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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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4.7 stars on average, based on 122 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Turkish Coffee Hangover

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Hi Everyone,

Hope you’re having a fine day. Thanks again to everyone sending me their thoughts, opinions and articles. It’s really amazing.

One thing that several people have asked me to comment on already is this story. So here goes.

Indeed, this is an exciting step towards the integration of blockchain technology into traditional finance. It’s nice to see such a reputable institution such as the World Bank using a private Ethereum network to monitor their new bond. However, we’re really just scratching the surface with this one.

In the realm of programmable money, the practical applications of this new tech are limited only to our imagination. So, to use it to manage bonds is nice but it somehow feels like we’re not living up to the full potential with this one.

As one pundit put it… this is almost like when the world celebrated the internet’s groundbreaking ability allowing people to order DVD’s from the comfort of their living room.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Turkish Coffee Hangover
  • Dollar is Strong
  • Crypto Support

Please note: All data, figures & graphs are valid as of August 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The excessive energy that the financial markets received from the “emerging markets currency sell-off” seems to have faded by now. Indeed, the entire debacle felt kind of like a strange rush of exuberance similar to the experience of drinking some very strong coffee. What we’re left with is contained fatigue.

Volatility has now returned to normal and the Lira seems to be in retracement. This despite the fact that neither Trump nor Erdogan seem ready to give any ground. In fact, the Turkish president announced a boycott of American technology yesterday and specifically targeted the iPhone, advocating Samsung instead.

AAPL was notably unaffected.

One thing that might be worth watching is the EEM Emerging Markets ETF that lost significant ground over the last few days and is now testing the lows.

Looking at the stocks today, things do seem to be in the red again. Let’s see how things progress. Precious metals are also down so be careful out there.

Take a look at Copper for example, which is down more than 1000 pips in the last 48 hours.

Dollar is King

As we discussed in yesterday’s update, all these progressions seem to be a direct reaction to the strength in the US Dollar.

A tightening labor market mixed with creeping inflation is causing the Federal Reserve to take aggressive action.

The Dollar’s strength against other major currencies can be seen quite clearly since the start of the month.

As well, the Dollar Index seems to have experienced some sort of breakout in the last few days.

Crypto Support

The crypto market is rebounding today after yesterday’s sizable sell-off. This relief rally has many alternative investors breathing easier, as we have green across the board.

The range we’ve been watching on bitcoin has been holding rather well. Since the beginning of the year, we’ve seen buyers stepping in about halfway through the $5K handle (yellow line), which is approximately what analysts estimate is the cost to mine bitcoin.

On the upper side, resistance is being maintained by the 200-day moving average (blue line). While the stable range should be seen as a positive sign, a breakout in either direction is always a possibility.

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

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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4.7 stars on average, based on 122 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: U.S. Stocks Rebound as Turkish Lira Rebounds; Cryptocurrencies Plumb 2018 Lows

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U.S. stocks rebounded on Tuesday, as the threat of contagion from Turkey’s Lira crisis showed signs of fading. Meanwhile, the downward spiral in cryptocurrencies intensified amid signs of a large-scale ICO cash-out.

Stocks Return to Strength

All of Wall Street’s major indexes returned to positive territory, with the Dow Jones Industrial Average rising 112.42 points, or 0.5%, to 25,300.12. The broader S&P 500 Index gained 0.6% to 2,839.96, with all 11 primary sectors finishing in positive territory. The technology-focused Nasdaq Composite Index returned 0.7% to finish at 7,870.90.

Gains were evenly distributed across multiple sectors, with consumer discretioanry, financials and industrials shares leading the rally.

The CBOE VIX, also known as the fear index, pulled back sharply from five-week highs as risk-off conditions cooled. VIX closed down 10% at 13.31, on a scale of 1-100 where 20 represents the historic average.

Chinese Growth Figures Miss the Mark

Signs of a sputtering Chinese economy emerged last month with key industrial and consumption metrics missing their mark.

Industrial production and fixed-asset investment grew at their slowest pace in nearly two decades, the National Bureau of Statistics reported Tuesday.

Industrial production rose 6% year-over-year in July, unchanged from the previous month. Fixed-asset investment growth slowed to 5.5% annually from 6% a month earlier. Meanwhile, retail sales grew 8.8% annually in July compared with 9% in June.

