SVET Markets Weekly Update — April 8th – 12th 2024
In his weekly column, investor and entrepreneur Svit Svitlo provides his overview and interpretation of the last week's significant macroeconomic events, and their impact on crypto markets in the near term.
SVET Markets Weekly Update April 8–12, 2024
On Week 15, stocks and crypto continue their downward trend, influenced by technical, economic, and geopolitical factors. Wednesday’s CPI increase and Thursday’s spike in the dollar intensified this decline. Both stock and crypto markets appear more bearish on a daily basis. However, BTC and ETH are holding above critical support levels at 60–62K and 2.9–3K, respectively. Yet, if negative geopolitical factors persist, these support zones may be tested next week.
Monday
On Monday, stocks finished flat ahead of a data-heavy week. Investors were awaiting inflation data, consumer sentiment, and Fed clues on rate cuts. Earnings season starts Friday. Tesla surged 3% on robotaxi news, but Apple, Nvidia, and others fell. In the world’s markets, Israel held interest rates amidst the war, copper prices rose on EU and China manufacturing resurgence hopes. Both BTC and ETH were in positive territory. Ether was leading the surge with an impressive gain of over 9%, while Bitcoin was up by more than 4%. It feels like traders have started to steer the market preparing for the “sell the news” event after the upcoming BTC halving.
Details
Consumers expect inflation to stay around 3% for the next year, unchanged for 3 months. This is a 3-year low. They anticipate higher costs for necessities like gas, food, and healthcare, but steady home price growth. Long-term inflation expectations are mixed, with 3-year views edging up and 5-year views down.
Crypto
BlackRock and Fidelity’s Bitcoin ETFs (IBIT & FBTC) were launched 59 days ago, and they’ve seen continuous investment, outperforming 99.9% of all ETFs ever launched since the market began (1990s). This surge is likely due to growing institutional interest in crypto, inflation concerns, and a desire for alternative investments in a shaky global economy.
World Markets
The Philippines kept interest rates at a 17-year high (6.5%) to fight inflation. Inflation is rising, especially rice prices, but remains within the target range. The central bank upped its 2024 inflation forecast to 4% but left its 2025 view unchanged at 3.5%. Turkey’s Industrial output surged 11.5% YoY in Feb, the fastest pace in 2 years. Mining and manufacturing led the gains. Despite a slowdown in electricity production, this marks a strong rebound from January’s decline.
Israel held interest rates steady at 4.5% for a second meeting. This aims to boost the economy and control inflation despite war-related uncertainties. While current inflation is within their target range, future expectations are rising. Policymakers are cautious due to war, a weakening shekel, and rising oil prices. GDP growth is still projected at 2% for 2024 and 5% for 2025.
Commodities
Copper prices soared to a 14-month high (over $4.25/lb) on strong global manufacturing data. Positive PMI readings from Germany, China, and the US signaled rising demand for copper. Supply disruptions in Africa and production cuts by Chinese smelters further boosted prices.
Tuesday
On Tuesday, stocks surrendered their gains, with financials, industrials, and tech sectors leading the decline while real estate remained positive. Small business confidence plummeted to levels not seen since the 2007–08 depression. Internationally, commodities continued their upward trajectory, driven by gold and with tin prices reaching year-highs. BTC (-4%) and ETH (-5%) retreated sharply after encountering resistance levels at 72K and 3.7K, respectively. The rest of the crypto market followed suit, with Litecoin (-7%) and Avalanche (-6%) leading the downward trend.
Details
Small business confidence plunged to a 12-year low (88.5) in March. Inflation is the top concern, followed by a tight labor market. Owners are pessimistic about sales growth and hiring plans are slowing down. Economic optimism dipped to a 4-month low in April (43.2). All sub-indices fell except confidence in federal policies. Investors remained optimistic (54.9) while non-investors grew more negative (36.6).
Crypto
Overall, spot Bitcoin ETF volumes have been on a decline since its peak (early March). Grayscale’s main spot ETF saw a large outflow ($303 million), but other spot ETFs like Bitwise and BlackRock’s had inflows. This creates a net outflow of $224 million overall. However, looking at a broader timeframe, nearly $1 billion flowed into Bitcoin ETFs last week, mostly into BlackRock’s product. Despite the recent spot ETF outflows, overall interest in Bitcoin investment vehicles remains strong.
World Markets
Saudi Arabian industrial output declined 7.7% YoY, the smallest drop in 8 months. Mining, especially oil production, dragged down the sector. However, manufacturing rose 2.1%, driven by growth in items like metals, paper, and beverages. Overall, industrial production edged up 1% monthly.
Currencies
DXY is stuck near 104.2 as investors wait on key inflation data and Fed minutes. Strong jobs data and hawkish comments from Fed officials lowered expectations for rate cuts this year (60 basis points vs prior forecast of 75). The dollar is steady but could weaken against the yen, potentially inviting intervention from Japan.
Commodities
Gold keeps rising 8th day in a row, reaching over $2,350 an ounce. Strong demand from central banks and safe-haven buying are fueling the rally. China keeps adding to its gold reserves, and analysts predict prices could hit $3K by 2025. Geopolitical tensions and inflation add to gold’s appeal. Investors await Fed minutes and US inflation data for clues on interest rates.
Tin prices hit a 15-month high of nearly $30,000 per tonne, mirroring other base metals. Strong global demand and worries about supply are behind the surge. Indonesia, a key exporter, restarted mining but future regulations cast a shadow. Positive manufacturing data in China adds fuel to the fire for base metals. FYI: The world’s leading tin producers: China, Indonesia, Peru, Myanmar and Bolivia.
Wednesday
On Wednesday, stocks plunged as inflation worries flared in a major upset to tech bulls, dimming hopes of Fed rate cuts. The Fed funds rate is now seen staying high in June (76.8% vs 42.6% yesterday) and July cuts are less likely. All sectors fell, with tech giants like Apple and Microsoft leading the decline. Globally, the race in commodities continued with copper prices reaching a one-year high. BTC and ETH reacted to the hot CPI print by dipping down ~2% but then recovering. However, the rest of the crypto market remained in the red, with Polkadot, Algorand, and Polygon slashing 3%, while Bitcoin Cash corrected down by almost 10%.
Details
Inflation jumped to a 7-month high of 3.5% in March, exceeding forecasts. Energy costs rose, especially gasoline, but some utilities and fuel oil eased. Food inflation held steady, but shelter, transportation and apparel prices jumped. The monthly CPI increase (0.4%) matched February’s but missed expectations. Core inflation remained unchanged at 3.8% (both monthly and annually).
30-year fixed mortgage rates jumped to a 5-week high (7.01%) in the week ending April 5th. Fed officials signaling a cautious approach to rate cuts, strong jobs data, and persistent inflation are blamed for the rise. Rates for jumbo loans and FHA loans also increased.
World Markets
Fitch Ratings downgraded China’s credit outlook to negative (from stable) citing concerns about its finances. China’s debt is rising as it moves away from a real estate-focused economy. Other major rating agencies have China at A+ (S&P) or A1 (Moody’s) with mixed outlooks.
Brazilian inflation continued to cool, hitting a 9-month low of 3.93% in March. This drop below the central bank’s target (4.5%) paves the way for further interest rate cuts. Transportation costs led the decline, with falling fuel prices. Food prices rose slightly. The monthly inflation rate was also minimal, the smallest in 8 months.
Currencies
Stronger-than-expected inflation data (3.5% YoY) sent the dollar soaring (up 0.7%). This suggests the Fed will hold off on rate cuts. The data, including steady core inflation and a higher monthly CPI, follows a strong jobs report. The market now expects less rate easing from the Fed (50 bps vs 60 bps) with no cuts until September.
The Euro tumbled below $1.08. Investors flocked to the dollar as expectations of a Fed rate cut faded. In Europe, markets awaited the ECB’s policy meeting. Though rates are expected to hold steady. The Japanese yen reached a 32-year low (152.7 yen per dollar). Hot inflation data is fueling expectations that the US Fed will maintain high interest rates, widening the gap with Japan’s near-zero rates. This is a boon for carry traders borrowing cheap yen to buy higher-yielding dollars. Japan’s central bank is watching closely, hinting at intervention if the yen weakens excessively.
Commodities
Copper prices soared to a 15-month high (over $4.30/lb) due to supply worries and rising demand. Chinese smelters are planning output cuts, adding to supply woes caused by mine disruptions in Africa and South America. This coincides with signs of a manufacturing rebound in the US and China, boosting demand for copper.
Thursday
Stocks rebounded on technical over-sold indicators after yesterday’s slump despite rising PPI and falling unemployment. The rise was led by Apple and Nvidia (up over 3%). The Fed likely wants to see further improvement before cutting rates. Internationally, the ECB holds its rate steady at 4.5%, prompting depreciation of the EURO on dovish comments, while oil is edging up due to growing tensions in the Middle East. BTC and ETH lingered just above 70K and 3.5K, respectively. Most of the crypto market is in the red, led by Uniswap, which dropped 10% on an SEC prosecution.
Details
Producer prices (PPI) rose modestly (0.2%) in March, the least since December. This follows a larger increase in February. Prices for services remained steady, but goods prices dipped slightly due to lower gasoline costs. Despite the monthly slowdown, annual producer inflation reached a 10-month high (2.1%).
Jobless claims dropped to a 1-month low (211th) in the week ending April 6th, defying expectations. This reversal follows an upward revision in the prior week’s data. The tight labor market aligns with the strong jobs report, potentially giving the Fed more room to keep interest rates high to fight inflation.
30-year fixed mortgage rates hit a 1-month high at 6.88% on April 19th, up slightly from the prior week. This rise mirrors a similar increase in Treasury yields. Inflation data may seem stable, but financial markets are wary. Mortgage rates were significantly lower (6.27%) a year ago.
Crypto
Grayscale’s Bitcoin ETF saw a surprisingly small outflow ($18 million) on Wednesday, a record low. This follows comments from the CEO suggesting selling pressure is fading. Analysts point to lower bankruptcy-related sales and high fees (1.5%) as reasons for the shift.
World Markets
The ECB kept interest rates at record highs (4.5%) for a fifth month. While inflation is easing, the bank remains cautious due to high service prices. It might cut rates if it’s confident inflation is on track to the 2% target. Future decisions will depend on data. China’s consumer inflation slowed sharply in March, rising only 0.1% YoY vs expectations of 0.4%. Food prices led the decline, falling due to lower pork and vegetable costs. Non-food inflation also eased. This comes after a larger increase in the previous month. Monthly CPI saw its biggest drop in 3 years.
Brazilian retail sales defied expectations, rising 1% in February (following a revised 2.8% jump in January). This suggests consumer strength despite high-interest rates. Sales growth was driven by pharmaceuticals, furniture & electronics, and personal care items. However, lower sales of food and fuel limited a steeper increase. Year-on-year, sales surged 8.2%, the highest in nearly two years.
Argentina’s central bank cut interest rates again (down to 70%) despite raging inflation (over 275%). This is the 3rd cut since December. It is prompted by Milei’s libertarian ideology, which aimed at maintaining the competition among producers rather than cutting off their money sources. While inflation has slowed recently, the country still faces recession and rising poverty despite positive investor sentiment.
