In the weekly edition of “Wednesday Worldview,” we take a step back from the everyday minutiae of price action and try to evaluate the global landscape on a macro level. We aim to identify and discuss upcoming financial trends across the world as they take shape and grow.
Taking a look at the U.S. markets, we saw a rise in the U.S. stock market on Monday. These gains helped to offset some of the losses from the week before, with much of these gains being from the transportation industry, such as airlines, cruises, and manufacturers. In addition to the increased short-term confidence in the U.S equities markets, pending home sales in May spiked nearly 45%. It’s important to note that none of these factors are especially indicative of a resurgent economy. However, this economic resilience in the U.S. cannot be understated, especially when just last week, warnings of a “second-wave” of COVID-19 were threatening to derail the economy once again.
As for cryptocurrency markets, it appears the market is attempting to recover after the past weekend price stumbles. Bitcoin crashed below $9,000 after a record-setting amount of expirations in its options markets on June 26th, which caused drop-offs across the majority of the digital assets traded in Bitcoin. In the globally-traded and always-open cryptocurrency market, major weekend moves such as this one are not atypical, but this does make comparing it against the rest of the financial world a bit tougher. Investors are still looking to see if there’s a correlation between Bitcoin and the rest of the broader traditional economy.
The greenback (USD) has continued to rally higher against all traditionally known safe-haven currencies, which includes the Yen, the Franc, and even the GBP. Traditionally a reliable pair, the GBP/USD pair fell to a fresh monthly low of 1.2251. This monthly low continues as Brexit talks drag on, rippling across economies across the entire E.U. and leading to uneasiness across the continent.
This uneasiness across the continent has reverberated across the global economy as a whole, and most recently, the WHO head, Dr. Tedros, stated that “the worst is to come.” Gold, a traditional safe-haven asset, has continued to consolidate to around $1,770.00 a troy ounce – a marked increase from last year. A popular theme we could see over the next 12 months is investors continuing to move to “safer assets,” due to the anxiety of Covid-19 lurking in the background (or foreground).
As market investors and market traders, it’s obvious to see that there’s an abundance of fear and pessimism in the air, and considering the circumstances, it can be hard to use critical thinking skills to make rational decisions. Still, in times like these, we must be reminded of the power of volatile markets from the greats below:
Sir John Templeton
“The first rule of investment is ‘buy low and sell high’, but many people fear to buy low because of the fear of the stock dropping even lower. Then you may ask: ‘When is the time to buy low?’ The answer is: When there is maximum pessimism.”
Warren Buffett
“You pay a very high price for a cheery consensus. It won’t be the economy that will do in investors; it will be the investors themselves. Uncertainty is actually the friend of the buyer of long-term values.”
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