2024-8-31 06:40 |
SVET Markets Weekly Update – August 26–30th, 2024
On Week 35, stock markets began to show signs of a slowing uptrend. The Fed’s favored inflation indicator, Core PCE prices, increased at a slower pace. Globally, the dollar weakened to a 13-month low after Powell hinted at rate cuts. Gold hit a new record high as investors bet on Fed monetary easing. In the crypto markets, BTC and ETH remained within their month-old ranges of around 60K and 2.5K as political uncertainties continued to haunt investors. Additionally, the arrest of Telegram CEO Pavel Durov in France sparked a worldwide discussion on digital rights.
Monday
On Monday, stocks were mixed, with the Dow hitting a record high while tech stocks fell. Investors anticipated rate cuts and focused on Nvidia’s earnings. Durable goods orders rebounded to a four-year high. Internationally, the dollar hit its yearly low as gold and oil surged following Powell’s dovish comments and ongoing tensions in the Middle East. BTC and ETH declined slightly after hitting their 200-day moving average.
Details
Manufacturing orders rebounded strongly (+9.9%, the most in 4 years) in July, driven by transportation equipment including defense aircraft. Overall orders excluding transportation declined slightly. The data challenges recent pessimism about the manufacturing sector.
Crypto
The arrest of Telegram CEO Pavel Durov in France has sparked a worldwide discussion on digital rights, with some criticizing it as an attack on free speech and privacy. Prominent figures have condemned the action, prompting Macron to deny personal involvement, arguing that the arrest is part of a judicial investigation, not a political decision.
World Markets
Nigeria’s economy grew faster in Q2, driven by increased oil output. Non-oil sectors also grew steadily. However, quarterly GDP was nearly flat due to a sharp decline in the previous quarter. The Ifo Business Climate index in Germany fell to its lowest level in six months in August, indicating a worsening economic outlook. Companies are more pessimistic about the current situation and future prospects.
Currencies
The dollar weakened to a 13-month low after Powell hinted at rate cuts. Markets are now expecting a 25 basis point cut in September. The euro and sterling strengthened against the dollar as central banks in Europe and Japan signaled potential rate hikes.
Commodities
Crude oil prices jumped on Monday due to Middle East tensions and expectations of lower interest rates. Rising tensions in the Middle East have raised concerns about oil supply disruptions. The Fed’s potential rate cuts have boosted market sentiment, though concerns about weak energy demand persist. Gold hit a new record high as investors bet on Fed rate cuts. Powell signaled a shift in Fed policy, emphasizing job market risks and inflation decline. Rising geopolitical tensions also supported gold’s safe-haven appeal.
Tuesday
On Tuesday, stocks traded mixed as Richmond manufacturing reached a four-year low. Tech stocks rose, led by Nvidia, KLA, Adobe, and Teradyne. Globally, the Mexican peso hit a 20-month low as investors worried about the government’s reforms. Meanwhile, BTC and ETH dropped sharply to their monthly support levels of 60K and 2.5K, respectively, as rate-cut-induced enthusiasm faded and technicals kicked in due to the absence of support from institutional traders and whales, who remain influenced by political ambivalence.
Details
The Dallas Fed’s service sector index fell in August, indicating a decline in business activity. Employment remained stable, but company outlook and input prices rose. The Richmond District Survey showed a contraction in service sector activity in August. Demand and revenue indexes fell, but the future outlook remains positive. House prices rose slightly in Q2 but slowed down in June. Higher mortgage rates and increased home inventory contributed to the slowdown.
Crypto
BlackRock is launching an Ethereum ETF on the Brazilian stock exchange. This follows the successful launch of their Bitcoin ETF earlier this year. The new ETF will trade under the ticker code ETHA39. This move further solidifies Brazil’s position as a leading market for crypto ETFs.
World Markets
German consumer confidence plummeted in September due to job insecurity, rising bankruptcies, and a weak economy. Thai car sales and production continue to decline (-21%), marking the 14th consecutive month of decrease. Tighter financing rules and economic slowdown are blamed.
