S&P Breakout to New Highs Underway as ECB Cuts Rates to Record Low & Restarts QE, BTC & Gold Falls Flat
This Friday the 13th, there is nothing that is spooking investors.
This week several market events unfolded that has the S&P 500 and Dow Jones Industrial Average both coming close to touching the record highs.
To start with, the European Central Bank (ECB) announced a cut of 10 basis points to its deposit interest rates, to negative 0.5%.
BREAKING: The ECB just announced they are cutting interest rates and introducing a large stimulus package.
There is obviously a Bitcoiner inside the organization 🚀🚀
— Pomp 🌪 (@APompliano) September 12, 2019
The ECB also announced a substantial bond-buying program of 20 billion euros per month, as part of its QE initiative. Investors, as expected were pleased that ECB has taken to QE again, hoping the new program will give the global economy a much-needed push.
Draghi: Negative rates will not provoke the collapse of the financial system
— European Central Bank (@ecb) September 12, 2019
“The question remains whether this will be enough to reverse the damage caused by the geopolitical disturbances that have undermined corporate and investor confidence (at least towards cyclical assets) in recent months,”
said Michael Shaoul, chairman and CEO of Marketfield Asset Management.
European Central Bank, acting quickly, Cuts Rates 10 Basis Points. They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports…. And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!
— Donald J. Trump (@realDonaldTrump) September 12, 2019
Before this came the good news from President Donald Trump who said he would be delaying the planned increase of tariffs on Chinese goods as a “gesture of goodwill.”
Treasury Secretary Steven Mnuchin said the president “could do a deal any time” but won’t until “it’s a good deal.”
Meanwhile, the Labor Department reported that consumer prices slowed last month. While the Consumer Price Index — that is used as a measure of inflation — rose slightly in August, the core CPI measurement rose to 2.4%, the highest level since 2008.
Both the Dow and S&P 500 are inches away from the all-time highs set in July. The Dow seems to be on way to surpass the intraday record high of 27,398.68 (currently at 27,239.87) while the S&P 500 is closing in on its record of 3,027.98 points (currently at 3,013.03).
According to Capital Wealth Planning’s Jeffrey Saut, a sustainable market bounce is coming.
“Our work suggests where interest rates are right now that a fair market multiple on the S&P is 19 times earnings.,”
he said. “You’re still looking at above 3,100 on the S&P by year-end.”
“I’ve never wavered since October of 2008,”
“We’re in a secular bull market.”
The gold price has been up moderately the same as Bitcoin, which is trading at $10,295 with 24 hours gains of 0.21%.
According to Bitcoin bull and Fundstrat’s Tom Lee, strong S&P 500 rally would be the catalyst for Bitcoin ATH.
Now, it is to be seen when BTC first would push for a new 2019 high before breaking all records.