Indices across the board sold off today, making it the 5th session in decline as many investors and traders take high valuations as a good time to take profits. The NASDAQ is down the most in the past couple of sessions, as investors rotate out of an overcrowded “big tech” trade, down around 7%. The S&P 500 and the Dow Jones are down 2.5% and 0.6%, respectively.
Nothing can scare off Investors.
It has been 15 days into the new year, but it feels like a year’s worth of events has already occurred. Most notably
· Capitol Attacks from Pro-Trump protesters
· Tesla, a company that technically does not make a profit (without the help of regulatory credits), is worth around $800 Billion, around about $100 Billion less than Facebook. Elon Musk is now the wealthiest person in the world.
· President Donald Trump has been impeached for the second time
· Coronavirus vaccines are being distributed all around the world after a worldwide effort
· Alibaba’s Jack Ma is still nowhere to be seen
Central banks, central banks, central banks. This week ahead, central bankers from all around the world will conduct their annual Jackson hole meeting in which historically they discussed the macro-environment and, of course, monetary policy. However, due to Coronavirus restrictions, they cannot meet at Jackson Hole for the first time in 40 years. Like many meetings, they will be hosting a virtual, available for the public to tune into. The main focus? “Navigating the Decade Ahead: Implications for Monetary Policy” – Or put simply, Monetary policy: Coronavirus edition. Here is your week ahead.
GBP/USD falls to 1.25705 on the back of relative strength over the past two weeks. General risk sentiment fueled the rally. However, fears of a second wave abruptly stopped the rally.
FED keeps rates unchanged at 0.25% and promises to leave rates unchanged through 2022. Furthermore, Chairman Jerome Powell stated that they would “increase treasury purchases at least at the current pace.” This supports Jerome Powell’s supportive tone in helping to recover from what he regards as the “biggest economic shock in the US, and in the world in living memory.”
Markets brace for the week ahead as the Coronavirus continues to disrupt the world order. As a result, the death toll has topped 300,000 worldwide, markets have shown a tentative appetite towards risk-on assets. Oil is up 7.45% the past week, with the S&P 500 down 1.58%. Gold is up 2.3%.