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Week in a Glance: Biden and stimulus, Central banks and lockdown The past week turned out to be quite eventful with various fundamental events. The main thing, of course, was the inauguration of Biden and the expectations of the markets for the implementation of his plan to help the US economy in the amount of $1.9 trillion. On Tuesday, before the inauguration, the future head of the US Treasury, Jannette Yellen, spoke in Congress and called to “act big”. Actually, this speech was like a trigger for a change in sentiments in the financial markets, which again switched to the greed mode. As a result, the US stock market renewed its historical highs. Although the behavior of the cryptocurrency market shows that it is likely that the hour of reckoning is just around the corner. This refers to the departure of Bitcoin, albeit temporary, below 30K, that is, it has lost a quarter of its value. Cryptocurrencies are an extreme form of human greed and an early indicator of sentiments shifts. So, it looks like something is starting to change. The next in line is the US stock market. Actually, something is changing in the air of the stock markets despite all those highs. The earnings season is going pretty strange. Companies publish generally good, and in some places excellent, financials. But their shares after that tend to fall (with few exceptions like Netflix). Looks like, fewer and fewer people want to buy at prohibitively high prices. Especially when you consider that the global economy is steadily declining in the first quarter due to lockdowns. Germany and a number of other European countries have decided to extend the lockdown until mid-February. The past week can be called the week of the Central Banks. The Bank of Japan, the ECB, and the Bank of Turkey left the parameters of their monetary policy unchanged (as the markets expected). As a result we did not see any powerful movements in this regard.
DJ:DJIShort
by Trade24Fx
Stable Central Banks, Turkish Lira and US Data Yesterday can be called the day of the Central Banks: Bank of Japan, ECB and even the Bank of Turkey. Since all the above-listed central banks left their monetary policy parameters unchanged (as the markets expected), we did not see any serious price movements yesterday. In general, oddly enough, the main intrigue was around the Bank of Turkey. The fact is that Erdogan is very dissatisfied with the current high rates of the Central Bank (17%) and has repeatedly stated the need to reduce them. But the Bank of Turkey demonstrated de facto independence and left 17% in the game. This means that the Turkish lira continues to remain extremely attractive from the position of carry trade. So sell USDTRY looks like a potentially very attractive trade. A bunch of data were published yesterday related to the US labor and housing markets. Initial jobless claims were slightly better than forecasts and the previous value. But in general, 900K is a lot. More than three times higher than pre-pandemic levels: a quick economic recovery and V-shape as they are. Meanwhile, Biden's optimism in the financial markets has subsided somewhat. The fuse lasted just a couple of days. The oil market is also consolidating on the top. The data on oil stocks from the API showed unexpected growth, which puzzled buyers. However, who cares now about the real situation in the oil market, when $1.9 trillion are looming on the horizon.
Short
by Trade24Fx
Biden, Central Banks and earnings seasonThe earnings season in the US continues to gain momentum. And with rare exceptions such as Netflix (stocks literally skyrocketed by 15% yesterday), we see a similar picture: good financials come out, but the stock not only does not grow, but even declines. One of the explanations for this is the fact that stocks are very overvalued and it is physically much easier for them to fall than to rise. It is quite possible that this is one of the signs of the upcoming correction in the US stock market. But for the correction, it is necessary at least to switch the attention of the markets from the stimulus package in the United States to the state of the economy or a pandemic, or at least to be puzzled by the fact that stimulus are only being planned and there is no fact in general. The fact is that for some elements of Biden's plan, votes are needed not from 50 senators, but from 60. That is, Biden needs to convince at least 10 Republican senators. It is unlikely that it will be easy and fast, if at all that would be. But until Biden stops talking about stimulus in each of his public appearances, shifting attention will be difficult. So yesterday, entering the office as President, Biden mentioned the need to support the US economy and its citizens. And although Biden is now taking all the attention of the financial markets, this does not mean that nothing else is happening. The current week is extremely busy with meetings of the Central Banks. Yesterday, for example, the Bank of Canada announced its decision on the parameters of monetary policy. The rate was not changed as expected, but it was noted that due to the pandemic, Canada's GDP in the first quarter will decrease by 2.9%. After that, the Canadian dollar has strengthened significantly, which, in our opinion, is a good opportunity for its sales. Today the ECB will announce its decision on the parameters of monetary policy. And the Bank of Japan has already decided to leave rates unchanged.
