Wednesday , November 25 2020

The classic 60:40 rule loses its meaning, the role of bitcoin becomes stronger



Trillions of governments and central banks committed to dealing with the economic catastrophe caused by the epidemic have increased almost all types of assets, and after March the violent mood is noticeable especially on the stock market and cryptocurrencies.  Photo: Reuters

Trillions of governments and central banks committed to dealing with the economic catastrophe caused by the epidemic have increased almost all types of assets, and after March the violent mood is noticeable especially on the stock market and cryptocurrencies. Photo: Reuters

Even the world’s biggest managers wonder if the classic investment rule – 60 percent in stocks and 40 percent in bonds – still applies.

Jernej Kastelic (NLB)

This year is really special in the financial markets as well. The Fed and other central banks have been much more aggressive than in the previous financial crisis. One of the consequences is also a record amount – more than $ 17 trillion – of debt securities, the yield of which is now negative. That’s why the world’s biggest managers are wondering if the classic investment rule – 60 percent in stocks and 40 percent in bonds – still applies. The consequences are in other markets. Given the unprecedented increase in the money supply in the United States, some analysts are confident that the dollar will continue to lose, and stocks are promised a record end of the year. Gold has been gaining value for most of this year, but Blackrock, which manages nearly $ 8 trillion in assets, says it will lose its importance in the future because of digital currencies that have better features.“, Said Jernej Kastelic, head of the group for trading in financial instruments in NLB.

The value of bitcoin increased by 35 percent in November alone and yesterday was just under 19,000 US dollars.  Photo: Pixabey

The value of bitcoin rose by 35 percent in November alone and was just under $ 19,000 yesterday. Photo: Pixabey

Bitcoin is getting closer to a record $ 20,000
As cryptocurrencies continue to rise, the XRP (wave) jumped 60 percent in the last week to $ 0.463, and bitcoin is approaching the record of December 2017, when its value was 20 thousand dollars. Yesterday, it was mostly just under $ 19,000. The $ 18,000 limit is very important, if it lasts, a new record will appear. More serious correction, which is occasionally indicated, is still receding. Although the most important cryptocurrency has gone from $ 3,600 to $ 18,700 in just eight months, the selling pressure is quite small and there are more and more institutional investors on the demand side.

Dow Unions (New York) 29,263 points (weekly change: + 0.7%)
S & P 500 (New York) 3,557 points (-0.8%)
Nasdaq (New York) 11,854 points (+ 0.2%)
DAX30 (Frankfurt) 13,076 points (+ 0.5%)
Nikkei (Tokyo) 25,527 points (+ 0.6%)
SBITOP (Ljubljana) 853 points (+ 2.3%)
10-year Slovenian bonds mandatory return: -0.11%
10-year US bonds mandatory return: + 0.83%
EUR / USD 1.1857 (+ 0,2%)
EUR / CHF 1.0798 (+ 0.0%)
bitcoin

18,350 USD (+ 15%)

Brent oil USD 45.09 (+ 4.6%)
gold

1,870 (-1.1%)

Euribor (six months) -0.509%

Analyst Michael Novograc, who is often bullish on bitcoin, notes that with more and more bitcoin investors moving gold (by the way: bull betting) hedge Gold price funds were close to the 17-month low on Sunday until November 17). He believes that real growth has just begun. He predicts that by the end of next year, the value of the coin will be between 55 and 60 thousand dollars.

Also this month, due to two reliable vaccines against covid-19, the enthusiasm for investing in gold has diminished, with increasingly pessimistic forecasts.  At the financial company Macquarie Group, they believe that the cyclical bull market is over and that prices have probably peaked.  Photo: Reuters

Also this month, due to two reliable vaccines against covid-19, the enthusiasm for investing in gold has waned, with increasingly pessimistic forecasts. At the financial company Macquarie Group, they believe that the cyclical bull market is over and that prices have probably peaked. Photo: Reuters

Gold buyers are betting mainly on inflation
Gold fell significantly for the second week in a row, in part because the United States still does not expect to adopt a new fiscal aid package any time soon. Finance Minister Stephen Mnuchin surprisingly noted that aid offered to vulnerable groups during the spring wave would be scrapped on December 31st. Gold prices, which usually rise when the world is in trouble, exceeded $ 2,000 by 31.1 grams ounces in the summer and then ran out of electricity. The outflow of tied gold ETFs is growing in November. The covid-19 vaccine eliminates a lot of uncertainty, but there remains (due to emergency measures taken by governments and central banks) the fear of inflation, which could increase the value of gold again in the future.

Similar expectations were already in 2011, when gold prices, due to all liquidity measures related to the 2008 financial crisis, exceeded $ 1,900 for the first time (at that time the eurozone was also threatened with collapse), but then the curve turned down, because the world did not face inflation, but deflation, and the eurozone withstood the turmoil. Therefore, data on inflation and, of course, the movement of the dollar will be crucial. When the dollar loses, it is almost always positive about gold prices.

With the news that they will be included in the calculation of the S&P 500 index this year, Tesla shares last week rose by 20 percent and again exceeded $ 500.  Photo: Reuters

With the news that they will be included in the calculation of the S&P 500 index this year, Tesla shares last week rose by 20 percent and again exceeded $ 500. Photo: Reuters

JPMorgan: In the US, GDP will decline in the first quarter
Oil prices rose significantly by almost five percent on a weekly basis, despite the threat of a resupply, so that it rose again above $ 45. In the background is the hope that Opec + will postpone the decision on the planned increase in production for at least three months. Wall Street, after two exceptional weeks in which the Dow ions rose by 11 percent, has lost slightly in the last five trading days, and the Nasdaq has risen. News of the effectiveness of the Moderna Coronavirus vaccine on Monday raised the Dow Unions and S&P 500 indices to new highs and then plummeted. Infections are growing exponentially around the world, and the measures are hampering the economy.

JPMorgan economists are the first to predict that the United States will experience a decline in GDP (one percent) in the first quarter of 2021. They forecast growth of 4.5% for the second quarter of 2021, and even 6.5% for the third. The Bubjan Stock Exchange SBITOP index rose 2.2 percent from Monday to Friday, after NLB shares rose 8.2 percent (again over 40 euros) and Krka by almost five percent. In the first nine months, Krka increased its net profit by 22% to 210.14m euros. Petrol’s profit halved in this period (to 40.5 million euros), and the share price slipped by one and a half percent on Friday to 314 euros.




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