You may have noticed that we haven’t discussed the VIX volatility index in the daily market updates in quite some time.
There’s actually a really great reason for that. It’s been painstakingly boring for the past few months.
In this chart, we can see that Wall Street’s favorite ‘fear indicator’ has not closed above 13 points the entire year.
With the absence of fear, the markets have no reason to fall. On the other hand, they haven’t been all that greedy during this month.
The song has now become repetitive. Stocks are certainly overvalued. There’s a large amount of evidence. It’s quite clear that we’re in a bubble but the bubble could very well continue to inflate for quite some time before any of the air is let out.
- No Fear
- Political Drivers
- A Date with Brexit
Please note: All data, figures & graphs are valid as of March 21st. All trading carries risk. Only risk capital you can afford to lose.
There’s only one word to describe the stock market’s performance at the moment…. boring.
The main indices on Wall Street skated by with a small loss. So far today the Nikkei 225 is slightly down, the China 50 is slightly up, neither more than 0.5%, and the ASX in Australia is completely flat.
At this point, I’ll be happy to see some direction. Any direction except sideways will do.
The US Dollar remains under pressure as the FBI is now ready to investigate Trump’s ties with Russia and whether or not Putin had his fingers in the US election process.
As we mentioned in a previous update, investors in the US have a lot of politics to digest at the moment. The US Dollar index is now playing with the 100 level. However, a break of the support line at 99 would certainly be surprising, especially since the Fed is on track to hike rates another twice again this year.
At the moment, the sentiment on eToro is showing 88% buying the US Dollar index.
A Date with Brexit
It’s official! The UK is now planning to formally submit their application to exit the EU on March 29th.
The British Pound has gained confidence now that the politicians have dropped their charade and May’s timetable remains intact.
This chart shows the GBPUSD from Theresa May’s clean Brexit speech on January 17th.
The First Minister of Scotland has been growing increasingly vocal about the possibility of Scotland leaving the UK, but many are taking this as political grandstanding and at this point, it seems highly unlikely to occur any-time soon, not within the next 2 years anyway, a virtual lifetime in the world of global politics.
The Pound Sterling could see some movement today as the CPI inflation data is published within the next hour. Analysts forecast that the price of goods and services has risen more than 2% for the first time since 2013.
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With inflation at these high levels, the Bank of England could very well be looking to follow the US’s lead and start hiking interest rates in the near future.
Governor of the BoE, Mark Carney, will be delivering a speech about an hour after the CPI numbers are released. His greatest fear at this point is that those inflation numbers are stronger than expected.
Such an outcome would almost certainly force the seasoned central banker to play his hand earlier than he would like and start indicating a rate rise is in the draw.
Have an amazing day ahead!
Senior Market Analyst