Long
by Trade24Fx
Yellen's message, IEA outlook, and of course Biden Yesterday was filled with optimism and joyful expectations. Expectations of money, a lot of money. In this light, the speech of the future head of the US Treasury, Jannet Yellen, in Congress caused increased interest. In fact, the former head of the Fed was supposed to present Biden's plan for a new stimulus package, which the he announced last week. What she actually did, saying that it was time to spend big and don't think about debt. Let's save the economy and the citizens of the United States today, and we will deal with the consequences tomorrow, that was her message. By the way, today Biden's inauguration and America will move in the new era. The stock market as a whole was growing confidently, but rather strange things were happening in single stocks as usual for the current earnings season. Goldman Sachs published excellent financial results, but the shares were under pressure, losing about 1.5% during the trading session. Bank of America was rather unconvincing on almost all fronts of reporting, from profit to revenues, but at the same time, stocks demonstrated growth throughout almost the entire American session. Oil also grew yesterday. But that was a part of the overall movement, not the asset's own strength. The fact is that the IEA published its monthly outlook with forecasts for the oil market for 2021 and their vision is rather pessimistic: the value of demand has decreased by 0.3 million bpd. In general, the rise in oil continues to be part of the general movement of greed and as soon as the markets remember about fear, oil will invariably fall out.
TVC:USOILShort
by Trade24Fx
2
China GDP Britain problems and Biden's expectations Yesterday was a holiday in the United States, so it was calm in the financial markets, and nothing extraordinary happened in the fundamental background. The main news of the day can be considered the publication of China's GDP for 2020. An increase of 2.3% against the background of the GDP drop in the overwhelming majority of other countries is a clear positive. But, on the other hand, for China, this is the worst result in the last 45 years, which somehow does not look very happy. The data on industrial production and retail sales also caused a strange feeling: the growth of the first indicator by 7.3% is a clear positive, but the 4.6% of the second after previous 5% was rather disappointing. But in general, China still inspired hope for a bright future. What cannot be said about the pandemic, which has not yet been brought under control in the world. As a result Germany decided to extend the lockdown until mid-February, which reminded the markets that the solution to the problems of the world economy will not be quick and immediate. The UK, meanwhile, continues to "enjoy" life outside the EU. Judging by a number of groans from business in the country, not everyone is happy with what has happened: new taxes, additional certification, rising costs for the delivery of products to Europe, a ton of additional paperwork - these are not all the consequences that have befallen companies. According to the Bank of England, only 6% of companies were ready for this, the rest plunged into chaos. Brexit could cost British exporters £ 25bn ($ 34bn) this year as a result of weak demand and increased bureaucracy, according to a report by insurance company Euler Hermes Group SAS, leading to a 1.1% contraction in gross domestic product. In this light, our recommendation to sell the pound continues to be more than relevant. The only thing we would like to note is that in the current conditions it is safer to do this against the euro, that is, to buy the EURGBP pair. Janet Yellen, Biden's nominee to run the Treasury Department, will tell the Senate Finance Committee on Tuesday that the government must "act big" with the coronavirus relief plan. And on Wednesday, Biden will become the new President of the United States. That can provoke another wave of hopes for the best from the financial markets.
Long
by Trade24Fx
Weekly in a Glance: US stimulus, impeachment, earnings seasonThe main events of the past week include the second impeachment of Trump, as well as the stimulus package from Biden. Trump wanted to make a history; Trump made history. Not as the man who made America great again. But as the first, against whom the impeachment procedure was initiated twice. House of Representatives voted in favor of this on Wednesday. Now it's up to the Senate. On Thursday, Biden announced his vision for a new stimulus package for the US economy. The planned size is $ 1.9 trillion. On the same day, the head of the Fed, Jerome Powell, confirmed that in the foreseeable future there will be no tightening of monetary policy in the United States and, in general, the year will be a year of rapid economic recovery. From macroeconomic statistics, it is worth noting a 5% decline in German GDP in 2020, as well as an unexpected and rather strong decline in retail sales in the United States (by 0.7%). US earnings season kicked off last week. Banks traditionally open it. CitiGroup, JP Morgan, Wells Fargo, as well as Delta Airlines and BlackRock have already reported. And it should be noted that some pretty interesting things were happening. On Thursday, Delta Airlines once again recalled that 2020 was a year of complete failure for the airline industry (the company lost 65% of revenues, continues to generate hundreds of millions of losses, and financially everything is bad). BlackRock, on the contrary, felt like a fish in water and by the end of 2020 added more than 1.2 trillion (!) of AUM to their total assets under management, that is, the company is the largest investment company in the world. And now the question is: which of the companies has grown in price and which has decreased? BlackRock lost about 4.5% (!), while Delta Airlines gained a few percent. Tellingly, this behavior of the markets continued on Friday, as a result of which CitiGroup and Wells Fargo lost about 7% (!) each. In general, Friday recalled that all attempts to analyze individual assets at any time can be multiplied by 0 with the general movement. A sharp jump in the level of fear on Friday provoked a general rally, classic for such an event, in which investors moved from risky assets. Accordingly, the stock markets and the cryptocurrency market declined, commodity markets fall, but the dollar, on the contrary, felt quite comfortable and demonstrate significant growth.
