The US authorities are ready to print USD 1 trillion. Bitcoin and Euro break records. What does it mean for a regular investor?
Bullish moods prevail in the world financial markets. A big group of assets from EUR/USD and US stocks to commodities and bitcoin showed new highs this week. Several important news supported buyers: the US authorities are close to adopting a package of macroeconomic assistance to the economy in the amount of USD 1 trillion, while Great Britain became the first country in the world to approve the new coronavirus vaccine and will start mass vaccination within the next few days.
Calendar of economic statistics.
The US authorities get ready to ‘shoot’ a trillion dollars.
From stocks to bitcoin: why bulls celebrate victory again.
Purchase of the Slack messenger for USD 28 billion: what do you need to know?
Calendar of economic statistics
|Date, time (GMT +3:00)||Event||Impact/Forecast|
|Tuesday, December 813:00||Tuesday, December 813:00Germany. ZEW Economic Sentiment Indicator.||EUR. Dax. Forecast – 41.7, previous value – 39.|
|15:00||United States. Short-term forecast of the Energy Information Administration (EIA).||OIL. Gaz.|
|Wednesday, December 918:00||United States. Job Openings and Labor Turnover Survey (JOLTS).||S&P 500. USD. Previous value – 6.436M.|
|18:00||Canada. Interest rate decision of the Bank of Canada.||CAD. Forecast – 0.25%, previous value – 0.25%.|
|Thursday, December 1015:45||Eurozone. Interest rate decision of the ECB.||EUR. Forecast – 0%, previous value – 0%.|
|16:30||United States. Consumer Price Index (CPI).||USD. S&P 500. Forecast – 0.2%, previous value – 0.2%.|
|Friday, December 11||United States. Producer Price Index (PPI).||USD. S&P 500. Forecast – 0.2%, previous value – 0.2%.|
|Tuesday, December 813:00|
|Germany. ZEW Economic Sentiment Indicator.|
|EUR. Dax. Forecast – 41.7, previous value – 39.|
|United States. Short-term forecast of the Energy Information Administration (EIA).|
|Wednesday, December 918:00|
|United States. Job Openings and Labor Turnover Survey (JOLTS).|
|S&P 500. USD. Previous value – 6.436M.|
|Canada. Interest rate decision of the Bank of Canada.|
|CAD. Forecast – 0.25%, previous value – 0.25%.|
|Thursday, December 1015:45|
|Eurozone. Interest rate decision of the ECB.|
|EUR. Forecast – 0%, previous value – 0%.|
|United States. Consumer Price Index (CPI).|
|USD. S&P 500. Forecast – 0.2%, previous value – 0.2%.|
|Friday, December 11|
|United States. Producer Price Index (PPI).|
|USD. S&P 500. Forecast – 0.2%, previous value – 0.3%.|
The Congress negotiations about the economy support measures will stay in focus of investors next week. Other important events are meetings of the Bank of Canada and ECB, where interest rate decisions will be made. Surprises are not expected, that is why accompanying statements of officials are more important than specific decisions. Forex volatility is possible. Attention should also be paid to the US inflation data. If these data are higher than forecasted, it might cause strong movements in the bond market and bank stocks.
US authorities get ready to ‘shoot’ a trillion dollars
Optimism in the financial markets was supported this week by advance of the Congress negotiations with respect to the second package of the economy fiscal stimulus. Influential representatives of the Republicans and Democrats already announced their readiness to vote. A compromise amount is at stake – around USD 1 trillion.
Democrats in the House of Representatives wished to vote for much more – around USD 2 trillion, but the Republican majority in the Senate threatened to veto the initiative. They are concerned about an uncontrolled growth of the budget deficit.
This is the most long-expected event not only for regular Americans, who suffer from the corona-crisis, but also for Wall Street bulls. Growth of stocks would have been just impossible without massive fiscal stimuli, which ran at around USD 2 trillion in spring-summer 2020.
The S&P 500 index (ESZ0) renewed its historic high against this background in expectation of the Nonfarm Payroll, which publication is expected after lunch on Friday, December 4.
One more important piece of news in the field of fighting the epidemic came from Great Britain. This country became the first country in the world, which approved the Pfizer (PFE) COVID-19 vaccine and will start mass vaccination next week. The British plan to do away with the ‘corona’ once and for all.
From stocks to bitcoin: why bulls celebrate victory again
Successful advance of the Congress negotiations plays against the American dollar, since the fiscal stimuli will be supported mainly by an additional emission. Moreover, there is a risk of an inflation shock in 2021.
Prophecies of ‘apocalypse messengers’, represented by some well-known economists, about the coming devaluation of the greenback by 20-30% do not look too overconfident against such a background. The EUR/USD (6EZ0) pair established the 2-year high, overcoming the psychologically significant level of 1.2. The next goal of 1.23 is quite possible.
More and more major investors and even some US top banks consider bitcoin (BTCZ0) as an alternative to the dropping dollar. Bitcoin managed to take advantage of the weakening dollar for renewing its historic high. However, it lacked strength for a more significant leap forward and the futures contract was again traded below USD 20,000.
Meanwhile, investors need to be careful. The exponential crypto growth often ends with equally sharp retracements.
The Slack messenger purchase for USD 28 billion: what do you need to know?
Many companies try to take advantage of cheap loans and high stock prices. On Wednesday, December 2, the American developer of the business process automation systems – the Salesforce (CRM) company – announced a purchase of a popular corporate messenger (Slack) for USD 27.7 billion. The goal of the merger is to unite the company efforts for development of a branched software ecosystem for business.
In the last few years, Salesforce has been one of the most active players in the merger and takeover market. The company acquired the Tableau visual analytics service in 2019 for USD 15.7 billion and several dozens of smaller companies. The Salesforce ambition is to join the elite group with capitalization of more than one trillion dollars, becoming a peer to Google and Microsoft in the software market. The company was worth USD 200 billion at the moment when this review was written.
Not all Wall Street analysts are happy with these new purchases. As a result, the company stock (CRM) reacts to the news with a crash on a big volume.
However, it might well be that Salesforce becomes a new Wall Street star, since it has a number of crucial components for this:
Technology. The company has been on top of the Forbes The World’s Most Innovative Companies rating for several years, developing CRM systems on the basis of cloud computations and a lot of accompanying products.
Investors’ trust. The company estimates are extremely high and stay at the Tesla level.
Charisma of its Director General, billionaire Marc Benioff, who is well-known for his social activity and weight among colleagues.