Just yesterday we remembered the events of the cold autumn of 2008. The Fed lowered the rate by 0.75% at an unplanned meeting, everyone was optimistic and the market fell sharply on this positive news again. And what did we see on Monday? The situation was 100% repeated!
S&P500 chart of the day
Before the markets opened, the Fed immediately reduced the rate to zero. And promised another injection of liquidity. And also announced that its actions will be supported by all the leading central banks of the world. What is the result? Markets are showing the strongest fall again. That’s exactly what we warned our clients about yesterday.
Why is this happening? In fact, the Fed has confirmed that the situation is critical. And if not critical, then why reduce rates to zero and fill the market with liquidity? If we abstract from this money, it becomes clear that it will not save a huge number of businesses, which will simply close due to lack of clients.
At the opening of the market gold moved sharply up, reaching a mark of $ 1575 per troy ounce. Not experienced traders remembered that yellow metal always grows on quantitative easing. However, the price quickly turned around and showed the third consecutive day of decline with a huge range (and gold has been falling for 5 consecutive days).
What should be understood? Yes, gold always rises on the quantitative easing and as a result it is likely to rise, showing new historical highs. But it is not known when it will happen. Maybe within a week (little chance), or maybe by the end of the year (very big chance).
Now the price of gold is driven not by expectations of future profits, but by fears of investors. Everyone needs money to cover their losses. Gold, which has not declined so much, is an ideal asset for sale, giving the opportunity to secure only a small loss.
Against the backdrop of last week’s cryptomarket falling, it was possible to assume that Monday will be a new bloody day for Bitcoin. This is the scenario where it all started. BTC fell to $4,400, but then suddenly grew and traded at about $5,0000-$5,100, not following down other risky assets.
This is a very important signal, which should be carefully considered by all investors. Perhaps “smart money” understands the following. With a huge amount of “empty money” injected into the market, Bitcoin’s capitalization is only $90 billion. And BTC, which is different from dollars and EURO, is not subject to inflation. This means that the price of $5,000 or less has now become the level at which purchases of large investors and funds began.
What is waiting for us today?
01.30 Minutes of the Australian Reserve Bank meeting
10.30 UK unemployment rate for January
11.00 Business sentiment index ZEW Germany for March
14.15 U.S. industrial production for February
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