TVC:USOILShort
by Trade24Fx
Biden's plan, -5% from Germany, jobless claims, OPEC reportYesterday Biden announced his vision for a new stimulus package for the US economy. The sum is $ 1.9 trillion. Financial markets took this news rather coolly and as atypically as possible: stock markets did not grow, commodity markets did not show optimism, and cryptocurrency markets began to unfold after some growth. This suggests that the markets are running out of steam. On the one hand, everything is logical when you look at the number of daily cases and deaths in the United States, as well as the resulting restrictive measures. Yesterday's data on jobless claims reminded the markets about the causal relationship between the pandemic and the economy. The figure of 965K with average expectations of 795K is if not shocking, then sobering for sure. In addition, the US Congressional Budget Office reported that the budget deficit for the first three months of the new fiscal year increased by 60% compared to the same period last year and amounted to about $ 573 billion. And this amount did not take into account the last stimulus package of $ 900 billion. Given that at the end of 2021, the Budget Office expects a budget deficit of 1.8 trillion. It is not very clear (purely arithmetically) where Biden is going to take money from to implement his stimulus plan. Germany has reported on the growth rate of GDP in 2020. No growth of course, but drop in fact. GDP fell by 5%. Markets we did not receive anything fundamentally new, simply because the median forecasts of experts were a decline of 5.1%. You can even find a positive for Germany in these data, since there are chances that German economy did not go negative in the 4th quarter. OPEC has published its monthly oil market outlook. Nothing sensational was detected. But since the markets have recently become accustomed to a permanent negative in the form of downward revisions of forecasts of demand growth rates, the lack of new information was perceived as positive. However, 95.9 million b / d of demand in 2021 is still more than a dubious reason for optimism simply because in the pre-pandemic reality it would have amounted to 100+ million b / d. That is why our position on oil remains unchanged - we sell.
TVC:USOILShort
by Trade24Fx
5
Trump’s Record, Tesla’s problem and US Oil Stocks On Wednesday, the US House of Representatives voted to impeach President Donald Trump, making him the first president in US history to be impeached twice. In any other situation, we could talk about the reaction from the financial markets to this event. But not in a pandemic world where markets have their own laws of behavior. So the US stock market did not think to decline, as well as the dollar. Yesterday oil did not even think to grow, although it had a reason for this: US oil inventories drop (formally indicates a deficit in the market), which is a bullish signal. Let us express on this occasion the theory that we voiced earlier: when oil was at $ 10- $ 20, US, China, India and other countries actively purchased cheap oil, filling up reserves. And now, when there is a choice to buy oil on the market at $53 or take at $15 from the stocks, they choose the second option. That is, there is no deficit as such, but there is a purely economic calculation and an attempt to save up to $100 million a week. And where does a serious shortage in the oil market come from now, if there are lockdowns all around? This means that the demand has dropped sharply and is not growing. At the same time, the OPEC + compliance level literally collapsed from 100% + to 75% in December. That is, we are talking about the fact that an additional supply appeared on the oil market under 2 million bbl / d. In total, our mid-term vision for oil has not changed: we are still selling the asset. Tesla buyers received "great" news yesterday: The National Highway Traffic Safety Administration (NHTSA) on Wednesday asked Tesla (NASDAQ:TSLA) Inc to recall 158,000 Model S and Model X vehicles over media control unit (MCU) failures that could pose safety risks by leading to touchscreen displays not working. This is a rather atypical situation, since usually companies themselves initiate a recall of cars if they find faults in them. Tesla pretends that they do not see any problem. They can be understood, well, the most secure and highest-quality car in the world will have technological problems that provoke a threat to security. Recall that Tesla is a huge bubble that must burst sooner or later. And news like this is essentially a needle that leaves holes in the bubble shell.
TVC:USOILShort
by Trade24Fx
2
Europe and a Double-Dip Recession, Trump and impeachment The situation with the pandemic in Europe continues to be as dire as possible. The logical consequence of this was the statement by Merkel that the German authorities are considering extending the lockdown for another 10 weeks. For the largest EU economy, and the EU as a whole, this means a guaranteed decline in GDP in the first quarter. Bloomberg Economics, in particular, believes that the eurozone economy will contract by about 4% in the first three months of 2021 (previously predicted to grow by 1.3%). And if a decline is also recorded at the end of the fourth quarter of 2020 (JPMorgan believes that in the fourth quarter of 2020, the European economy contracted by 9%.), Then Europe will officially go into a state of recession (for the second time in a year). Europe is not the only problem region. Japanese Prime Minister Suga said that the state of emergency announced in Tokyo could spread to other prefectures. As for the vaccination as a panacea for a pandemic, although the United States at the start of the week had a record for the number of vaccinations per day (1.25 million), this is far from the pace that will allow the States to achieve herd immunity in the foreseeable future. According to the most conservative estimates, it is necessary to make about 500 million shots, which at a rate of 1.25 million per day gives extremely disappointing estimates of the timing of this vaccination (about 400 days). Meanwhile, Democrats continue systematically destroying Trump. It would seem that there is only a week left and they can forget about Trump as a bad dream. But no. Today the House of Representatives is going to initiate the impeachment procedure (the second during the Trump term).