Currencies
The euro dropped to a 2-month low ($1.07) after the ECB held rates steady. The ECB hinted at future rate cuts if inflation keeps falling. Investors are now expecting a small rate cut in June and a bigger one by year-end. China’s Yuan strengthened (7.25) after the central bank set a stronger exchange rate (7.0968) and data showed lower inflation. This follows a weakening due to hot inflation data from overseas. Strong car sales suggest recovering consumption.
Commodities
Oil prices stayed above $86 per barrel on worries of a wider Middle East conflict disrupting supply. Stalled peace talks between Israel and Hamas and potential Iranian retaliation for suspected Israeli attacks are fueling concerns. This comes despite a larger-than-expected US oil inventory build.
Meme-coin Comment: Markets Are Markets
Hearing “meme-coins” raises the brows of many. However, markets are markets and there is no “easy money” in any of them. Doubts? Just take a look at what experienced meme-coin traders are advising their followers:
- Rely on past successes. Find meme coins that are 1st on their blockchain;
- Buy when nobody else wants to buy;
- Set aside 20%-30% of your profits in a separate wallet;
- Be in the 1% minority;
- Have patience and conviction;
- Don’t blindly cut losses quickly if you have a sound thesis;
- Make contrarian plays.
Want more pragmatic advice? Here you go:
- Not constantly rotating capital
- Utilizing sniper bots
- Following insiders
- Maintaining small bets
- Adhering to a consistent strategy
- Sticking with winning trades while cutting losses
So, basically, they are advising prudent capital management, thorough research, sticking to winners while cutting others short, and contrarian thinking. So much for “a Gen-Z casino” 🙂 I bet even the old Warren would be proud 🙂
Friday
On Friday, import prices rose as consumer confidence dipped, serving as a catalyst for a major stock technical sale. This was compounded by big banks’ disappointment with earnings and China’s anti-foreign-processor policy which worried tech investors. Tech stocks were hit especially hard, with AMD and Intel down sharply. In markets, the dollar, gold, oil (including gasoline), and other resources continue to surge due to intensifying geopolitical risks and traders’ uncertainties towards economic policies. BTC and ETH significantly dipped, with BTC briskly touching 65K and ETH reaching 3K. The rest of the crypto market plunged heavily, with some coins including ChainLink, Cardano, Algorand, Polkadot, Avalanche, and Polygon depreciating by 15% or more.
Details
Import prices rose for a third month straight (0.4% in March), the most since mid-2022. Fuel imports led the increase (up 4.7%), while non-fuel imports were slightly higher (0.1%). Overall, import prices are now slightly higher than a year ago for the first time in over a year.
Consumer confidence (Michigan Consumer Sentiment survey) dipped in April, below expectations. This follows a recent high in March. People are cautious due to the upcoming election’s potential effect on the economy. Inflation expectations are also ticking up slightly.
Crypto
A fifth of BlackRock’s new ETF investments this quarter went into their Bitcoin ETF (IBIT). This Bitcoin fund attracted $13.9 billion, the fastest-growing ETF ever for BlackRock, despite only launching in January. Overall, BlackRock saw strong inflows across its ETFs, with $67 billion entering in the first 3 months.
World Markets
China’s trade surplus fell sharply in March (to $58.55 billion) compared to last year, missing expectations. Exports dropped more than imports (7.5% vs 1.9%). Despite the monthly decline, China still has a surplus of $183.71 billion for the first quarter, driven by a slight increase in both exports and imports. India’s annual inflation dropped to a 10-month low of 4.85% in March, better than expected. Food inflation eased, with vegetables leading the decline. Prices for clothing, housing, and fuel also saw slower increases.
The Brazilian currency hit a new low in April due to global tensions and expectations of lower interest rates. Despite this, lower inflation and strong retail sales suggest a resilient Brazilian economy. Spain’s inflation rose slightly in March (3.2%) after hitting a 6-month low in February. Housing, utilities (due to VAT increase), transportation (fuels), and recreation costs all saw price increases. Food inflation slowed down. Core inflation also dipped (3.3%) to its lowest level since February 2022.
Both national and EU-harmonized inflation rose slightly compared to February. Italian factory sales plunged 3.1% in January, the biggest drop in almost 4 years. This follows a small rise in December. Both foreign and domestic demand fell. Sales were down across all categories, from car parts (intermediate goods) to furniture (consumer goods). This extends a year-long trend of declining factory sales.
Currencies
The dollar (DXY) reached a near 5-month high (106) in April on expectations of higher interest rates and geopolitical tensions. The dollar rose across the board, with the biggest gains against the Australian, New Zealand dollars, Euro and British Pound.
Commodities
Believe it or not, cocoa prices continued their crazy and absolutely unprecedented 6 months run, hitting a new record high (over $10,800/tonne, 5x compared to Nov 23). It is blamed on worries about lower supply. Extreme weather led to poor harvests in West Africa, a key producer. Traders are concerned about the upcoming mid-crop season in Ivory Coast, where dry weather could further limit output. Data shows cocoa shipments from Ivory Coast are already down significantly year-on-year.
Gold prices soared to a new record high (over 2.4K) in April due to safe-haven demand amid fears of war in the Middle East. Strong physical demand from China also bolstered gold prices.
Gasoline prices surged in April to a one-year high($2.82 per gallon) on fears of war in the Middle East. Despite a surprise rise in domestic gasoline supplies, concerns about oil disruptions from the region outweighed this, pushing prices up.
Comment: The World Divided Two Ways
This week illustrates the politics-over-economics trend as global regions, “The East” and “The West,” diverge politically and financially. Central banks’ policies reflect these shifts.
“The East,” serving as a low-cost manufacturing hub for “The West,” experiences faster inflation declines due to lower production costs, primarily food and energy. Conversely, “The West’s” reduced consumption, influenced by higher Fed rates and energy prices, slows Eastern manufacturing growth.
Despite its population size, Eastern markets lack wealth and infrastructure, hindering governments’ ability to stimulate economies with cheap credit, like China’s past efforts, where disparity, notably in real estate, persists.
Meanwhile, the West excels in services, aided by technology, especially in USA, while manufacturing stagnates, particularly evident in leading EU economies like Germany and France. As a result, America’s stubborn inflation surprises Fed officials.
Adding “The South-East” and “The South-West,” politically aligned with East and West respectively, complicates matters. “The South-West” benefits from preferential treatment, lowering local inflation. Conversely, “The South-East” struggles due to inadequate Eastern demand for exports and sheep imports.
Non-aligned countries like India and Saudi Arabia play their resource card to stabilize economies amid tariff threats. However, this strategy’s sustainability is questionable.
The economic divide deepens as political confrontations intensify (even leading to kinetic, military clashes) impacting central bank rates, budgets, investments, and trade. The West’s advantage lies in broader market instruments (treasures, debts) liquidity, allowing expansive government spending without sharp currency devaluations.
Conversely, the East moves towards government-steered economies, consolidating monopolies and controlling consumer habits. This shift, coupled with potential currency independence, challenges Western investors and leads to prolonged price pressures.
Tariff wars exacerbate these tensions, worsening Western consumer markets. Bitcoin, gold, and other anti-inflationary assets signal anticipation of economic upheaval amidst geopolitical strife.
On Week 16, earnings season kicks off with big names like Goldman Sachs and Netflix reporting. Retail sales and Fed speeches are also on tap. China’s GDP and Europe’s inflation rate are key global events to watch.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update — April 1st – 5th 2024
On Week 14 jobs data fluctuated, leaving analysts bewildered. Meanwhile, Fed officials added to the confusion with their mixed messages on rate cuts. Globally, tensions between aging world leaders led to a downturn in commodities such as oil, gold, silver, zinc, and aluminum. Additionally, food prices, including meat and dairy, saw increases. Central banks, including the ECB in Frankfurt, sought to prop up struggling EU economies, while counterparts in China and India moved to devalue their currencies for competitive advantage. In Central and South America, as well as much of Africa, inflationary pressures persisted, forcing policymakers to maintain high-interest rates despite lackluster economic performance.
The crypto market, largely influenced by North American corporate investors, mirrored the stock market’s volatility, resulting in BTC and ETH experiencing a classic bearish double-top formation on daily charts. However, this pattern could shift to a bullish continuation flag if geopolitical tensions ease.
Monday
On Monday, stocks dipped after Q1 gains as manufacturing surprisingly grew, keeping the Fed on hold as inflation eased. Tech stocks rose (Microsoft, Nvidia, Amazon, Meta) while utilities lagged. Globally, China’s PMI surprised on the upside; oil remained steady. The dollar rose on manufacturing data, while the Turkish lira fell on local election results. Crypto markets plunged, with BTC forfeiting 3% and ETH dropping more than 5%. Major alts saw even steeper cuts, with Bitcoin Cash, Solana, Polkadot, and Polygon sliding more than 7%.
Details
The manufacturing sector grew marginally in March after 16 months of decline, exceeding expectations (PMI to 50.3). New orders and production rose, but employment continued to fall. Prices kept rising due to high material costs.
Crypto
Milei’s election win in November 2023 was met with excitement by digital asset supporters who hoped for a BTC-led future for Argentina. However, despite initial promises, Milei’s government has disappointed the crypto community by implementing new registration requirements for crypto firms in line with FATF rules. The National Securities Commission of Argentina has introduced a Registry of Virtual Asset Services Providers, requiring crypto firms to register or risk being banned from the country.
World Markets
The Caixin China General Manufacturing PMI rose to 51.1 in March 2024, surpassing market expectations and marking the fifth consecutive month of factory activity growth. This was fueled by increased new orders domestically and abroad, with foreign sales reaching a year high and output seeing the largest increase since May. However, employment continued to decline as firms remained cautious about costs.
Spain’s new car sales dipped 4.7% in March after a strong February. Despite the March decline, sales for the first quarter are still up 3.1% year-on-year.
Mexico’s manufacturing PMI held steady at 52.2 in March, showing continued growth despite slightly slower hiring. New orders and output rose, but worries about US demand dampened optimism. Manufacturers raised prices due to higher input costs.
In March, the Russia Manufacturing PMI rose to 55.7, indicating the sector’s strongest growth since August 2006. Output and new orders saw significant increases, with foreign demand rising for the first time in five months. This led to higher employment rates and increased input buying to replenish stocks.
Currencies
The dollar rose close to a two-month high after data suggested manufacturing growth and inflation are on the rise. Investors are looking ahead to economic reports and Fed comments this week for clues on future interest rate cuts. The dollar gained against major currencies like the Euro.
The Turkish lira dropped to a new low of 32.4 per USD following Erdogan’s AKP party’s defeat in local elections. Concerns arose over potential shifts in economic policies, but Erdogan vowed to address inflation. Turkey’s inflation hit 67.07% in February 2024, prompting citizens to invest in gold and USD-linked assets. The central bank raised interest rates by a significant 4,150 bps over the past year amid economic challenges.
Commodities
Oil prices stabilized around $83 per barrel, hitting a 5-month high, with anticipation for OPEC+’s meeting to extend production cuts. Investors are monitoring Ukrainian drone strikes on Russian refineries, peace efforts in Gaza, and Chinese manufacturing growth.
