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The number of investors in various asset classes has significantly risen in past years. This is due to the ease of setting up trading and investment accounts, increasing popularity of copy-trading or the fact that “stocks only go up.” However, investing and trading are significantly more difficult than they appear. That is one of the reasons, why vast majority of new investors or traders losses money. This is not only due to the lack of experience, money management and risk management, but also due to the insufficient information about markets and trading and investing disciplines. At Investro, we believe that the more quality information we provide to the community, the more everyone can benefit from it, cutting their potential losses as well as protecting their wealth and leading to better results.
Therefore we have created a commonplace for investors irrespective of their prior knowledge or experience of investing or global financial markets, where they can share information as well as educate themselves on topics of investing in various asset classes.
Will crypto become a part of retirement portfolios?The awareness of cryptocurrencies has rapidly increased as they are not just seen as speculation, but as long-term investments.
Cryptocurrencies have come a long way since their creation. Thousands of bitcoins could have been bought for a couple of bucks. Then one bitcoin was worth a dollar, while now it’s worth about $20,000.
The great returns that cryptocurrencies offer are drawing new investors into the space every day. It is estimated that more than 300 million people use crypto, and this number continues to rise; expecting it to reach 1 billion by 2025. Now investors are even considering adding crypto to their retirement funds, especially Gen Z and Millennials.
Crypto in a retirement portfolio?
There are many cryptocurrencies that fell by 99% or even more and will never be considered a good long-term investment. However, some stood the test of time and have risen in the long run, like Bitcoin or Ethereum. Bitcoin crashed many times since it was created, but it always came back stronger.
Related article:Bitcoin medium-term analysis: Is local bottom near?
That is why many Gen Z and Millennials are invested in these digital assets and want them to be a part of their 401(k) retirement plans. According to the survey by Investopedia, which polled 4,000 US adults, 28% are keen on adding cryptocurrencies to their retirement portfolio. About half of the respondents claimed to have a basic understanding of digital currencies, but most of them invest despite knowledge gaps.
“Our relationship to money, investing, and financial planning has radically changed in the past few years as new asset classes like crypto and NFTs have emerged just as millions of people are taking their first steps into investing,” said Investopedia editor Caleb Silver.
Where do generations invest? Source: investopedia
As seen from the chart, Millennials invest in assets the most out of all generations. They are especially keen on crypto, with a staggering 38% of Millennials. Moreover, Gen Z and Gen X seem to be similarly bullish on this new asset class. The survey also found that most of each generation still relies on traditional income sources like 401(k), but wants crypto as a part of it.
Several large asset managers are already taking steps to make this happen, though crypto-based retirement funds have been in the works since early 2019. As the interest in digital assets rises, Fidelity Investmentshas advanced its position as a leader in digital assets. It offers its clients a diversification of their 401(k) retirement plan with Bitcoin.
Also read: What does Rishi Sunak’s victory mean for crypto?
In 2021, Rest Super became the first retirement fund in Australia to offer its 1.9 million customers cryptocurrency allocation as a component of a diversified portfolio. Several other big players are noticing the development of the crypto space and want to participate in this booming sector.
Bottom line
However, there are tragedies like the crash of Terra Luna or Celsius Network, which also make some asset managers skeptical. This is why Bitcoin, along with Ethereum, are the top two choices regarding long-term crypto investments, as they have been tested through time.
They have always created a new all-time high level in a bullish cycle, and they are expected to do so in the next few years again. If that happens, Bitcoin could be worth more than $100,000, while Ethereum could jump somewhere between $5,000 and $10,000.
Large asset managers already showed their interest in this sphere after they saw how fast people adapted to the idea of cryptocurrency investments. The number of money managers accepting crypto is likely to grow, but they will probably focus only on a few biggest cryptocurrencies.
Mercedes-Benz increased earnings in Q3 by 83%The company enjoyed high demand in Q3, especially for more expensive models, which had a positive effect on the company's profits.
German carmaker Mercedes-Benz reported its results for the third quarter of this year. Thanks to the high demand for more expensive models, the carmaker achieved very good results.
Harald Wilhelm, who is a member of the Board of Management of Mercedes-Benz Group AG. said of the results.
“Mercedes-Benz once again delivered solid results thanks to the robust demand for our desirable products. In combination with our ongoing financial discipline, we are making the company more resilient and setting the pace for the months ahead, as we continue accelerating our transformation.”