FOREXCOM:NAS100Short
by Trade24Fx
Why the dollar is rising and cryptocurrencies are falling The start of the week was remembered by the dollar's growth. The explanations for this were different, ranging from the sharply increased yield of US Treasury bonds (the yield of 10-year bonds, for example, has doubled in the last 3-4 months), ending with an increase in nervousness in financial markets due to the pandemic, weak data on NFP, new coronavirus strains, second impeachment to Trump, etc. Despite the fact that yesterday's rise in the dollar was the third day of growth in a row, it is still too early to turn over into buying it. So far, we can only state the destruction of previous trends, but not the formation of new ones. By the way, about Trump. Although little more than a week remains before his inglorious end as President of the United States, the Democrats clearly felt the blood and want to shame him completely and irrevocably. 2 impeachments in one term is not a fact that Trump would like to enter the history with. However, given that there is almost no time left, the likelihood of this is extremely small. Trump's problems turned out to be contagious enough, as evidenced by the sale of Twitter shares after the social network banned Trump's account. It seems that they wanted the best, but in the end, they turned out to be digital dictators and tyrants. Even more indirectly, due to the social activity of Trump and his supporters, Google and Apple suffered, which removed the Parler social network application from their stores. Over the past few days, the cryptocurrency market has lost about 20% of its capitalization, or about $ 200 billion, and has officially moved to the territory controlled by bears. The main question now is whether Bitcoin will collapse by another 70-80% in the nearest future or will it wait. It is likely that the Ripple scandal knocked the ground out from under the feet of the bulls. Most of the leading cryptocurrency exchanges decided to suspend the XRP token trading. Among the latter, the second in the coinmarketcap.com rating cryptocurrency exchange Coinbase. Understanding that the recent top 3 cryptocurrency market XRP token in such a scenario could drop in price to 0, acted like a cold shower. And this is rational: if one lawsuit can multiply the capitalization of any token by 0, then buying these tokens at 40K can be a very expensive. At the right time, these sales were superimposed on the message of Bank of America to their clients, in which they clearly demonstrated that the cryptocurrency bubble is the largest in the entire modern history of the markets and deservedly receives the title of “mother of all bubbles”.
BITFINEX:XRPUSDShort
by Trade24Fx
5
Week in a Glance: blue wave, OPEC + and cryptocurrency fever The past week has finally confirmed the formation of the "blue wave". Biden is officially recognized as the President of the United States. The House of Representatives has long been under Democratic control. The Senate is now also dominated by the Democrats, thanks to the vice president's decisive vote. One of the last attempts by Trump to retain power ended in the ugliest way (the storm of Capitol Hill by Trump's supporters). Despite the unprecedentedness of the event, the US stock market ignored this event completely. Negative NFP numbers were also ignored. The reason is the expectations of new stimulus from the Democrats. Let us recall that it was the trillion injections from the Government and the FED that led to the fact that against the background of the most severe economic crisis in the country and the world, the US stock market grew by tens of percent. Markets are obviously looking forward to a repeat this in 2021. So the trends of 2020 have intensified at the start of 2021. As a result, Musk became the richest man in the world, ahead of Jeff Bezos. Well, the situation was brought to the point of absurdity. The owner of a company that produces as many cars in a month as a Volkswagen or Toyota produce in a day or two (!) has become richer than a person whose company is the world leader in e-commerce. However, this is not the only sign of the reigning madness. The blockchain fever has again created the illusion that the world of finance is moving into qualitatively new level, which means that people urgently need to buy everything related to cryptocurrencies, otherwise they can be late and miss the deal of their whole life. We have already written more than once how it will end. The only question is time. The funny thing about this situation is that even the most ardent supporters of buying cryptocurrencies can hardly point what is the fundamental difference between Bitcoin at the start of 2020 with price 7K, and Bitcoin at the start of 2021, when it is quoted at 40K +. Another important event of the past week, which determined the mood on the oil market for the whole week, was the OPEC + meeting. It was supposed to approve the next increase in production by 0.5 million b / d. Considering that the opinion on this issue was divided (Russia was actively for increase, Saudi Arabia and a number of other countries were against this), they could not make a decision on Monday. On Tuesday, unexpectedly for everyone, they did not increase production, because Saudi Arabia offered to voluntarily reduce its production by 1 million b / d for two months.
