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Japan: Why Should We Care

Japan: Why Should We Care

Japan, Prime Minister Shigeru Ishiba has resigned. Sanae Takaichi has been nominated in his place. The issue deserves a focus. Why?

Japan, at this moment, deserves a deeper look. Here we will deal with a new figure in Japanese politics, Sanae Takaichi, a possible future Prime Minister, especially due to her ideas on economic policy. Let us not forget, in fact, that Japan is the fourth-largest economy in the world, with significant weight globally.

Japan: Let’s Quickly Give Some Context

In early September, Japan experienced a delicate moment regarding national politics: Prime Minister Shigeru Ishiba, leader of the Liberal Democratic Party (LDP), resigned.

The LDP members chose Sanae Takaichi in his place, who could be the first woman in Japan to hold the role of Prime Minister. First, however, the LDP must find one or more partners with whom to form the coalition that will govern the country. This is because Komeito, literally the “Clean Government Party”, which for more than twenty years was a government ally with the LDP, declared it wanted to break the agreement. All this will make Takaichi’s nomination as Prime Minister slightly more complex.

Let us now see, in more detail, who Sanae Takaichi is and why these political dynamics should interest us.

Who is Sanae Takaichi?

The daughter of an office worker and a policewoman, Sanae Takaichi was born in Nara Prefecture in 1961. Before entering politics, Takaichi was a heavy metal drummer, an expert diver, and a television presenter.

She developed an interest in politics around the 1980s and entered the political game in 1992, when she tried to run for parliament as an independent. The attempt failed, but she did not give up: four years later she ran again with the LDP and was elected. From that moment she is considered one of the most conservative figures of the Liberal Democratic Party.

Moving on to her positions on economic policy, Takaichi is an absolute fan of Margaret Thatcher. Her goal, as she herself has declared, is to become the Iron Lady – the nickname given to Thatcher when she governed – of Japan. Furthermore, she was a protégé of former Japanese Premier Shinzo Abe, a very influential figure in her formation.

This last point is very important: Shinzo Abe, in fact, was the author and strong supporter of an economic policy based on a strong injection of money through fiscal stimuli and increased public spending. The aim was to revitalise the Japanese economy, at that moment in a deep crisis caused also by the shock of the 2008 financial crisis.

Specifically, Abenomics – a portmanteau of Abe and Economics – was founded on three arrows: expansive monetary policy to increase inflation (Japan was in a state of chronic deflation) and depreciate the Japanese Yen, favouring national exports; negative interest rates to incentivise money circulation in the economy; and structural reforms to increase Japan’s competitiveness. Sanae Takaichi has promised to relaunch her vision of Abenomics.

Let us therefore come to the central core of the article.

With Sanae Takaichi, Japan Could Join the Fiscal Stimulus Club

The Japanese Iron Lady seems to have clear ideas: “I have never denied the need for fiscal consolidation, which is naturally important. But the most important thing is growth. I will make Japan a vigorous land of the Rising Sun again”. In other words, economic growth comes before balancing public accounts.

Sanae Takaichi, indeed, has promised huge public funding for government-led initiatives in sectors such as artificial intelligence, semiconductors, and batteries. She then declared she wants to increase defence spending and announced new tax credits – i.e., fiscal bonuses – to increase workers’ net income, deductions for domestic services, and other tax breaks for companies offering internal childcare services. Finally, her programme envisages strong public investments in infrastructure.

Financial markets, naturally, like all this very much: fiscal stimuli and expansive policy are manna from heaven for businesses, which can access credit more easily, invest, innovate and, ultimately, increase profits, with more than positive consequences for share values. And the effects have already been felt.

Market Reactions: The “Takaichi Trade”

The Nikkei, the main Japanese stock index, proved particularly sensitive to developments regarding Takaichi’s nomination as Prime Minister. Retracing the sequence of events, it is patently obvious how the Japan 225 – another name for the Nikkei – strongly desires the Iron Lady governing the Land of the Rising Sun.

For example, Sanae Takaichi was chosen by the LDP as heir to the resigning Prime Minister Ishiba on the weekend of October 4th and 5th, with stock exchanges closed. On Monday the 6th, the Nikkei gained more than 5.5% in a single session – reaching up to 8% if we also count Friday the 3rd, when rumours were already starting to circulate. The “Takaichi trade”, in this sense, led the main Japanese index to touch new highs.

Equally but conversely, when Komeito broke away from the coalition, undermining Takaichi’s nomination, the market reacted very negatively: on October 10th, the Nikkei lost more than 5.6% on the stock exchange.

Since Komeito’s renunciation, Sanae Takaichi has moved to look for other parties that could support the government alliance, obtaining good results. As favourable news came out, the Nikkei reacted consistently: +5.4% in the week between Monday the 13th and Friday the 17th of October.

Finally, on Monday, October 20th, the leader of the right-wing party Nippon Ishin – the Innovation Party – announced that he will make official the agreement to support Takaichi’s choice as Prime Minister. Once again, the Japanese index shows its appreciation: +2% in one session and an updated All Time High.

What is the Moral of the Story?

So, even the fourth economy in the world could start spending, and heavily. With the new leader, Japan could switch to a regime of great public spending, large deficits, and expansive monetary policy, enormously increasing public debt. The goal: to ensure that economic growth exceeds debt growth.

We are in a historical moment where the top three world economies, with the fourth trailing, have launched fiscal stimulus policies founded on a massive increase in public debt.

The moral, therefore, is singular and very simple: if the main thought is “spend”, the method to realise it is printing money. The necessary consequence is the devaluation of money – or, in other words, inflation. In similar scenarios, the main protection instruments, the so-called debasement hedges, have historically represented a valid exit route for capital preservation.

And when one speaks of debasement hedges, the mind immediately runs towards two assets: gold and Bitcoin. All this is even more valid if we rethink the very recent statements of Larry Fink, CEO of BlackRock, released during an interview with the broadcaster CBS: “Markets teach you that you must always question your convictions. Bitcoin and cryptocurrencies have a role, just like gold: they represent an alternative”.

What awaits us in the near future? If you don’t know how to answer, don’t worry, nobody knows. However, to not miss updates, you could subscribe to our Telegram channel and Young Platform, given that we deal often and very willingly with these themes.The information reported above is for exclusively informative and divulgative purposes. It does not in any way constitute financial advice, investment solicitation, or personalised recommendation pursuant to current legislation. Before making any investment decision or asset allocation, it is advisable to contact a qualified consultant.

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Gold plummets: worst crash since 2013

Gold crashes: worst crash since 2013

Is gold reversing course? 21 October marks the worst decline in recent years and surprises investors. What happened and why?

On Tuesday, 21 October, the price of gold fell to levels not seen in about 12 years. The event left investors around the world speechless: added to the extent of the loss was the shock caused by the fact that the value of the precious metal had been rising steadily for months. So? It’s time to analyse the facts. 

The price of gold plummets: what happened?

In just over 24 hours, gold recorded its worst performance since 2013, losing almost 8.3% to reach $4,000, before rebounding and settling at a compound of writshock– in the range between $4,050 and $4,150. 

An incredible figure that testifies to the magnitude of the event is related to the loss, in terms of market cap, of the most noble of metals: this -8.3% corresponds, give or take a million, to approximately $2.2 trillion or, to put it another way, the entire market capitalisation of Bitcoin. 

