When we look at the markets, the Japanese Yen continues to have an effect. For a long time, loans drawn from Japan were entering risky assets around the world. However, as a result of BOJ’s surprising interest rate hike of 0.15 basis points instead of 0.10 last week, positions in world markets are being closed and a currency that is constantly gaining value is being purchased on top of loans in Japanese Yen and returned to Japan. In other words, those who do carry trade are in serious trouble. Another factor other than Japan is that investors are pricing in the FED being late in the timing of interest rate cuts and putting the economy in trouble as a result of bad US data, especially employment data. When we look at the FED meeting last Wednesday, I can say that Powell was indifferent to the data.
Because he did not give a clear message that he saw weakness in the employment market. In addition, Powell did not use a definitive word regarding the interest rate cut in September. "I can imagine anywhere from zero to a few cuts, depending on how the economy develops, and I don't want to set a baseline for you today," he said. We had a shock in the data on Thursday and Friday, and Sahm's Rule (unemployment rate 3-month moving average rising 50 basis points above the latest 12-month low), but I don't think the labor market is as bad as it seems. Hurricane Beryl and seasonal layoffs may have misled the report. Also, the increase in the unemployment rate is due to the lack of new jobs rather than layoffs. But whatever the reason, this rate is not something that stands still, it moves in both directions, and in the medium term, it is upward.
While I still think the market should recover, if the Fed doesn't intervene while Japan is pulling all its liquidity out of the markets, those who have investments in Bitcoin, Ethereum, world stock markets, and commodities may be left to pick bread on the streets next week. In this process, only those who hedge their investments with the VIX will probably survive, and every time the FED doesn't intervene, the markets will fall and suffer after the positions are unwound. only VIX will continue to make profit. Right now, many people have learned the painful way to use VIX because they are not prepared. Those who have a position on the leveraged side but do not have VIX have disappeared regardless of the market. Those who are in profit in VIX and in loss in others have not been affected much by the situation. Those who have only VIX positions continue to make serious profits.
In the following process, I compare the situation to July 2007. Because at that time, the FED was late and then they injected liquidity into the market in August. The market saw a rapid recovery and peaked in October. While Japan is shaking the markets so much, I think opportunities will start when the FED puts money into the market. On the other hand, volatility will continue after this time. For this reason, in the VIX fear index, which I previously called an opportunity below 15, prices below 18-20 USD levels are now a buying opportunity.
With serious index sales in Ethereum, 2100 appeared. If there is no problem with geopolitics or liquidity, 2400 may be the last bottom support point. DAX tired to 17000 yesterday. Nasdaq broke 17900 but could not close below. If it can stay above 17900 in today and tomorrow's closings, the trend will turn upward. The movement may not be very fast, but the upward turn is inevitable. Although the ounce of silver tested below 27, it closed the day at 27.2. Partially positive, if there is no liquidity problem, it will continue on its way. In the other scenario, the possibility of 25 should not be ignored.
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