BITSTAMP:BTCUSDShort
by Trade24Fx
2
NFP data, cryptocurrency madness and hopes for the best This week can definitely be called the Democratic. Biden is officially recognized as the President of the United States and less than two weeks are left before his inauguration. Senate is controlled by Democrats. Accordingly, the eyes of the markets are again obscured by money. Expectations of cash rain in the form of new stimulus packages are spurred on by the “fear of missing out” and decisively everything is being bought up, from assets in the stock markets to cryptocurrency and commodity ones. Bitcoin reached 40K, but analysts predict a minimum of 100K. However, we already passed the promises of 100K or even 500K in 2017. Recall that in 2018, instead of the promised of half a million dollars or at least 18K-19K, as it was in December 2017, bitcoin was given a little more than 4K. The funny thing is that the 80% fall in bitcoin prices was far from the first in its history, but the memory of the cryptocurrency fans is a little longer than that of the goldfish, so you should not be surprised at the current growth or how it will inevitably end. The whole question is only in time. However, it is in the nature of people to believe in the best. And now, at the peak of the pandemic and lockdowns, which are intensifying and prolonging lockdowns around the world, belief in a quick economic recovery has re-activated. Although, it would seem, spring-summer 2020 showed the economic price of lockdowns. But everyone has already forgotten the drop in US GDP by 30% + in the second quarter of 2020. In general, we can write a lot about the forgetfulness of the markets. But lets get back to today. Labor market statistics have always been the subject of intense interest from financial markets. Now all attention, of course, will be on the NFP numbers. The indicator has been steadily declining over the past six months, and there is absolutely no reason to expect a break in this trend. That is, the data will almost certainly come out weak with a high probability of going into the negative zone. For the markets, this can be a reminder that things are not as great as they think. Accordingly, today we can witness selloff in the US stock market, but the dollar may well strengthen, riding a panic wave using its safe-haven status.
BITSTAMP:BTCUSDShort
by Trade24Fx
1
Blue wave, chaos in Washington, and frightening ADP data The Blue Wave (Democrats take control over of the White House, Congress and Senate), widely anticipated in November but initially failed, appears to become real yesterday. The results of the Senate elections from Georgia showed that control of this last bastion of the Republicans is shifting to the Democrats, as with a 50-50 vote, the decisive vote passes to the US Vice President. What does this mean for financial markets? There is no consensus. The most popular version is an increase in stimulus for the US economy. It seems to be a powerful positive signal for the stock market (especially if we recall 2020), but on the other hand, the issue of inflation may become extremely relevant with the subsequent reaction of the Fed in the form of tightening monetary policy. The rise in the US rate can become the needle that inevitably pierces bubbles in the US stock market. Another threat of the "blue wave" for the US stock market may become the corporate tax increase promised by Biden. This means that buyback programs already cut in 2020 will be under the pressure, or even the opposite processes might start - lacking cash, companies will sell their previously bought back shares. Yesterday was marked by chaos in Washington. The generally routine procedure for approving the results of the electoral votes at a joint meeting of the Senate and the House of Representatives was interrupted by a crowd of Trump supporters, which took the Capitol Hill by storm and broke into the building of Congress. The meeting was interrupted, the congressmen were evacuated, the Washington authorities announced a lockdown. In general, Trump decided to leave as loudly as possible. As a result there have been discussions among some Cabinet members and Trump allies about invoking the 25th Amendment, which would allow a majority of the Cabinet to declare Trump unable to perform his duties and remove him. This week has been extremely successful for the oil market. Following the surprise from Saudi Arabia (a promise to reduce production by 1 million barrels per day for two months) and the OPEC + decision not to increase production in February, the official data on US oil stocks showed a sharp decline (by 8 million barrels). which was the fourth consecutive decline in US oil stocks. But new pandemic records in the world, as well as in the United States and Great Britain, which automatically means at least a delay in the pace of economic recovery, and in the worst-case scenario a move into a second recession, we still have no any will to buy oil from current prices. Moreover, yesterday's figures on employment in the US from ADP not only came out much worse than forecasted, but also went into the negative zone (-123K against the forecast of + 88K). Markets are waiting for the official statistics on the US labor market (will be published tomorrow) and looks like they have to prepare for the worst (negative values in the NFP data).