Tuesday
On Tuesday, stocks dropped sharply as strong economic data (job openings, factory orders) dimmed hopes of a Fed rate cut in June. Tesla slumped due to lower-than-expected deliveries. On world markets, silver is up on growing geopolitical threats. Eurozone production activity remains subdued, the Euro weakened on ECB rate cut expectations, and the Indian rupee depreciated as regulators aim to compete with China. BTC and ETH continued their vertical downfall alongside stock indexes, dropping another 7% each. Some other major coins, including Uniswap and Avalanche, shrank by more than 8%.
Details
Job openings rose to 8.76 million in February, exceeding expectations. Gains were seen in finance, government, and some service sectors. Openings fell in information technology and the federal government. Job growth varied regionally, with the West showing the strongest increase.
Crypto
Singapore tightened crypto rules (PS Act) to protect users and ensure financial stability. All crypto businesses, even those indirectly involved, must comply. Regulations apply to cross-border transfers. The Monetary Authority of Singapore (MAS) oversees these measures to combat money laundering and terrorism financing.
World Markets
Eurozone factory activity (PMI) remained in decline for March, but the rate softened. This revision to 46.1 reflects improving supply chains and a slower drop in output. New orders and exports also fell less sharply. Despite some optimism, job cuts continued due to weak growth expectations.
German inflation eased to 2.2% in March, the lowest in nearly 3 years, meeting market expectations. This brings it closer to the ECB’s target of 2%. Both overall and EU-harmonized rates declined. Food and energy price drops led the slowdown, while services inflation rose slightly. Core inflation also dipped to its lowest level since mid-2022.
French manufacturing PMI dipped in March, extending a 14-month decline. However, the drop slowed, with some restocking and backlog clearing. New orders contracted further, leading to job losses. Despite this, manufacturers remain optimistic about future demand due to expected economic improvement.
Currencies
The euro weakened to a near two-month low below $1.08. Investors expect the ECB to cut rates more than the Fed this year as German inflation slows to a 20-month low of 2.2%. While French inflation dipped, rates in Italy and Spain rose slightly.
The Indian rupee weakened past 83.4 to the dollar, near a record low. This is due to expectations of less central bank support (RBI) and potential weakening of the Chinese yuan (PBoC). A weaker rupee could help Indian exports compete with China’s. High energy prices also pressured the rupee as India imports oil and coal.
Commodities
Silver surged past $25.50 per ounce, a year-high, on Middle East tensions and safe-haven demand. Industrial use, like solar panels backed by IKEA’s EV grant, also boosted prices. However, strong US economic data dampened hopes of an immediate Fed rate cut, sending those bets below 60%. Investors now focus on jobs data and Fed speeches for clues on future rate changes.
Wednesday
On Wednesday, stocks edged higher after mixed economic data. The services sector slowed, but job growth remained strong. Tech stocks rose except for Microsoft and Intel, which dropped due to the earthquake in Taiwan. Globally, Eurozone inflation is down to a 2-year low, while gold and oil continued to over-perform amid tense geopolitical disputes. The crypto market’s slide paused, with BTC and ETH hovering above major resistance levels at 66K and 3.3K respectively. Meanwhile, some major coins continued to slump, with Bitcoin Cash and Litecoin down more than 8%.
Details
Service sector growth slowed (ISM PMI to 51.4). New orders, inventories, and employment weakened. Prices eased but remain a concern. Private businesses added 184K jobs in March, the most in 8 months. Service sectors like leisure/hospitality led gains. Goods production added jobs in construction and mining, but manufacturing saw little growth.
World Markets
Eurozone inflation dipped to a 28-month low of 2.4% in March, missing expectations. Both headline and core inflation rates fell. Energy prices led the decline, while food and goods price growth slowed. Service inflation remained steady. Monthly inflation stayed positive at 0.8%.
Eurozone unemployment held at a record low 6.5% in February, despite a slight rise in jobless numbers. Youth unemployment remained flat at 14.6%. Spain has the highest rate (11.5%), while Germany enjoys the lowest (3.2%). This is an improvement from 6.6% unemployment a year ago. Turkey’s inflation surged to a 16-month high of 68.5% in March, exceeding forecasts slightly. Transportation and housing costs rose the fastest, while food inflation eased. Core inflation climbed to 75.2%. Despite a slower monthly increase, high prices remain a major concern.
Currencies
The dollar weakened after a surprising slowdown in service sector growth. This data clashed with other strong economic indicators this week like job growth and factory orders. Investors now await Fed Chair Powell’s comments as hopes for a June rate cut hover around 59%.
Commodities
Oil prices hit a 5-month high above $86 per barrel after OPEC+ extended production cuts. Supply concerns due to attacks on Russian facilities, Middle East tensions, and a focus on output reduction by key members like Iraq pushed prices higher. Gold surged to record highs above $2,280 per ounce. Rising tensions in the Middle East and Ukraine fueled demand for safe havens. Mixed signals on Fed policy exist, with some expecting 3 rate cuts this year. Investors await Friday’s US jobs report and Fed comments for clues on interest rates.
Thursday
Stocks rose as hopes for Fed rate cuts grew again after jobs data and Powell switched to dovish comments once more. All sectors gained, with tech (Meta +3%) and real estate leading. Alphabet fell on news of potential AI search fees. On world markets, ECB bureaucrats reiterated their pro-growth stance, weakening the Euro as service PMI grew, while copper prices jumped on China’s economic recovery hopes. The crypto market improved on technical volatility, with BTC reaching 68K and ETH — 3.4K. Bitcoin Cash (+7%) and Binance (+5%) were among the best daily performers.
Details
Jobless claims unexpectedly surged to 221,000, the highest in two months. This contradicts recent strong labor data, suggesting higher interest rates might be slowing the job market.
Job cuts jumped to 90,309 in March, the highest in 15 months. Tech (14,224) and government (36,044) led the losses. This brings Q1 job cuts to 257,254, exceeding Q4 2023 but down from Q1 2023. Cost-cutting is the main driver, with tech still leading job cuts overall.
Imports surged to a 16-month high of $331.9B in February, driven by a $7.1B increase in goods. Consumer goods (phones, household items) led the rise, followed by food, beverages, and auto parts. Service imports also climbed, with travel and transportation sectors showing the biggest gains.
Crypto
Memecoins dominated the crypto market in Q1 2024 (RWA being the second), surging over 1300% on average. Solana (SOL) was a major driver. This outpaced other sectors by a wide margin, with Brett (over 7700% gains) leading the pack. The sector now boasts 6 major cryptocurrencies by market cap. This impressive performance has caused mixed reactions within the crypto market.
World Markets
Eurozone services sector PMI (51.5 in March) grew modestly after 6 months of decline. Sales improved, but mainly domestically. Businesses added staff, though slower than before. Price pressures eased to multi-month lows. Service providers remain optimistic about future activity.
Currencies
The dollar weakens for a third day (104) as expectations of Fed rate cuts grow. Jobless claims and March job cuts rose, and service sector growth slowed. Investors await Friday’s jobs report for clues. Fed Chair Powell signaled rate cuts likely in 2024, but data dependence remains. The Euro and other currencies gained against the dollar.
Commodities
Copper prices soared to a 14-month high (over $4.20/lb) due to a weaker dollar and supply concerns. Lower US interest rates (expected due to weak service sector data) boosted demand from global manufacturers and key importers like China (despite some demand worries there). Mine disruptions in Africa added to supply risks, prompting Chinese smelters to cut output.
Friday
On Friday, stocks increased in a technical recovery after Thursday’s sharp downturn, despite strong jobs data. The unexpected drop in unemployment and continued wage growth suggest a robust labor market, potentially delaying Fed rate cuts. Despite Friday’s gains, the market is on track for a weekly decline. Globally, gold hit a new ATH, silver surged above $27, and Zimbabwe is launching a new currency. The crypto market was mostly in the red, despite BTC recovering slightly above $68K. Solana (-5%) and Algorand (-3%) led the decline.
Details
Unemployment unexpectedly dipped to 3.8% in March, defying expectations. Job gains were strong (498th) and the labor force participation rate increased. Despite Fed rate hikes, the job market remains tight.
Crypto
Grayscale reshuffled its crypto funds based on index rebalancing. Cardano and Cosmos were removed from some funds and proceeds reinvested in existing holdings. The Large Cap Fund now holds mostly Bitcoin and Ethereum as well as 4.52% of Solana, and ~3% in XRP and Avalanche, while the Smart Contract Platform Ex-Ethereum Fund focuses on Solana and Cardano (plus, 12.25% — Avalanche, 8.53% — Polkadot and 6.25% Polygon). The DeFi Fund remains unchanged (8% — Uniswap, 20.41% — MakerDAO, and 13.17% — Lido).
BlackRock added big names like Goldman Sachs and Citigroup as authorized participants for its Bitcoin ETF. This move suggests major financial institutions are increasingly interested in being part of the cryptocurrency market. Crypto VC funding surged 38% and funding reached projects not seen since late 2021. This might signal a new wave, similar to pre-bull run periods. Crypto-focused VCs like Andreessen Horowitz are leading the charge.
World Markets
Hong Kong’s Hang Seng index ended flat (16,723.92) despite initial morning losses. Positive retail sales and business activity data lifted investor sentiment. Upcoming US jobs data and China inflation figures are on watch. Financials gained, while tech, property, and consumer stocks fell. The index is down 1.1% for the week due to Fed rate hike concerns and geopolitical tensions. The index reached its 1997 level when Hong Kong was officially handed back to China by the United Kingdom on July 1. Overall, the Index halved (ATH ~32.7K) since the “Umbrella Movement” hit Hong Kong in 2014. It was a political movement that emerged in response to proposed reforms to the electoral system by the Chinese government, which were viewed by many in Hong Kong as restrictive.
Currencies
The Mexican peso surged to a near 7-year high (over 16.49 per USD) due to low volatility, high interest rates, and economic strength. Even with a recent rate cut, Mexico’s high real rates make the peso attractive (carry trade). Some central bank officials worry about inflation but support the peso’s stability.
Zimbabwe is launching a new currency to replace its failing dollar. Backed by foreign currencies, gold, and other valuables, it aims to tackle inflation and a weak economy. This is the first move by the new central bank governor to address Africa’s weakest currency. The new currency launches at a set rate on April 8th with lower interest rates (20% vs 130%).
Commodities
Silver prices surged above $27 after strong jobs data reduced expectations of Fed rate cuts. The data showed unexpected job gains and steady wage growth. This aligns with comments from Fed officials suggesting slower rate cuts. Silver is up 6.5% for the week due to Middle East tensions and hopes for future easing.
Food prices edged up in March, ending a three-month decline. Vegetable oils surged 8% to a year-high, while dairy prices reached an 11-month peak. Meat prices also rose slightly. However, cereal and sugar prices fell, with cereals reaching a 40-month low. This is due to strong competition among wheat exporters and a production increase in India for sugar.
On Week 15, investors eye key data: US inflation, FOMC minutes, consumer confidence, and trade figures. Global focus includes interest rate decisions, inflation announcements, and China’s economic data.
SVET Markets Weekly Update – March 25th–29th, 2024
On Week 13, the economy continued to show signs of slowing down, with major regional manufacturing indexes indicating weakness. Prices decelerated across main sectors, while FOMC members sent mixed signals about potential rate cuts, leading to mixed stock results. The S&P and DJ hit record highs, while the Nasdaq underperformed and the dollar index rose.
