Danger of impeachment

Sometimes one has a feeling like the internet is giving them unbelievable opportunities. And sometimes one has a feeling that the internet took democracy from them. We do have unbelievably fast media and never-ending plurality because of the internet. There are so many opinions and news that one can’t distinguish real from fake and important from unimportant. Which is somehow complicating the legibility of world especially in the connection with the fact that not only Russia but the rest of the world is as well ruled by oligarchs who think that they are endlessly smart and unshakable. It is true even in the USA.

A fairly surprising news that has a strong potential to influence the financial markets came from the USA. The American president D. Trump is in a danger of impeachment, meaning the constitutional legal action leading to dismissal from the office for pressing the chief of FBI to not investigate his former security adviser who was accused of cooperation with Russia. On top of that, the pressure on Trump is growing because he told the Russian president significant military secret. However, the Russian president stated to the media today that the American president didn’t tell him anything. By doing that he stood up for the American president but didn’t calm down the situation in any way, on the contrary, he only added the fuel to the fire of speculators that Russia has financed Trump’s campaign and now it’s covering for him.

That started a spiral of hypotheses that are all leading to the democracy being rotten. Logically, that immediately rose worries among speculators that Trump won’t be able to unite the American parliament and enforce what he has been planning before the elections at this disturbing situation. That’s why the stocks are dropping and the dollar is depreciating. Let’s remember how the financial markets were growing in expectations at the beginning of the year that almost omnipotent Trump will fix the world. The excitement and the golden aura have vanished like when you swoosh a magic wand at least in the eyes of the financial speculators. Gold is thanks to that quickly growing. The market is looking for a safe haven just like I have been already mentioning last week. The price has been still under 1220 dollars per ounce on 10th May and now it is at 1248 dollars.

It is a habit of politicians that when the situation gets serious they are trying to divert the attention. That’s why there is a logical chance that Trump could surprisingly send a couple of missiles on North Korea like he did some time ago in Syria. Media would be paying attention to the chance of the nuclear war and not to the impeachment. But today the gold hasn’t even reached its twenty-day average yet. That’s why I think it still has more space for growth.
In the light of all these events, the dollar depreciated against the euro today to the weakest value since D. Trump has been elected into the office. That is a really weak exchange rate. The twenty-day average is stronger by two cents. If Trump won’t do some other misstep and handles the situation this time as well, I think the dollar is going to return to the stronger values. The current exchange rate is not matching the strength of the America. (It would be of course different if the impeachment was really set into the motion which is something I’m not betting on.)

Marketa Sichtarova, Vladimir Pikora

The gold is looking good

The financial markets are once again optimistic. They are STILL (!) living by E. Macron’s victory in the French presidential election. But it was a stress for the multinational corporations. Le Pen could hypothetically cause them significant losses with her fight against globalisation.

Thus, Macron’s victory torpedoed the gold. The price returned where it has been last time in March. The investors are not fearing the political instability anymore but they are rather looking at the interest rates and as it is known the gold is not carrying any interest which should lower its price even more. The current price is 4 dollars under the 100-day average - which is not a bad price for buying. Why?

Unlike others, I am assuming that Macron’s winning doesn’t mean we have all the complications behind us. Korea is going to return like a boomerang. And there is one more thing: There is a new indicator of the risk apart from the gold and that is bitcoin. It has always been growing when somewhere on the planet the governments are getting stricter. One time it was Cyprus, one time India and one time China. Bitcoin reached its new all-time high yesterday.

It reached even to 1750 dollars at one moment. Its exchange rate was 778 dollars a year ago and less than a month 1150 dollars. So the investors seeking the risk are seeing risk even now after Macron’s victory. To buy bitcoin now in this phase of the sinusoid is in my opinion too late but the time doesn’t have to be bad for gold...

Macron is making the speculators happy

The European stock exchanges are growing to the twenty-month high. They are being helped by the recent television duel of candidates for the French presidency.

The duel – at least as many are claiming – “won” E. Macron. The conviction that Macron is going to win the election is reflecting also in the bond market where there is actually the lowest difference of yields of French and German bonds in a plenty of months. That’s why the dollar erased its previous profits.

It is clearly showing that what is going to influence the financial markets in following days is going to be the French election. It’s counting on Macron’s victory. If it comes true it won’t influence the market much. But the bigger commotion would set in if the polls were wrong just like they were about BREXIT and Le Pen would win. Then sharp depreciation of the euro would come (appreciation of the dollar) by several percent, fall of the European stocks and also of the French bonds.