The collapse of gold has also affected companies linked to the mining sector – some may notice interesting similarities. The two largest mining companies in the world, Newmont Corporation and Agnico Eagle Mines Limited, have in fact recorded sharp declines: from the opening of the stock markets on Tuesday 21st to the time of writing, the two companies are losing more than 10%.

Gold is not the only precious metal in trouble: silver is currently down 8.6%, while platinum, which is actually doing a little better, is down 7.2%.

The causes

If the price of gold is plummeting, as many analysts claim, the causes are mainly technical. In a nutshell, the sell-off could be a necessary consequence of the rally that, since January 2025, has seen the yellow metal gain more than 50%: quite simply, if an asset grows for a long time, it is likely that sooner or later someone will decide to take profits. 

To this argument, which certainly carries weight given the rise in gold prices, two variables of a more political and economic nature could be added. 

The first is related to the relationship between the United States and China, which appears to be easing: after the clashes on 10 and 12 October, which eventually triggered the worst sell-off in the history of cryptocurrencies, US President Donald Trump and Chinese President Xi Jinping are expected to meet in Seoul on 31 October. The conditional tense is a must because The Donald has repeatedly shown that he changes his mind at the drop of a minute. 

Here is an example. On Tuesday 21st, the POTUS confirmed his intention to reach an agreement with the supreme leader: “I have a very good relationship with President Xi. I expect to be able to reach a good agreement with him,” but then added that the meeting “may not happen, things can happen, for example someone might say ‘I don’t want to meet, it’s too unpleasant. But in reality, it’s not unpleasant. It’s just business.” Pure unpredictability. 

The second, on the other hand, could be understood in part as a consequence of the first: the strengthening of the US dollar. The DXY, which measures the value of the dollar against a basket of the six most important foreign currencies, has gained 1.3% since mid-September. 

Is this a reversal of the trend or a temporary retracement?

Has the upward trend in gold come to an end, or are we witnessing a mere temporary halt? This is the question of questions, to which, of course, no one can answer.

What we can say, however, is that a change of course could be excellent news for Bitcoin. An interesting precedent can be found in 2020: when gold reached its market peak in August at £2,080, Bitcoin hit bottom at £12,250 – what times. 

From that moment on, gold moved sideways for about three years before beginning an upward trend that saw it double in value, while Bitcoin embarked on the epic bull run of 2020-2021: from £10,000 in September 2020 to £65,000 in April 2021. A veritable rotation of capital in favour of the King of Crypto. 

Citigroup assigns a strong ‘Buy’ rating to Strategy

In the event of a trend reversal, will the gold-BTC pattern repeat itself in 2025? Again, there is no way of knowing. However, banking investment giant Citigroup has officially started following Strategy (MSTR), Michael Saylor’s company that holds 640,418 BTC: its first recommendation to investors was ‘Buy’, forecasting a target price for the stock of £485. 

The interesting thing is that Strategy’s share price – at the time of writing – is around £280: if Citi sets a target price of £485, it means that it expects the stock to grow by around 70%. Citi analyst Peter Christiansen, who is monitoring MSTR, said that such a price increase “is with its base case forecast over the next 12 months, set at £181,000, a potential upside of 65% from current levels“.

Gold and itcoin, neck and neck?

We’ll have to wait and see what happens in the coming weeks. The data tells us that, over the last three years, more and more financial institutions – central banks in particular – have started to stockpile physical gold, partly to protect themselves from the devaluation of the dollar, accentuated by the Trump administration’s management.

On the other hand, we are witnessing an almost daily increase in showbero entities, both public and private, that are deciding to include Bitcoin in their treasuries and that, generally, no longer see the asset as an alternative, but as a choice.  

Finally, as always, we remind you that the information contained in this article is for informational purposes only. It does not constitute financial, legal or tax advice, nor is it a solicitation or offer to the public of investment instruments or services, pursuant to Legislative Decree 58/1998 (TUF). Investing in crypto-assets involves a high risk of loss – even total loss – of the capital invested. Past performance is no guarantee of future results. Users are invited to make their own informed assessments before making any financial and/or investment decisions.

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Fed: Who wants to be the new president?

Fed: Who wants to be the new president?

The Fed changes face: in May, Chairman Jerome Powell will end his second term, and Donald Trump will have to choose his successor. Who will it be?

After eight years, the Fed, the US central bank, will be led by a new chair: Jerome Powell, who currently holds the top job, will have to make way for a new figure. It will be up to the US President to choose his successor. Let’s take a look at the most likely candidates.  

The Fed prepares for a new Chairman.n

In May 2026, the Fed will undergo a significant structural change: the current Chairman, Jerome Powell, will step down after eight years and be replaced. The person who will head the US central bank will be chosen directly by Donald Trump: after the nomination, however, the Fed Chairman candidate will also have to be approved by the US Senate. 

As we shall see, Treasury Secretary Scott Bessent has released a list of five names, at least three of whom are potentially very close to being nominated. The only spoiler we can give is that Jerome Powell is not on Bessent’s list. Why? For at least two reasons. 

No chance for Jerome Powell: dura lex, sed lex

The first is legal in nature: although the law in force in the US – the Federal Reserve Act – does not set a term limit for the Fed Chair, Powell will leave the central bank due to a rather curious coincidence of events. 

Jerome Powell took office as Governor in May 2012 to complete Frederic Mishkin’s unexpired term – much like the very Trumpian Stephen Miran, who was appointed Governor last July following the resignation of Governor Adriana Kugler.

Two years later, in June 2014, Powell was officially appointed Governor for a full 14-year term, expiring on 31 January 2028. In 2018, Donald Trump, during his first term, promoted Powell to the role of Chair (i.e., President) of the Federal Reserve. Four years later, at the legal end of his term, he was confirmed by Joe Biden, who was President of the United States at the time. This brings us to the present day: in 2026, it will be four years since Biden’s confirmation and, as a result, the word ‘End’ will appear. 

But then, if the law does not set a maximum term limit for the Fed Chair, why can’t Jerome Powell be re-elected to that role? Because the Federal Reserve Act has a fundamental rule: the Fed Chair must also be a member of the Board of Governors, i.e. the central bank’s governors. 

This rule cannot be applied in Powell’s case: even if he were re-elected to the top position at the Fed until 2030, his status as Governor would lapse in 2028, as he would have reached 14 years of service since 2014. At that point, he would automatically be removed from the Chair role.  

The Trump administration’s dislike of Powell is well known

Even if this rule did not exist, the situation would not change: the chances of Powell being included in Bessent’s list would be close to zero. And here we come to the second reason, which is more ‘relational’ in nature: Trump and company do not like the current Chair, to put it mildly. 

As we have reported on several occasions, the President of the United States has often used harsh tones towards Jerome Powell, especially during the summer FOMC meetings, when the much-coveted rate cut was slow in coming. Because of this ‘slowness’, Donald Trump began to nickname him Jerome ‘Too Late’ Powell and threatened to fire him on several occasions. 

With Powell now out of the running, let’s take a look at the names chosen by the US Treasury Secretary.

The most likely candidates

On Sunday, 26 October, while travelling on Air Force One to Tokyo, Scott Bessent told reporters that he had narrowed down the number of candidates to five following the first round of interviews, which is expected to be followed by a second round. 