So what were the results in numbers?The company achieved revenue of €37.7 billion, up 19% year-on-year, compared to €31.6 billion in Q3 2021.
Earnings before interest (EBIT) was €5.2 billion, an 83% year-on-year increase from 3Q 2021 when the company reported €2.8 billion.
Mercedes-Benz AMG GTR in darkness
Read also: The world is hit by the first truly global energy crisis
Net profit was €4 billion compared to €2.6 billion in the same quarter of 2021.
Car sales were up 38.3% to 530,400 vehicles, a very interesting number considering the current global economic situation.
At the same time, the outlook for future profits has been raised, with the company still struggling with higher demand than the number of cars it can offer. This is great news for all investors.
How is the carmaker affected by the current situation?One of the big issues for the carmaker may be the lack of gas during the winter season. Recently, the automaker announced that they are stockpiling parts for this reason.
There is also the problem of record inflation, which entails ever-increasing interest rates. This is adversely affecting the automaker, especially in Europe and the US. Mercedes has therefore lowered its sales estimates in these markets.
You may also like: Tesla falls following China report
Weaker sales in the US and Europe should be offset by significantly higher sales in China, where tax breaks are boosting demand. Overall, Mercedes-Benz expects a slight increase in global car sales. Rival carmaker Volkswagen is also relying on the Chinese state, as we reported in a recent article.
Investors, however, have taken these good results and positive outlook rather neutrally and the stock is only up slightly over 1%.
Sugar prices in the European Union are almost three times higher than a year ago. Smaller companies in the industry are facing problems.
Recently, we have seen a very rapid increase in the price of sugar in Europe. The approaching winter season is characterized by increased consumption of this sweet commodity, so let us look at why it is now becoming so expensive so quickly.
Sugar prices in the European Union are now almost three times higher than a year ago. This is mainly due to extreme growing weather and large increases in energy prices.
Spot prices for refined white sugar in the EU are around $1016 per tonne, the highest level on record. On the world market, the price per tonne of sugar is around $530, about half the EU price.
Do we need to relax import tariff-rate quotas?The National Confectioners Association (NCA), together with the Chocolate, Biscuit and Confectionery Industry Association of Europe (CAOBISCO), have issued a joint statement calling on the governments of the United States and Europe to start taking steps to help the sugar market.
In the announcement, the companies state.
“We are urging the US and The EU Commission and Member States to relax tariff-rate quotas (TRQs) to allow for additional and faster importation of quality white sugar. Where possible, we encourage collaboration and cooperation to facilitate access to additional imported sugar supplies. There are several tools available to both the American and European authorities.”
The problem is that import tariffs on sugar are set too high to protect domestic markets.
Sugar in the shape of Europe surrounded by a variety of sweets
Read also: US considering restrictions on Russian aluminum imports
They also mention the situation that could arise if the situation is not addressed.
“Inaction could result in factory slowdowns and stoppages in a time of global economic uncertainty. This uncertainty places a burden on the market and the consumer, especially when we look to deliver products promptly. Currently, demand far exceeds supply, and this has a ripple effect throughout the whole supply chain.”
Muriel Korter, Director General of the EU confectionery industry association Caobisco, also expressed her concerns about the EU sugar market situation on the company’s Twitter account.
Why is expensive energy also to blame for higher prices?Sugar production is one of the most energy-intensive sectors in the EU and is mainly dependent on gas. It is now in short supply in Europe and its price is several times higher than in previous years.
Therefore, if we take into account the fact that most beet sugar factories run on gas, we can expect very high production costs. Another problem is that this year has been a record-dry summer, which has resulted in a slightly smaller crop. Both of these things are putting a lot of pressure on the smaller producers in particular, who may now be in big trouble.
These 3 main reasons drove inflation sky-highInflation levels worldwide reached record highs from the 1980s because of several factors, and now economies face serious trouble.
What happened? Why is inflation so high that it makes the cost of living hard for everybody? Although it is a tricky topic to swallow, it’s also pretty simple. High inflation was caused by several factors that happened one by one.
1. Money printing and interest rates
The root of all problems was COVID-19. It could’ve caused one of the worst crises ever, so central banks started printing money at record levels, sending stocks and other risk-on assets to astronomic levels. Fed also decreased interest rates drastically from 1.75% to 0.25%, which boosted the economy like it was on steroids.
