Hope you're enjoying the holiday season so far. To all our clients and colleagues in the UK and across Europe, we wish you a very happy Boxing Day!

Trading during the holidays is kind of like bowling with half the pins. Needless to say, results can be rather unpredictable. 

Across Europe and the Americas, even though the markets are open periodically, large investors tend to take the entire week off from Christmas to New Years. In other words, the lights are on but nobody's home.

Many times they'll hand the keys over to their assistant or to the mid-level executives with explicit instructions not to touch anything unless the markets get ugly. Well, this year the markets are already ugly going into the holiday. So the handlers probably have different type of instructions, possibly more detailed, but we can only speculate as to what they may be.

Traditional Markets

Over the weekend, the President of the United States has reportedly posed a question to his advisors, one that stunned everyone in Washington and half of New York. Can the President of the United States fire the Chairman of the Federal Reserve?

The fears have now largely been assuaged as the President in what may be a Christmas miracle has now publicly expressed support for the Fed.

For those wondering, the answer is... probably. Though it's never been done before, if Trump said his famous catchphrase "you're fired" to Jerome Powell, it would probably be binding. However, the effect on the stock market and the economy would be extremely unpredictable. 

The Fed is supposed to be independent of the government and above partisan politics. That's the only way this system works. Should that dynamic be called into question, it would certainly raise harsher questions about the relationship between the government and money.

Steven's Liquidity Issue

In a seemingly unrelated but no less bizarre incident. The US Secretary of the Treasury, Steven Mnuchin published the following very fancy letter.

TL;DR: Steven called the heads of 6 major banks in the USA to verify that they have enough liquidity.

This just seems to be a very odd thing to confirm at the moment. First off, nobody was really asking about the levels of liquidity within the top banks in the first place, so it does seem strange that the Secretary feels the need to express that it's there.

Second, with the amount of money that's been injected into the financial system over the last decade, the bigger problem would probably be too much liquidity rather than a lack thereof.

In short, this statement has probably raised more questions than it has provided answers. However, I'm not really concerned about this. Working in an office, we often see people who glorify the work they do or over-embellish things. That's probably all this is. Steven showing the people that he's doing his job.

Crypto: Bounce or Reversal

Though it was very nice to see a rally in the week leading up to Christmas, it seems the crypto market is once again playing defense.

A very sudden drop was experienced during the Asian session on Christmas morning, snapping through the new trendline and breaking the momentum that the market was working so hard to build.

At this point, the market can be seen within a range from $3,650 to $4,200.

A breakout to the downside could certainly see bitcoin testing the yearly lows once again. On the other hand, a breakout to the upside could have us testing a $6,000, a level that if broken could signify the end of the bear market.

Still, I have noticed a very distinct trend over the last week that the cryptos gaining most during the upswings are the cryptos that have negative stigmas around them. So it is still entirely possible that a good part of the upward pressure we've been seeing lately is due to short covering.