Globally, gold reached a new ATH as major world banks softened their hawkish anti-inflationary rhetoric. Inflationary dynamics eased worldwide, although the yen stumbled as the Japanese economy showed some inflationary signs. The Chinese economy’s performance was still under question, despite upbeat government economic reports and promises to support the economy from CPC officials. Meanwhile, cocoa prices surged on pure speculative rush.
Crypto markets relented, with a double top pattern forming on BTC and ETH daily charts, leading many analysts to worry about a potential market reversal on a sell-the-news event after the upcoming BTC halving.
Monday
On Monday, new home sales decreased, Texas manufacturing slowed down while Chicago’s picked up, stocks paused after last week’s record highs. DJ fell, S&P dipped, and Nasdaq remained flat. Consumer staples and industrials led declines, while energy outperformed. Intel and Microsoft dropped on China news (Intel processors ousted from government PCs). Chipmakers surged. Internationally, the Yuan rose on the government’s support while cocoa continued to rally. BTC and ETH led the crypto market, gaining over 6%, driven by technical factors and forming a ‘double top’ pattern.
Details
New home sales dipped slightly in February (662Th annualized rate) compared to January, missing expectations. This aligns with rising mortgage rates. Sales dropped in some regions but rose in others. The median home price was $400,500. There’s currently an 8.4-month supply of new homes available.
Chicago Fed’s economic growth index rose slightly to 0.05 in February, indicating a modest pick-up in economic activity. Improvement was seen in production, sales, and inventories compared to last month.
Texas manufacturing slowed down in March according to a Dallas Fed survey. Production, new orders, and shipments all fell. Business outlooks also weakened, with increased uncertainty. This suggests slower growth for Texas manufacturing. The 10-year Treasury yield rose as investors wait for clues on Fed rate cuts. Atlanta Fed Bostic expects a single cut instead of two, while Powell hinted at three cuts. Key inflation data and Fed official comments are eyed. Bets on a June rate cut are rising.
Crypto and Local Banks
Iceland ditches Bitcoin mining for “real” farms. Worried about food security and energy use, the country prioritizes agriculture and self-sufficiency, aiming to feed its people and lessen reliance on imports. Renewable energy will focus on homes and essential industries, not digital currencies.
Hundreds of small banks are struggling after last year’s troubles. Sources analyzed about 4000 institutions and found 282 with high levels of commercial real estate exposure and unrealized losses from the rate surge. Mergers have stalled. Behind doors, fearing publicity, regulators are quietly pressuring banks to improve their finances.
World Markets
Ghana’s central bank held interest rates at 29% to fight inflation. Inflation eased slightly to 23.2% but remains high. Economic growth in 2023 (+2.9%) exceeded targets (+2.3%), but the trade surplus narrowed due to lower exports.
Currencies
China’s Yuan strengthened to 7.25 after state banks intervened and signaled support. This follows recent weakness on economic growth worries.
Commodities
Rice futures prices fell to a 4-month low of $17.8 per hundredweight as the USDA forecast larger global rice supplies and slightly lower demand (Pakistan’s high stocks, India’s growing production). Cocoa prices continued their unprecedented rise, hitting a record high of $9.4K a ton (+45% in March). This is explained by supply concerns in top growers Ivory Coast and Ghana. Poor harvests hurt by El Niño rains and heat. Ghana cut its production forecast. Prices may rise further as the smaller mid-crop season approaches.
Tuesday
Stocks were in the red on Tuesday as investors awaited inflation data and Fed clues. Durable goods orders surprised on the upside, but consumer confidence missed, and regional manufacturing activity continued to slow down. The financial and consumer discretionary sectors led, while utilities and energy lagged. Tesla and Reddit rose on news. In the world’s markets, the yen weakened despite Japanese government support, the Brazilian real is cheaper due to export concerns, and the Swiss franc fell against the USD due to its central bank’s rate easing move. BTC and ETH stumbled, meeting resistance at 70K and 3.6K, respectively, increasing the chances of forming medium-term side-channels on their price charts.
Details
Home prices rose faster than expected in January (6.6% YoY), with San Diego and Los Angeles leading the gains. However, prices dipped slightly month-over-month due to rising mortgage rates. Only Southern California and Washington D.C. saw price increases in January.
Factory orders for durable goods rose 1.4% in February, exceeding expectations. This follows a January decline. Orders for transportation equipment (cars, machinery) bounced back significantly. Business spending plans also showed a modest increase.
Richmond manufacturing index fell to -11 in March, signaling a slowdown. New orders and backlogs dropped sharply. Despite this, employment remained stable and wage growth continued. Businesses are still somewhat optimistic, but less so than last month.
A Texas service sector business survey showed a decline in March (index -5.5). Companies’ outlooks remained flat, but uncertainty rose. Revenue growth slowed, and employment was steady. Price pressures eased, but future activity expectations stayed positive.
Crypto
The London Stock Exchange will start trading Bitcoin and Ethereum ETNs in late May, pending regulatory approval. This move aims to bring cryptocurrencies to the traditional stock market.
World Markets
German consumer confidence rose insignificantly to -27.4 in April, the highest level of 2024. Income and economic outlook improved modestly. However, willingness to buy remains very low, and saving is still high. Experts say a sustained economic recovery hinges on lower inflation and clearer government plans.
Spain’s economic growth slowed in 2023. The final quarter came in at 2.0%, following a similar increase in the previous quarter. This brings the full-year growth to 2.5%, down significantly from 2022’s 5.8% expansion.
Currencies
The weak yen prompted warnings from Japanese officials. Finance Minister Suzuki didn’t rule out intervention, and currency diplomat Kanda called the decline “speculative.” This follows the Bank of Japan’s recent rate hike, which had little impact on the currency.
The Swiss Franc weakened to a 5-month low. The Swiss central bank cut rates rate by 25bps to 1.5% and lowered inflation forecasts (also to 1.5%), while the US Fed held rates due to high inflation. This policy contrast caused the Franc to depreciate.
The Brazilian real weakened (to 4.98) due to lower inflation and a weak export outlook. Lower inflation data increased expectations of a dovish stance by the central bank, potentially slowing future rate cuts. Concerns about slowing demand for iron ore and soybeans in China, key Brazilian exports, also weighed on the real.
Wednesday
On Wednesday, stocks rebounded after a two-day slump. The Dow surged on strong performances from Apple and Intel, while the S&P hit a record high. Tech stocks lagged, with Nvidia dropping. Investors await Fed comments and inflation data for clues on rate cuts. Utilities, real estate, and industrials led gains. In the world’s markets, Chinese industrial profits surged, while EU consumer sentiments improved only marginally. BTC and ETH continued to slide down by several percentage points, forming a side-channel on daily graphs. The crypto market followed suit, with Algorand, Polygon, and Solana dropping by 3% and more.
Details
30-year mortgage rates dipped barely noticeable to 6.93% (previous: 6.97%) in late March. This could increase housing inventory, but experts say it will likely be slow as rates are expected to fall further this year.
Crypto
Republican lawmakers urged the SEC to clarify rules for digital assets like Ethereum, particularly regarding custody services. They argue Ethereum isn’t a security and current uncertainty harms the market. This impacts offerings like Ethereum ETFs and the broader digital asset landscape. Fidelity applied to launch a spot ETF. This filing offers the possibility of some holdings being staked to earn rewards.
World Markets
Chinese industrial profits surged 10.2% in early 2024, reversing a 2023 decline. This points to an economic recovery fueled by government support. Private sector profits grew much faster than state-owned ones. Gains were strong in tech, autos, and energy, while profits fell in mining and agriculture.
Eurozone economic confidence rose to a 3-month high (96.3) in March, beating expectations. Both manufacturers and consumers were more optimistic, with sentiment also improving in services and retail. Inflation expectations eased slightly, while manufacturers expect to raise prices. Confidence rose in France, Italy, and Germany, but fell in Netherlands and Spain.
French consumer confidence rose in March to a near two-year high but stayed below the long-term average. People felt better about finances, standard of living, and future inflation. They were also more optimistic about buying big items and job prospects.
Spain’s inflation rose to 3.2% in March, after a dip in February. This is in line with expectations. Energy prices drove the increase, but food price growth slowed. Core inflation, excluding volatile items, dipped to its lowest level in over two years — 3.3%.
Russia’s industrial output surged to a 2-year high of 8.5% in February, up from 4.6% growth in January. Manufacturing, utilities, and mining all saw strong gains. The overall Russian economy also grew at a solid pace of 4.6% year-on-year in January.
Currencies
The Euro held steady around $1.08, likely ending the quarter down vs. the USD. This follows the ECB signaling future rate cuts due to falling inflation. Investors expect a cut in June, with some anticipating more by year-end. The dollar strengthened as US rate cut expectations eased.
The yen weakened to a 32-year low (152), sparking talk of intervention by Japanese officials. Finance Minister Suzuki warned they might take action. This follows the Bank of Japan’s recent rate hike, which had little impact on the currency’s decline.
The British pound held steady (1.26) but is on track for a quarterly decline versus the dollar. This follows dovish signals from the Bank of England, which kept rates unchanged despite inflation. Some policymakers shifted toward holding rates, leading markets to believe the UK could cut rates before the US, but one official downplayed that expectation.
South Africa’s rand gained slightly (18.9) after the central bank kept rates high to fight inflation. Inflation is near the target range, but policymakers expect it to take longer to cool down. This means interest rates will likely stay high for a while.
Mexican peso strengthened to an 8-year high (16.6) due to lower unemployment and bets on continued tight monetary policy to fight inflation. The central bank cut rates slightly but signaled a wait-and-see approach.
Thursday
Stocks barely budged at the close of Q1, with investors awaiting inflation data and Powell’s comments. This caution persists despite a strong quarter for stocks, with the S&P up 10% (its best performance since 2019). Internationally, gold reached a new ATH on expectations of global rate cuts, oil rose due to geopolitical tensions, and the dollar index is up following hawkish comments from FOMC members. In the crypto market, BTC surpassed 70K and ETH reached 3.5K once again. Bitcoin Cash continued its surge, adding 7% and surpassing 575.
Details
The economy grew at a solid 3.4% annual rate in Q4 of 2023, slightly better than first thought. This was driven by stronger consumer spending on services and increased business investment in areas like technology and structures. Housing investment grew modestly, while government spending rose more than expected. Trade played a smaller role as both exports and imports grew slower than initial estimates. A bigger-than-expected reduction in business inventories also weighed slightly on the final growth figure.
Jobless claims unexpectedly fell to 210K in late March, better than expected. This continues a trend of low claims, but a separate measure of ongoing unemployment ticked up slightly. The data suggests a tight labor market, potentially allowing the Fed to wait before cutting rates.
The Chicago PMI showed a deepening contraction in March (index 41.4). This is the 4th straight month of decline and the worst in 10 months. New orders and production fell, while employment surprisingly rose. Prices paid by businesses also dipped. Also, the Kansas City Fed’s manufacturing index plunged to -9 in March, indicating a steep decline in production.
At the same time, consumer confidence (Michigan Consumer Sentiment Index) rose to a 29-month high of 79.4 in March after a revision. Both expectations and current conditions improved, while inflation expectations dipped slightly.
Crypto
A new report by Statista predicts a surge in global cryptocurrency use. Here’s a quick breakdown:
Russia: Projected to have the world’s second-highest number of crypto users (38.5 million) by 2027, boasting the fastest growth rate (15% annually).
