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The broader stock market managed to recover some lost ground over the past month. While Russia’s invasion of Ukraine continued to drag on for the 9th month. Supply constraints seem to have eased as inflation data released in December showed a mild slowdown in price increases. Despite the ease in price rises, concern for the state of the global economy is still on the rise.
Source: TradingView
Stock Market Dead Cat Bounce or Start of Bull Market?
The stock market saw some recovery from the recent concerns of high inflation and the consequential effects of Federal Reserve interest rate hikes. The month of November saw inflation data slow slightly.
And more importantly, the long-desired Federal Reserve pivot to easing monetary policy may be getting closer. The Federal Reserve chairman, Jerome Powell, said in a speech on November 30, that there would most likely be a reduction in the size of the next hike.
The stock market reacted positively to this news and the S&P 500 jumped from 3853 to end the day at 4088. Which equals a 6.1 percent increase in only one trading session. Overall, the S&P 500 is up by 5.62 percent for the month of November. Year to date, the S&P 500 is still down 15 percent.
What remains still to be seen is how quickly the Federal Reserve will decelerate monetary tightening, and how much lost ground might the stock market recover thanks to that.
Cryptocurrencies Hold Their Ground
The crypto winter seems to never thaw, as debilitating news keeps hitting the market. Usually when we think we have just cleared the most recent bad event. At the beginning of November, rumors started arising that FTX may be facing liquidity problems and was about to collapse.
On November 11, reports hit the headlines that FTX and partner firm Alameda Research had filed for bankruptcy. The matter of FTX’s demise is still under investigation and it yet remains to be seen whether Sam Bankman-Fried committed fraud as some analysts suggest or it was simply bad management.
In any case, apart from an initial selloff of the main crypto coins in the two days running up to the official news of FTX filing for bankruptcy, the market has since managed to stabilize. Bitcoin dropped from $20,675 to $15,512 before confirmation of the FTX debacle.
It has managed to trade in a range with that recent low as a floor and a top range of $17,250. This price range may hold unless there is more bad news. However, there seems to be a bottom creating around these levels for Bitcoin.
Crude Oil Drops $13 per Barrel
Crude oil prices have been very volatile over the past month, as they often are. WTI crude oil prices dropped $13 a barrel from their peak price on November 7. In November crude oil prices lost 15.9 percent from their high of $93.73 to current levels of $80.88 at the time of writing.
OPEC’s previous production cuts have done little to maintain the price of crude oil at the organization’s target level. Many analysts see the price of crude oil dropping further due to a global economic cooldown.
To maintain the price of crude oil above or around OPEC’s target level of $90, we will probably need to see the organization agree on further supply cuts to balance the reduction in global demand. From the demand side, a lot will have to do with how the situation evolves in China, where lockdowns are still implemented on a broad basis.
Wrapping Up
We always recommend investors allocate cash to a diverse choice of assets. Those actively managing a stock portfolio should invest in a wide range of stocks. We have created a list of the best investment newsletters to help you make better-informed decisions.
While investing in a diversified portfolio of assets allows you to reduce your overall risk. Assets whose returns are not correlated to each other are the way to achieve this. You may want to consider adding precious metals, you can read our reviews on the top gold companies here.
Mark Turner is an author and editor at Sophisticated Investor. He has over two decades of experience in the financial industry as a broker in both Chicago and New York and has written for several top tier publications. He currently covers the topics of alternative investments, geopolitical events, US economy, portfolio diversification and others.