The list includes Trump adviser Kevin Hassett, former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, Fed Vice Chair Michelle Bowman, and BlackRock executive Rick Rieder. Let’s take a look at them one by one.

Kevin Hassett

He is a loyal supporter of Donald Trump: he served alongside the US President during his first term as Chair of the Council of Economic Advisors and still holds a position in the administration as Director of the National Economic Council. In addition, between the two terms, he worked for the investment fund of Jared Kushner, Trump’s son-in-law. 

Given this background, it would be reasonable to assume that Hassett could be Trump’s first choice, as he is a politician who places great importance on loyalty. However, there are a couple of strategic considerations. 

Firstly, the markets’ reaction to his appointment could be particularly harmful, as a Fed led by Hassett would be perceived as firmly subordinate to the will of the POTUS (President of the United States). 

Secondly, if the Federal Reserve were to make decisions that Trump did not like, with equally unwelcome macroeconomic consequences, the latter would find it much more difficult to blame one of his loyalists: the rhetoric he is using against Powell would have less effect. 

Kevin Warsh

A former Fed governor, he was a member of the Board of Governors during the 2008 financial crisis, before resigning in 2011 following the US central bank’s shift towards quantitative easing (QE) – i.e. a more expansionary monetary policy. He has been an executive director and vice president at Morgan Stanley and is currently a visiting fellow at Stanford University.

His impressive CV rightly makes him a potential successor to Powell. Added to this are his connections with the American conservative establishment: like Hassett, he also worked for the White House as an economic adviser to George W. Bush (also known as Bush Jr.), who later appointed him Governor of the Fed. Furthermore, the family of his wife, billionaire Jane Lauder, granddaughter of Estée Lauder, founder of the cosmetics company of the same name, with a market cap of £32 billion, is on excellent terms with the Trump family. 

However, here too, there are a couple of strategic considerations, starting with his views on monetary policy. Warsh is considered a ‘hawk‘ because, according to reports, he is fixated on controlling inflation, which was the main reason for his resignation as Governor in 2011. A Fed led by Warsh would therefore be more inclined to implement a more restrictive, or at least less expansionary, economic policy. 

In short, a very different attitude from that of the POTUS, who has been imploring Powell to cut rates for months. 

Christopher Waller 

Currently serving as Governor of the Fed, appointed by Trump in 2020, Waller has spent his life between university classrooms and the corridors of the US central bank. 

He has taught as a professor at various universities in the United States – Indiana, Washington and Kentucky – and in Germany – Bonn University. In 2009, he joined the Fed’s St. Louis office as Vice President and Research Director, where he helped create FRED (Federal Reserve Economic Data), a massive free database of economic and financial data managed by the Fed. 

Waller is a crypto-enthusiast and views the cryptocurrency sector in a positive light: on 21 October, at the Fed in Washington, he chaired the Payments Innovations Conference, a meeting which, in his own words, aimed to “bring together ideas on how to improve the security and efficiency of payments, listening to those who are shaping the future of payment systems“. The conference was attended by, among others, Sergey Nazarov, Co-Founder & CEO of Chainlink; Heath Tarbert, President of Circle; and Cathie Wood, CEO of Ark Invest. 

There is one problem with all this: Christopher Waller’s long experience within the Federal Reserve circles. The future Chair chosen by Donald Trump will also have to be a new figure, capable of reforming the Fed’s structure and making it less decisive in terms of economic management. Waller, on the contrary, may have internalised the very dynamics that Trump intends to dismantle, thus making him unsuitable for the role. 

Michelle Bowman

Michelle ‘Miki’ Bowman is the first of the two outsiders, i.e., those with a background different from the three candidates just examined. However, like Waller, Bowman is also a sitting governor appointed by Trump in 2018. Trump himself promoted her to Vice Chair of the Fed in January 2025, a role that places her just one step below Jerome Powell.

Why is she an outsider? Because, while Hassett, Warsh and Waller have a purely economic or high-finance background, Bowman has a degree in Advertising and Journalism and a master’s degree in Law. 

Before moving on to the last candidate, a note about Michelle Bowman: she is known for being someone who fights tenaciously to advance her agenda and achieve her goals, despite political pressure. For example, she has repeatedly expressed dissent towards many of the Biden administration’s measures. In September 2024, hers was the first dissenting vote by a Fed governor after two decades of unanimous voting on monetary policy. She is a strong-willed woman who would undoubtedly appeal to The Donald.  

Rick Rieder

Rieder is an outsider not so much because of his academic background, but because he is not a member of the Fed’s Board of Governors. He is, in fact, a senior manager at BlackRock with a deep understanding of the bond market, which is his speciality. 

Rieder is therefore not entirely unfamiliar with the workings of the central bank and the political subplots in Washington. Still, he is very familiar with high finance and the bureaucracy that surrounds it. In this sense, he could be considered the antithesis of Waller. 

Finally, Rieder is known for his gruelling work schedule: he is said to get out of bed every day at 3:30 a.m. to get a few hours’ head start on his competitors.     

What are the odds for each of the candidates?

Well, we have examined Jerome Powell’s potential successors; now it’s time to take a look at the bookmakers, namely Polymarket. 

At the time of writing, the odds for each name are: 

  • Kevin Warsh: 15%
  • Kevin Hassett: 15%
  • Chris Waller: 14%
  • Scott Bessent: 5%
  • Rick Rieder: not even listed
  • No announcement before December: 53%

Why is Scott Bessent even on the list? Because Donald Trump, on his trip to Tokyo at the end of October, told reporters that he was considering him as Fed Chair, but that Bessent himself would refuse because ‘he likes working at the Treasury‘. A few minutes later, he backtracked, saying, ‘We’re not actually considering him. ‘ 

So, who will win the race for Fed chair? Or, to quote the article’s headline: who wants to be the new chair?

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Fed rates: Will the next FOMC meeting scare the markets?

Fed rates: Is the next FOMC meeting scaring the markets?

Rates, Fed undecided on next moves: the outcome of the December FOMC meeting is less predictable than those in September and October. What do analysts predict? 

Fed rates have a significant impact on financial markets: investors, aware of the importance of interest rates, try to anticipate the decisions of the FOMC (Federal Open Market Committee) to position themselves in the best possible way. Compared to the last two meetings, where the outcomes were practically a foregone conclusion, the December meeting presents numerous unknowns: what is the most likely outcome?  

What happened at the last FOMC meeting?

On 28-29 October, the Fed met at its headquarters in Washington to discuss the macroeconomic situation and decide what to do about interest rates: the Council, with ten votes in favour out of twelve, opted for a 25 basis point cut, lowering rates by 0.25% to a range between 3.75% and 4%. 

The outcome, as we anticipated, was widely expected and already discounted by the markets, which had been growing for weeks – except for the halt on 10 October, when Trump announced 100% tariffs on China.

But it was the press conference following the meeting that was the real key moment. Here, Federal Reserve Chairman Jerome Powell, in listing the reasons behind the cut, made a very significant statement: “A further cut in benchmark interest rates at the December meeting is not a foregone conclusion, quite the contrary.” Markets in chaos.