USA: Currently leads with 52.8 million users, expected to nearly double by 2027 (102.2 million).
Europe: Combined user base to reach 191.6 million by 2027 from 101.5 million in 2022 (14% annual growth).
Rest of the World: Expected to experience explosive growth, jumping from 291.7 million users in 2022 to 729.3 million by 2027 (20% annual growth).
World Markets
German retail sales dropped 2.7% YoY in February. This follows a record low in March 2023 and indicates continued weakness in the retail sector. Germany’s unemployment rate stuck at a 15-month high of 5.9% in March. Disparities remain, with Bremen and Berlin worst hit, while Bayern and Baden-Württemberg fare best. South Africa’s producer price inflation (PPI) dipped to 4.5% in February (below expectations), after a higher reading in January. The pace of price increases slowed down for various goods. Monthly inflation was also lower than forecast. Brazil’s unemployment edged up to 7.8% in early 2024, but remains low compared to levels (up to 15%) since 2015. The number of unemployed people increased, but wages also grew slightly.
Currencies
The dollar rose to near a six-week high around 104.4 after a Fed official hinted at delaying rate cuts. This comes as inflation data remains strong. Investors await the key PCE inflation report for clues. The dollar gained ground against most currencies but could weaken versus the yen if Japan intervenes to support it.
Commodities
Gold prices surged to a new ATH, on track for its biggest monthly gain (+8.5%) in over a year. This rally is fueled by hopes of Fed rate cuts despite stubborn inflation. Investors see gold as attractive due to lower yields and ongoing geopolitical tensions. The key inflation data on Friday will be closely watched for clues on the Fed’s future moves. Oil prices climbed above $82 per barrel for a third month in a row. This is despite a surprise inventory build and ongoing geopolitical tensions. The rise is fueled by expectations of OPEC+ maintaining production cuts at their upcoming meeting, along with higher refinery activity.
Friday
The stock market is closed for the Easter break. Powell delivered his remarks at the San Francisco Fed, indicating he’s not in a hurry to cut rates, contrary to majority expectations. This may reflect negatively on Monday’s market opening. Globally, gold continues to outperform, hitting a new ATH at $2,230 while steel prices fall to a 4 year low on the weakening Chinese economy. BTC and ETH remained within narrow ranges of $72K-$68K and $3.6K-$3.4K on hourly charts, forming a double top pattern on daily ones. Meanwhile, Bitcoin Cash keeps rallying, rising approximately four times YoY and outperforming all major alts except Solana, which surged approximately eight times YoY.
Details
Core inflation (PCE), excluding food and energy, remained steady in February at 0.3% monthly and 2.8% annually. Personal income grew, but at a slower pace than January. Spending surged in February, driven by services like finance and transportation, along with car purchases. This suggests inflation might be plateauing, while consumer confidence is rising.
Crypto
Bitcoin Cash (BCH) saw a dramatic reversal in mid-February, skyrocketing 55% in a week. This surge comes ahead of a key event: the halving on April 3rd, which cuts new coin creation in half. This, along with the launch of BCH futures contracts on Coinbase and a rising network hash rate, has fueled a return of investor interest and speculation about BCH’s future. Even BCH co-founder Roger Ver is reigniting the debate about BCH’s role as the “true” Bitcoin.
A UK government task force published a report exploring how blockchain technology can be used in investment funds. This builds on their earlier work and looks at using tokens as collateral and streamlining the investment process. The government welcomes this progress, highlighting the UK’s position as a leader in financial innovation.
Crypto analysts argue that cryptocurrencies, particularly meme coins and NFTs, are better suited for the modern attention economy than Web2 platforms, which struggle to accurately measure and compensate for user attention.
World Markets
Ukraine’s current account deficit shrank significantly to $111 million in February 2024, compared to $705 million a year earlier. This is due to a sharp drop in both service and good imports. Smaller surpluses from other areas partially offset this improvement. Vietnam attracted $4.6 billion in foreign investment in the first quarter of 2024, up 7.1% YoY. Pledges for future investment also rose, indicating continued growth. Manufacturing received the most investment, with Singapore and Hong Kong as the top sources.
Commodities
Gold prices remained near record highs above $2,230 despite thin trading. This is due to expectations of central banks cutting rates, including the Fed’s possible move in June. Geopolitical tensions also boosted demand for safe-haven gold. Steel prices plunged to a 4-year low due to weak demand in China. Steel mills are taking in iron ore, but production is down as construction slows. This reflects a gloomy outlook on China’s property market despite government attempts to boost it.
During Week 14, locally focus is on jobs data and economic activity indicators. Globally, inflation reports and manufacturing health are key. Trade data and interest rate decisions will also be watched closely.
Comment: On falling PMI in major States
So, we still have burgeoning stocks coupled with a weakening economy, along with Powell’s constantly dwindling influence. He continues to play political games in an election year, giving the market hints on impending cuts, only to retract them, trying to navigate between pressure from both Democrats and Republicans. Meanwhile, economic data from the week confirmed the economic slowdown.
Democrats are worried about their falling popularity among key, low-income electorate due to high rates, affecting mortgages and slowing the economy. Plus, accumulated inflation pressure is unbearable. At the same time, Republicans enjoy rates, which undermine Democrats’ position. Let’s see how things develop.
In Kansas, the main manufacturing industries heavily impacting regional PMIs include transportation equipment manufacturing (35%), machinery manufacturing (25%), and food manufacturing (20%).
Corporations such as Spirit AeroSystems Holdings Inc., Textron Aviation, and Cargill are major players in transportation equipment manufacturing, machinery manufacturing, and food manufacturing respectively, significantly influencing regional PMIs.
In Chicago, the dominant manufacturing sectors influencing regional PMIs are machinery manufacturing (30%), fabricated metal product manufacturing (25%), and food manufacturing (20%).
Prominent corporations like Caterpillar Inc., John Deere & Company, and Archer-Daniels-Midland Company are key contributors to machinery manufacturing, fabricated metal product manufacturing, and food manufacturing respectively, impacting regional PMIs.
In Michigan, key manufacturing industries significantly affecting regional PMIs are transportation equipment manufacturing (40%), machinery manufacturing (25%), and fabricated metal product manufacturing (20%).
Companies like General Motors, Ford Motor Company, and Fiat Chrysler Automobiles are dominant players in transportation equipment manufacturing, significantly affecting regional PMIs.
So, falling regional PMIs indicate a rapidly worsening situation in key industries such as transportation, food, and machinery across the country. The Fed must pay attention to that.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update (March 18–22, 2024)
On Week 12, the Fed kept its rate unchanged while hinting at a hawkish policy reversal. Stock markets reacted with new ATHs, while BTC and ETH still lingered after the massive 10% correction following the quarterly options expiration. In world markets, stock indexes rallied when major central banks, including those in China and Brazil, began pivoting their policies from anti-inflationary to pro-growth. The ECB also signaled a softening of its rate hike rhetoric.
Monday
On Monday, stocks rebounded as investors focused on AI advancements ahead of the Fed meeting, overshadowing interest rate hike concerns underpinned by homebuilders’ rising confidence. Apple and Alphabet benefited from news of AI integration. On the world’s markets, the Chinese manufacturing sector added 7% unexpectedly, while oil prices continued to grow on worsening geopolitics and lower supplies. The crypto market was in the red, experiencing a continuing correction with BTC hovering slightly above 67K and ETH dipping below 3.5K. Among major alts, only Avalanche (+7%) continued to rise.
Details
Homebuilder confidence jumps to 8-month high (51) in March as low existing inventory pushes buyers to new construction. Mortgage rate dip below fall’s peak further fuels demand.
Crypto
Digital assets see record inflows for two straight weeks, reaching $2.9 billion last week. This pushes the yearly total to $13.2 billion, surpassing 2021’s bull run. BTC dominates with nearly all inflows (99.9%), while overall trading volume remains steady at $43B — 47% of overall global BTC volumes. Despite China’s strict crypto regulations, Chinese investors made $1.15B, contributing to the global total of nearly $38B. The US remains the leader with $9.4 billion in crypto earnings, followed by the UK at $1.4B. Hong Kong, a part of China, also saw significant crypto activity with $250M in gains.
BlackRock’s BTC trust sees high trading activity with an average daily trade size of $13K, suggesting retail investor interest (~250K trades in a day, a trade size is ~326 shares, or ~$13K). El Salvador accumulated over $65 million in unrealized BTC profit. According to a survey conducted by the Central American University, only 12% of the local population have used BTC at least once to pay for goods and services in 2023.
World Markets
China’s manufacturing output roared back in Jan-Feb, growing 7% YoY, exceeding expectations (5%) by far. This is the fastest pace in nearly two years, driven by strong manufacturing and utilities.
Currencies
Brazilian real tumbles to a 4-month low (over 5 per USD) as investors weigh potential interest rate cuts in Brazil vs. expected hikes by the Fed.
Commodities
Oil prices jump 2% to hit a high of $82.72 per barrel (highest since October) due to several factors: lower exports from Iraq and Saudi Arabia, signs of rising demand in China and the US, and ongoing geopolitical tensions impacting supply. Copper prices surged to a new high since April 2023 (above $4.1 per pound) on strong Chinese economic data (factory output +7%, retail sales +5.5% yoy). Smelter production cuts due to low concentrate prices also contribute to the rise. However, a 9% decline in property investment remains a concern.
Tuesday
Stocks are flat ahead of the Fed meeting, ignoring the sudden surge in building permits. No rate hike is expected. Internationally, Japan increased its key interest rates to 0.1% for the first time in eight years. The crypto market was hit by a second wave of correction, with Bitcoin reaching 62.4K and Ethereum down to 3.2K. Some altcoins, including Solana, Polkadot, and Cardano, slid more than 7%.
Details
Building permits jump 1.9% to a 1.52M annual rate in February, exceeding expectations and hitting a post-August high. Gains in Midwest and Northeast offset declines in other regions.
Crypto
Former Treasury Secretary says a forgotten method (Arthur Okun’s pre-1983 system) shows inflation is much worse (18% vs official 4.1%) as it considers housing costs and interest rates. “Price indexes do not include borrowing costs. Thus, when interest rates jumped last year, official inflation did not fully capture the effects it would have on consumer well-being”. Over $122 million poured into 27 projects in a week on the Solana, driven by the memecoin craze and booming DEX activity. Grayscale Bitcoin Trust sees the biggest outflow ever ($640 million) as Bitcoin dips and investor sentiment sours.
World Markets
Breaking with 8 years of negative rates, Japan hikes rates to 0.1% to combat inflation and support rising wages. They’re also scaling back asset purchases with some flexibility to adjust. Eurozone economic sentiment surges to a 14-month high (33.5) in March, with analysts mostly expecting stable activity. However, inflation expectations remain deeply negative (-64.3) and the current economic situation is still seen as weak (-54.8). Russia’s borrowing costs soar (13.4% yield on 10-year bond) due to high inflation (is at 7.7%, with a 4% target), weak consumer response to rate hikes, and government spending concerns (budget deficit is RUB 1.474B in Jan-Feb).
Currencies
Euro weakens near $1.08 as dovish ECB signals (possible rate cuts) counter slowing wage growth. 5 out of 26 members of the central bank governors (Spain, the Netherlands, Ireland, Greece, Slovakia) have publicly supported rate cuts in June. British pound tumbles to 2-week low ($1.27) as investors eye key inflation data and central bank decisions this week. BoE is likely to hold rates, but mulls August cuts, unlike ECB and Fed’s expected June moves.
