One tweet by Tesla Inc’s Chief Executive Officer (CEO) and Founder Elon Musk led to a significant fall in price of Bitcoin. Market Expert Ajay Bagga in chat with Zee Business Managing Editor and Market Guru Anil Singhvi said that this was akin to hitting your own leg with an axe. Bagga said that the US Market Regulator Securities and Exchange Commission (SEC) has previously warned Musk.  

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Musk’s statement saying that he found Bitcoin overvalued, brought the price of Bitcoins down. He recently bought Bitcoins worth USD 1.5 billion which have now reached a valuation if USD 2.5 billion.
Bagga also spoke about the bond yield scenario in India and the US.  

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On being asked if there is a correlation between the bond yield movements of US and India, Bagga said,"There is no correlation as the Indian bond yields are driven by internal forces and the foreign investors are very less in comparison to a country like China. The foreign investment is worth USD 14 trillion in Chinese government bonds. The foreign investors are interested in Chinese Government bonds despite the case of defaults being reported, he said.

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Things to keep in mind

Bagga said that investors need to see if the interest rates are rising and the bond markets are the first indicators of what lies ahead. The bond markets are suggesting that the growth is now coming back as the normalisation curve is increasing and there is a rebound.

One must also see if the bond markets are suggesting a rise in inflation due to the recovery. Also, there is a super cycle starting in commodities prices and it has been seen that the prices of metals including Gold, Silver and copper have gone up significantly.

On US Economy  

Bagga said that Fed Chairman Jerome Powell in his statement before the Senate has said that it will continue to give stimulus. Powell said that the time has still not come for the Fed to stop stimulus as the economy has to go a long way. The Chairman also said that he expected the economy to come in the second half of the year.  

The Chairman also stressed on the need to generate more employment as many people have even stopped looking out for a job. The interest rates will not change for now, Bagga said quoting the Chairman.
After this statement, the US Markets shot up. Dow, which was down by 390 points ended in the green, Bagga said. Nasdaq which was 4 per cent down ended the day just 0.5 per cent shy of last close.