Ed Moya, Senior Market analyst at OANDA, joins us for a discussion on the general markets, Fed policy expectations, the rotation from growth to value, the precious metals sector, and the pullback in the cryptocurrencies. We start off noting the rough start to this week in the general markets, but that there does seem to be a rotation into some more defensive sectors like consumer staples, utilities, healthcare, and energy. We also not that that this recent pullback in some tech and growth stocks may be attractive to generalist investors looking perpetually to buy the dip near key moving averages.
Next we delved into how the market is now adjusting for an increase in the number of central bank rate hikes, to fight persistently high inflation, and that this may continue to pressure the general markets and US dollar, but be an environment where gold and the precious metals may get a bit more of a bid. Ed recaps that last year there were a number of factors working against a bid in gold, such as the move into surging cryptos, the strength of the general markets, and the strong dollar, but that many of those trends may be versing some as we get closer to the tapering of accommodative buying and the initiation of the rate hiking cycle.
We wrap up by getting Ed’s thoughts on the recent 40% crash in Bitcoin and pullback in many other cryptocurrencies over the last 2 months, and where he sees supporting coming in. Many of the market traders and commentators in the crypto sector had pivoted over to positions in altcoins, but with the recent underlying weakness in both Bitcoin and Ethereum, that just pulled down the whole sector. Despite many traders in the digital space rotating into NFTs and other DeFi companies in the sector, Ed still sees the recent bounce in Bitcoin from $37,600 up to $42,000 earlier this morning as proof there are plenty of investors on the sideline waiting to buy the dip.
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