Currencies
The Mexican peso is weakening due to political risks and concerns about judicial independence. Proposed constitutional reforms threaten investor sentiment, leading to capital outflows. While new tariffs on Chinese goods may benefit Mexico indirectly, other economic factors like inflation and weak retail sales continue to pressure the peso.
Comment: What’s Up With Thailand?
The Thai economy is gradually recovering, although growth remains below expectations. The Bank of Thailand has revised its GDP forecasts to 2.4% for 2023 and 3.2% for 2024. However, incorporating the Digital Wallet project could push 2024 growth to 3.8%. Tourism, previously a major economic driver, remains a concern, with tourist numbers unlikely to reach pre-pandemic levels. Meanwhile, household debt and low inflation continue to challenge consumer purchasing power.
Wednesday
On Wednesday, stocks fell on technical factors despite Nvidia’s strong earnings report. Notable movers included Nordstrom and Ambarella. Internationally, France’s unemployment rate fell sharply in July as a result of the Olympic Games. BTC and ETH struggled to retain their $60K and $2.5K levels due to low demand as the August vacation period kicks in.
Details
Mortgage applications rose slightly the previous week, following a sharp decline. This increase is attributed to lower interest rates. Applications for new home purchases rose, while refinancing applications declined slightly.
Crypto
The Ethereum Foundation’s spending is divided between internal (38%) and external initiatives (68%). Most of the budget goes to external projects, including new organizations. This spending has raised questions about the foundation’s transparency and alignment with its mission.
World Markets
France’s unemployment rate fell sharply in July, indicating a tight labor market. However, compared to a year ago, unemployment rose slightly. Russia’s unemployment rate remained at a record low of 2.4% in July, reflecting a labor force crisis caused by the ongoing war in Ukraine. At the same time, Russia’s monthly GDP growth rose to 3.4% in July from 3% in June, marking the highest growth rate since May 2021.
Currencies
The Brazilian real weakened as the dollar strengthened on growth signals. Inflation in Brazil rose slightly, fueling expectations for a rate hike. The central bank remains committed to its inflation target despite some improvement in inflation data.
Comment: What’s Up With Brazil?
Brazil’s economic trajectory over the past decades serves as a cautionary tale about the limitations of government interventions in stimulating sustainable growth. Despite various attempts at state-led economic policies, Brazil has struggled to achieve consistent long-term economic expansion. The country’s experience highlights the challenges of relying on government-driven growth strategies when fundamental market demand is weak, especially in key sectors like agriculture, which has been affected by fluctuations in Chinese demand.
Thursday
On Thursday, stocks closed mixed, with the Dow hitting a new record but the Nasdaq falling slightly, while data showed unexpected GDP growth. Nvidia’s stock dropped after its earnings missed high expectations, raising concerns about the AI boom. Globally, the economic outlook in the Eurozone improved slightly. BTC and ETH remained stuck at $60K and $2.5K in the absence of drivers.
Details
The economy grew faster than initially thought in the second quarter (+3% vs 2.8%), primarily due to increased consumer spending. Pending home sales unexpectedly fell by 5.5% in July, reversing June’s gains. Initial unemployment claims decreased slightly, but remain elevated compared to earlier this year.
Crypto
Australia has seen a surge in BTC ATMs (1200), now ranking third worldwide. This growth raises concerns about potential criminal activity like money laundering and scams. Strict local banking rules and a prevalent gambling culture contribute to the increasing demand for BTC ATMs in Australia.
World Markets
South Africa’s annual producer price inflation decreased to 4.2% in July. The economic outlook in the Eurozone brightened in August, with the sentiment indicator reaching its highest point in over a year.
Currencies
The Brazilian real fell past 5.6 against the dollar as concerns over President Lula’s central bank nominee and rising inflation pressures increased. The US economy’s stronger-than-expected growth also strengthened the dollar.
