Lessons › Fundamentals and news › Fundamentals beyond stocks
World 7 · Fundamentals and news · lesson 13 · level 4
Fundamentals beyond stocks
Each market has its own fuel: interest rates for currencies, supply and demand for commodities, and adoption and token supply for crypto.
In one line
Each market has its own fuel: interest rates for currencies, supply and demand for commodities, and adoption and token supply for crypto.
Explained simply
Think of three cars that run on different fuels: one on petrol, one on electricity and one on gas. Markets are similar, because currencies, commodities and crypto are each moved by different things. Knowing a market's fuel helps you know which news matters.
The lesson
Currencies are driven largely by interest-rate differences, growth and trade flows between countries. Commodities respond to supply and demand, such as weather, inventories and production decisions, which are often reported in weekly or monthly data. Crypto is driven by adoption, liquidity, regulation news and token supply changes such as scheduled unlocks, and most coins have no earnings to value. Stock ratios such as P/E do not fit these markets, so each needs its own checklist.
A worked example
Illustrative example: country A's interest rate is 5.25% and country B's is 0.50%, so the rate gap is 4.75 points (5.25 minus 0.50), which tends to support A's currency against B's. In oil, analysts expected inventories to fall by 2 million barrels, but the weekly report shows a rise of 3 million, a surprise of 5 million barrels (3 minus (−2)), which tends to weigh on the price.
The same idea at four levels
- Beginner. Different markets are moved by different things, so the news that matters changes by market.
- Foundation. Currencies follow interest-rate differences and growth, commodities follow supply and demand, and crypto follows adoption and token supply.
- Intermediate. Commodity data often comes on a schedule, such as the US weekly petroleum report on Wednesdays at 10:30 New York time.
- Advanced. A widening interest-rate gap in one country's favour tends to support its currency, and a surprise build in oil inventories tends to weigh on oil.
- Expert. Experts build a separate driver checklist for each market and never force stock ratios onto currencies, commodities or coins.
Mistakes to avoid
- Applying stock valuation ratios to currencies, commodities or coins.
- Ignoring scheduled supply events, such as inventory reports or token unlocks.
- Reading a commodity report without comparing it with the forecast.
Check yourself
What largely drives currencies?
Interest-rate differences, growth and trade flows. Money tends to flow toward higher returns and stronger economies.
What drives commodity prices?
Supply and demand. Weather, inventories and production matter.
Do most coins have earnings to value?
No. Most coins are not businesses with profits.
Which is a crypto-specific driver?
Token supply changes, such as scheduled unlocks. More tokens reaching the market can weigh on price.
When is the US weekly petroleum report normally released?
Wednesdays at 10:30 New York time. It moves a day later in holiday weeks.
Goal of this lesson: Identify the main fundamental drivers of currencies, commodities and crypto.