Wednesday
On Wednesday, stocks soar to new ATHs after the Fed maintains rate cut plans. Tech leads rally, with mega-caps like Meta and Apple up over 1%. In world markets, gold set a new record at $2222. The crypto market surged back with BTC and ETH gaining about 7%.
Details
Fed holds rates at a 23-year high of 5.25%-5.5% but promises three cuts later in 2024, with projections for stronger economic growth but slightly higher inflation. They see unemployment falling to 4% this year.
Crypto
With BTC ETFs approved, the pressure is on for ETH ETFs. Several companies are vying for a green light from the SEC, with deadlines approaching. Despite regulatory hurdles and DeFi challenges, analysts remain optimistic about Ethereum’s strength and growing DeFi ecosystem. DeFi protocols surged 80.3% YoY to $51B, with a 21.6% increase in wallet addresses.
World Markets
Brazil cuts rates 50bps to 10.75% as inflation eases but remains above target. They aim to boost the economy cautiously while keeping inflation in check.
Commodities
Gold rises to $2222, setting a new record, after mixed central bank signals. Fed to hold rates, but hints at cuts later in 2024. BoE eyed for future rate cut clues.
Thursday
On Thursday, manufacturing activity is down, the service sectors cools a bit, home sales grow unexpectedly, and stocks soar on a continuing tech lead rally with Micron up 16% on strong earnings. Reddit debuts on NYSE, but Apple tumbles on a DOJ lawsuit. Internationally, the EU manufacturing sector continued to soften, as the Swiss Bank cuts its key rate while the Bank of England kept its rate unchanged but showed signs of softening its anti-inflationary stance. Despite that, the crypto market turned red, correcting after yesterday’s surge on the Fed news turning into dovish enthusiasm. BTC’s trading slightly above 65K, ETH — 3.4K. Among the few coins which are still in the green are XRP (+7%) and LTC (+1%).
Details
Service sector growth cools down in March, with PMI dipping to 51.7 (3-month low). New business slows, but employment rises. Businesses see higher inflation and are boosting marketing plans despite these mixed signals. Philly Fed Index dips to 3.2 but beats forecasts (expected -2.3). Shipments and new orders improve, suggesting some expansion. Prices remain low, but future activity expectations rise.
Existing home sales surged 9.5% to a 1-year high (4.38 million) in February, defying forecasts. More houses on the market are meeting buyer demand, with gains in all regions except the Northeast.
Crypto
Massive real-world asset tokenization (such as $326 trillion in real estate or the gold market, valued at $12.39 trillion) could fuel the crypto market by boosting liquidity. That trend is confirmed by mainstream opinion leaders — the Boston Consulting Group and BlackRock. India cracks down on foreign crypto exchanges like Binance and OKX, blocking their websites and prompting an exodus to local exchanges. Local exchanges see massive user inflows with the government’s unclear regulations and high taxes making things difficult for foreign players.
World Markets
The Bank of England holds rates at a record 5.25% despite inflation dipping to 3.4% (lowest in nearly 30 months). One member voted for a cut, but policymakers wait for clearer signs inflation is under control before easing. German manufacturing PMI sinks to 41.6 (worst in 5 months) despite a slower decline in output. Backlogs and employment continue to fall, but sentiment improves. French manufacturing PMI tumbles to 14-month low (45.8) as output and sales plummet. Despite some supply chain improvement, job cuts held steady.
EU car sales surge 10.1% in February (+12.1% previous), with strong growth in France and Italy. Electric cars hold 12% market share (up from 9%), boosted by Belgium, France, and Netherlands despite a German dip.
Currencies
Mexican peso weakens after central bank cut rates (25bps to 11%). Inflation dips but remains above target (4.4%). Investors weigh the Bank of Mexico’s move against the Fed’s planned rate cuts later in 2024.
Commodities
Gold continued to increase, fueled by expectations of central bank easing. The Fed signaled rate cuts, and now the Bank of England holds steady, with one vote for a cut. Switzerland became the first major economy to cut rates, further boosting investor confidence in looser monetary policy.
Friday
On Friday, stocks cool off after record highs. Dow retreats, but weekly gains expected. Consumer discretionary stocks lag, while utilities and communication services rise. On world markets, Euro, Chinese Yuan and Indian Rupee weakened on rate cut expectations, EU gas prices increased due to supply concerns, the cocoa market is in panic with prices quadrupling in the past two months.
Crypto
The crypto market entered into a correction mode forming a sideway channel with major coins sliding down for more than 4%. BTC got under 64K and ETH dropped below 3.4K. BlackRock clients have much more interest in BTC than ETH.
A Minnesota UBI bill that would give up $300 to $1.2K every month for two years to low-income residents has already advanced through a House committee. The program would be funded with $200 million over two years.
World Markets
El Salvador’s economy rebounds. Q4 growth hits 4.5%, the highest in 2 years. Trade and investment surge, but consumer spending slows. This marks a significant improvement from the previous quarter’s decline. Vietnamese stocks climb to 18-month highs, boosted by Wall Street’s record and hopes of US rate cuts this year. Local gains led by finance and construction sectors after Hanoi appointed a new acting head of state.
Currencies
Dollar strengthens for a second week, hitting 3-week highs (104.2). Bets on earlier rate cuts by other central banks lift the dollar. Swiss National Bank cut rates, Bank of England paused, and Bank of Japan shifted policy, but remains dovish. The Fed held steady on rates and its plan for 3 cuts, but awaits signs of inflation easing.
China’s offshore yuan weakens to a 4-month low (7.25 per dollar) on expectations of more easing. The central bank hints at looser policies, and a strong dollar adds pressure. Investors await data to assess China’s economic health. Euro falls to near $1.08, its lowest level in over 5 months, on hopes of ECB rate cuts. A hawkish ECB official signaled potential cuts before summer, aligning with market expectations of multiple reductions this year. The ECB remains data-driven, though, and future moves depend on inflation. Indian rupee weakens to record low (83.5) after China’s currency move sparked an Asian selloff. Despite the drop, strong economic growth (8.4% GDP) and high PMI (over 60) kept the rupee somewhat stable.
Commodities
European natural gas prices stay high near €29/MWh due to supply worries. Concerns include outages in Norway, repairs at a US terminal, and competition for gas from Asia. However, analysts expect prices to fall as winter ends, with more solar power and stable gas storage levels in Europe. Cocoa prices keep surging, hitting a record high above $8,600 per pound (was ~2K at the start of the year). Fears of a global cocoa shortage intensify as reports emerge of processing slowdowns in West Africa and lower-than-expected harvests in Ivory Coast. Analysts predict a wider global cocoa deficit due to these supply concerns.
On Week 13, local investors will expect inflation data, Fed speeches, GDP. In the EU they will watch for inflation and rates. Japan, Canada will see key data releases.
Comment: Fed’s Created Inflation Is Confirmed.
I was always arguing that the Fed’s old bureaucrats have created non-core inflation (excluding food and energy) by themselves, through their stupid-high interest rates.
Now, the fact that governments are significantly altering their inflation statistics by not including in it the effect of rising rates is confirmed by non other than the former Treasure Secretary Mr. Summers himself. Note that Japanese bankers kept their rates at a negative level (!) throughout that time, achieving better results in “suppressing inflation” by doing absolutely nothing (in fact, even printing more money). In Japan, inflation is about 2% now.
All main-stream economists’ counter-arguments suggesting that the Japanese economy is “structurally different” are inconsistent with the concept of “global financial markets” and the fact that Japan imports almost all of its energy from abroad, thus facing inflationary prices like everyone else. Bottom line, almost all non-core inflation stemmed from producers and service providers simply factoring the Fed’s rates into product prices and salaries.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update – March 11th–15th 2024
During week 11 BTC turned red for the first time in two weeks, while main stock indices, except the Nasdaq, managed to close in green. This comes despite inflation rising unexpectedly to 3.2% and traders being jittery about the outcome of the FOMC’s meeting next week. On world markets, oil, gold, and silver prices rose despite the dollar index edging above 103.
Overall, traders behaved more rationally this week compared to the previous two weeks, when major stocks and crypto markets continually reached new all-time highs (ATHs). Investors factored in the slow but sure deterioration of economies worldwide as energy and food prices began to appreciate again. Additionally, despite the ongoing rally in “big name” tech stocks, smaller and mid-sized stocks underperformed, leading many analysts to question the validity of the recent bull market.
A similar trend is occurring in the crypto markets, where major coins outperform and reach ATHs, while the vast majority of coins and tokens remain in bear market territory. This situation characterizes the 2024 market as a “golden bull run” driven by hyper-rich institutional and private investors aiming to make the most profitable assets across all markets out of reach for the average capital holder.
Monday
On Monday, the stock market sees mixed performance. The Dow ticks up slightly, while the S&P 500 and Nasdaq dip. A tech sell-off hits Nvidia, AMD, and other tech stocks. However, materials, energy, and consumer stocks rose. Investors anticipate key inflation data before the Fed meeting on March 20. Internationally, Japan managed to avoid entering a recession, and steel prices reached a 9-month low. BTC reached a new ATH at $72.4K, leading the rest of the market, with ETH closing above $4K again. Many altcoins, including XRP (+20%), Litecoin (+17%), Avalanche (+15%), and Algorand (+14%), significantly outperformed the two leading coins.
Details
Consumers inflation expectations stay put at 3% for next year, matching a 3-year low. Gas prices expected to rise slightly, while some sectors like medical care, education, and rent see inflation dip. Long-term inflation outlooks inch up slightly.
Crypto
Bitcoin price skyrockets to a new high above $72K, jumping over 70% this year with its total market cap above $.14 trillion. This surge pushed BTC’s total value above silver’s $1.382 trillion for the first time.
World Markets
Japan barely avoided a recession. GDP grew slightly (0.1%) in Q4, revising previous estimates. Capital spending surged, exports rose, and net trade helped offset weak consumer spending and government cutbacks. Japanese big manufacturers turn gloomy. Business sentiment tumbles (survey index -6.7%) despite economic growth. Concerns over global issues and potential rate hikes weigh on sentiment. Germany’s inflation dips to 2.5% (lowest in 2 years), beating expectations. Food and energy slow down, core inflation steady. Monthly price increase falls short of forecast.
Currencies
China’s currency strengthens (past 7.2 yuan/dollar) on inflation data. Consumer prices unexpectedly rose in February, sparking mixed signals for future stimulus. Producer prices remain low, suggesting economic recovery may be fragile.
Commodities
Steel prices in China drop to a 9-month low (CNY 3.5K/tonne) on worries about weak demand. Imports fall 8.1% year-on-year, while steelmakers ramp up iron ore purchases. Investors wait for China’s loan data to gauge future demand.
Tuesday
On Tuesday, major stock indices rose despite an unexpected inflation increase and a decline in business activity. Internationally, manufacturing output decreased in Brazil and India, while Mexico registered an increase. BTC, ETH, and most of the crypto market corrected, while XRP surged by 20%. MicroStrategy bought 12,000 BTC.
Details
Inflation rose unexpectedly to 3.2% YoY in February (above predictions). Energy slowdown weaker than expected. Food, used cars, and apparel price increases eased compared to January. Transportation costs continued to surge. Monthly inflation ticked up slightly (0.4%).