Fed interest rates, source: tradingeconomics.com
However, this also allowed the creation of ‘cheap money’, a rise in wages, stocks, and cryptocurrencies, which led to overvalued markets and rising inflation. The more money in circulation, the less valuable it became.
Related article:These 5 countries avoided high inflation (at least for now)
That is how inflation started to take off. Inflation in the US averaged 1% in 2020, but it jumped in 2021 from 2% to almost 10% at the beginning of 2022. But in the midst of this inflation rise, other factors started to enter the game and push it even higher.
2. Demand-pull inflation
Demand-pull inflation is when the demand for goods and services increases quicker than the economy’s production capacity. It’s the most common cause of rising prices. This is because demand was high, and supply couldn’t keep up, which was also caused by the Russia-Ukraine war in Europe.
The supply could not keep up with demand, and producers may not have had time to create the necessary manufacturing to increase the supply. A shortage of raw resources or a lack of trained labor could also prevent them from succeeding. If sellers don’t increase their asking price, they’ll sell out and soon discover they can now afford to boost pricing.
Inflation in several countries, source: link
This causes inflation if enough sellers engage in it, which is the perfect case of what happened last year, and it is still ongoing. As prices grow, inflation becomes a more common concern. Customers are encouraged to spend more now to prevent price increases in the future by this anticipation, which fosters growth even more.
3. Cost-push inflation and energy crisis
Finally, there is also cost-push inflation, which directly results from the increase in production cost and supply shortage. The supply side is impacted by a number of factors that cause inflation. Cost-push inflation, for instance, might result from interruptions in the global supply chain, such as the one brought on by the pandemic in 2020.
Read more:Paul Tudor Jones shows how to spot a market bottom
Some economists mention rising salaries as another element that can lead to inflation driven by supply. According to this hypothesis, businesses would typically respond to pressure to increase employee pay by increasing prices to cover these costs.
Also, as commodities experienced a surge in prices, this pushed the prices of food and energy significantly higher. Now that people have gotten used to higher inflation and expect it to continue to rise, it has become built-in inflation, where wages also need to increase to keep up with the status quo. However, the opposite is actually the reality as people struggle to keep up with the rising inflation.
Conclusion
It’s all basically a snowball effect that has no end when it gets out of hand. Central banks may saved the economy temporarily in 2020, but they failed to act quicker in 2021, and this may cause long-term damage to the economy in the upcoming years.
While the whole crypto market is bleeding throughout 2022, many investors are starting to look for a potential bottom.
The chief market strategist of InTheMoneyStocks.com, Gareth Soloway, has predicted that Bitcoin (BTC) as the leading cryptocurrency would likely correct more as it continues to struggle with the macroeconomic climate.
Soloway claimed that the worst-case scenario for Bitcoin is a correction towards $3,500. He added that if this level is reached, the cryptocurrency’s growth will probably resemble that of Amazon shares during the Dot-com bubble. He thinks Bitcoin might bottom in a year.
“There will be a pivot in Bitcoin as it matures as regulation helps people feel more confident. I think in the near term we’re going to see a little bit of a bounce then a wave down to $12,000 to $13,000, and then I do worry that you’re going sub $10,000 to $8,000 maybe even worst case scenario $3,500 very small percentage but that would be the equivalent of Amazon.com collapse in the dot com era,” claimed Soloway.
Soloway thinks that when Bitcoin develops and separates from stocks, it will probably be viewed as gold. The experts also issued a warning that the divergence from stocks might take time to manifest.
Related article:Exploring the Bitcoin bottom for the 47th time
Soloway continued by saying that institutions’ willingness to invest in the field will be essential to Bitcoin’s future growth. However, he stands by the opinion that institutional investors can only participate in this space in the regulatory framework. Soloway states that the extended dollar movement could kill risk assets like Bitcoin, but is that really so?
Why $3,500 Bitcoin is unlikely to happen
If anything, Bitcoin is digital gold, not gold, and performs far better than the yellow metal. Bitcoin may have suffered enormous losses this year, but this is nothing new. Looking back at the historical data, Bitcoin always falls after solid price expansions as other assets did. High interest rates and inflation hurt Bitcoin too, but the probability of Bitcoin falling by 95% to the 2018 low is unlikely. Here’s why.
