On December 13, 2019, China and the United States formally reached an agreement on the text of the first-stage economic and trade agreement. This reflects the common demands of both China and the United States to ease trade conflicts and improve trade relations. The conclusion of the agreement avoids the escalation of disputes. It is expected to bring a certain boost to the economies of both sides and mitigate the impact on global economic trends, while increasing global financial markets Risk appetite.
Driven by the good news, global stock markets performed well in the closing phase of 2019, and the A-share Shanghai Stock Index returned to the 3,000 mark. At the same time, the US S & P 500 Index was a strong record since 2013 after a wave of rapid rises. There is no doubt that this "excitement" of market sentiment shows that investors or traders are confident in the market's prospects.
However, a more "intriguing" phenomenon has appeared in the market. That is, gold did not show a significant pullback after the news that seemed to be unfriendly to safe-haven assets landed. Instead, it regained weight quickly after a period of sideways. Pick up the rally. At the same time, during the first half of this year, the "emerging risk-averse assets" bitcoin, which has been widely accepted by the market, also performed very lightly during this period. The price has remained horizontally in a narrow range of about $ 500.
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Why does the market's risk appetite increase significantly while some of the more representative safe-haven assets do not show a large outflow of funds and a significant drop in prices? This is greatly related to the interpretation of the "crisis easing" of Sino-US trade frictions by mainstream market views.
Gregory Draco, chief U.S. economist at the Oxford Economics Research Institute, pointed out that no matter how much China and the United States have made, it will no longer be possible to completely eliminate the damage that the "trade tug of war" has caused to the two countries and the global economy. The conclusion of the first phase of the agreement may have very limited positive effects on the economic growth of the two countries.
The Nomura Global Market Research team pointed out that there is still a lot of uncertainty in the future. As U.S. Trade Representative Lighthizer said, any change in implementation may lead to a "sudden rebound" in tariffs, which may lead to long-term uncertainty. This is another aspect of business confidence and investment that may not substantially rebound. One reason. Although the conclusion of the first-phase trade agreement has stimulated global financial markets in the short term, the market still lacks confidence in US President Trump's variables at the implementation level. .
Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, pointed out that China and the United States reaching agreement on the text of the first phase of the agreement does not mean that everything will be fine. After all, the United States has previously shown a "spirit of abandonment". The United States is likely to have a financial crisis and a depression in the real economy in 2020. Once this happens, their motive for China's compliance will definitely weaken.
The market generally believes that in the short term, China and the United States each take what they need, but the long-term nature and complexity of the reconstruction of the two countries' trade systems have not fundamentally changed, and there are still various variables in the specific implementation level of economic and trade agreements. The overall trend of Sino-US trade still has a long way to go. And this uncertainty has directly led to the "strange" response of the global financial markets mentioned earlier.
The performance of gold prices in the past week or so has made this expectation more realistic. Under the circumstance that the stock market has continuously created new highs, the US dollar index has rebounded rapidly in the short term, and the market risk appetite has quickly picked up, a series of "should" suppressing the price of gold have been "ignored" by gold prices. The strength has been validated.
George Gero, managing director of RBC Wealth Management, said that when gold is indifferent to bearish news, it means that positive signals for the price of gold have appeared. The market performance in the recent period shows that gold is conducting "forward-looking hedging" of potential risks. The rapid rise in gold prices in the short term means that investors' hedging needs are very strong. When the heat of the stock market explodes until overbought conditions occur, a certain amount of funds will inevitably flow out of the stock market. Gold and the yen were once the first choice for this type of funds, and Bitcoin has clearly entered the market in 2019. Safe-haven assets.
In general, due to the high level of economic development of China and the United States, competition between the two sides in the economic and technological fields is inevitable. The long-term competition between the two countries in the economic and trade field makes the complexity of Sino-US trade relations still difficult. eliminate. This means that the market's hedging demand will continue to exist for a long time to come.
Compared with the "reward halving" event, which has a great influence on the market, the favorable support of risk aversion for the price of Bitcoin may be the most convincing "argument" for Bitcoin in 2020.