Tuesday 21 June 2022 at 17:29
Blockchain of Broken Dreams, Stocks bounce back, Data shows slowing growth and not a collapse, Oil rebounds, Gold struggles – OANDA
Blockchain of Broken Dreams
Crypto traders have been walking a lonely road that no one knows how low it will go. Wall Street has been closely checking the vital signs of the cryptoverse and the good news is that it is still alive. Bitcoin’s shadow is not the only thing rallying today as US stocks bounce back after a disastrous trading week sent it to bear market territory.
Q1 2022 hedge fund letters, conferences and more
London Quality Growth Investor Conference: The J Stern & Co World Stars Global Equity
At this year’s inaugural London Quality Growth Investor Conference, Chris Rossbach, the J Stern & Co World Stars Global Equity fund manager, highlighted his top undervalued growth investments. Stern & Co is a private bank with $1.1 billion of assets under management. The business is still 25% owned by the founding Stern family and partners, Read More
For the longest time, it seems Bitcoin hodlers were walking on the boulevard of broken dreams. The last part of this historic crypto plunge was not just a de-risking Wall Street moment as many traders start to have a super bad feeling about the economy, but large parts of the crypto markets are seeing stress, including blockchain investments. Surging borrowing costs, margin calls, and excessive leveraged speculation helped accelerate the selling pressure over the past two weeks. The entire cryptocurrency market is seeing some buyers emerge as the selling pressure may have been overdone.
Crypto is not going away and some investors are starting to believe further downside might be limited.
Following a long weekend and the worst trading week in almost two years, US stocks bounced back as investors anticipate the Fed will hesitate into tightening policy more aggressively, which is alleviating imminent recession calls. Wall Street is hearing a chorus of central banks (RBA, ECB, and Fed) say they will deliver more rate hikes to fight inflation but hopes remain they will hesitate from sending their respective economies into an immediate recession.
Another round of economic data confirmed the slowdown that is happening throughout the economy, but a complete collapse of activity is clearly not happening. US existing home sales for May shows the housing market is cooling quickly as surging borrowing costs and a weaker consumer weigh on demand. These supersized rate hikes will cause trouble for the housing market and that might help lead some to believe the Fed won’t continue to aggressively tighten policy later this year.
The Chicago Fed National Activity index for May showed a rapid deterioration with economic activity. Sales and employment components remained positive but not necessarily provided optimism that weaker trends for growth will change anytime soon. Sales turned positive after three consecutive negative readings, so many were not surprised by the slight rebound.
Oil prices are rallying as last week’s selloff was overdone given how the short-term crude demand outlook remains for the US and China. The oil market remains too tight over the short-term and rising expectations over tougher sanctions with Russian crude should keep demand especially strong here.
Energy traders saw oil prices slide almost 15% in just a week, despite a very tight market. The paid for crude prices wasn’t justified and more of a reflection of the risk aversion mood that sank global equities.
WTI crude should easily be supported above the $100 level throughout the summer, which means any dips will be bought into.
Gold prices are anchored as investors await to see how aggressive central banks will be with their tightening cycles and if the bond market will sway them into larger-than-expected hikes. Gold is struggling today as Wall Street buys up beaten down stocks and cryptos. Demand for safe-havens is not the vibe on Wall Street and that could have bullion remaining vulnerable here to the lower boundaries of its new $1800 to $1880 trading range.
Article By Edward Moya, OANDA