Musk Boosting Crypto & Markets Preparing for the Fed

15 июн. 2021 г.

Yesterday can be called the day of cryptocurrencies. If last week cryptocurrencies ignored the fundamental positive, then at the start of the week they could not stand it and began to grow in response to the news that Musk is ready to resume transactions with cryptocurrency if miners optimize energy use (reduce it by 50%).

The billionaire Tudor Jones added fuel to the fire, saying that if the Fed continues to ignore the rise in inflation, then it is necessary to buy gold, commodities, as well as cryptocurrency.

Tellingly, on the eve of the FOMC meeting, the markets are betting that the Fed will ignore the unwinding of the inflationary spiral and leave the parameters of monetary policy unchanged, as well as its vector for the foreseeable future. Recall that consumer inflation in the United States in May was not only at its maximum over the past 13 years, but also 2.5 times (!) exceeded the Fed's target.

Markets believe that the central bank will continue to ignore that it is failing in its core function. We are betting that the Fed will approach the matter responsibly and if it does not reduce the volume of asset purchases, then at least it will announce its intentions to do so in the near future. From a trading point of view, this means the advisability of medium-term dollar purchases, as well as sales in the US stock market.

As for the increased objects of demand from investors, today it is no longer the US stock market (too overheated), but the European stock market. Europe's largest stock ETF, the Vanguard FTSE Europe ETF, has recorded record capital inflows since 2017. The motivation is generally clear: European stocks are less overvalued, and the European economy is recovering with a lag relative to the United States.