Since Powell uttered those words until now – that is, at the time of writing – the major stock indices have entered a phase of severe difficulty, but then they rebounded and are now flat.

The crypto market has also taken a hit, of course, with Bitcoin down 16.8 percentage points since 29 October and Ethereum down almost 20,6. Overall, since that fateful day, the total market cap has fallen by £600 billion, from £3.7 trillion to £3.11 trillion.

Fed, shutdown and block on the publication of macroeconomic data 

During that press conference, Powell responded to questions from journalists about the shutdown’s impact on federal activities. In particular, curiosity focused on the stance the Fed might take at the next FOMC meeting, in a context of almost total absence of data crucial for analysing the macroeconomic scenario.  

Powell himself had already mentioned the difficulties of the moment, stating that “although some important data has been delayed due to the shutdown, the public and private sector data that remains available suggests that the outlook for employment and inflation has not changed much since our September meeting“. 

On this issue, however, the most interesting response came from the Fed Chairman to Howard Schneider of the well-known Reuters news agency. The journalist rightly asked him whether the lack of key information, such as inflation or employment, could have led members of the US central bank to “make monetary policy based on anecdotes”, i.e. qualitative data – such as personal opinions – rather than economic models based on quantitative data. 

Powell initially stated that ‘this is a temporary situation’ and that ‘we will do our job‘. He then went on to say, ‘If you ask me whether it will affect the December meeting, I’m not saying it will, but yes, you can imagine… what do you do when you’re driving in fog? You slow down.

In short, the latest FOMC press conference presented us with a Jerome Powell who appeared even more cautious than the classic “we’ll wait and see” approach that characterised the first six months of 2025. A determined Jerome Powell, who wants to see his task through to the end, even though he will leave the top job in May 2026 to make way for the new Fed Chair.

Fed rates: what do analysts and prediction markets forecast?

Here too, the question is entirely open. The most authoritative voices are divided into two camps: a 25-basis-point cut versus no change (rates unchanged). There is, of course, no mention of a 50 basis point cut. 

The first faction, in favour of a quarter-point cut, is leveraging the weakness of the labour market, particularly the slowdown in hiring: in a Reuters poll of 105 economists, 84 bet on a quarter-point cut, while the remaining 21 chose the No Change option. 

In particular, Abigail Watt, an economist at UBS, justified her vote to Reuters by stating that ‘the general feeling is that the labour market still appears relatively weak, and this is one of the key reasons why we believe the FOMC will cut in December‘. Watt goes on to say that she would change her opinion if data were released that ‘contradicted this sense of weakness‘. 

The second faction, those in favour of unchanged rates, instead takes as its main argument Powell’s words quoted above: “the outlook for employment and inflation has not changed much since our September meeting“. 

For example, Susan Collins, head of the Boston Fed, is of this opinion and believes that a third consecutive cut could fuel inflation at a time when the impact of Trump’s tariffs remains unclear. Specifically, she told CNBC that “it will probably be appropriate to keep interest rates at their current level for some time to balance the risks to inflation and employment in this environment of high uncertainty“. 

Interest rates, according to the FedWatch Tool and Polymarket

FedWatch is a financial tool provided by the CME (Chicago Mercantile Exchange) that calculates the implied probabilities of future Federal Reserve interest rate decisions. Why ‘implied’? Because it deduces probabilities from the market prices of 30-day Federal Funds futures rather than from explicit opinions. 

In simple terms, FedWatch reports market expectations by looking at investors’ portfolios. If it says ‘80% probability of a cut’, it means that 80% of the money invested in the market today is betting on a cut. Currently, according to this tool, a 25 basis point cut is 89,6% likely, while No Change is 10,4%.

According to the most famous prediction market of the moment, Polymarket, the result is a 25 basis point cut at 97%, No Change at 3%, a 50 basis point cut at 1% and a 25 basis point increase at around 1% – if you are interested in knowing how it works, we have written an Academy article dedicated to Polymarket. 

What will the Federal Reserve do? 

As we have explained so far, the Fed will have to take a large number of variables into account before its Chairman leaves the room, approaches the microphone and utters the familiar ‘Good afternoon‘.

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Berachain: a new era for DeFi?

Berachain: Is this the future of DeFi?

Berachain is a blockchain implementing a consensus mechanism that could well revolutionise the world of DeFi: the Proof-of-Liquidity (PoL).

What’s all the fuss about?

Berachain is a Layer 1 blockchain that has garnered significant attention from many investors, both institutional and retail. This is primarily thanks to the consensus mechanism it’s built upon—the network’s own invention, Proof-of-Liquidity.

The fundamental idea, simplified to its bare bones, is to transform liquidity from a passive resource into an active engine for network security, thereby re-aligning security with the interests of the end-users.

What’s more, Berachain distinguishes itself through its extreme flexibility, being perfectly capable of hosting decentralised applications (dApps) developed initially on Ethereum.

Berachain: proof-of-liquidity and EVM identical

To embark on our journey to understand the Proof-of-Liquidity (PoL) consensus mechanism, we can start by defining it as an evolution of the more widely known Proof-of-Stake (PoS).

In a network utilising PoS, the security and integrity of the chain are upheld by validators, or nodes. They lock up tokens—or stake them—and in return, receive rewards when they successfully validate blocks. These rewards act as a powerful incentive for staking, fostering a virtuous cycle that secures the network.

However, this mechanism has a slight “flaw”: it isolates the validators—and their economic clout—from the broader ecosystem, meaning the Dapps and the users.

To simplify, we could (with a poetic licence) compare a PoS blockchain to a coal-powered train: just as validators secure the network by staking their tokens, the engineers ensure the train’s movement by shovelling coal into the furnace. However, the energy released “only” serves to make the train run.

The Proof-of-Liquidity consensus mechanism, by contrast, lays the groundwork for a system where the energy generated from the burning coal not only moves the train but simultaneously lights up the carriages, heats the water in the bathrooms, operates the window mechanisms, and so forth. It’s a game-changer.

How is this achieved? Through a two-token model that involves validators, dApps, and the community:

The latter has a particular feature: it is soulbound—similar to items in World of Warcraft—and cannot be bought, sold, or traded.

The virtuous cycle of PoL

  1. On one side, validators stake $BERA to ensure the chain’s security and receive $BGT in return.
  2. On the other side, users, via dApps like DEXs (Decentralised Exchanges), provide liquidity to pools and in exchange earn LP-tokens (Liquidity Provider Tokens). These “receipt tokens” certify the action and allow for the future redemption of the liquidity.
  3. These LP-tokens have a utility: they can be staked in Reward Vaults—smart contracts that then reward the user with $BGT for staking.
  4. Where do these $BGT tokens originate? They come from the validators. Validators receive them as a reward for staking $BERA and, thanks to PoL, are obliged to distribute the lion’s share to users who staked their LP tokens in the reward vaults.
  5. Validators are also motivated to direct $BGT to the Reward Vaults by the dApps themselves. This is done through a market of incentives (other tokens, stablecoins, etc.) offered by the protocols to increase the portion of $BGT for their end-users (liquidity providers).
  6. Users then delegate the $BGT tokens they obtained from locking LP-tokens in the Reward Vaults to validators, effectively “boosting” them. In return, users receive a share of the aforementioned incentives. A validator is ‘boosted’ when it receives more $BGT from users, increasing the amount of $BGT that can be directed to the Reward Vaults.