Core inflation dipped slightly to 3.8% YoY in February (a near 3-year low), but remained above expectations. Shelter costs, a major contributor, slowed down. Prices for recreation and personal care eased, while medical care and auto insurance kept rising. Monthly core inflation stayed flat at 0.4%. Small business confidence dips to a 9-month low (89.4) in February. Inflation replaces labor quality (down to lowest since early 2020) as the top concern for owners.
Crypto
MicroStrategy buys more Bitcoin (12,000) as its price hits a new high. Their total holdings now stand at 205,000 BTC, worth over $14.8 billion. BlackRock’s new Bitcoin ETF (iShares Bitcoin Trust) also holds a significant amount (197,943.2 BTC).
World Markets
Brazil’s inflation slows down for the 5th month straight, reaching 4.5% in February (lowest in 7 months). Food and transportation costs rose, but housing, clothing, and healthcare saw some relief. Monthly prices ticked up (0.83%, highest in a year) due to school year expenses and fuel tax increase.
India’s industrial output grew 3.8% year-on-year in January 2024, lower than expected (4.1%). Manufacturing, making up most (78%) of production, slowed to 3.2% growth compared to December’s 4.5%. However, mining and electricity sectors saw faster expansion (5.9% and 5.6%, respectively). This follows an upward revision for December’s growth (4.2%).
Mexico’s industrial output jumped 2.9% in Jan (exceeding expectations). Construction boomed (17.9%), while manufacturing recovered (0.1%). Mining dipped further, and utilities grew slower. Monthly production also rose slightly (0.4%).
Currencies
The Brazilian real weakens (4.98 per USD) on inflation concerns. Higher than expected inflation in Brazil (4.5%) and potential Fed rate cut delay weigh on the real. China’s economic slowdown further weakens foreign demand for Brazilian exports.
Commodities
Oil prices jump past $78/barrel on OPEC’s upbeat demand forecast. They predict 2.25 million bpd growth in 2024 and a raised 2023 economic outlook (+2.8%). Despite the production increase (led by Nigeria and Libya), OPEC cuts and Middle East tensions support prices.
Wednesday
The stock markets dip after record highs. The S&P 500 and Nasdaq fell slightly, while the Dow Jones gained. Nvidia, Tesla, and Intel dropped, while Amazon rose. On world markets, silver, soybean, and copper prices surged due to a combined effect of a lower dollar, bad weather, and monopolistic manipulation of pricing. BTC shot above 73K, stimulating the rest of the crypto market with BNB (+10%) and MATIC (+8%) leading the way.
Crypto and AI
MicroStrategy raises $500 million through convertible notes to buy more Bitcoin. These notes mature in 2031 and pay interest twice a year.
The EU passed a law regulating AI. It bans harmful applications like facial recognition databases used for mass surveillance and social scoring. “Deepfakes” must be clearly labeled. High-risk AI in areas like law enforcement and education requires strict oversight, transparency, and human involvement. Citizens have the right to challenge AI-based decisions.
World Markets
Russia’s inflation surges to 7.7% in Feb, exceeding forecasts (7.4%) and the central bank’s target (4%). Food and services prices contribute most. Monthly inflation slows slightly.
Currencies
The Mexican peso strengthens (near 16.66/USD) on hawkish central bank signals. Policymakers prioritize inflation control and advocate for gradual interest rate adjustments. Strong industrial production growth (2.9%) and lower-than-expected inflation (4.4%) support their stance.
Commodities
Silver surges to $24.7/oz (highest since Dec 2023), mirroring gains in other metals. Expectation of central banks easing rates (Fed, ECB in June, BoE in Aug) fuels the rise. However, Bank of Japan is predicted to tighten policy soon. Soybean prices climb near 3-week highs (~$11.8/bushel) due to lower supply concerns. Brazil revised production estimates downward due to bad weather in key regions like Argentina. However, prices remain down over 9% for the year due to a 2023 surplus.
Copper prices soar above $4/pound (7-month high). Chinese smelters cut production due to low concentrate prices affecting profitability. Specific limits not set, but adjustments planned. Exploring alternatives like using more copper blister to reduce reliance on concentrate.
Thursday
On Thursday, stocks fall after inflation data raises concerns. Higher yields and mixed economic data (strong producer prices, weak retail sales) cause investor jitters. The energy sector rises with strong oil prices. Internationally, the South African manufacturing sector is experiencing slow growth due to rising energy prices. BTC corrected sharply following stocks, bringing down the rest of the crypto market, while some coins such as Polygon and Stellar dropped more than 5%.
Details
Producer prices (PPI) jump 0.6% in Feb, the highest since Aug 2023. Exceeds expectations (0.3%). Goods surge 1.2% (energy +4.4%, food +1.0%). Services rise 0.3% (transportation +0.9%, trade -0.3%). Core inflation slows to 0.3% (Jan: 0.5%) but tops estimates (0.2%). Yearly inflation hits 1.6% (Jan: 0.9%), exceeding forecasts. Jobless claims drop below expectations: 209,000 in the week ending March 8th (vs. expected 218,000).
Crypto
Major banks are creating digital tokens (crypto) for real-world assets like bonds and deposits ($108 trillion+). This tokenization is being explored cautiously. Regulators in the US and Hong Kong are involved, with the Fed allowing some exploration by member banks. Banks are primarily using private, permissioned blockchains endorsed by regulators, not fully public ones.
Blockchain gaming surges: daily active wallets jump 20% in February. Play-to-airdrop campaigns and rising crypto game token prices are seen as key drivers. This trend suggests growing interest in this sector.
World Markets
South Africa’s manufacturing sector surges 2.6% YoY in January, exceeding expectations. This marks the fourth month of consecutive growth, driven by chemicals, wood products, textiles, and others.
Currencies
Stronger dollar (above 103) reflects persistent inflation. Higher producer prices, lower jobless claims, and weaker retail sales data raise concerns. Reduced hope for Fed rate cuts in 2024 (56.7% chance for June cut, down from 58.2%).
Commodities
Oil prices surge to highest since November ($81.26/barrel) due to several factors: IEA predicts higher global oil demand in 2024; oil inventories unexpectedly declined last week; attacks on Russian refineries and ongoing conflicts add uncertainty; OPEC+ decision to limit supply strengthens prices.
Friday
Stocks fell on the triple witching expiration due to a tech sell-off and concerns over a Fed rate hike. Amazon and Microsoft led the decline. Despite the daily drop, the market saw small weekly gains. On the world’s markets, the central bank of China kept its key rate unchanged at 2.5%. The crypto market was in the deep red as BTC plunged below 70K on traders’ following stocks. Among major alts, only Solana (+5%), Avalanche (+5%), and Binance (+1%) showed a positive dynamic.
Details
Manufacturing activity in New York State plunged in March, with the Empire State Index reaching a much worse than expected -20.9 (down from -2.4 in February). This reflects a significant decline in demand, new orders, shipments, and unfilled orders. Employment and working hours also weakened. Despite some hope for future improvement, overall sentiment among firms is cautious. Consumer confidence dips slightly to 76.5 in March, a 3-month low. Mixed signals: modest decline in business condition expectations, flat current conditions. Inflation expectations remain unchanged. Consumers cautious about long-term outlook due to upcoming elections.
Crypto
The Dubai International Financial Centre (DIFC) recently passed a new Digital Assets Law, aiming to: clearly define regulations for those using and investing in digital assets; modernize the DIFC to attract international investment; establish the DIFC as a hub for innovation in digital assets and blockchain technology. However, it’s unlikely that any of the bureaucrat’s ‘regulatory initiatives’ will really improve anything except for the bureaucrats themselves.
Bank of America reports record investments: the groundbreaking inflow in stocks of $56.1 billion, the highest ever for a single week; a significant milestone with $3.4 billion in crypto-investments.
World Markets
India’s trade gap widens to $18.7 billion despite strong export growth (11.9% YoY). Imports surged even faster (12.2% YoY) due to robust domestic demand and higher oil prices. Officials remain optimistic about exports holding steady. French inflation dipped slightly to 3% annually in February (down from 3.1%). This is the lowest level since early 2022, driven by slower price increases in food, manufactured goods, and services. However, energy costs, particularly electricity and fuel, are rising faster, causing a 0.8% jump in monthly consumer prices. While a slight improvement is seen, rising energy prices remain a concern.
Currencies
Japanese yen weakens against the dollar (below 148.5) as traders anticipate the Bank of Japan’s policy decision. Rumors suggest the bank might end negative rates due to wage growth, but the market seems to expect this already. Governor Ueda acknowledges a moderate economic recovery with some data showing weakness.
On Week 12 it gets busy: Fed meeting on 20th of March: Economic forecasts, interest rate projections in focus Macro data: Manufacturing, services activity, housing market on watch. Global focus: Interest rate decisions in several countries (Japan, UK, etc.). Inflation: Data releases from Canada, UK, South Africa, Japan. Purchasing Managers’ Indexes (PMIs): Flash updates from various regions. China: Key economic indicators like industrial production, retail sales, and investment monitored.
Comment: Why High Fed Rates Do Not Bother Them?
We have a lot of self-congratulatory comments coming from mainstream media on how “brilliantly” the Boomer-led Fed managed to keep rates at an astronomically high level without hurting economic growth. Let’s look at this.
They claim that unemployment is low. It’s wrong. It’s low among low-paid employees in government, transportation, manufacturing, and healthcare. This is supported at an unsustainable level by corporations, which have pushed SMBs — incapable of financing their businesses with such overpriced loans — out of the markets. Unemployment is high and rising among the most valuable and productive parts of the workforce in technology, finance, and high-value-added services. This is especially true for new, fledgling, and the most innovative businesses.
They claim that stock market highs increase the wealth of consumers, who then spend it in retail shops. It’s not true, too. In the USA, institutional investors, which include both active and passive funds, own ~80% of all stocks. So, private investors only hold USD ~$8 trillion of the ~$40 trillion worth of the local stock market.
Moreover, for an “average” asset holder, real estate makes up ~50% of holdings (including primary residence) and stocks & investments only ~25%. The rest is cash & savings (15%) and other (10%, including vehicles, retirement accounts, and valuables). With that, only 40% of homes in the USA are mortgage-free, according to various sources.
You might not be a genius to see that a positive impact on private asset holdings from rising stock prices (~30% YoY, or +5% (15%*0.3) to individuals’ wealth) can’t beat the combined effect of almost doubled prices on food, shelter, or -7% (15%*0.5) and cosmically high mortgage rates (~10%), or -3% (50%*0.1*0.6).
So, we have a combined effect of -5% yearly decrease in private wealth or -8.2% if you count the +3.2% inflation. Only brain-empty Boomer politicians can’t see this obvious fact and continue to preach the great “success of economic policies”.
That’s not all. If the present political trends of establishing a “strong government” with high taxes, high rates, and increasing regulatory burden continue, the economy might enter a Japanese-style stagnation. Here’s how it plays out.
The decades-long economic stagnation in Japan can be attributed to various factors, including a surplus in corporate savings (check), policy mismanagement (check), structural impediments (check), and the close ties between economic bureaucracies and corporations (double check).
