The charts that matter: bitcoin surges to a new record high

As bitcoin storms through its previous record high price, John Stepek looks at how it's affected the charts that matter most to the global economy.

Welcome back.

First things first, keep an eye out for a very special podcast landing in your inbox on Monday morning – Merryn has interviewed one of our favourite financial market analysts, Russell Napier. I won’t give you any spoilers here – suffice to say, it’s a must-listen. Don’t enter 2021 without it! Look out for it, Monday morning, first thing.

In the current issue of MoneyWeek, we look at IPO fever – is it really such a bad thing in a decade that has seen equity markets shunned as a place to raise capital? – and our regular writers give their top tips for the year ahead. That includes me, and I can only say I hope I do better than I did last year… get your first six issues free here if you don’t already subscribe.

Also in this week’s podcast, after a succession of guests and City professionals and people whose opinions you might actually want to hear, I finally join Merryn again to chat about V-shaped recoveries, investment ideas for 2021, and how all in all it’s been a very weird year in more ways than one. Merryn also interviews a pair of entrepreneurs to find out how startup companies have coped in what certainly felt like a very hostile environment. Have a listen here.

Oh and just on podcasts – if you have the time or the inclination and the option to do so, do please leave a review (preferably a five-star one) on whatever podcast platform you use. It’s not just for our egos – the more good reviews we get, the more listeners we attract, and the more resources we can invest in developing the podcast to make it even better.

Speaking of IPOs, that’s what our latest “Too Embarrassed To Ask” video is all about. So if you’re confused as to what an IPO is, or why it happens, you can dispel that confusion in a little over two minutes’ viewing by clicking here.

And just to say – this’ll be the last Saturday edition of Money Morning until 9 January. But your daily Money Morning will soldier on through 2020 for a while longer.

Anyway, here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Now for the charts of the week.

The charts that matter

Gold made a comeback this week as the most important event of all – the Federal Reserve’s latest meeting – passed by without any sign that the Fed will even consider raising interest rates until inflation is well and truly upon us. With a signal of intent that clear, it’s almost a surprise that gold isn’t higher than it is.

Gold price chart

Gold price chart

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) slid decisively after the Fed meeting, and it’s getting harder and harder for dollar bulls to maintain the idea that this is a passing correction.

US dollar chart

US dollar chart

(DXY: three months)

The Chinese yuan (or renminbi) carried on rising against the US currency (when the black line below rises, it means the yuan is getting weaker vs the dollar). At some point, the Chinese will start to feel that this is a problem – it’s not good for their manufacturers – but so far we haven’t reached that point.

CNY/USD chart

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond was little changed, but drifting higher.

US Treasury bonds chart

US Treasury bonds chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year stayed nailed to the floor.

Japanese bonds chart

Japanese bonds chart

(Ten-year Japanese government bond yield: three months)

The yield on the ten-year German Bund perked up imperceptibly from last week.

German Bunds chart

German Bunds chart

(Ten-year Bund yield: three months)

Copper kept rising as investors become ever more convinced of the “green bubble, reflation bonanza” scenario for next year.

Copper price chart

Copper price chart

(Copper: nine months)

The Aussie dollar made further gains as it benefits both from demand for commodities and from the weakening US dollar.

AUD/USD chart

AUD/USD chart

(Aussie dollar vs US dollar exchange rate: three months)

Cryptocurrency bitcoin had a stellar week. It finally broke decisively above the 2017 high, amid signs that it’s going mainstream.

Bitcoin price chart

Bitcoin price chart

(Bitcoin: three months)

US weekly jobless claims rose even further this week, coming in at 885,000, compared to 862,000 last week (which was revised up from 853,000). Economists had been hoping for closer to 800,000. The four-week moving average rose to 812,500 from 776,000 the week before.

US jobless chart

(US jobless claims, four-week moving average: since Jan 2020)

The oil price (as measured by Brent crude) also surged higher this week as more investors buy into the reflation trade as mattering more than the longer-term “we don’t need oil anymore” trade.

Brent oil price chart

Brent oil price chart

(Brent crude oil: three months)

Amazon drifted again as the background music grows ever more hostile to Big Tech, and because it’s also not a reflation trade stock.

Amazon share price chart

Amazon share price chart

(Amazon: three months)

Meanwhile Tesla just kept going as its promotion to the S&P 500 looms next week. I am very curious to see what happens when it goes up into the “grown-up” index. Will that mark the top? Will the weird option-related shenanigans that have helped the stock cease to function properly? Will it be a case of “buy the news, sell the event”? We’ll soon find out, just in time for Christmas.

Tesla share price chart

Tesla share price chart

(Tesla: three months)

Have a great weekend. And don’t miss the Russell Napier podcast – it’ll be in your inbox bright and early on Monday!

Recommended

Changpeng Zhao: Binance founder undaunted by the crypto winter
Bitcoin & crypto

Changpeng Zhao: Binance founder undaunted by the crypto winter

Changpeng Zhao, the founder of controversial cryptocurrency exchange Binance, has been severely battered by carnage in the sector. But the future is b…
3 Jul 2022
Ray Dalio’s shrewd $10bn bet on the collapse of European stocks
European stockmarkets

Ray Dalio’s shrewd $10bn bet on the collapse of European stocks

Ray Dalio’s Bridgewater hedge fund is putting its money on a collapse in European stocks. It’s likely to pay off, says Matthew Lynn.
3 Jul 2022
Just how powerful is artificial intelligence becoming?
Tech stocks

Just how powerful is artificial intelligence becoming?

An uncannily human response from an artificial intelligence program sparked a minor panic last month. But just how powerful are machines getting – and…
2 Jul 2022
Persimmon yields 12.3%, but can you trust the company to deliver?
Share tips

Persimmon yields 12.3%, but can you trust the company to deliver?

With a dividend yield of 12.3%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate compa…
1 Jul 2022

Most Popular

Five dividend stocks to beat inflation
Share tips

Five dividend stocks to beat inflation

During periods of high inflation, dividend stocks tend to do better than the wider market. Here, Rupert Hargreaves pick five dividend stocks for incom…
30 Jun 2022
Don’t try to time the bottom – start buying good companies now
Investment strategy

Don’t try to time the bottom – start buying good companies now

Markets are having a rough time, so you may be tempted to wait to try to call the bottom and pick up some bargains. But that would be a mistake, says …
1 Jul 2022
UK house prices are definitely cooling off – but are they heading for a fall?
House prices

UK house prices are definitely cooling off – but are they heading for a fall?

UK house prices hit a fresh high in June, but as interest rates start to rise, the market is cooling John Stepek assesses just how much of an effect h…
30 Jun 2022