The circle is complete: validators, dApps, and users all collaborate in a self-sustaining ecosystem that rewards every component for its work. Though $BGT generates implicit value, it can always be exchanged for $BERA at a 1:1 ratio—jolly good stuff.

EVM identical

EVM stands for the Ethereum Virtual Machine. If we were to compare Ethereum to a global supercomputer, the EVM would be its operating system—the decentralised technological architecture necessary for executing smart contracts and transactions.

With its EVM Identical design, Berachain has reproduced an exact copy of the EVM on its own chain. This means Berachain is a blockchain that is 100% compatible with Ethereum’s EVM. The consequences are pretty obvious: the enormous number of developers working on Ethereum could easily “move” to Berachain without noticing any difference whatsoever.

The strategy is certainly intriguing: Berachain develops a potentially revolutionary consensus mechanism and says to programmers across the globe, “Look here, you code on Ethereum, but you’re curious about our PoL? No bother, we’ve created an execution environment that is totally identical to what you’re accustomed to, and it updates in sync with Ethereum“. In fact, by March 2025, just one month after its launch, Berachain had already amassed nearly $3 billion in Total Value Locked (TVL).

Berachain: team and funding

Not much is known about the team, as its members have opted to remain anonymous. The three co-founders have always presented themselves to the public under the pseudonyms Smokey the Bear, Homme the Bear, and Papa Bear.

This public anonymity, however, stands in stark contrast to the solid trust the project has earned in the institutional world. This is evidenced by the $100 million raised in a Series B funding round in April 2024.

Some of the world’s most prominent investment funds, which are also active in traditional finance, participated in this fundraising. The most noteworthy names include Brevan Howard Digital, the crypto arm of a behemoth with over $20 billion in assets under management. They were joined by Web3-specialised Venture Capital firms such as Framework Ventures, whose portfolio boasts projects like Aave (AAVE) and Chainlink (LINK), and Polychain Capital.

A dash of Italy in Berachain

We’ll conclude by sharing a piece of information that makes us rather proud: there’s a good bit of Italy in Berachain! Its European headquarters are in Milan, with a team that collaborates on research and development operations.

Perhaps this is what facilitated the recent partnership with Napoli—yes, the SSC Napoli coached by Antonio Conte. The collaboration isn’t directly with Berachain, but with KDA3, a platform that “develops innovative digital sports solutions”. KDA3 is built on Berachain, which invested directly in the platform in 2025. Furthermore, KDA3 is also in partnership with the Canadian Basketball Federation and will be launching other partnerships with international clubs in the coming months.

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Travel the world with WeRoad thanks to exclusive discounts for Young Platform Club members

WeRoad: up to €450 off on trips

If you love to travel, meet new people, and save money, the partnership between Young Platform and WeRoad could be a perfect fit. Members of our Clubs can redeem up to €450 in promotional coupons for the famous group trips organised by WeRoad. Let’s take a quick look at what this is all about.

What is WeRoad?

More than just one of the most important Italian tour operators, also active in France, the UK, Germany, and Spain, WeRoad is Italy’s largest community of travellers. Their mission is as simple as it is effective: to connect people, cultures, and stories through travel.

To achieve this, WeRoad creates groups of up to 15 people and organises trips to more than 125 different destinations, thematically divided into categories like Active Trips (centred around activities like skiing or surfing), On the Road Trips, and Safaris—plus much more.

Thanks to this winning format, WeRoad has gathered a community of more than 200,000 WeRoaders and 2,000 trip coordinators.

How does the benefit work?

This is a coupon that can be used for 3 different trips, with a value that varies based on your Club tier:

  • Bronze Club: €50 discount on 3 trips – Total discount €150
  • Silver Club: €70 discount on 3 trips – Total discount €210
  • Gold Club: €100 discount on 3 trips – Total discount €300
  • Platinum Club: €150 discount on 3 trips – Total discount €450

How to use your coupon

If you haven’t already, join a Club or upgrade to the one that offers the best benefits for you. Next, select the WeRoad benefit and click “Get Code.” You will receive an email from Young Platform. At this point:

  1. Read the email, which contains the coupon, the link to book your trip, and the expiration date of the promotional code. You can save the email to easily find it for your next trip.
  2. Visit the WeRoad website by clicking the button in the email. To ensure the coupon is accepted, use the website for the country you registered in on Young Platform.
    • If you listed Italy as your country of residence during identity verification on Young Platform, use the coupon on weroad.it.
    • If you listed an EU country other than Italy as your country of residence, use the coupon on weroad.com.
  3. Choose your preferred WeRoad trip using the search bar or the menu. Once you’ve found a destination, select your dates and click “Book.”
  4. At checkout, enter your coupon under “Do you have a discount code?”. Make sure the discount has been applied, and you’re all set!

Pay attention to the details!

Remember that the total discount must be used for 3 different trips and:

  • It is not valid for WeRoad X, WeRoad Express, or WeRoad Adventure trips.
  • If the trip costs less than the discount value, WeRoad will issue a new coupon for the remaining credit.
  • If the discount doesn’t cover the entire trip cost, you will only have to pay the difference.
  • It cannot be combined with other discount codes or vouchers.

Additionally, in case of withdrawal or cancellation, the refund policy depends on the code’s expiration date. In any case, if you encounter any problems, contact support at [email protected].

The WeRoad discount is just one of many benefits included in Young Platform Clubs. If you’d like to discover the others, visit the Club page. 

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Young Platform Pro gets an upgrade: here’s what’s new

Young Platform Pro gets an upgrade: here's what's new

Young Platform Pro is now even more “Pro”: with this latest update, we’ve introduced features explicitly tailored for professional traders. Discover what’s new.

At Young Platform, we’re committed to supporting the needs of advanced traders. That’s why we’ve redesigned the architecture of Young Platform Pro, introducing new features aimed at providing a complete and efficient trading experience. This isn’t just a cosmetic update—it’s a fundamental reimagining of the platform, placing the priorities of professional crypto traders at the very centre.

The importance of high-performance tools

Just as a surgeon achieves better precision and reduces risk with cutting-edge instruments, a trader operates more effectively and nimbly with a modern, high-performance platform. Maximum responsiveness, granular control, and uninterrupted operation are the cornerstones of the latest Young Platform Pro update. Let’s dive into the new features.

An interface designed for performance

The interface isn’t just an accessory—it’s a critical part of any trading strategy. It must be functional, easy to read, and optimised for all kinds of sessions, especially high-intensity ones. With the latest update:

  • Enhanced accessibility: Major improvements have been made in keyboard navigation and screen reader compatibility, making the platform more inclusive and professional.
  • Improved visual comfort: The colour palette has been redesigned to ensure high contrast and adhere to WCAG standards, based on the four POUR principles (Perceivable, Operable, Understandable, Robust). This helps reduce visual fatigue, especially during night sessions.
  • Optimised desktop design: The interface now makes better use of modern monitor form factors, increasing information density and minimising wasted space.