Comment: What’s Up With South Africa?
South Africa’s economic trajectory since the 2000s presents a stark example of resource-driven growth failing to translate into broad-based prosperity. Despite periods of record GDP growth fueled by natural resource extraction, the country has experienced a troubling divergence between economic expansion and employment creation. This disconnect is further highlighted by the stock market’s tenfold increase since 2000 and low inflation rates. Such trends point to a deeply unequal distribution of wealth, where profits from resource extraction are not reinvested into job-creating businesses within the country.
Friday
On Friday, stocks closed August with gains as the PCE price index matched expectations. The Dow reached a new all-time high (ATH). Dell’s earnings boosted its stock, while Intel surged on restructuring news. Internationally, the unemployment rate in the Euro Area reached 6.4%, the lowest level since 1995. BTC and ETH continued to significantly underperform the stock market, forming bearish patterns as traders remained ambivalent about both economic and political conditions. Meanwhile, Q2 saw a 2.5% increase in venture capital funding for crypto startups.
Details
The core PCE price index, the Fed’s favored inflation indicator, increased 0.2% in July, matching expectations and June’s rise. Year-over-year, core PCE inflation was 2.6%, below forecasts, suggesting the Fed may start lowering interest rates soon.
World Markets
The Eurozone’s inflation rate dropped to 2.2% in August 2024, down from 2.6% in July. This is the lowest rate since 2021. While this is good news for the European Central Bank, inflation remains above its target. Energy prices fell significantly, but inflation for services and food increased.
Currencies
The Euro weakened against the Dollar, reaching a two-week low of 1.108. This was due to lower-than-expected inflation data in the Eurozone, which increased the likelihood of a European Central Bank interest rate cut on September 12. Inflation rates fell in all major Eurozone economies.
Commodities
Oil prices fell to $73.5 due to OPEC+ plans to increase oil production and weaker-than-expected Chinese demand. Despite recent supply disruptions, OPEC+ is expected to proceed with its planned output hike. Oil inventories are at their lowest since January, but demand remains weak, causing price forecasts to be lowered.
On Week 36, some key economic indicators will be released, including the August unemployment rate, ISM Manufacturing PMI, S&P Global Manufacturing PMI Final, Balance of Trade, and JOLTs Job Openings data. Internationally, the Eurozone will release retail sales, Manufacturing PMI, and GDP growth rate. China’s Caixin Services PMI will also be published.
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SVET Markets Weekly Update (August 19–23, 2024)
On Week 16, data revealed weaker job growth, indicating a cooling labor market. Following Powell’s speech at Jackson Hole confirmed expectations for an interest rate cut in September and fueled a market rally.
Monday
On Monday, stocks maintained their upward trend, capitalizing on the previous week’s gains and adding over $3 trillion in value from this month’s lows. The S&P and Nasdaq marked their eighth consecutive day of gains. Investor optimism is high ahead of a key speech by Powell. Globally, the euro, yen, and British pound are up sharply as the dollar dropped to its eight-month low on renewed hopes for Fed cuts. Gold is at its highs as geopolitics remain tense. Meanwhile, BTC and ETH are stuck under $60K and $2.6K amid political uncertainties.
Crypto
The Wisconsin Investment Board recently revealed significant investments in BTC ETF in a filing with the SEC. It now holds about $100 million in BlackRock’s Bitcoin ETF, increasing its shares from approximately 2.45 million in May to about 2.9 million as of June 30. Notably, it no longer holds shares in the Grayscale Bitcoin Trust, which it had previously invested in.
World Markets
Malaysian economy continues to grow. Malaysia’s imports surged 25.4% in July, hitting a record high. Strong domestic demand drove growth across sectors, especially manufacturing and agriculture. Imports from major partners like China and the US increased, while those from Saudi Arabia declined.
Thailand’s economy grew by 2.3% YoY — faster than expected in Q2, driven by exports and increased government spending. While private consumption slowed due to high costs, industrial output rebounded.