DJ:DJIShort
by Trade24Fx
Lockdown in England, OPEC + decision and Georgia electionsWe have already noted that this week is not an easy one. In fact, it turned out to be so. This is confirmed by the roller coaster of the pound, bitcoin, oil and stock markets. However, it should be noted once again that we are not dealing with several different movements (assets belong to fundamentally different markets), but with one general movement tied to the market sentiments. Markets opened on the usual positive, which later changed to negative. Price trends have changed accordingly. For example, after rising by 2.5%, oil lost more than 1% by the end of the day. Bitcoin, losing 20%, eventually came out by only -6%, etc. At the same time, in reality, nothing has changed. Only the perception of reality has changed. The hopes for vaccines and quick herd immunity were replaced by the idea that lockdowns have not gone anywhere and, on the contrary, they are becoming tougher, which means that in the foreseeable future, there is no need to expect positive from the economy. Direct evidence in this favor is a third national lockdown for England until mid-February. And then there's the Senate elections in Georgia, which will determine the balance of power in the key legislative body and, by and large, the overall political balance in the United States. But at the same time, Tesla shares showed new all-time highs amid information that the company's mega-goal for 2020 in terms of production and sales of cars in 2020 has been achieved. We are talking about 500K cars per year. The growth relative to last year is really impressive, but Tesla fans forget that single Volkswagen, with capitalization 8 (!) times less, for some reason, produces 20+ times more cars. However, the rise in Tesla shares is part of the general frenzy around the electric car industry, since Nio, with even more miserable results in terms of production and sales (less than 50K cars per year), has a capitalization almost comparable to Volkswagen (50 billion versus 80 billion of the German giant). And only Nikola continues to demonstrate quite clearly what is waiting for Tesla and Nio in the foreseeable future. But let’s get back to the yesterday news. OPEC + meeting ended without a recommendation for February. In general, they can be understood, because there were two options: to say that since February OPEC+ will increase production by another 0.5 million bbl / d (Russia’s position) and to start selloff in the oil market, or to say that OPEC+ will not increase production, because demand will collapse due to pandemics and to start selloff in the oil market. As a result, they decided to do nothing and started selloff in the oil market.
Short
by Trade24Fx
1
New year with old sentiments and tendenciesNew 2021 year has started without revelations and breakdowns of existing tendencies. Markets have somehow routinely continued to grow in the direction of risky assets and to decline in safe-haven assets. The logic in this can be found without too many problems: the stimulus package in the US, adopted at the end of 2020, promises more money to the god of money, plus a trade deal between the UK and the EU removed one of the most problematic political issues. Also, as usual, there are plenty of hopes - vaccines, a new US President, and a global economic recovery ahead. It is typical for the year 2020, but even more reasons can be cited against current sentiments: lockdowns, since the pandemic is not going to subside, despite the start of the vaccination process in the world (there are already more than 10 million vaccinated around the world). And since lockdowns are in the game, then you should not count on a quick recovery of the economy. But if 2020 taught anything, it is that the world can be perceived as one-sided as possible: seeing the positive and ignoring the negative. Judging by the fact that Bitcoin has exceeded 35K, in 2021 the markets still prefer to see only the positive. There is much more vaccine news on the horizon that is positive by default (with the exception of side effects reports or disruptions to vaccination plans). The first working week of the new year will be pretty eventful: US labor market stats, elections of two senators who will determine the balance of power in the Senate, the OPEC + meeting, retail sales in the Eurozone. So the week will not be boring.
TVC:USOILShort
by Trade24Fx
Feast in time of plague: the main result of 20202020 was an economic disaster, if not a catastrophe, as the global economy plunged into one of the worst recessions in history. Entire sectors of the economy, albeit temporarily, have practically ceased to exist: air travel, tourism, physical retail, restaurant business, etc. And against the background of all this, the US stock market (case of the Nasdaq Index) ends the year with growth by 100% (!), if we take the March lows as a mark, or by almost 50% if we take the start of the year. It looks somehow irrational. But there really is logic. Trillions to save the global economy and ultra-low interest rates have fueled the insatiable appetites of avid investors. Only the Central Banks of the USA, Europe and Japan have poured about $ 8 trillion. But there are other central banks and also governments. As a result, about $ 21 trillion was injected to save the world economy. Obviously, without these injections, the crisis would have been even larger and more destructive. But the cost of this salvation is too high. This is not only about the swollen balance sheets of central banks and a sharp increase in budget deficits and government debts, but also about the fact that a significant part of the aid went not to the real sector, but to financial markets. As a result, we have Bitcoin at 27K (while at the start of the year traders did not give it even 5K, and the funniest thing is that the January’s BitCoin as an asset does not differ from the December one), the Nasdaq Index is near 13K, copper at eight-year highs, and we are not speaking about Tesla, Nio and others like them. It would seem that if against the background of a record economic decline, the stock market was growing, then in 2021, with the economic recovery, it is even more doomed to growth. But if we recall the basis of the current growth, the conclusion does not seem so clear. Why? Because the Governments and Central Banks have already put all the cards on the table and even shook a few jokers out of their sleeves. There is practically nowhere to cut rates further or to expand quantitative easing programs, as well as to endlessly and uncontrollably increase budget deficits. The feast is over. And 2021 will be the year of the hangover. When it will be necessary to clean up the rubble: deal with public debt, budget deficits, central bank balance sheets, etc. That is, we have every chance of getting the reverse process, when money injections will be replaced by their withdrawal with all the consequences for overpriced markets.