Cryptocurrencies did not start with institutional investors, but with a few people entering the space at a time. Their entry into the space is not essential, but it will definitely help Bitcoin grow.
Read more: Inflation breakdown – Not as bad as it seems
You can see three major expansions on the rainbow chart that happened after Bitcoin halving in 2012, 2016 and 2020. Then the price fell by approximately 85% in 2014 and by 80% in 2018. In 2022, Bitcoin dropped by about 75%, so over time, every price decline is getting smaller in percentage, but bigger in terms of dollars.
Rainbow chart, source: blockchaincenter.net
Now it begs the question of whether the bottom is in or we are close. Nevertheless, it should be one of both, as all indicators point to a potential low. Bitcoin fell to the lowest part of the Rainbow chart, which is supported by a former all-time high (ATH) level from 2017. Bitcoin and altcoins tumbled after US CPI data, but then they pumped back up, bringing Bitcoin close to $20,000 once again.
Bitcoin weekly chart, source: tradingview.com
When Bitcoin breaks the trend line in the chart and a potential bottom is confirmed, we may start looking for a pullback upward above $25,000. As shown in the tweet, the RSI indicator is totally oversold, with Bitcoin a little below the 200-day moving average (SMA). It worked three times in the past, but will it work now? This is basically a fire sale signal.
Bottom line
Everyone being pessimistic about the future development of Bitcoin is nothing new. The media proclaimed Bitcoin dead a million times, but it is still here. While it can still go lower, $3,500 per Bitcoin is very unlikely.
Moreover, it would be better to dollar-cost average or buy and hold rather than look for the exact bottom. This is because you don’t need to catch the absolute bottom. It’s not about timing the market but about the time in the market.
UK records highest food inflation in historyFood prices are rising globally along with energy prices. The UK is now seeing the highest rate of inflation in this category.
Food inflation has climbed to its highest level since the British Retail Consortium (BRC) began tracking the index in 2005, according to released data.
What has risen the most?Food inflation is the sum of several different types of sectors. Overall food inflation in the UK reached 10.6% in September, up from 9.3% in August. This is the highest rate of inflation recorded in the food category since tracking began.
Annual growth in shop prices rose to 5.7% in September from 5.1% in August. This is another record high for shop price inflation since the index began tracking in 2005.
Inflation in the ambient food category also recorded its highest value at 8.6% for September, up from 7.8% in August.
For fresh food, inflation swelled to 12.1% from 10.5% in August, also the highest inflation rate recorded in this category.
Non-food inflation was also 3.3% for the month, slightly above the three-month average inflation rate of 3.1%. Non-food products include DIY, gardening, and similar products.
Man viewing receipts in supermarket and tracking prices
BRC chief executive Helen Dickinson OBE commented on the situation.
“With costs mounting across the board, September saw shop price inflation hit yet another high. The war in Ukraine continued to drive up the price of animal feed, fertilizer, and vegetable oil, causing fresh food inflation to rise significantly over the past few months, particularly for products such as margarine.”
She also added a comment on the plight of retailers.
“Retailers are battling huge cost pressures from the weak pound, rising energy bills, and global commodity prices, high transport costs, a tight labor market, and the cumulative burden of government-imposed costs. And, with business rates set to jump by 10% next April, squeezed retailers face an additional £800m in unaffordable tax rises. Government must urgently freeze the business rates multiplier to give retailers more scope to do more to help households.”
What is expected in the coming months?The situation in the UK, as in other European countries, is beginning to be challenging for many businesses and households.
Energy prices are still rising and many countries are talking about capping energy prices to prevent households and businesses from getting into existential difficulties. There are differing views on the situation, and while Hungary is strongly opposed to energy capping, Poland reports that it has enough gas and coal for the winter.
Large European companies such as the German car manufacturer Mercedes are stockpiling parts due to fears of gas shortages. Their fears appear to be correct, as the current situation surrounding the Nord Stream 1 and Nord Stream 2 pipelines, which run along the bottom of the Baltic Sea from Russia to Europe, is bad. Following explosions and disruptions, gas is leaking from them into the sea and will certainly not be coming on stream any time soon.