Currencies
The dollar is falling to its eight-month low, as investors bet on Fed rate cuts. Weak economic data and recession fears are driving the decline. The yen, Aussie, and kiwi are gaining ground against the dollar. Markets await Fed Chair Powell’s speech for further clues on interest rates.
Commodities
Gold holds near its record high amid geopolitical tensions and economic uncertainty. Investors seek safe haven as US-Middle East conflict escalates and Ukraine-Russia tensions rise. The market expects Fed rate cuts but awaits Powell’s speech for clarity.
Oil market continued to oscillate between a deteriorating world economy and rising Middle East tensions. Prices plunged over 2% as ceasefire talks in Gaza and weak Chinese demand weigh on the market. Secretary of State Blinken is pushing for a ceasefire to ease geopolitical tensions. OPEC and IEA cut demand forecasts, adding pressure to oil prices.
Tuesday
On Tuesday, stocks fell after breaking a 20-year record streak of higher highs, as investors await clues from the Fed regarding rate cuts. Tech and consumer stocks led the gains, while energy and materials declined. Internationally, inflation in the Eurozone rose unexpectedly, and gold reached a new ATH as global investors face increased economic and political risks. BTC and ETH remain unchanged, staying within their ranges of $59K-$60K and $2.5K-$2.6K, respectively.
World Markets
Eurozone inflation rose to 2.6% in July, exceeding expectations. Energy and non-energy industrial goods prices surged, while food inflation eased slightly. Core inflation held steady at 2.9%. France and Germany saw higher inflation compared to Italy.
China kept interest rates unchanged, despite earlier cuts. The central bank is shifting focus from quantitative targets to interest rate tools to stimulate the economy.
Commodities
Gold prices hit a new record high as investors anticipate interest rate cuts from major central banks. Slower inflation fuels expectations of Fed rate reductions, while other central banks, including the ECB, BoE, and Riksbank, also signal easing monetary policy. Global economic uncertainties and geopolitical tensions boost gold’s safe-haven appeal.
Oil prices steadied after a sharp drop, driven by hopes for a Middle East ceasefire and rising Libyan production. However, concerns about China’s economy and potential US interest rate cuts are weighing on prices.
Wednesday
On Wednesday, stock growth slowed as prices edged toward a key resistance level and investors weighed economic data and expectations for Fed rate cuts. The BLS revised down job growth numbers, adding to concerns about a softer labor market. The Fed is likely to cut rates in September and potentially more this year. Globally, oil dropped to six-month lows due to a weakening economy, while gold reached a new ATH on the growing probability of rate cuts around the world. BTC and ETH attempted to break out of a descending wedge formation but remained constrained at roughly the same monthly levels.
Details
Recent data shows job growth was weaker than previously reported, with 818K fewer jobs added, suggesting a cooling job market. July’s job numbers were also disappointing, further indicating a slowdown in the economy.
The average interest rate for 30-year fixed-rate mortgages fell to 6.50%, the lowest in over a year. This marks a 32-basis point drop in four weeks and an 81-basis point decline compared to a year ago.
World Markets
Argentina’s economy shrank in June, with sharp declines in utilities, construction, and manufacturing. Growth slowed in other sectors. This marks the second-worst contraction of the year.
Japan’s exports rose to a 7-month high in July, driven by cars, machinery, and electronics. Growth accelerated to 10.3% but missed forecasts. Exports to major markets like China and the US increased, while those to Thailand, Germany, and Russia declined.
Currencies
The dollar fell to its lowest point in 2024 after the Fed hinted at a possible rate cut. Weaker US job data and a stronger Euro, Pound, and Yen contributed to the dollar’s decline.
Commodities
Oil prices fell as investors reacted to Fed rate cut expectations and weaker-than-expected job growth. Lower oil inventories couldn’t offset concerns about China’s economy and Middle East tensions.
