Welcome to Extreme Investor Network, where we break down all the wild market action from this week and provide valuable insights for investors at home. In a time of low macro visibility and uncertainty, it can be challenging to navigate the markets. However, we are here to help you make sense of it all.
One key development to watch is the decoupling from the Japanese yen carry trade. The currency strengthened dramatically on fears of higher rates in Japan, but Bank of Japan officials have indicated they will not raise rates in the current unstable market environment. This has resulted in a drop in the Invesco CurrencyShares Japanese Yen Trust (FXY), signaling a decline in the yen.
On the other hand, the Cboe Volatility Index (VIX), also known as Wall Street’s “fear gauge,” remains elevated, indicating expectations for heightened volatility in the coming weeks. The VIX futures curve is in backwardation, suggesting concerns about the macro environment and seasonal weakness persisting in the months ahead.
Despite these challenges, the consensus is that we are not currently in a recession, although the economy is slowing. Travel and hotel companies have reported a modest slowdown, highlighting the need for cautious optimism in the current economic climate.
As we navigate through this period of market turbulence, it’s important to differentiate between a correction and a bear market. While we are currently experiencing a correction, characterized by concerns about potential risks, it is not yet a full-blown bear market where significant downturns occur.
During times of market volatility, it is crucial to remain level-headed and stick to a long-term investment plan. Avoid letting emotions drive your decisions and take a lesson from history. Remember, selling during panics is often a mistake for long-term investors. Instead, think like a seasoned investor with years of experience behind you – act like you’re 200 years old, not 2 years old.
By staying calm and focused on your long-term goals, you can weather the storm and come out stronger on the other side. At Extreme Investor Network, we are here to provide you with the tools and insights you need to succeed in the ever-changing world of trading. Embrace the challenges, stay informed, and most importantly, stay invested for the long haul.