Read also: U.S. fuel exports broke records
Commenting on the current situation in the UK, Mike Watkins, Head of Retail and Business Insight at NielsenIQ, said:
“With food and household energy prices continuing to rise, it’s no surprise that NielsenIQ data shows that 76% of consumers are saying they expect to be moderately or severely affected by the cost-of-living crisis over the next 3 months, up from 57% in the summer. So households will be looking for savings to help manage their personal finances this autumn and we expect shoppers to become more cautious about discretionary spend, adding to pressure in the retail sector.”
Severe explosions damage Nord Stream pipelinesSwedish and Danish gauging stations massive underwater explosions where the Nord Stream pipeline subsequently started leaking gas.
After the explosions, the Danish military released a video showing a circle of cleared water about one kilometer in diameter. The damage affected both the Nord Stream 1 and Nord Stream 2 pipelines.
This has once again increased gas prices in Europe as it is another negative news for the energy market. We have seen many of these recently in connection with Nord Stream, from problems with turbines or force majeure.
Even though both pipelines were out of service, they are still filled with gas, which is leaking into the sea. For example, Nord Stream 2 has not been officially started up, so it still had a pressure of approximately 105 bar. Now, however, it is only 7 bars on the German side.
Read also: U.S. fuel exports broke records
The operator of the pipeline, Nord Stream AG, 51% owned by Russia’s Gazprom, said.
“The damage that took place on the same day at the same time on three branches of the Nord Stream subsea pipeline system is unprecedented. It is not yet possible to estimate when the gas transportation infrastructure will be restored.”
At the same time, Russia’s Gazprom has announced that it will not be able to pay transit fees for gas shipments through Ukraine to Europe if Russia imposes sanctions on Ukraine’s Naftogaz.
Was this sabotage?The German side is openly saying that it was orchestrated sabotage. The cause of the explosions is still under investigation, but neither the Danish nor the Russian side is ruling out intentional culpability.
Asked by Russia’s state-run TASS news agency whether the leaks could be the result of sabotage, Russian spokesman Dmitry Peskov said.
“No possibility can be ruled out at the moment.”
The possibility of sabotage has not been ruled out by Danish Prime Minister Mette Frederiksen. She said it was hard to imagine that it was an accident. She said this at the inauguration of the Baltic Pipe pipeline, which will become an important route for transporting gas from Norway to Denmark and Poland, which reports that it already has enough oil and coal for the winter.
First female Italian prime minister – who is Giorgia Meloni?Giorgia Meloni is the first female and new prime minister of Italy. She is well-known for her right-wing activism. What is she planning?
Italy elected its first female prime minister, Giorgia Meloni, marking a new beginning and the most right-wing government since World War II. Now Italy is set for a change.
History has just been made
Meloni began her political career in the 1990s as a far-right activist, and her campaigning is now characterized by vehement criticism of the European Union, immigrants, and LGBTQ communities. Her time comes now as Giorgia Meloni won the majority of votes in Sunday’s election in Italy, making her the first female prime minister of Italy.
According to the model generated by RAI, the state broadcaster, her alliance, which also included Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia, received roughly 43% of the vote.
That would give the group at least 114 seats in the Senate, where a majority of 104 votes is needed. After leading the opposition to Mario Draghi’s technocratic rule, which stabilized the nation over the previous 18 months following the horror of the pandemic, Meloni rose to prominence in politics.
Potential troubles ahead
The charming 45-year-old, however, has little experience in leadership, and she would assume government at a dangerous time for her nation. The energy shortages brought on by Russia’s invasion of Ukraine will fuel runaway inflation and threaten GDP, putting the next Italian administration in the middle of a number of overlapping problems. The energy crisis may cool down in the long term, but at present, it is still ongoing.
Also read:GBP/USD crashes to all-time lows, touches 1.04
The yield on Italy’s 10-year bonds has increased from less than 1% in December to more than 4.3% as a result of the blow to Italy’s budget and the possibility of future interest rate increases from the European Central Bank. And ECB just started raising interest rates, so there might be more pain ahead.
President Sergio Mattarella will meet with party leaders as the next step in the constitutional process before virtually definitely appointing Meloni to form the next government. Still, the process can take many weeks, and no radical changes are expected right away. On October 13th, the newly constituted 200 senatorial and 400 lower house legislators will meet for the first time.
Now the question remains whether Meloni will keep Draghi’s reform plan or deviate from it. This has the power to impact the EU because money could start flowing out of it. Meloni is likely to roll back some of the policies Draghi had implemented in an effort to support the economy.
