs seen at the beginning of 2018.

Let’s have 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

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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