Gold prices rose as central banks eased monetary policies. The downward revision of nonfarm payrolls reinforced concerns about the US labor market and strengthened the case for aggressive rate cuts. Central banks in Sweden, China, the Eurozone, and the UK have all lowered rates.
Thursday
On Thursday, stocks are down due to a technical correction and anticipation of Powell’s speech at the Jackson Hole conference. Tech stocks led the decline, while financials and real estate sectors gained. The market pullback was not deterred by rising jobless claims. Globally, Eurozone manufacturing is slowing as economic activity decreases and inflation rises. Meanwhile, the British pound has reached a one-year high due to its strong local economy, whereas the Indian rupee is at a record low as the country’s central bank struggles to support exporters. BTC and ETH have remained unchanged, hovering around their monthly levels of 60K and 2.5K.
Details
The Chicago Fed National Activity Index (CFNAI) fell in July, indicating economic weakness. Production, sales, and employment all contributed to the decline. However, personal consumption and housing showed signs of strength.
Initial jobless claims rose to 232K, exceeding expectations. This reinforces the softening labor market trend, supporting expectations for Fed rate cuts. Outstanding claims also increased, while the four-week moving average declined.
The business sector continues to grow for the 19th month, but the pace slowed in August. The service sector remains strong, while manufacturing faces challenges. Inflation eased, but input costs remain elevated.
The Kansas Fed Composite Index rose to -3 in August from -13 in July, exceeding expectations. This marks an improvement in economic conditions in the region.
World Markets
The Eurozone’s private sector expanded in August, led by services. Manufacturing continued to decline, though new orders for services increased. Employment growth slowed, and inflation rose.
Consumer confidence in the Eurozone and EU fell in August, defying expectations. This suggests growing pessimism among consumers despite recent economic improvements.
Currencies
The dollar index stabilized after four consecutive declines as investors await Fed Chair Powell’s speech. The Fed is likely to cut rates in September due to moderating labor markets and weaker economic data. The dollar has weakened against major currencies this week.
The Indian rupee fell to near its record low (84) against the dollar in August. The RBI’s efforts to support exports and expectations of a weaker US dollar were overshadowed by concerns about inflation and monetary policy. While inflation has eased, the RBI expects it to remain elevated.
The British pound has risen to a 12-month high (1.3) due to stronger-than-expected UK economic data. Manufacturing and services sectors saw growth, boosted by increased spending. The pound’s strength is also supported by a weaker dollar as investors anticipate lower interest rates.
The Euro declined as slower wage growth in the Eurozone supported expectations for more ECB rate cuts. Markets now see a high probability of a rate cut in September and further reductions by year-end. Business activity in the Eurozone is mixed, with strong growth in France and a decline in Germany. In the US, the Fed is likely to cut rates in September.
Commodities
Oil prices rebounded after a four-day slump. The recovery was driven by a decline in oil inventories despite concerns about a US economic slowdown and increased oil supply. Traders are watching for clues on US economic policy from the Fed Chair’s speech.
Friday
On Friday, stocks rallied, led by technology and semiconductor stocks, after Powell signaled rate cuts in his Town Hall speech. Traders now anticipate a 70% chance of a 25 basis point rate cut in September. Globally, gold prices rose as the dollar weakened sharply while other major currencies gained value. Meanwhile, BTC and ETH broke through their monthly ranges, reaching 64K and 2.7K, respectively, boosted by traders’ enthusiasm about impending monetary easing and Robert Kennedy’s announcement of support for Donald Trump.
Details
During his speech at the Jackson Hole Economic Symposium, Powell indicated that an interest rate cut is likely in the September meeting. He observed a rapid cooling in the labor market due to a weaker July jobs report and revised payroll figures. Powell expressed growing confidence that inflation is nearing the 2% target, suggesting it’s time for less restrictive monetary policy. Additionally, recent Fed meeting minutes showed broad agreement among policymakers on the need to lower rates this quarter.