Read more:Higher interest rates hurt crude oil
A spending plan for roughly 200 billion euros in pandemic recovery funding from the European Union could be jeopardized if considerable adjustments are sought. The first female prime minister with extreme right-wing oriented opinions could bring drastic changes to Italy.
ECB works with 5 companies to create digital euroThe ECB chose five companies to work with on the development of the long-debated digital euro. The biggest company is Amazon.
Hand holding a smartphone with a digital euro on the screen with the map of EU in the background
The vast development of the digital world is making it almost inevitable for central banks to step in and adapt. For decades, central banks printed tons of banknotes into a financial system, and now ECB is developing the digital euro alongside five prominent firms.
Digital euro might be on the way
A digital euro, which the ECB describes as a central bank-issued substitute for cash, is currently the subject of a two-year inquiry. The ECB must decide by September 2023 whether to issue one. The EU is actively exploring central bank digital currencies (CBDC) while it’s behind China, which is already testing CBDCs. However, Fed is behind ECB as it has not yet shown significant interest in digital currency.
Five companies will work with the European Central Bank (ECB) to create potential user interfaces for the digital euro. Each of the chosen organizations will concentrate on a particular use case of a digital euro in collaboration with the ECB team. The selected companies to work with ECB are Amazon, Nexi, EPI, Worldline and CaixaBank.
Development roles
The European Payments Initiative (EPI), a network of 31 banks and credit institutions, and Amazon, the largest e-commerce corporation in the world by market capitalization, will play key roles. The other participants are Spanish multinational CaixaBank, French payments platform Worldline, and Italian payments-focused bank Nexi.
Amazon will work on e-commerce payments, while CaixaBank will create a mobile application that mimics the processes customers will take to deposit virtual currency into their bank accounts or send it to other parties. EPI and Nexi will focus on point-of-sale retail payments, and Worldline will investigate offline payments between individuals.
Christine Lagarde, the president of the ECB, stated earlier this year that a digital euro is not supposed to replace cash but rather supplement it. Nevertheless, the role of digital currencies in the world has been becoming stronger ever since Bitcoin was created, and this role is expected to gain momentum even more in the future. Therefore, the question remains which central bank will become the leader of CBDC?
Bottom line
While there are many skeptics of CBDC, this move seems inevitable as the world is adopting digital tools. The time of cash might soon be gone, but it will undoubtedly take at least a few years to develop and adopt this technology. Cryptocurrencies may struggle hard in 2022, but they might also become beneficial from the combined use of CBDCs.
Jesse Powell to step down as Kraken’s CEO – what comes next?Jesse Powell, the well-known CEO of Kraken exchange, is stepping down, and there are a few important takeaways from this.
The well-known co-founder of Kraken, Jesse Powell, stepped down as the CEO of the exchange. Instead, he’ll become chairman of Kraken’s board of directors.
New beginning
Kraken’s co-founder Jesse Powell will stand down from his position as CEO, the company announced on Wednesday. Powell will be succeeded as CEO by the business’s COO, Dave Ripley.
This is after Powell founded the exchange back in 2011, ending an 11-year chapter as the CEO. Powell said he decided to concentrate more on the company’s products, user experience, and more extensive industry advocacy. He was very honest with his answer as he stated:
“As the company has gotten bigger, it’s just gotten to be more draining on me, less fun,” Powell told Bloomberg News on Wednesday.
Troubles in the company
Jesse Powell, an early proponent of Bitcoin, has come into conflict with Kraken staff members. This happened after he posted seditious remarks on the company’s Slack this year about race and gender. Those who did not share his views were urged to leave the organization, and a few actually did.
Moreover, The Treasury Department is looking into Kraken for possible sanctions violations. According to a July article in The New York Times, the government plans to fine Kraken as it’s in an investigation connected to Iran’s users trading cryptocurrencies on the Kraken exchange.
While it may seem suspicious to leave the company right now, Powell refused any controversies. He reportedly informed Kraken’s board about his department as CEO more than one year ago.
Crypto advocate
Although Powell shared some controversial views regarding race and gender, he is a well-known advocate of cryptocurrencies. He was recently invited on TV on Bloomberg, disagreeing with Jamie Dimon’s pessimistic view on cryptos.