Customizable and synced setup across all devices

Experienced traders need to be able to switch between devices without skipping a beat. Consistency, fluidity, and coherence in the work environment are essential. With Young Platform Pro, you can now:

  • Build a fully customizable layout: Thanks to the new modular tab system, you can create your ideal setup tailored to your specific trading style. Every configuration is saved to your user profile and remains consistent across devices.
  • Sync chart studies to the cloud: Your TradingView analyses—indicators, trend lines, annotations—are no longer locked to a local device. They’re saved and synced in the cloud.
  • Set advanced options for each tab: Every section of your layout can be configured independently, allowing for detailed and precise control of your workspace.
  • View any tab in full screen: Each tab can be expanded to full screen, letting you focus entirely on charts or the order book when needed.

Total control over execution and trading operations

As we mentioned earlier, high-performance tools are essential for a professional trading experience. That’s why the core features of the order panel have been reengineered to deliver greater transparency, speed, and operational safety. Specifically:

  • Operational details always visible: You can now view detailed information on open and closed orders directly within the trading interface.
  • The Order Form has been enhanced:
    • Quick percentage selectors for capital allocation (25%, 50%, etc.).
    • Clearer information on fee calculation and alerts for Limit orders that may execute as Market orders.
    • A detailed order preview, which can be turned off for those who prefer a faster workflow.
  • Improved protection against user errors: A confirmation step has been added when cancelling open orders, helping to prevent accidental actions during high-pressure moments.
  • More flexibility in Market Buy: You can now place market orders using the base currency of the pair (e.g., 0.1 BTC on BTC/EUR), aligning with international platform standards.
  • Advanced tooltips: Every feature is now accompanied by contextual explanations, supporting both experienced traders and those exploring new functionalities.

API v4: optimised performance and speed

We know that automating strategies or building integrations requires instant, reliable data channels. As of March 2025, we’ve rolled out API v4, which reduces latency, enhances stability, and makes everything run more smoothly.

A professional trading experience: even on mobile

We understand that high-level traders keep a constant eye on the market and can’t afford operational interruptions.

With the introduction of mobile responsiveness, you can now enjoy a smooth, consistent, and high-performance experience from your smartphone or tablet. Monitoring, execution, and analysis are always at your fingertips—with no compromises compared to the desktop version.

Lastly—but by no means least—remember that we’ll continue to list new cryptocurrencies on a regular basis: the Young Platform team is constantly working to diversify and expand the range of tradable assets, so we can meet the needs of everyone who has chosen us. All of this is, of course, closely tied to our ongoing work to strengthen and optimise order-book liquidity.

Young Platform Pro has evolved.
 It’s now a more mature, high-performance trading environment than ever before.

Discover it today and take your trading to the next level.

Discover Young Platform PRO!
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Mercosur: The EU Gives the Green Light to the Agreement

Mercosur agreement: a new era for global trade?

After 25 years of negotiations, Mercosur and the European Union are closer than ever to finalising a strategic partnership. So, what does this actually mean?

Mercosur and the European Union may be on the verge of signing a trade agreement that the European Commission itself has called “the biggest free trade deal ever signed”. The EU-Mercosur agreement involves countries that account for approximately $20 trillion in GDP and 700 million consumers.

What Exactly Is Mercosur?

The Mercosur—or Mercado Común del Sur (Common Market of the South)—is an organisation established in 1991 by the Treaty of Asunción. Its purpose is to “promote a common space that generates business and investment opportunities through the competitive integration of national economies into the international market”. The full members are Brazil, Argentina, Paraguay, and Uruguay. Venezuela was also a full member but was suspended in 2016 due to anti-democratic practices. Bolivia is currently in the process of joining as the fifth full member.

Additionally, there are several associate members, who enjoy privileged status but are not part of the main bloc. These include Chile, Colombia, Ecuador, and Peru.

Mercosur is a common market with the goal of increasing the exchange of goods and services, as well as the free movement of people. This applies both regionally among South American countries and internationally through agreements with other blocs, such as the one with the European Union. To achieve this, member countries are working to mutually reduce customs barriers, thereby promoting economic integration.

In 2023, the Mercosur bloc generated $447 billion in exports and $357 billion in imports, which is equivalent to 10.9% of international trade. These figures include both internal trade among members and external trade with other countries.

What Does the EU-Mercosur Agreement Entail?

Negotiations between the EU and Mercosur have been ongoing for approximately 25 years, marked by periods of tension and détente. A breakthrough finally occurred on 6 December 2024 in Montevideo, Uruguay, when EU leaders reached an understanding with the South American bloc countries. This past Wednesday, the European Commission presented the treaties that will define the commercial agreement, representing another significant step towards its officialisation.

The agreement is a result of a shared desire to remove trade barriers, ensure a responsible and eco-friendly supply of raw materials—with a particular focus on addressing Amazon deforestation—and send a clear message in favour of regulated international trade and against all forms of protectionism.

Specifically, the agreement is based on a principle of reciprocity. European industries, primarily those in automotives, machinery, and spirits, will gain greater access to the Mercosur market. In return, Mercosur will be able to more easily export its agri-food products to Europe, including meat, sugar, coffee, and soy.

This latter point, in particular, has caused some concern among agri-food companies in France, Poland, and, to a certain extent, Italy. The primary fear is related to unfair competition. South American countries have less restrictive environmental and food regulations than the EU, allowing the use of antibiotics, pesticides, and hormones that are banned in Europe.

In any case, the agreement provides for a gradual easing of customs tariffs on 90% of goods traded between the two blocs. It also establishes preferential channels for both European and South American companies, giving them greater access to public tenders and investment opportunities.

According to the European Commission, the final result will be a 39% increase in EU exports to Mercosur and an estimated 440,000 new jobs created across Europe.

The Road Ahead

As anticipated, the EU-Mercosur agreement is not yet official. However, it represents a crucial phase in bringing the two blocs closer, especially as they seek protection from costly Trump-era tariffs.

This is an interim trade agreement, meaning it is provisional. As such, it does not require the approval of all 27 member states, but rather only the ratification of the qualified majority of the EU Council. This means at least 15 out of 27 countries (55%) that represent at least 65% of the population must vote in favour.

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Russia-Ukraine war: updates

Russia–Ukraine war: any updates?

It was a busy weekend for Donald Trump, who met with Putin, Zelensky, European leaders, and NATO representatives. What happened – and how did markets react?

It was an eventful and politically charged weekend: over the course of four days, a bold and unpredictable Donald Trump hosted Russian President Vladimir Putin, Ukrainian President Volodymyr Zelensky, six European heads of state, including Giorgia Meloni, and NATO Secretary General Mark Rutte in the United States. The aim? To seek a potential solution to a war that has now entered its fourth year, following Russia’s invasion of Ukraine.
Here’s a brief recap of what took place – and a final look at how the markets responded.

Trump and Putin: meeting in Alaska – 15 August

On 15 August, at a US military base near Anchorage, Alaska, US President Donald Trump met face-to-face with Russian President Vladimir Putin to discuss the ongoing war in Ukraine. The lead-up to the meeting attracted global attention, mainly due to Trump’s surprisingly warm demeanour towards Putin: red carpets, handshakes, pats on the back, and broad smiles.

But one detail, in particular, made headlines: the US President spontaneously offered his Russian counterpart a ride in the iconic, armoured presidential limousine – known as “The Beast” – away from cameras and microphones. What was said during that ten-minute ride remains unknown. What is certain, however, is that the two men were seen laughing and chatting amicably, like old friends.