Building permits fell in July but less than initially estimated. Single-family permits rose slightly, while multi-family permits plummeted. Regional data shows declines in most areas except the Northeast.
Crypto
Robert F. Kennedy Jr. paused his independent presidential campaign on Friday, announcing his support for Donald Trump, a fellow BTC advocate. Speaking in Phoenix, he thanked his volunteers and hinted at a campaign conclusion but clarified that he would only withdraw his name from the ballot in swing states to avoid aiding Democratic candidate Kamala Harris. Kennedy’s campaign has not ended entirely, as he seeks to navigate his path forward in the election.
Recent data from the decentralized prediction market Polymarket indicates that Donald Trump is ahead of Kamala Harris in 2024 election odds, following Robert Kennedy Jr.’s campaign suspension. Trump has a 51% chance of winning, while Harris’s odds have decreased to 48% after she replaced Joe Biden as the Democratic nominee.
World Markets
The Bank of Japan (BoJ) remains committed to raising interest rates if inflation consistently reaches the 2% target, despite global market instability, Governor Kazuo Ueda said in Parliament. He emphasized that the BoJ is monitoring market volatility after its July interest hike. Ueda stated that any changes to monetary easing would depend on economic and price trends. He also noted that fluctuations in the yen could impact inflation forecasts, prompting discussions on potential policy adjustments if significant risks arise.
Iceland’s producer prices rose in July (by 6.2% YoY) at the fastest pace in 7 months. Marine products and metal prices surged, while food and other manufacturing prices slowed. Export prices rose faster than domestic prices.
Currencies
The dollar weakened below 101 after Fed Chair Powell hinted at rate cuts. Markets are now expecting multiple cuts this year. The yen strengthened as Japan’s central bank signaled potential rate hikes.
Commodities
Gold prices surged to near-record highs as the Fed signaled rate cuts. Powell’s dovish tone at Jackson Hole fueled expectations for a rate cut in September, 100bps in total this year. Lower interest rates boost demand for gold, which doesn’t pay interest.
WTI crude oil futures rose above $74 per barrel, rebounding from a low of $71.9 on August 21 as markets evaluated major suppliers’ responses to declining energy demand. Reports of reduced consumption from top fuel consumers, along with a weak S&P PMI indicating lower manufacturing activity in August, fueled concerns. This led markets to speculate that OPEC+ might postpone phasing out output cuts in the fourth quarter, further affecting supply from major oil exporters.
On Week 12, investors will be closely watching a number of key economic indicators. Locally, the second estimate of GDP growth, core PCE price index, durable goods orders, and the Dallas Fed manufacturing index will be released. Internationally, the Eurozone economic sentiment, German consumer confidence and inflation, French unemployment claims and inflation, and the Chinese manufacturing PMI will be of interest.
Comment: What’s Up?
Investors are swinging from one extreme to another, oscillating between concerns about impending stagflation and excitement over anticipated Fed easing. This shifting sentiment influences how market participants interpret economic data.
As a result, rising unemployment is viewed by traders as either a bullish signal, because it reinforces the narrative of Fed cutting rates soon, or alternatively, as a bearish indication if investors choose to view it as an indicator of a slowing economy.
Currently, there are two distinct groups dominating the markets — long-term investors, who focus on economic fundamentals, and short-term traders, who closely follow Powell’s every word. Both are trading simultaneously with high volumes, leading to heightened volatility that characterizes today’s market environment.
That is compounded by the inherent instability in global commodities markets as geopolitical tensions around the world escalate. This is reflected in oil prices, which rise due to heating conflicts in Eastern Europe and the Middle East, or fall suddenly as investors reassess their outlook for slowing economies in China and the EU, anticipating a long-term decline that will impact regions worldwide and lead to downward pressure on oil prices.