Policy mistakes, such as the consumption tax hike in 1997 (check) and slow disposal of nonperforming loans (check), exacerbated the economic challenges. The complex structure of Japan’s political economy, characterized by symbiotic relationships between economic bureaucracies and corporations (check), also played a role in impeding progress.
The link between Japan’s economic stagnation, high asset prices (check), and low levels of innovation and entrepreneurship is multifaceted. The prolonged economic slowdown has hindered innovation and entrepreneurial activities due to risk aversion (rapidly growing with Millennial and Gen Z generations) and limited opportunities for growth (almost check).
The aging population (check, if immigration channels are closed) impacted the labor force and innovation landscape. Moreover, the dominance of large corporations and conglomerates in Japan’s economy (check) has created barriers for small businesses and startups to thrive (check), contributing to a lack of dynamism in the entrepreneurial ecosystem.
So, as you can see, we are on a straight road into the classical economic dystopia, where the current abyss between the haves and have-nots will widen for the next 20–30 years before the current system collapses and the new free-market, supplemented by UBI and politically decentralized system is built.
SVET Markets Weekly Update – March 4th–8th, 2024
On Week 10, BTC reached 70K and ETH reached 4K. The Dow, S&P, and Nasdaq all hit new ATHs. Faced with unexpectedly high unemployment and easing inflation, gold rose to a record high of 2.2K, while the dollar fell by 1.4%.
Monday
On Monday, stocks indices closed lower as investors awaited economic data releases and Powell’s congressional testimony for insights. Meanwhile, on world markets, gold hit a record high, while Japanese manufacturing continued to expand and Chinese production slowed down slightly. Bitcoin almost reached an ATH but retreated due to spontaneous profit-taking. The rest of the crypto market also performed well, with some major coins such as Dogecoin (+12%) seeing double-digit percentage increases.
Crypto
The second milestone for the Ethereum ETF application passed the Sunday. Analysts predict a 70% chance of approval by May. BlackRock filed for an Ethereum ETF. Futures-based products exist but lack attention.
World Markets
South Korea’s GDP grew 2.2% in Q4 2023, up from 1.4% in Q3, with an average annual growth of 6.95% from 1961–2023, peaking at 20.8% in 1969 and hitting a low of -7.3% in 1998.(BOK) The Jibun Bank Japan Services PMI rose to 52.9 in February 2024, marking 18 months of sector growth, driven by a significant increase in new business from tourism and product launches. Employment surged, but growth was mainly domestic as foreign demand stagnated. Input cost inflation eased, while output cost inflation grew. Business sentiment dipped but stayed optimistic about future investment and expansion.
The Caixin China General Service PMI fell to 52.5 in February 2024, marking the slowest expansion since November. Despite increased export orders, overall new work and employment dropped. Higher input prices led to increasing output prices, and business sentiment hit a four-month low. Turkey’s 10-year bond yield reached 26% amid rising inflation and upcoming elections. Annual inflation hit 67% in February, with expectations of it surpassing 70% in May. Concerns persist about potential lira depreciation and looser fiscal policies post-elections.
Currencies
The euro surged to 1.085, the highest since February, as investors anticipate the ECB meeting for clues on future interest rates. Inflation eases but core rate remains high, suggesting a cautious approach from the ECB.
Commodities
Gold hit a record $2,115 per ounce as investors predicted FED interest rate cuts. This follows data showing a 16-month contraction in US manufacturing and weak consumer morale.
Tuesday
The Dow, S&P, and Nasdaq dropped more than 1%. Tesla, Microsoft, and Meta led the decline due to concerns over China and the tech sector’s health. Gold reached a new all-time high on weak PMI and expectations of rate cuts. BTC crashed spectacularly to $59K after touching an ATH at $69K as a result of a massive Wall Street bear attack, taking down the rest of the crypto market with it. Some major coins, such as Bitcoin Cash (-14%), Cardano (-11%), Polygon (-11%), and Algorand (-10%), depreciated by ten percent or more within a few hours.
Details
Services sector growth slowed in February (to 52.6 from 53.4), despite rising business activity and new orders. Employment and supplier deliveries contracted, while inflation pressures eased, concerns remain regarding inflation, employment, and geopolitical conflicts.
Crypto
Solana DEXs smash weekly trading volume record, exceeding $11 billion (154% increase) and surpassing the previous high of $9.88 billion. Orca and Raydium (DEXs) on the Solana network saw $4.5B and $3.52B in trade.
World Markets
The Eurozone Composite PMI rose to 49.2 in February, indicating near-stabilization of the economy. Growth in service sector activity and contractions in manufacturing output continued. France and Germany experienced modest growth, while Ireland and Spain observed solid expansions. Industrial producer prices in the Eurozone decreased in January, marking a moderation from the previous month.
Commodities
Gold hits a new record high ($2,130) on weak PMI and factory orders, fueling expectations of rate cuts (55% chance priced in for June). Geopolitical tensions and recession fears add support. Investors eyeing jobs report and Powell’s speech for further clues.
Wednesday
On Wednesday, stocks rebound after Powell’s comments and data. Fed not rushing to cut rates, labor market strong, Nvidia, Meta, Broadcom up and Apple fall for 6th day. On world’s markets, gold surged to the new ATH on Powell’s comments and weak job reports, while wheat dropped on oversupply and oil continued to rise. The crypto market was in deep green as all major coins recovered from Monday’s crash to their 2 years height. BTC kept above 65K.
Details
Private businesses added 140K jobs in February, below expectations of 150K. Most new jobs were in service sectors, especially leisure and hospitality. Most jobs shed were in mining (-4K) and information (-2K). Job openings fell to 8.86 million in January, the lowest in 3 months and below expectations. The decline was broad-based across most sectors except nondurable goods manufacturing. Job openings also decreased in most regions except the Northeast.
Crypto
El Salvador’s BTC holdings surpass $150 million, reflecting a $50M profit since adopting it as legal tender in 2022. President Bukele’s daily 1 BTC buying strategy has grown their stash to 2,380 BTC, currently valued at $164.7 million.
World Markets
In February 2024, the HCOB Eurozone Construction PM increased slightly to 42.9, indicating a continued but softer decline in activity, with housing remaining weak. New orders fell sharply, affecting purchasing, while employment declines slowed, and future outlook slightly improved. Input costs rose at a slower rate.
Euro area retail sales fall further in Jan 2024, down 1.0% YoY (1.3% expected) after -0.5% decline in Dec. This marks the 16th consecutive month of contraction. Brazil’s industrial output surges 3.6% YoY in Jan 2024, exceeding expectations (2.8%) and marking the 6th straight month of growth. Egyptian stocks surge to record high (32150) on surprise central bank move: 600bps rate hike, currency floatation. Loan rates hit record highs (28.25%), pound weakens towards 50/$1.
Hong Kong’s Hang Seng rebounds 1.7% to 16,438 after a drop, driven by hopes of China’s stimulus measures (5% GDP target, support by during the annual National People’s Congress) and rising US futures. Tencent, JD.com, and other tech giants lead gains.
Commodities
Wheat prices plummet 5% to 3.5-year low on falling global prices, abundant supply from major exporters like Russia and Ukraine, and slightly increased global wheat production. US oil prices jump over 2.5% to near 4-month high as lower-than-expected inventory rise, Fed’s wait-and-see stance, and OPEC+ cuts support demand. Geopolitical tensions add further pressure.
Thursday
Major indices climbed, with the S&P 500 and Nasdaq hitting new highs. Powell hinted at the Fed cutting rates this year, while jobless claims edged up slightly, and labor costs were revised lower. In the world markets, the ECB held the rate at the record high of 4.5%. BTC hovered under 68K, while the rest of the crypto market continued to outperform, with Solana (+14%), Binance (+10%), and Algorand (+8%) leading the surge.
Details
Employers announced most Feb job cuts (84,638) in 11 months, led by tech (12,412) and transportation (13,573). YTD cuts down 7.6% YoY, with tech leading industry cuts (28,218).
Crypto
Tether partners with Uzbekistan to make it a blockchain hub. This aims to boost the country’s economy and innovation through crypto and stablecoins.
World Markets
ECB holds interest rates at record highs (4.5%) to fight inflation (projected at 2.3% in 2024), despite revising down growth forecast to 0.6% for 2024. They anticipate a rebound in growth (1.5% in 2025, 1.6% in 2026).
Currencies
Dollar falls to 1-month low on rate cut bets. Fed sees inflation nearing 2% target, jobless claims rise, layoffs highest since 2009. Euro surges despite lower ECB forecasts.
Commodities
Sugar futures near 2.5-month low (21 cents/lb) on weak demand, Thailand output optimism. Potential cane planting decline in India and lower production expected in Brazil’s center-south (40.8 million tons).
Friday
On Friday the Nasdaq, S&P and Dow hit new ATHs but then stocks retreat after chip a selloff. The unemployment rate went up unexpectedly. Fed rate cut bets in June stay. On the world’s markets, Eurozone GDP is flat. BTC reached 70K and then retreated to 66K in a second wave of profiteering. ETH reached over 4K. The rest of the crypto market went down after BTC with most coins correcting 1–3%.
Details
Feb unemployment at 3.9%, highest since Jan 2022 (up from 3.7% expected). Unemployed rose by 334k to 6.5 million.
Crypto
Retail crypto interest is rising (website traffic, Google searches) but not at peak levels (compared to 2022). Bitcoin searches up, “how to buy” less so. Ethereum searches are stronger. Crypto app usage climbs (Coinbase) but isn’t near peak. Retail seems hesitant to make a full commitment.
World Markets
Eurozone GDP flat (0.1% yoy) in Q4 2023, matching Q3. France, Italy, Spain grew, Germany shrank.
Currencies
Dollar tumbles to mid-January low (102.5) on cooling US jobs data. Strong Feb payroll hides revisions down, unemployment up, wage growth slows. 57% chance of Fed rate cut in June. Greenback falls most vs. yen, pound, and Aussie dollar. Weekly: -1.4%.
Commodities
Gold hits record high at $2,200 on rate cut bets. Feb jobs strong, revisions lower, unemployment up. Wage growth slows. 60% chance of Fed rate cut in June expected.
On Week 11: market analysts will focus on: inflation, retail sales, and consumer sentiment. The UK watches jobs, GDP, and trade. China’s loans, car sales, and housing market are in focus. Brazil, India, and Russia’s inflation rates key. Eurozone and India’s production along with Australia’s business confidence round out the global economic data picture.
Comment: Where are we going?
So, the story of this week (and of many previous ones) is a paradoxical one. While assets like BTC, domestic and international stocks, and gold are all rallying, the underlying state of the world seems to be deteriorating rapidly. Economies are struggling, with unemployment rising and GDP slowing or stalling. Many ridicule Powell and his political friends for celebrating a non-existent victory over inflation. Despite Powell’s attempt to appear confident during his Congressional testimony, it contrasted sharply with polls showing growing consumer unease.
The question remains: where are we headed? Everyone seems to be expecting rate cuts in June, hence the current stock and BTC rally. But what if the Fed doesn’t cut rates, or if FOMC members make more hawkish comments, leading to a sudden shift in investor sentiment and renewed focus on the troubled economy?
Planning your 2024 crypto-media spend? Brave New Coin’s combined website, podcast, newsletters and YouTube channel deliver over 500,000 brand impressions a month to engaged crypto fans worldwide.
Don’t miss out – Find out more today