DJ:DJIShort
by Trade24Fx
2
Another portion of steroid growth, and a new attack on MaYesterday in the financial markets were concentrated on the news that Trump had signed a stimulus bill for the US economy and on the expectations of the second attempt by the Democrats to increase stimulus checks from $ 600 to $ 2,000 (as Trump wanted). The U.S. House of Representatives had voted earlier to increase stimulus payments to qualified Americans to $2,000 from $600, sending the measure on to the Senate for a vote. While it is not clear how the measure will fare in the Senate. In general, there is nothing strange in the next round of growth in demand for risky assets. New all-time highs for the US stock market, Bitcoin at 27K +, the rise of commodity markets - these are links in the same chain. In this light, as well as because of another rate hike by the Central Bank of Turkey (last week they raised the rate by 2% to an incredible 17% for the present), it is perhaps worth recalling our recommendation to buy the Turkish Lira. The huge interest rate differential cannot fail to attract profit-hungry investors. So the chances of further growth in the Turkish Lira are pretty high (all these carry-trade things). At the same time, the markets no less habitually and traditionally ignored the potential and real fundamental negative. For example, experts predict that after the holidays it is worth expecting a sharp increase in the number of COVID cases and an intensification of the pandemic. The oil market continued to pretend that OPEC + would not inject an additional 0.5 million b / d of oil on January 1, 2021. They also tried not to notice Russia's desire to increase production by another 0.5 million b / d from February 1. China continued attempts to destroy Jack Ma's empire. Ma should not have criticized China's financial regulators and state-owned banks at a Shanghai summit on October 24. As a result, Ant's IPO was blocked, an antitrust investigation against Alibaba was initiated, and now Ant Group has been ordered to cut operations. The loss of a third of Alibaba's capitalization is Jack Ma's personal tragedy, but it is also a good opportunity for investors to buy shares of the company not at $320, but at $220.
Short
by Trade24Fx
2
Week in a Glance: Brexit, New Strain, US Stimulus, Tesla and XRPThe main event of the last week without a doubt is a trade deal between the EU and the UK. The sides reached an "agreement on zero tariffs and zero quotas." This outcome was the most likely, so nothing extraordinary happened. The problems of the UK do not end there: a new strain of the virus, the situation with the pandemic, lockdowns, damage to the economy - this is only a part of the negative that Britain will have to deal with at the start of 2021. And if the negotiations between the EU and the UK looked like a tragedy, then the epic with stimulus in the US looks more like an absurd comedy. Last week, Democrats and Republicans finally came to an agreement. Happy end? No, because Trump decided to remind everyone about himself and refused to sign the bill, agreed in both the House of Representatives and the Senate. Rationale - $ 600 stimulus checks is not enough, $2000 is needed. And after that even more ridiculous things began. The Democrats agreed with Trump's demand and wanted to re-vote the bill with checks for $2000, but the Republicans (!) blocked this initiative. In general, it was impossible to watch what was happening without laughing. Especially, after President Donald Trump signed the $900 billion coronavirus relief package on Sunday. On pandemic fronts, markets were focused on a new virus strain that had already made its way to Germany and the US, and news of new restrictions in the UK. Tesla's inclusion in the SP500 index was an important event last week. But a sharp rise in shares did not follow. On the contrary, on the first day of trading in the new status, Tesla lost about 6.5%. The scandal of the week can be considered the SEC's lawsuit against Ripple, accusing it of an unregistered placement of securities for $ 1.3 billion. As a result, XRP cryptocurrency lost over 60% of its value. The coming week will be the last week of the outgoing year. Given that this is a week of Christmas break in many countries, low liquidity will be present in the markets, which will remain an extremely explosive moment, coupled with a high probability of starting profit taking.
