Hi Everybody,

Some say the chart of Bitcoin over the past year is simply outrageous. Well, maybe it is, but not as outrageous as the US national debt!!

Thanks to spending on the most recent natural and political disasters the US government is now in the hole for $20 Trillion. Despite this landmark milestone and despite everything else the US stock market’s S&P 500 Index closed at an all time high record level.

Tell me again how Bitcoin is a bubble.

eToro, Senior Market Analyst

Today’s Highlights

  • National Treasure
  • Risk is On
  • Cryptos in Green

Please note: All data, figures, and graphs are valid as of September 12th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

The headlines across financial media say that “fears subside.”

It is clear that stock markets are going up despite the 27 major natural disasters that have occurred in the first days of what some are calling Septembergeddon.

Furthermore, some analysts even pointed to the lack of a nuclear strike from North Korea as a reason for stocks to rise. True, Kim Jong Un didn’t launch any missiles over the weekend and instead decided to party with his people but that’s not any indication of what side of the bed he’ll wake up on tomorrow.

No, my friends. The markets are rising for a different reason…. Central bank manipulation.

Of the $20 Trillion that we mentioned above that the US owes, $4.5 Trillion of it is owed to their own central bank. Most of that money has ended up in the stock market.

In this chart from Bloomberg, we can see the stock markets rising since the financial crisis started in 2008 and the Fed’s balance sheet ballooning in comparison.

What about other safe havens?

So yeah, we can say that the stock markets are no longer a barometer of market sentiment. It used to be that when stocks were going up we could think of sentiment as being risk on. So, some of that sentiment may still be in the market, which explains why financial journalists are so confused.

They feel that since the stock markets are going up, the fears must be subsiding. They then look at the price of gold, the number one safe haven, and see that it’s down $23 an ounce in the last three sessions and see confirmation.

At this point though, I’m not sure gold can be used as a great example. It’s been bought so much over the past few weeks that signals are all showing that it’s been a bit overdone. So a bit of falling back doesn’t necessarily mean that risk is back on.

So we really need to look at the currency markets for help here. This is the performance so far this week.

Indeed, the biggest safe havens JPY, CHF, and the Euro are all falling so far this week.

OK, I guess nobody is scared of Kim Jong Un, or Harvey, or Irma, or Chipas, Jose, Trump, or multiple wildfires, or the out of control national debt, or the Federal reserve who wants to offload their $4.5 Trillion starting next month. I guess everything is just hunky dory.

Crypto Update

All major cryptos are in green for the second day in a row. It seems we do have some mild sustained growth. We’re far from the huge surging action that we saw in August but the pullback does seem to be over.

Let’s see how the day progresses.

Leave us a comment!