As for the press conference that followed – the quotation marks are deliberate – very little of substance was shared. The two leaders answered virtually no questions, instead offering vague and formulaic statements.

Putin opened with praise for the atmosphere of “mutual respect”, going so far as to remind attendees that Alaska was once a Russian territory. He then shifted to the main topic: the war in Ukraine. Once again, the Russian leader insisted that peace talks could only begin if certain preconditions were met – namely, international recognition of Russia’s claims over disputed regions, Ukraine’s demilitarisation and neutrality, a ban on foreign military presence, and new Ukrainian elections.

Then it was Trump’s turn. Notably restrained, the US President – usually known for his long-winded statements – kept things brief. “There were many points on which we agreed”, “great progress”, and “an extremely productive meeting” were among the few phrases he offered. In essence, a lot of diplomatic smoke and mirrors, followed by the admission that no concrete agreement had been reached – but that “we have a very good chance of getting there”.

Trump, Zelensky, Europe and NATO meet in Washington, D.C.

Between Sunday and Monday, Donald Trump held talks with Ukrainian President Volodymyr Zelensky, before extending invitations to six European leaders – France’s Macron, Germany’s Mertz, Italy’s Meloni, Britain’s Starmer, Finland’s Stubb, and EU Commission President Ursula von der Leyen – as well as NATO Secretary General Mark Rutte.

The main topic on the agenda was clear: the security and territorial integrity of Ukraine. For months, Zelensky, alongside European and NATO officials, has been urging President Trump to provide firm guarantees that any peace deal must respect Ukraine’s sovereignty, and that future agreements must act as a deterrent against further Russian aggression. The proposal? To allow Kyiv to build a modern, specialised and well-equipped army that would discourage any future invasions.

The problem? As we saw earlier, Vladimir Putin is wholly opposed to this and has made very different demands.

What’s Next?

It’s difficult to predict, given Putin’s elusive nature and Trump’s unpredictability. That said, on August 19, Trump confirmed that Putin had agreed to a direct meeting with Zelensky, which would be followed by a trilateral summit involving the US, Russia, and Ukraine.

In a post on his Truth Social account, Trump wrote:
“At the end of the meetings, I called President Putin and began organising a meeting, at a location to be determined, between President Putin and President Zelensky. After this meeting takes place, we will have a trilateral meeting, which will include the two presidents and Mme”

UK Prime Minister Keir Starmer and German Chancellor Mertz also confirmed this announcement.

How did the markets react? 

The reaction from traditional financial markets was largely positive. The three major US indices – the Nasdaq, Dow Jones, and S&P 500 – initially rallied on news of the Trump–Putin summit in Alaska, before easing back slightly. Analysts suggest investors were hoping for more concrete results, rather than vague diplomatic gestures.

A similar trend was observed across European markets, particularly in Paris, Frankfurt, and London, which have all been performing strongly since early August.

The crypto market, however, told a slightly different story.

Between August 13 and 14, Bitcoin surged to a new all-time high of $124,000, before pulling back to around $115,600 after again failing to break through the resistance zone between $121,000 and $123,000.

Ethereum also came close to surpassing its own all-time high, missing it by just $100. It’s currently trading at around £4,300, with a renewed breakout attempt looking likely – especially now that the previous resistance at £4,100 seems to have become support.

As for the Total Market Cap, since the announcement on Thursday, 7 August, it has risen from $3.7 trillion to approximately $3.85 trillion – a gain of around 3.8% (roughly $150 billion).

Lastly, Bitcoin dominance continues to slide. Over the past 12 days, BTC’s market share has decreased by more than three percentage points, currently standing at 59.7% at the time of writing.

Is there a glimmer of hope?

So, can Donald Trump really bring Vladimir Putin and Volodymyr Zelensky to the same negotiating table? Are we genuinely moving towards peace, or is this just political theatre?

And what role will Europe play in the outcome?

Subscribe to our Telegram channel or sign up directly to the Young Platform below to stay up to date with all the latest developments.

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How the Stock Exchange works, explained simply

How does the stock market work?

NYSE, Nasdaq, LSE – what do these names mean? They refer to some of the world’s leading stock exchanges. But what exactly is a stock exchange, and how does it work?

The stock exchange, more commonly known as the stock market, is a financial marketplace where shares, bonds, and other securities are bought and sold. Once considered the domain of financial insiders, the stock market has now entered popular culture, thanks in part to numerous cult films that have graced cinema screens since the 1970s.

But what is the history of the stock exchange? What are its key components? And who are the leading players involved? Let’s take a closer look.

How and when was the stock exchange created?

The earliest recorded evidence of trading, lending, and deposit activities dates back to the second millennium BC, inscribed in the Babylonian Code of Hammurabi. Similar financial practices were also found among the ancient Greeks, Etruscans, and Romans.

However, these early forms of financial exchange cannot truly be considered a ‘stock market’ as we understand it today. The first genuine stock exchange was established in Amsterdam, in the Netherlands, around the 17th century.

The Middle Ages

In the late Middle Ages, the world of finance began to take on a more structured form with the emergence of the first banking institutions. Italy – particularly the cities of Genoa, Venice, and Siena – was, for many years, the central financial hub of Europe.

Around the 14th century, a new trading centre emerged that attracted merchants from across the continent, helping to shape a financial system that was still quite rudimentary. This was in Bruges, Belgium, specifically in the Ter Buerse Palace, built by the aristocratic Van der Bourse family. It was here, where merchants gathered to exchange goods and currencies, that the name ‘Borsa’ (stock exchange) originated.

Later, essential exchanges were established in Antwerp, Lyon, and Frankfurt, marking a shift from private to public management, with increasingly clear and stricter regulations.

The Modern Age

In the 17th century, the Amsterdam Stock Exchange became the most important in Europe – and likely in the world. This period also saw the creation of the first joint-stock companies, which significantly boosted the trading of securities, including government bonds and commodities.

The 18th century witnessed the rise of international trade, as well as the emergence of speculative bubbles. The most famous was the South Sea Bubble in England (1710–1720), when share prices soared before collapsing, causing heavy losses. It led to the Bubble Act, a law aimed at curbing speculation by limiting the formation of new companies.

Meanwhile, in New York, a group of merchants began meeting under a plane tree on Wall Street to trade securities – a humble beginning for what would become a future global financial centre.

The Industrial Revolution and the modern stock market

During this period, the stock market became crucial not only for company growth but also for the economic development of entire nations. London and Paris became key financial markets, funding industrial projects, infrastructure, and even colonial and military ventures.

In 1817, the New York Stock Exchange (NYSE) was officially established. Over time, it would grow to become the world’s largest stock exchange by market capitalisation.

The 20th century: successes and severe financial crises 

By 1900, the stock market had become the beating heart of the capitalist system. Economics and finance were now deeply interconnected. It was a century marked by sharp contrasts, alternating between periods of remarkable economic growth – such as the Roaring Twenties and the post-World War II boom – and severe financial crises, including the Great Depression of 1929 and Black Monday in 1987.

This volatility highlighted the need for regulation. Supervisory authorities such as the SEC (Securities and Exchange Commission) in the United States and Consob (National Commission for Companies and the Stock Exchange) in Italy were established to oversee financial markets, which were now dealing with enormous capital flows.