China’s cooling economy comes as policymakers look to counter America’s protectionist policies, which have resulted in a tit-for-tat trade war between the world’s two largest superpowers. However, China’s massive trade surplus with the U.S., combined with its reliance on smoke-stack industries, suggest that Beijing can’t counter Washington’s escalating expansive levies.

Last month, U.S. President Donald Trump announced plans to administer levies on an additional $200 billion in Chinese goods. Earlier in the month, the administration implemented tariffs on $50 billion worth of Chinese goods.

Cryptocurrency Downtrend Intensifies

Ethereum was at the center of another crypto crash Tuesday, as the total market capitalization fell to $193 billion, the lowest point of the year. The ether price shed more than 10% to plumb new 14-month lows.

As Hacked reported earlier, ICO burnout appears to be largely responsible for the protracted selloff, leaving bitcoin with a 54.5% share of the total market. The largest digital currency by market capitalization came to within $100 of its yearly low, which would have likely sparked a deeper correction in the broader market.

At one point during the day, 78 of the top-80 altcoins had reported double-digit percentage losses. With the exception of a few obscure names, no major cryptocurrency in the top-100 was spared the losses.

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 546 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 Rebound as Turkish Tensions Ease

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While nothing has been fixed in Turkey overnight with the vague plans announced to fight inflation by the finance minister, global markets rebounded after yesterday’s panicky conditions.US stocks undoubtedly led the way higher yet again, as the Lira, which made it to the mainstream media in the last few days, is up by more than 7%, with the USDT/TRY pair pulling back to 6.50 from a high above 7, and risk-on assets are higher globally, with especially equities staging a rally.

USD/TRY, Daily Chart Analysis

The other emerging market currencies that sold off are also correcting, with the Argentinean Peso, Brazilian Real, and the Russian Ruble all being off their lows. Despite the positive signs today, the underlying trend is still bearish in the FX segment, and the Dollar’s strength doesn’t seem to abate, with short-term Treasury yields also looking stable.

DAX Index, Daily Chart Analysis

While the major European indices are slightly in the green, headed to the closing bell, European banks that are exposed to Turkey are not showing much enthusiasm, and we expect risk-off sentiment to return in the coming days, until meaningful action is taken by the Turkish authorities.

Emerging market currencies are definitely feeling the contagion effects, with the Argentinean Peso, the Brazilian Real, and the Russian Ruble all being down big time in the last few days. So far, the Turkish leadership failed to calm the market, rather they fueled the fire with the aggressive rhetoric, and the seeming ignorance of the basic macro-economic rules.

In economic news, China was all the rage today, and the country that has been targeted by Trump’s tariffs is feeling the pain. It would be foolish to think that the trade war alone is to be blamed for the weaker than expected indicators across the board, but the skirmish between the two mega-powers definitely triggered a slowdown in the credit fueled economy.

Shanghai Composite, Daily Chart Analysis

Industrial production, retail sales, and investments all came in well below the consensus estimates, and with the Shanghai Composite already being in a bear market, and the Chinese Yuan hovering near its 13-month low against the Greenback, all looks set for a harsh awakening in China.

US Still the Island of Caolm

In the US all eyes are on tomorrow’s retail sales report, while today only two less important economic releases came out. The NFIB small business indicator was higher than expected and import prices were unchanged as the Dollar’s rise likely evened out the first effects of the new tariffs.

Nasdaq, 4-Hour Chart Analysis

The Nasdaq rebounded strongly overnight, leading the major indices higher again, and with that it got very close to its all-time high, outperforming the rest of the world by a mile. With powerhouses Apple and Amazon still pushing to new highs, even as more balanced portfolios are left behind, the tech index could set a new record as soon as today, should the otherwise shaky risk-on shift hold.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed so far today, as copper fell below $2.70 again, as it got hit hard after the Chinese data dump, while oil continued to rally, climbing back above $68 per barrel, with regards to the WTI contract.

Gold also bounced back above $1200, despite the Dollar’s rally against its major peers, and we have to wait and see if the spike below $1200 finally marked the lengthy downtrend in the precious metal.

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 317 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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