A Potentially Decisive Day for the Future of Markets
The US stock market continues to tear and toss. The formal reason is the same - the successful start of the reporting season. More than 70 companies from the S&P 500 index have already reported financial results. According to Earnings Scout magazine, 86% of companies exceeded their ratings. Overall, third-quarter earnings are forecast to rise 35% over last year.
Such a significant increase in profits dispels the main fear of the markets - the growth of inflation provokes an increase in companies' costs, as a result of which their profits decrease.
In our opinion, the exhalation of relief is still hasty, especially in the context of what is happening on the world energy market. Yes, and yesterday's data on inflation in the UK, Eurozone and Canada showed that the central banks have less and less room to maneuver and will have to raise the rate.
According to Bloomberg, by September 2022, almost all leading central banks (with the exception of the Bank of Japan) will raise the rate. Moreover, the Bank of England will do this 4 times, and the Bank of Canada 3 times.
So it's too optimistic to talk about the lack of alternatives to the growth of stock indices. In general, today can be decisive. The fact is that at the same time a number of markets and assets have approached key levels or historically important points.
The Fear Index (VIX) is storming the 15.50 support that separates pre- and post-pandemic realities. The SP500 index approached the trend line and all-time highs. Bitcoin, although at first glance broke through 65K, which opens the way for further growth, in fact, it can demonstrate a false breakout. The Dollar Index is storming the crucial support at 93.50.
In general, either all these levels will be broken at the same time, and we will receive a powerful inertial impulse. Or we will see a synchronous rebound with all the consequences that follow in the form of a rise in the dollar, a correction in the US stock market, a decline in the cryptocurrency market and an increase in the Fear Index.
Such a significant increase in profits dispels the main fear of the markets - the growth of inflation provokes an increase in companies' costs, as a result of which their profits decrease.
In our opinion, the exhalation of relief is still hasty, especially in the context of what is happening on the world energy market. Yes, and yesterday's data on inflation in the UK, Eurozone and Canada showed that the central banks have less and less room to maneuver and will have to raise the rate.
According to Bloomberg, by September 2022, almost all leading central banks (with the exception of the Bank of Japan) will raise the rate. Moreover, the Bank of England will do this 4 times, and the Bank of Canada 3 times.
So it's too optimistic to talk about the lack of alternatives to the growth of stock indices. In general, today can be decisive. The fact is that at the same time a number of markets and assets have approached key levels or historically important points.
The Fear Index (VIX) is storming the 15.50 support that separates pre- and post-pandemic realities. The SP500 index approached the trend line and all-time highs. Bitcoin, although at first glance broke through 65K, which opens the way for further growth, in fact, it can demonstrate a false breakout. The Dollar Index is storming the crucial support at 93.50.
In general, either all these levels will be broken at the same time, and we will receive a powerful inertial impulse. Or we will see a synchronous rebound with all the consequences that follow in the form of a rise in the dollar, a correction in the US stock market, a decline in the cryptocurrency market and an increase in the Fear Index.
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