Jamie Dimon, the CEO of JPMorgan Chase, slashed cryptocurrencies once again and called them a decentralized Ponzi scheme. Powell claims that “he can’t really understand it as a banker,” but it is certainly better than a centralized Ponzi scheme as the stock market or national currencies.
Conclusion
Although Powell ends as the CEO of Kraken, he clearly wants to stay on board and participate in future endeavors. Fun fact: he recently remembered the mining of Bitcoin in 2011 when it was only about $3.
Argentina raises interest rate to 75%Argentina's central bank raised its key interest rate to 75% in an effort to support its currency and curb inflation approaching 100%.
Argentina has had problems with its national currency for a long time. The central bank is trying to curb inflation, which has already reached almost 80% year-on-year and is rising at its fastest rate in 30 years. Many analysts believe that we could see it reach the 100% mark by the end of the year.
The central bank is fighting inflation with interest ratesUsually, when inflation rises, interest rates also rise. In Argentina, the Leliq base rate was raised by 5.5% to 75%. This is a big jump, with which the bank raised the borrowing cost to the highest level since October 2019.
Overall, this is the ninth rate hike this year and the bank has been accelerating for the last 3 months, with a 23% rate hike in this period. In the current situation, we can expect further gradual increases.
Businessman presses button interest rates on virtual screens
Read also: EC to limit revenues of electricity producers
Adriana Dupita, Latin America Economist for Bloomberg commented this the situation.
“The new rate hike catches up with the rise in current and expected inflation – but may not be enough to tame inflation or boost reserves. The substantial uncertainty on inflation and the persistent risk that the peso may soon see a sharper depreciation undermine the ability of the new rate to convince households to save or investors to have a position in pesos.”
The country needs positive interest rates due to IMF assistanceBesides trying to slow inflation, the central bank has another reason for introducing such high-interest rates. This is because having positive interest rates is a condition for the country to receive the $44 billion bailout it is seeking from the International Monetary Fund (IMF).
The country needs this loan primarily to meet its upcoming debt repayment obligations. Argentina does not want to find itself in the same position as Russia, which has recently been unable to pay its foreign debt. However, in the case of Russia, this was due to completely different reasons.
Second look at FedEx fiasco – the biggest daily drop everThis is the biggest daily drop ever for FedEx after the company reported weak earnings and guidance.
The transportation company, FedEx, posted its biggest daily loss ever as it announced weaker than expected results and cancelled guidance for the near future. As a reminder, the FedEx company, along with the aluminum producer Alcoa, tend to be considered benchmarks for the global economy.
As a consequence of the initial 1Q financial performance and predictions for a sustained unpredictable operating environment, FedEx announced it is dropping its fiscal year 2023 profits projection in a surprise pre-announcement made Thursday after the close.
Read more about FedEx here: Is the FedEx fall reason to panic?
Global volume slowness that intensified in the last few weeks of the quarter had a negative effect on first-quarter earnings. The macroeconomic downturn in Asia and service issues in Europe had a particularly negative influence on FedEx Express’s performance, resulting in a $500 million revenue deficit in this sector compared to corporate projections. Revenue for FedEx Ground fell by around $300 million short of corporate expectations.
Particularly for Q1:* FedEx preliminary 1Q adjusted EPS $3.44, estimated $5.10 * FedEx preliminary 1Q Revenues $23.2B, estimated $23.54B * FedEx preliminary 1Q adjusted operating income $1.23B, est. $1.74B
As a result, FedEx is retracting its fiscal year 2023 profits projection it gave on June 23, 2022, due to the preliminary first quarter financial results and prospects for a persistently unpredictable operating environment. The company also stated that it was implementing cost-cutting measures.
You may also read: Europe can get Russian gas through Nord Stream 2
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives.”
In order to minimize costs, FedEx would shut down 90 office sites, and five corporate office buildings, postpone hiring initiatives, limit flights, and cancel projects.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” said Raj Subramaniam, FedEx Corporation president, and chief executive officer.
Finally, when asked whether the economy is “going into a worldwide recession,” Subramaniam responded, “I think so. But you know, these numbers, they don’t portend very well.”
Fedex daily chart, Source: Author´s analysis, tradingview.com
Nuclear the new coal – US plans to transform its coal plantsWill the US be able to use the space of its coal-fired power plants to house nuclear reactors? Let's take a closer look at this topic.