Short
by Trade24Fx
Why the pound didn't skyrocket on news of the deal?If yesterday was a semi-holiday day, today is a full one. Merry Christmas to all our readers. But for the British apart from Christmas there is another reason to be happy - a trade deal between the EU and the UK. The parties reached an "agreement on zero tariffs and zero quotas." But the pound reacted to this yesterday without significant growth. Let's figure out why and what to expect from him it in the nearest future. To begin with, the most likely scenario actually happened, leading analysts estimated it at 80%. Accordingly, it has already been largely incorporated into the price. If someone has forgotten, we remind you that in May the pound was worth 1.21, and last week it reached 1.36. 1500 points of growth (partially due to the weakness of the dollar), but this is the discounting of the markets for the deal. Plus, the treaty still needs to be ratified. And after months of nervous negotiations, many do not fully believe that from January 1, 2021, the EU and the UK will not use the WTO rules. Also, do not forget that the trade agreement is only part of the picture formed by Brexit and many of its elements are very unattractive for the UK economy (The Bank of England said that even with a trade deal, the UK's gross domestic product is likely to be hit by 1% because of the Brexit in the first quarter of 2021). The massive exodus of bankers and financiers from London, which risks ceasing to be the financial center of Europe, the transfer of production facilities by a number of manufacturers to Europe from Britain. Even trade agreements between the EU and the UK, despite the success of the negotiations, will change for the worse: food safety regulation and exporting rules to product certification will change. And there are only a fraction of the price that Britain will have to pay to exit the EU single market. In total, the upside potential of the pound is more than limited. At any moment, the attention of traders may switch to the pandemic situation in Britain, lockdowns and the country's economy in the foreseeable future, and then the only option that they will consider is selling the pound. So, we think current pound prices is an excellent selling opportunity. And thanks to the deal, that we can now sell not at 1.32, but at 1.36.
Short
by Trade24Fx
2
Brexit, US vaccination failure, China vs AlibabaThe main event yesterday, which in many ways gave rise to optimism in the financial markets, was the information that the UK and the European Union are approaching a post-Brexit trade agreement after months of tense negotiations. The deal is expected to be announced on Christmas Eve. The growth of the pound in the light of such news is quite natural, but its continuation seems to be very limited both in volume and in time. The fact is that the country is tightening the lockdown and spreading the toughest measures against the background of almost 40,000 new cases of coronavirus per day. At the same time, the number of registered deaths was 744, which is the highest figure since April. Note that with more than 68,000 deaths from the virus, the UK is one of the hardest hit countries in Europe. So, we will use the growth of the pound as an opportunity to sell it. Trump refused to sign the stimulus bill and left the White House to celebrate the holidays. So, either the legislators will urgently adopt the amendments and approve Trump's "Wishlist" in the form of increasing the amount of one-time checks from $ 600 to $ 2,000, or after 5 days without the President's signature, an automatic veto will be imposed on the bill. And that's not the only gloomy news for Americans on Christmas Eve. The vaccination process has so far been effectively disrupted. Of the 20 million planned in December vaccinated, there are only 1 million (!) so far. Plus, according to recent polls, 4 out of 10 Americans surveyed do not want to get vaccinated. Jack Ma was also unlucky yesterday with his Alibaba. China's state market regulator said Thursday that it has launched an investigation against Alibaba over monopolistic practices. Today is a shorter day in most financial markets, and tomorrow it is generally a day off.
Short
by Trade24Fx
5
33 misfortunes of pound, U.S. stimulus and Trump So far, the main loser of the week in fundamental terms can be considered the British pound, which literally fell upon all the misfortunes of the world. A new, more infectious strain of coronavirus has provoked almost the whole world to sharply limit contact with the island, which is fraught with both massive economic damage and disruptions in the supply of goods, including food. British economy in 2020 was in trouble without all these issues^ the country is going through the worst period since the Great Frost of 1709 (!). Analysts expect the country's GDP to fall by 11% in 2020. And that's the half of the trouble, because now the UK has a chance of a double dip recession. Recall, technically, a recession is a decline in GDP for two quarters in a row. For the UK it happened in the 1st and 2nd quarters of 2020. And now analysts warn that the fourth quarter 2020 may end in the red, and given the current tough restrictions, which will last at least a month, or even two, there is every reason to expect a decline in GDP in the first quarter of 2021. And, finally, everything is traditionally bad with Brexit. London made an offer to Brussels, which europeans should not refuse (meaning a 35% reduction in fish catch in British waters by Europeans instead of the starting requirement of 60%). But the EU rejected the offer, which plunged the already gloomy British into despondency. Boris Johnson, to finish pound, has ruled out extending the deadline for reaching a post-Brexit trade deal into 2021. In general, everything is not very good with the pound and its current prices seem to be extremely high against this background. This means that there is an opportunity to generate extra profits. We are talking about selling the pound. Primarily against a very oversold dollar. Trump also reminded about himself yesterday. It would seem that the stimulus package in the US has been agreed and voted on. All that remains is Trump's signature and $ 900 billion will practically knock on the doors of the US economy. But Trump unexpectedly said that this stimulus package is “a disgrace” and refused to sign it. In general, there is nothing much to be happy about today, which means we continue to sell European and American stock markets, oil and other Teslas with cryptocurrencies.
Short
by Trade24Fx