The past week in markets summarized in three short headlines.
1. Consistently Bad
This week’s declines were steep but consistent as all three major indexes lost 4%-5% similarly to the past trading week. The S&P 500 lost 4.6% on the week, the Dow Jones slid 4.0%, and the NASDAQ suffered the most with a drop of 5.1%. Since the middle of August, the NASDAQ has fallen 17% and the Dow Jones has plummeted 13%, similar to pre-July levels before the rally which increased the value of stocks for most of the summer.
For the third straight meeting, the US Federal Reserve decided to hike interest rates, pushing the rates over 3% and to levels that haven’t been seen since 2008. Officials also predicted future rate-hike increases of 1.25% by the summer of 2023. Stock portfolios aren’t the only thing that’s dropping as fall begins. The price of oil has dipped under $80, down from over $120 a barrel in June.
2. Falling Crypto Disappoints
Bitcoin is barely above the $19,000 mark, with crypto investors across the board searching left and right for their missing profits. The recent inflation data and interest-rate hikes are having a serious impact on Bitcoin, and cryptocurrency as a whole. As analysts fear an economic slowdown due to Powell’s new measures, risky assets like Bitcoin, which has been extremely volatile these last few months, are taking a major hit.
Investors are opting for safer, more reliable portfolios as opposed to Bitcoin, which has dropped significantly in the last few months. Due to Bitcoin and cryptocurrency’s volatility, investors recommend only keeping 5% of your portfolio in this digital asset. Nate Nieri of Modern Money Management says it best, “You have a high chance of losing it all, but a small chance of winning it big.”
3. Weather Forecasting
Jobs in the finance industry are as numerous as ever, and people of all types can find jobs they enjoy. One such job is a weather-derivatives trader. Combining intricate knowledge of statistics, historical weather patterns, meteorological data, and predicted climate data, these traders essentially use predictions of the weather to make money.
If a company wants to safeguard itself from a weather-related event that could damage its crops, it’ll contact this type of trader. Prospective companies looking to capitalize or safeguard themselves from future fluctuations in temperature and precipitation often turn to this type of derivatives trader to do so. In the first 9 months of 2016, there were over 10 weather-related events costing companies over $1 billion. With global warming increasing and climates changing, this type of trading might find itself in the spotlight more often.
The market fell significantly with consistently poor results across the board. Cryptocurrency has also recently felt the impact of interest-rate hikes and increasing inflations. If you like finance and meteorology, weather-derivative trading might be the perfect career for you.