Daily Market News: Draghi’s last stand


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Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for October 24, 2019. The text below is an excerpt and does not contain the full analysis.


Hi Everyone,

Of the many takeaways from Zuckerberg’s appearance on Capitol Hill yesterday, the one thing that stood out for me was a comment from Representative Tom Emmer who pointed out that a vast majority of the questions being asked were ill-prepared and/or unrelated.

Congress is nowhere close to catching up with some of the most basic technologies affecting our time.

Indeed, there were probably at least as many, if not more questions about Facebook’s community standards policy than there were about the Libra project.

Still, what seems to me is that Facebook’s strategy to highlight the difficulties of innovating in the United States, especially in the face of Chinese progress, has paid off handsomely. We do hope that Facebook is successful in its mission to bring regulatory clarity to crypto USA.

We’ll take a good look at the market reaction below.

Today’s Highlights

  • Crypto volumes return: When bitcoin gets volatile, volumes go up. Most notably, Bakkt futures hit a new high level of trading activity. The top 10 crypto exchanges saw about triple what they’ve been tracking over the last week.
  • Earnings reports confirm current trade wars inflicting real damage to business confidence: Maker of industrial equipment Caterpillar reported rather under performing earnings. Investors don’t seem too concerned, as markets still rallied to fresh highs.
  • Mario Draghi’s Legacy: Throughout his tenure, €2.2 trillion was injected into the global economy. His last major act as President was to reinstate the QE program, which is set to resume next month at a pace of €20 billion per month for the foreseeable future. Here’s to hoping that his successor will be able to do more with less.

Please note: All data, figures & graphs are valid as of October 24th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

One stock that is often seen as a bellwether for the global economy is the well-known maker of industrial equipment Caterpillar, who reported their earnings yesterday with a rather depressing outcome.

It’s now quite clear to all, that the current trade wars that have been dominating headlines over the last few years are inflicting real damage to business confidence. Even the game making giant Hasbro has blamed their recent troubles and a 15% drop in share price on the ongoing trade wars and tariffs.

What seems interesting to me, and I know I’ve been using the ‘R’ word a lot lately, is that investors don’t seem too concerned with CAT’s under-performance. Here we can see the initial dip when the report was published (purple circle), followed by a mean rally that took it to fresh highs.

Last Stand

Today we will bid a teary farewell to the outgoing president of the European Central Bank, who will deliver his last interest rate decision before leaving office next week.

Super Mario Draghi has had a pretty good run as the ECB boss. He will always be remembered as the man who saved the European Union with a 2012 speech in which he stated that “the ECB will do whatever it takes to preserve the Euro.”

In this case, what it took was a whole lot of money printing. So, let’s take a look at his legacy. Here we can see the ECB’s balance sheet from the time that he took office in November 2011 until today.

All in all, throughout his tenure, €2.2 trillion was injected into the global economy. His last major act as President was to reinstate the QE program, which is set to resume next month at a pace of €20 billion per month for the foreseeable future.

Here’s to hoping that his successor will be able to do more with less.

Crypto Volumes Return

Shortly before Zuck took the stage before the House Financial Services Committee, bitcoin broke a major level of support that it had been working on for almost a month.

Here’s a chart that was tweeted by stock analyst Mark Dow moments before the movement. He totally called it, possibly even caused it.

As we’ve often seen in the past, when bitcoin gets volatile, volumes go up. Yesterday was no exception. Most notable are the new bitcoin futures contracts on Bakkt, which smashed a new all-time high level of trading activity. A total of 640 BTC changed hands with an estimated value of $4.8 million.

Across the top crypto exchanges, volumes saw a significant breakout. According to Messari data, the top 10 crypto exchanges saw about triple what they’ve been tracking over the last week.

At this point, it’s really unclear what caused the movement or how long the action will last. These things do have a way of snowballing and if we can build some momentum here it’s very possible we’ll be in for a larger movement up or down.

However, if the activity was solely surrounding Zuckerberg’s testimony or the downside breakout, it’s quite likely that volumes could fall back down as easily as they rose. So, I guess we’ll have to wait and see.

Have an incredible day ahead!


Mati Greenspan can be found on LinkedInTwitter, or etoro

This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.

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