The topic of green energy production is a topic that is addressed not only at the level of environmental activists but also at the state level. We have recently seen, for example, that in Europe, gas and nuclear power generation have been newly considered as green forms of investments.
It is nuclear energy that we will be looking at today because it is always a large and long-term investment. This form of energy production is proving popular in several countries around the world, especially now that energy prices are hitting their highs and many countries are experiencing an energy crisis.
Another reason why countries are turning to nuclear electricity is its almost emission-free operation. A large number of states have a plan to be as carbon neutral as possible in power generation by 2050. This was partly the reason why Japan returned to operating nuclear power plants after many years.
Aerial view of coal power plant high pipes with black smoke moving up polluting atmosphere
In the US, nuclear reactors could be placed in coal-fired power plants.The U.S. Department of Energy is exploring where it would be most efficient to locate new nuclear reactors. It looks like one of the best options will be to place them in coal-fired power plants, which look like the ideal place to do it.
According to a recent report, as many as 157 retired coal plants and 237 operating coal plants in the US could be converted to nuclear power generation.
The report found that of the decommissioned or active plant sites, 80% are suitable for hosting advanced reactors smaller than one gigawatt.
Emissions are already falling in the USWe can already see that carbon dioxide emissions from the US power sector have been declining in recent years. Most of this is because energy companies have started to phase out old coal plants and instead are using natural gas, wind and solar power. Now, according to a published report, the trend could be more towards nuclear power.
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The study also looks at jobs and overall emissions in the region. It shows that if a large coal plant were replaced by a nuclear plant of similar size, more than 650 permanent jobs could be created and the region’s greenhouse gas emissions would be reduced by 86%.
So it remains to be seen how much this new study will affect the energy sector and members of the ruling parties. It will depend on how the Biden administration handles it and the extent to which they support the creation of new nuclear power plants. It is often government subsidies and concessions that are key in helping to build such plants.
Is another stock market selloff on the way?While the stock market rallied throughout the summer, it might not be ready for a new all-time high just yet as bearish sentiment still rules.
While central bankers claim “we are not in a recession,” some experts claim the opposite. The US Dollar is getting stronger than ever as EUR/USD dives below parity once again. There are massive price increases in commodities, especially gas in Europe. Germany was forced to lower VAT on natural gas as a result. All these events are probably just preparation for what is about to come.
Another selloff in the making?
While there was a relief rally in the summer, many technical aspects point to a continuation of a started downtrend. Nasdaq bounced from the moving average (EMA200) in June and rallied from 11,000 to 13,500 upward to the descending channel. A massive bearish divergence confirmed the idea of a possible downturn, and stock markets continued to slide as Nasdaq fell by about 2.2% on Monday, August 22.
NASDAQ weekly chart, source: tradingview.com
When you look at Nasdaq from a daily timeframe, there is a clean bounce from the blue trend line and a break of the black trend line, suggesting it might just be a temporary peak. The market also failed to break the moving average and significantly overbought indicator OsMA supports the idea of another move downward.
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Even this survey claims a surprising 84% of people think it will take two years or longer for Jerome Powell, the chairman of the Fed, to bring the inflation down, and markets could continue to slide even more. All these pessimistic sentiments highlight how deeply skeptical investors are, and another selloff is very likely.
NASDAQ daily chart, source: tradingview.com
DAX looks bearish too
One of the easiest ways to identify a trend is by looking at higher or lower lows and highs. Since 2022, DAX (GER30) made several lower highs but always stopped at the support of 12,394. The last bounce downward showed as strong as the market refused to rise above EMA200. Now the market refused to break the trend line, and bearish divergences confirmed the reversal is here.
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So now there is a massive triangle formation, and usually, a new low is necessary to finish this pattern. If the bearish sentiment and bearish technical signals continue to pop up, a continuation of the bear market is very probable, possibly taking the price of DAX below 12,000 or even lower.
DAX daily chart, source: tradingview.com
The bottom line
Moreover, analysts expect Federal Reserve and the European Central Bank to raise interest rates even more, which could cause another selloff wave on the stock market.
So many signals confirm another market decline in the upcoming months, and its probability is very high. However, do not let this article influence you if you are a long-term investor, as this is a short-term perspective on markets, with a timeframe of 6-12 months.
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