Mati Greenspan
By Mati Greenspan
152 views

The Culling

Hi Everyone,

 

Free money is good enough when assets are fairly priced but pump enough liquidity into anything and it’s bound to drown eventually.

Germany’s biggest bank is about to get a bit smaller as the plan to lob off a huge chunk of the business. Around 18,000 employees are marked for the culling that will take place over the next 2.5 years.

It’s most interesting to note that those getting the ax are part of the investment arm of the bank, as the trading desks who have largely been unprofitable will bear the brunt of this restructuring.

In a world that is starving for yield, it seems harder than ever for bankers to make profits. This is the direct result of a full decade in which global central banks have kept interest rates near or below zero. When even a 2% annual return starts to look incredibly attractive, it’s clear that there’s very little meat on the bones.

 

The old financial system is dying a slow death. Let’s hope the new one is brighter.

@MatiGreenspan

eToro, Senior Market Analyst

 

Today’s Highlights

  • NFP is Strong
  • Erdogan Cuts
  • Crypto Flag Pattern

 

Please note: All data, figures & graphs are valid as of July 8th. All trading carries risk. Only risk capital you can afford to lose.

 

Traditional Markets

Unfortunately for Jerome Powell, or perhaps inconveniently, the monthly jobs report from the United States came out fantastic on Friday.

 

 

The Federal Reserve is largely expected to cut interest rates when they meet at the end of this month but with the economy performing this well, it’s getting increasingly difficult for them to argue that this is a prudent course of action.

Global stocks are weaker this morning, largely due to the above-mentioned paradox.

 

 

Independent No More

The President of Turkey raised more than a few eyebrows yesterday when he sacked the head of the Turkish Central Bank.

One of the main things that external investors look at when considering an investment in a particular country is if the central bank is independent of the government. As we know, most central banks are not able to be truly independent. After all, the heads of most central banks are put in place by the head of state but I digress.

All things considered, the market doesn’t seem too surprised by this move. Yes, the Turkish Lira did open much weaker after the weekend, but as you can see, the selloff (purple circle) wasn’t too dramatic.

 

 

What will be interesting to see is if President Trump will decide to comment on this news. After all, he’s expressed on several occasions his desire to remove Chairman Powell and has even said yesterday that Jerome is doing a terrible job.

Presumably, Trump’s most recent attack on the Fed is aimed at the upcoming rate decision. As if to say, “disregard that last jobs report, if you don’t deliver a rate cut as the market wants, you’re fired.”

 

What’s your Point?

The crypto market continues to consolidate the massive gains that have been accumulated so far this year, it seems like the pattern is coming to a point.

Here we can see the flag pattern that’s been forming over the last few weeks.

 

 

Many traders will take a breakout of this classic chart formation as an indicator for the next direction. There’s no doubt that many are still ready to buy in but are hoping to get a better price per coin before loading up the boat.

One more graph I wanted to flag for you is the trading volumes on peer to peer site localbitcoins, which has now spiked to its highest levels since November.

 

 

Title credits go to Everlast – The Culling

 

Wishing you an amazing week ahead.

 

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: http://etoro.tw/Mati

Twitter: https://twitter.com/matigreenspan

LinkedIn: https://www.linkedin.com/in/matisyahu/

 

Your Social Investment Network – www.eToro.com

eToro (UK) Ltd is authorized and regulated by the Financial Conduct Authority. eToro (Europe) Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission. eToro AUS Capital Pty Ltd. is regulated by the Australian Securities and Investments Commission, ABN 66 612 791 803, AFSL 491139.

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk.

 

152 views