In 1971, the Nasdaq was founded, marking the beginning of the stock market’s transition from a physical trading floor, filled with shouting and hand signals, to an electronic system driven by computers and algorithms.

The digital age

Fast forward to today: the rise of the Internet has transformed how the stock market functions. It has brought greater accessibility, instantaneous transactions, unprecedented capital mobility, and the emergence of entirely new markets.

Now that we’ve explored its history, let’s take a closer look at how the stock market works today.

How does the stock market work?

To understand how the stock market works, it’s first essential to understand what it is. The stock market can be described as the financial engine that links the world of businesses with that of savers and investors. On one side, companies seek capital to fund their growth – whether by opening new branches, developing new products, or hiring staff. On the other hand, individuals look for opportunities to grow their savings. This is where the concepts of primary and secondary markets come into play.

The primary market is where shares are created. When a company lists on the stock exchange for the first time, it sells its shares directly to investors – a process known as an IPO (Initial Public Offering). Investors, by purchasing these shares, provide the company with the necessary funds to grow.

The secondary market, on the other hand, is the market in which existing shares are bought and sold between investors on a daily basis. Companies do not earn money from these transactions, but the market allows investors to profit from rising prices.

But shares are not the only financial instruments traded on the market. A large portion of investments also involves bonds. Understanding the difference between the two is fundamental.

What are shares?

As mentioned earlier, shares represent small units of ownership in a company. Investors buy them with the hope of selling them later at a higher price. Even by purchasing a single share, an investor becomes a partial owner of the company.

This ownership grants specific rights, such as receiving dividends (a portion of the company’s profits, although not always guaranteed) and participating in shareholder meetings.

However, buying shares comes with risks. Share prices are closely tied to the company’s performance. If the business thrives, the price typically increases. If it struggles, the cost can fall – sometimes dramatically. In extreme cases, shares can become worthless.

This is because share prices are determined by the balance of supply and demand. The more people want to buy a share – perhaps because the company has released a revolutionary product or reported record profits – the more its price rises. If demand drops, the price falls.

A helpful analogy: how much would you pay for a bottle of water in a city? Probably not much – it’s easy to find. But how much would you pay for that same bottle in the middle of the desert?

What are bonds?

Bonds differ fundamentally from shares. When an investor buys a bond, they do not become a shareholder; instead, they become a creditor. What does that mean in practice?

Put simply, a company issues bonds to raise capital, just as it does when issuing shares, but the mechanism is different. Buying a bond is similar to lending money to the company. The investor agrees to lend a specific amount, understanding that it will be repaid after a set period (e.g., five or ten years). In return, the company pays the investor regular interest payments, commonly referred to as coupons.

These coupons function like an interest rate, and the amount paid often reflects the company’s financial stability and trustworthiness. A well-established, transparent, and profitable company will typically offer a lower interest rate than a riskier, less stable one.

The same principle applies to government bonds, which a national government issues to finance public spending. For example, Italian government bonds tend to offer lower interest rates than Moldovan bonds, because Italy is generally considered more creditworthy and therefore less risky for investors.

Compared to shares, bonds are considered safer and more stable. However, this usually means they offer lower potential returns. As always, the general rule applies: higher risk, higher reward – lower risk, lower return.

What are indices?

This bonus section ties together both shares and bonds. So, what exactly is an index?

An index is simply a group or “basket” of listed companies (in the case of shares) or debt instruments (in the case of bonds), grouped according to specific criteria.

What kind of criteria? For example:

  • The S&P 500 includes the 500 largest publicly traded companies in the United States.
  • The NASDAQ-100 tracks the 100 largest non-financial companies listed on the NASDAQ.
  • The S&P Global Clean Energy Transition Index includes 100 companies worldwide that are involved in the clean energy sector.

For bonds, indices might group securities by maturity date, such as all government bonds with a 10-year or 30-year term.

These indices are useful benchmarks. They help investors assess overall market performance, track sectors, and compare their portfolios against broader trends.

Who operates on the market? The main players

Now that we’ve explored the tools and rules of the stock market, it’s time to understand who actually takes part.

Listed Companies

First of all, there are the listed companies themselves – without them, the stock market wouldn’t exist. As we’ve seen, these companies launch themselves into the financial markets to raise capital for expansion, innovation, or operations.

Investors: institutional and retail

Next, we have the investors, who buy shares and bonds in the hope of growing their capital. Investors can be categorised into two main groups: institutional investors and retail investors.

  • Institutional investors are the heavyweights of the financial system. They manage enormous sums of money and can influence the price trends of individual companies. This group includes mutual funds, pension funds, and insurance companies, which invest their clients’ money to generate returns and earn management fees in the process.
  • Retail investors, on the other hand, are individual savers who invest their own capital in the hope of earning a return on investment. If you’re reading this, chances are you already are – or soon will be – a retail investor. If so, we recommend checking out our blog for helpful content on avoiding common mistakes, understanding diversification, and overcoming cognitive biases in finance.

Financial intermediaries

Let’s now turn to the players who make investing possible: the financial intermediaries.

These operators form the essential bridge between those who issue shares and bonds and those who buy them. For various technical, legal, and security reasons, it’s not possible to trade directly on the stock exchange without going through these entities. In practical terms, we’re talking about banks and online brokers, which provide access to financial markets in exchange for commissions.

You might wonder, perhaps with mild irritation, “Why am I forced to go through an intermediary just to buy a share in Coca-Cola?” The answer is simple: for the same reason you need a driving licence to operate a car. You can’t just jump behind the wheel and press the pedals at random.

You might rightly argue that once you’ve got your licence, you can drive yourself. True – but can you build the car?

That’s the point. Building the “car” in this case means having ultra-secure IT systems, legal authorisations, direct exchange connections, and regulatory compliance. It’s a complex, expensive, and highly regulated activity – which is why supervisory authorities require only authorised intermediaries to operate in this space.

Supervisory authorities

Speaking of oversight, let’s talk about the supervisory authorities – the referees of the financial world. If the stock market were a football match, these are the officials ensuring that the game is played fairly and in accordance with the rules.

These authorities may be national, such as the SEC in the United States, CONSOB in Italy, or the FCA in the UK, or supranational, like ESMA (European Securities and Markets Authority) in the EU.

Their key responsibilities include:

  • Investor protection – ensuring that intermediaries act reasonably and responsibly towards consumers;
  • Market transparency – requiring listed companies to publish relevant information such as financial reports, quarterly results, and even executive changes;
  • Fair trading – monitoring markets to detect and sanction unfair practices like insider trading, where individuals trade using confidential or privileged information.

But you never stop learning.

In this article, we aim to provide an overview of the stock market, outlining its key components and how it operates. That said, what you’ve just read is likely just the tip of the iceberg.

Suppose you’ve landed here fresh from watching The Wolf of Wall Street, dreaming of sipping Martinis on a sun lounger in a luxury resort in the middle of the Pacific within a year, just like the next self-proclaimed guru. In that case, our advice is this: stay grounded and start learning seriously.

In the meantime, why not subscribe to our Telegram channel or even sign up directly to the Young Platform by clicking below? We regularly share guides, tips, and financial updates to help you stay informed and avoid being caught off guard.

See you next time!