Fed May Have Hinted at Major Policy Change
- Minutes from July’s Fed meeting were published on Thursday, discussing the economic situation in the US and current interest rates.
- However, the most interesting takeaway may be that the Fed implied that it may change one of its most significant policies. One of the Fed’s main goals is to keep inflation at no more than 2% a year. And yet, rumours say that it may be changed to an average of 2% a year.
- This means that if this year’s inflation rate will be lower than 2%, the Fed will allow higher inflation next year.
- If that’s true, the USD may react negatively, the stocks market may react positively and gold could soar to new heights.
- At the same time, the SPX500 reached a fresh all-time high last week.
OPEC Expects oil Demand Recovery
- At last week’s OPEC meeting, Saudi Arabia Energy Minister Abdulaziz bin Salman Al Saud claimed that according to the average forecast of various agencies, including OPEC, EIA and IEA, global oil demand will reach about 97% of pre-epidemic levels in the fourth quarter of this year.
- As of last month, OPEC has reduced the production restrictions by 200 million barrels per day.
- From a fundamental standpoint, the positive outlook of oil demand could incentivise investors to buy, and potentially push the oil and energy sectors to a higher price towards the end of the year.
Bitcoin Cracks $12K
- Bitcoin broke the $12K level this week, albeit for about 36 hours. Overall the price action is making higher lows in the short term, which suggests bullish momentum.
- The amount of Bitcoin currently held on exchanges is at its lowest level since November 2018, which indicates a current “HODL” mentality amongst investors.
Apple at $2T, Tesla at $2K
- Apple’s market cap reached another all-time high last week, becoming the first American company to hit the $2 trillion mark. That’s as much as Italy’s GDP.
- The recent uptick has several explanations: The success of Apple Pay and the recent acquisition of Mobeewave suggests that Apple is becoming a strong Fintech player, on top of its other business verticals, and the recently-announced stock split may have also attracted new investors.
- Tesla hit a milestone of its own last week, reaching a share price of $2,000 for the first time in its history, maintaining its position as the world’s most valuable automaker and making Elon Musk the 4th-richest person in the world.
The Week Ahead
- The Fed’s annual Jackson Hole Symposium, with panels and speeches from top Fed officials, including Chair Jerome Powell (Thursday-Friday).
- Participation expected from both Bank of Canada Governor Tiff Macklem and Bank of England Governor Andrew Bailey.
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.