A Sicilian Artist, 3.2 Tons of Bronze, and the Birth of an Icon

A Look at the Markets - S&P 500 & USDJPY

It has been a poor couple of weeks for the S&P 500. This may be caused by poor quarterly earnings results with Tesla and other technology stocks. On the one hand, you can see that such drops are not uncommon (orange circles) even in a bull (positive) market.

However, on the other hand, this could be a warning of something more significant happening in the markets. Let’s look at a chart of the dollar versus the Japanese yen (USDJPY).

The chart shows that the Yen is extremely oversold (i.e. weak) and perhaps a major correction is due. Will USDJPY drop to 150 or even towards 140? This could increase volatility in the stock markets and the crypto markets.

Where will the markets go from here? Time will tell but prepare for the possibility of increased volatility and potential buying opportunities.

August can be a very volatile time for the markets due to many traders being on holiday.

The Dead of Night in New York: A Sicilian Artist, 3.2 Tons of Bronze, and the Birth of an Icon

In the early hours of December 15, 1989, under the cover of night, an Italian artist named Arturo Di Modica brought a huge 3.2-ton bronze sculpture into the heart of New York City. With the help of a small team, he secretly, without permission, placed the massive artwork right outside the New York Stock Exchange as a gift to the people of New York. The police quickly removed it, but the public loved it so much that it was reinstated nearby less than one week later. Little did he know, his unpermitted creation would become one of Wall Street’s, and indeed New York’s, most famous symbols—the Charging Bull.

So that is how there comes to be a bronze sculpture of a bull in the financial district of New York. However, why did Arturo Di Modica choose a bull? And why when people describe the financial markets they often talk about a Bull Market or a Bear Market?

Let’s answer these questions in this newsletter.

The Bull and The Bear

There are two iconic symbols associated with the financial markets: a bull and a bear. Why have these two animals been chosen? The exact origin is uncertain but a clue may be in the attacking styles of the two animals:

• Bull: Attacks by thrusting its horns upward, symbolizing rising prices.

• Bear: Attacks by swiping its paws downward, symbolizing falling prices.

The bull has come to represent a symbol of optimism and rising markets. Whereas the bear has come to represent a symbol of pessimism and falling markets.

Arturo Di Modica arrived without any money in New York in 1970. Only 19 years later he was able to spend 360,000 dollars of his own money on the Charging Bull sculpture. Therefore, I believe that he chose a bull to represent the opportunity and optimism he found in the country. In addition, he was driven by the desire to inspire and uplift the public, particularly in the wake of the 1987 stock market crash (known as Black Monday).

A Bull Market

We have seen how the bull has come to represent optimism and rising stock prices. More generally, a bull market is characterised by investor optimism, increased buying activity, and expectations that strong financial performance will continue.

Though there is no precise definition, a bull market is often said to start when the price reaches 20% above recent lows in the market.

Bear Market

In contrast, the bear has come to represent pessimism and falling stock prices. A bear market is characterised by investor pessimism, increased selling activity, and expectations that weak financial performance will continue.

Again, there is no precise definition, a bear market is often said to start when the price reaches 20% below recent highs in the market.

Bullish and Bearish

An investor who believes that the market or an individual stock will rise is said to be bullish while an investor who believes that the market or an individual stock will fall is said to be bearish.

For example, an investor may say:

“I am still bullish on NVIDIA due to the importance of AI but bearish on Tesla after this week’s poor quarterly earnings.”

Ethereum ETFs are go!

Ethereum ETFs started trading this week. As you can see, despite net inflows on the first day of trading, at the time of writing, it looks like a negative week for Ethereum. This is probably due to other factors in the financial markets - Bitcoin is also down at the time of writing.

I view the introduction of the ETF as a Bullish sign for the crypto market generally over the long term. The ETFs will make Ethereum more accessible (i.e. easier to buy as part of a standard investment portfolio) for retail investors.

Again, time will tell.

Rally di Roma Capitale 2024

Away from the financial markets, the Rally di Roma Capitale, returns to the city this evening(26th July 2024). Rally drivers from all over Europe and even the world compete in the 3-day event which is part of the European Rally Championship.

As with the Mille Miglia in June, this event will be a financial boost for the region bringing in substantial revenue for local businesses, particularly in hospitality, dining, and retail sectors. The event also promotes tourism, encouraging visitors to explore Rome and its surrounding areas, thereby increasing tourist spending.