Risky Assets Rise on Retail Sales, Lira Storms

The last week of the year started on the most positive note for risky assets. The US stock market has reached new all-time highs and the impression is that it does not want to wait for the start of next year. Once again, we note that this is not the specificity of a single US stock market, but part of the general rally in risky assets, because cryptocurrencies were also growing yesterday, adding about 21%, and oil with almost 4% growth.

Markets have clearly gone into berserker mode, where all negative aspects are ignored. Both current news, such as the cancellation of thousands of flights in the United States alone due to the outbreak of the pandemic, and promising news, such as a change in the vector of US monetary policy, are ignored.

The expectation of a milder course of the disease caused by the omicron, as well as the figures for retail sales in the United States during the holiday season, which, according to Mastercard, grew by 8.5% compared to last year, were already chosen as reasons for growth. And since 2/3 of the US GDP is generated by the consumer sector, the news is extremely good for the economy as a whole.

Of course, in such conditions, going against the market is an extremely dangerous idea. But all this does not negate the fact that the dynamics are too one-sided for such a versatile fundamental background.

It is still volatile in pairs with the Turkish lira. As soon as the Central Bank of Turkey stops intervening, the lira begins to pour in. According to some estimates, last week the central bank burned about $ 8 billion in reserves to support the national currency. In general, a sharp increase in confidence in the national currency, which Erdogan had hoped for, did not happen - people did not run to banks with lira in order to put them on deposits, or with dollars to exchange for lira. In this light, we remind you about the sale of the lyre after its most powerful and, as it turned out, exclusively steroid growth last week.