There's a famous quote...
"The lottery is a tax for people who are bad at math."
It seems the Trump administration is a tax for a country that stopped caring about government.
For all those who have expressed to me their opinion that these daily market updates are too opinionated, this view comes directly from the world-class economist Larry Summers, the man who could have had Janet Yellen's job but turned it down.
In a piece published by the Financial Times, he writes...
As Larry says, this is a very grave error for a cabinet that is mostly comprised of billionaires and businessmen.
Today's Highlights
- Kicking the Can
- China Downgrade
- $7.5 Billion Day for Cryptos
Please note: All data, figures & graphs below are valid as of May 24th. All trading carries risk. Only risk capital you're prepared to lose.
Market Overview
Kicking The Can in Europe
European law makers once again delayed action to solve the Greek Debt Crisis. This is one of the last apparent remnants of the Great Recession of 2008 and at this point, it seems Greece may remain in debt for a very long time.
The Greek government, the ECB, the heads of other EU states, along with the International Monetary Fund tried desperately to reach a deal this week but once again, the deal was delayed, this time until June 15th.
After a 7 hour meeting, the IMF broke off the talks saying that the current proposal did not do enough to provide relief for the people of Greece or for financial markets and that the level of debt under these circumstances would remain unsustainable.
Though Europeans are generally good at math, and everybody understands that at the current pace Greece could never hope to repay the mountain of debt, they are bad with timing. This is not the first time they have kicked the can down the road and it would be very surprising to see a long term solution on June 15th.
The euro has come down a bit against the dollar this morning but as we can see, it's still carrying a lot of momentum from Emanuel Macron's victory in the French Elections...
At this time, eToro sentiment on the EUR/USD is 68% short.
China Downgraded
Earlier today in the Asian session, the Moody's rating agency decided to downgrade China's credit score from Aa3 to A1. Not that A1 is a bad rating. Just that Moody's feels that Chinese growth going forward will need to come from monetary easing, which would have the effect of increasing their overall debt.
The move caused some moves in the Chinese stock market as well is in the Renminbi. However, the moves were quickly reversed.
Here's the spike on USD/CNH...
There are two reasons for the quick reversal. First, that though the credit rating was downgraded, Moody's has actually upgraded their outlook from negative to stable. Meaning, that even though they're relying heavily on quantitative easing, it isn't likely to deliver any sudden shocks to the market.
The second reason is a bit more cultural. Speaking with our Market Analyst in China over WeChat, today I learned...
"Chinese investors don't care about who is Moody's and what they do. The government here will always do what they plan."– Macy Ma @Macygogo
Furthermore, our customers and employees in China are far more interested in the Cryptoworld at the moment.
Cryptoworld at the Moment
...and with good reason.
The overall value of all digital assets currently in circulation has reached $86.5 Billion. It has added $8 Billion in the last 24 hours alone.
The second most popular Cryptocurrency, Ethereum, is up 11% this morning. The day has barely just begun and we're already at a fresh new all time high.
Most incredible is the daily chart. I simply can't get over this one...
If I had more time I would calculate the percentage growth since the beginning of the year, but I myself am sometimes bad at math.
Disclosure: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.