January 19, 2021

Stocks Futures Move Higher, Bitcoin Waits For A New Catalyst

Stocks Futures Move Higher, Bitcoin Waits For A New Catalyst

European and U.S. stock futures are moving higher as traders start to focus on more positive things. Firstly, traders are optimistic about the narrative that is coming out of the President-elect’s administration.

Janet Yellen, former Fed Chairwoman and now the upcoming Treasury Secretary, has indicated that the U.S. needs to spend big to bring back economic growth.

This particular stance of hers is very much in line with President-elect Joe Biden’s view. Fairly recently, Biden announced his vision of the next stimulus package, which is in the trillions.

There is no doubt in saying that the stock market is very used to the idea of having support from fiscal and monetary policy.

Without this support, bulls are just not ready to move. In other words, it is like saying that a car isn’t going to move without the fuel.

The moment traders and investors hear the word stimulus or spending big; they know that this means that the U.S. economy is going to shift into a higher gear, and this means that the stock market is going higher.

Having said that, one particular sector that may not see much love among investors is airlines. That is because Biden favours health over economy.

This means that the optimism that we saw yesterday on the back of news that the U.S. may lift travel restrictions for Europe and Brazil doesn’t sit right with Biden.

Basically, Donald Trump mentioned yesterday that travel restrictions would be eased off for the abovementioned regions. However, it is unlikely that Biden will follow that order as he takes the U.S. President’s Office tomorrow.

This means that business travel remains closed, and the airline industry is unlikely to return to its glory days. However, we may be approaching the end of this dark tunnel as lawmakers in the U.S., Europe, and other parts of the world continue to put more efforts into vaccinating more people. Perhaps, by Easter, we are likely to see the airline industry picking up more strength as compared to now.

Tesla Stock 

In terms of stock news, investors will be cheering the fact that Tesla has delivered the first Shanghai made Model Y in China. There is no doubt that China is the second-largest economy in the world, and the potential for electric vehicle penetration is mammoth.

It is true that investors have largely priced in the potential of this, and the competition within China for electric cars is highly likely to become more intense. This means that Tesla has a very short period of time to penetrate the market by using its brand’s power before consumers start looking at much cheaper e-vehicles.

China And U.S. Tensions

In terms of geopolitical tensions, there doesn’t seem to be an end in sight. Both the U.S. and China continue to fight a cold war and continue to slap sanctions on the other.

China has said that it will answer the U.S. sanctions in equal weight, as Beijing is highly disappointed with the U.S. involvement in Taiwan.

Once again, all of the geopolitical tensions, especially in relation to Taiwan, have been during the Trump era. The optimistic side is that Biden’s administration will smooth-out some of these tensions. 

Gold Price Pauses Its Rally   

In terms of commodity news, gold prices are pausing after a decent rally that we saw yesterday. The RSI is still close enough to the oversold region, which means that the bulls have a real chance to challenge the 50-day SMA on the daily chart.

On the fundamental side, the dollar index‘s strength very much triggered the downtrend, but today, investors are more hopeful about the next potential stimulus package, especially that the upcoming Treasury Secretary, Janet Yellen, has indicated to favour Biden’s policy. 

Bitcoin: A New Sheriff 

Crypto King Bitcoin continues to consolidate as the new Sheriff takes the helm of the SEC. This particular individual, Gary Gensler, has much more knowledge about digital assets as he has been involved at MIT in this space.

One thing that traders are betting on is that the new SEC head is less likely to ignore misconduct on Wall Street, and it is likely that we may see him making a good example of bad players.

All of this doesn’t necessarily mean the landscape is going to change for Bitcoin traders, but in fact, something that could favour the crypto king is the fact that some bad apples may be thrown out.

The new SEC’s head is going to take a much tougher stance on subjects like money laundering, which has given a bad name to digital assets.

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