Stock market shake

If you can’t make sense of what’s going on, you have to move your finger. There are no complaints from western market analysts about the disconnection of currency rates from the economic fundamentals. People are used to acting according to a pattern, but as soon as something starts to go wrong, the light fades, and you have to invent stories about inadequate market behavior. They have to tell investors: don’t follow us, we are lost too!
Today, authors of textbooks on fundamental analysis in their coffins are turning over themselves, or tearing hair on themselves. The dollar of the USA grows in response to weak statistics on States, the pound – in response to increasing risks of fruitless Brexit, and the “Australian” – in response to worsening international trade. Reading books written a few years ago is becoming stupid, and often harmful. It is like eating rotten fruit:

– What could be worse than biting off an apple and finding a worm in it?
– Bite off an apple and find half a worm in it!

Actually, it’s simple. The market is tired of traditional interconnections, where improved macrostatistics is perceived as an excuse for central bank rates to rise, which in turn increases the demand for assets and the currency in which they are nominated. The market needs a shake. And they only arise through new topics. In 2018-2019, such topics were trade wars, and in 2020, coronavirus. It is the pandemic that drives the U.S. stock indices, and those, in turn, the Forex instruments. If in March, COVID-19 drove the S&P 500 to the bottom, in April and May, rumors about a quick victory over the epidemic became the catalyst for the 40% rally. In June, the market began to fear the second wave, and Greed seems to be giving way to Fear again. Especially since a trade war could erupt at any moment.
I am responsive, intelligent, kind, and gentle, but not today. Donald Trump is once again criticizing Jerome Powell and threatening to break up relations with China, while Washington and Brussels cannot find common ground on the digital tax. Everyone’s right in their own way. Technological giants like Facebook are making huge profits from quarantined European users, and are adding to the American budget. On the other hand, in Robert Leitheiser’s words that many countries have decided that the easiest way to make a profit is to tax someone’s company, and these companies turned out to be American, there is also logic. But this has always been the case! In 2018-2019, the Chinese media called Trump the Robber, and the U.S. president claimed that it was the Celestial Empire that had been robbing the American people for decades, and it was time to end it!

Still, I want to believe that there will be no trade war, and if COVID-19 does not disappear on its own, as the White House master assures, it will be put under control. That’s two years ago, Trump could afford to choir, saying the States don’t need a trade agreement with China. Now the presidential election is on the line! The S&P 500 and a strong economy should be the main trump card. As for Beijing, if you don’t feel like it, it won’t work out very well.