Hi Everybody,
Ever since the great recession of 2008, the governments and central banks of the world have been pumping ludicrous amounts of money in the financial system in order to artificially inflate asset prices.
In the short term, this is really good for large corporations and financial institutions. However, the long term effects of these extraordinary and unprecedented policies are yet to be seen. Some economists have hypothesized that the fallout from all this excess money in the system could be even more devastating than the original financial crisis that it was intended to fix.
The US Federal Reserve has been making great efforts lately to get back to a normal policy. Next week, they should give us some indication about how they plan to get rid of more than $4 Trillion worth of bonds and other assets that they have bought over the last decade.
The European Central Bank however, is still pumping about €60 Billion into their economy on a monthly basis. In today’s monetary policy meeting, Mario Draghi is largely expected to maintain the pace of this program even though the noticeable effects have been very minimal lately.
The fact that an unelected official has so much power over so many people is a bit sad. I sincerely hope that in the near future, we’ll be moving to a better form of money. One that is more efficient, more democratic, and more fair to everyone.
–Mati Greenspan
eToro, Senior Market Analyst
Today’s Highlights
- UK Elections Day
- Freeze!… FBI!!
- Mining is now Mainstream
Please note: All data, figures & graphs are valid as of June 8th. All trading carries risk. Only risk capital you’re prepared to lose.
Market Overview
Today is the day we’ve been speaking about for almost two months. When Theresa May first announced the snap elections on April 18th she had a very wide lead in the polls. Since then her lead has narrowed to about 5%.
The main issue on the table is Brexit and what type of relationship England and the EU will have in 5 years time. Multiple terrorist attacks and budget plans from both parties have tried to change the focus of these elections. However, at the end of the day, the main decisive factor will be voter turnout.
Price action in the UK’s Pound Sterling has been as complacent as her citizens of late and many are just tuning out.
In this graph, we can see the GBPUSD since the Brexit Referendum about a year ago. Draw your own conclusions.
At this point, it’s impossible to know what will happen next. Who will win, by how much, and how the market will react remains a large question mark. Exit polls should be available as early as 10:00 PM in London. Be ready for anything!!
eToro has organized a special webinar to discuss these elections with three of our popular investors, all from the UK and all with excellent trading stats. Of course, like all things in eToro lately, the topic of conversation was changed about half way through to cryptocurrencies.
The recording is available now on YouTube at: https://youtu.be/Emn_TDc-ToU
Trump Under Fire
Today fired FBI Director James Comey will take the stand and reveal the nature of some private conversations he’s had with Donald Trump. His opening statement has been released already. You can find it here.
The main quote that keeps coming up is…
“I need loyalty, I expect loyalty.”
Legal experts feel that from this statement Trump may have crossed a line but hasn’t done anything explicitly illegal. Therefore, we may actually see some relief from the whole fiasco. However, if the Q&A session today has any further revelations, the consequences and market reactions could be significant.
Crypto Mining is Big Business
Recently, both AMD and NVIDIA have announced that they will be making brand new graphics cards specifically designed for mining cryptocurrencies.
According to an article on bitcoin.com, both card makers have been selling out due to an influx of people looking to get in on the action. So there is certainly a high demand for this new product.
So, if you’re scared about the extreme volatility involved in trading directly on Bitcoin and Ethereum or even if you’re just looking for another way to balance out your portfolio. You can also check out the stocks of these two companies who are looking to capitalize on this new industry in quite a different way.
Thanks to Jasper Lee our Managing Director in China for bringing this to my attention. Shares in both of these companies are surging on the news.
Have an amazing day ahead!!
Best regards,
Mati Greenspan
Senior Market Analyst