At the same time, we have bursts of growth in various regions of the world, driven by local factors. For instance, production is rising in Malaysia and Indonesia due to businesses relocating from China, where CPC policies have done little to stimulate the economy. Similarly, the services sector in the EU has seen an expected boost during the two-week Olympics event.
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SVET Markets Weekly Update – August 12–16, 2024
On Week 33, stocks surged, fueled by lower-than-expected producer inflation data and fewer unemployment benefit claims, easing recession worries while maintaining hopes for Fed rate cuts. Meanwhile, BTC and ETH stalled at $60K and $2.7K, respectively, despite the stock market’s upswing. In global markets, gold reached an all-time high and oil prices rose due to growing geopolitical tensions.
Monday
Stocks wavered, mostly in the red, as investors awaited key economic data. Inflation expectations fell to a record low, while tech stocks outperformed other sectors. Megacap stocks were mixed, with Tesla and Home Depot leading the declines. Internationally, oil rose by approximately 4% due to geopolitical tensions. BTC dipped below 60K, while ETH continued to be rejected by the 2.7K sales wall.
Crypto
Scientists used a supercomputer to simulate how social norms change over time, finding that norms can influence behavior and disappear. Decentralization is seen as key to sustaining cooperative norms.
World Markets
India’s annual inflation rate plunged to 3.54% in July, well below forecasts. Turkey’s unemployment rate surged to 9.2% in June, the highest in 10 months.
Commodities
Oil prices surged above 77.5 on supply concerns amid Middle East tensions and positive economic data. OPEC cut demand forecasts and extended production cuts.
Tuesday
Stocks surged, fueled by lower-than-expected producer inflation (PPI) data, raising hopes for larger Fed rate cuts. Tech and consumer stocks led the rally, with notable gains from Nvidia, AMD, and Amazon. Globally, gold is poised to reach an all-time high as tensions in the Middle East heat up. BTC and ETH paused at 60K and 2.7K, respectively.
Details
Small business optimism improved in July but remains below average. Factory gate prices rose slightly in July, driven by higher energy costs, especially gasoline.
Crypto
The presidential race has shifted, with Kamala Harris leading in Polymarket’s predictions market, holding a 52% chance of winning, supported by over $61 million in bets.
World Markets
Eurozone economic sentiment plunged in August, reaching a nine-month low.
Currencies
The Mexican Peso is trading at 19 per USD, close to its December 2022 low. The Indian rupee hovered near its record low of 84 per USD. The British pound weakened above $1.28 as stronger-than-expected UK job market data complicated forecasts for more BOE rate cuts.
Commodities
European natural gas futures have fallen to about ˆ39 per megawatt-hour. Gold dipped slightly below $2,470 per ounce.
Wednesday
Stocks were mostly unchanged after the CPI report met expectations. Tech stocks led gains while utilities lagged. BTC and ETH continued to trade in a narrowing range around 60K and 2.7K.
Details
Inflation cooled to 2.9% YoY for the fourth straight month in July. 30-year mortgage rates dropped to a five-month low (6.54%).
Crypto
The government has transferred $590 million worth of BTC seized from Silk Road to Coinbase.
World Markets
Eurozone economy grew 0.3% in Q2, matching Q1. New Zealand’s central bank unexpectedly cut interest rates by 25 bp to 5.25%.
Commodities
Steel rebar prices plunged to an eight-year low amid weak Chinese demand.
Thursday
Stocks surged, boosted by stronger-than-expected retail sales. Tech and retail giants like Cisco, Walmart, and Apple led the rally. Globally, oil and gold continued to appreciate due to geopolitical factors. BTC and ETH declined again.
Details
Retail sales surged +1% in July, beating expectations. Jobless claims unexpectedly fell for the second straight week. New York manufacturing activity slightly improved in August.
World Markets
The Philippines central bank surprises markets by cutting interest rates by 25 bps to 6.25%. China’s industrial production grew by 5.1% YoY.
Commodities
Gold prices rose after a dip, boosted by expectations of Fed rate cuts. Brent crude oil prices rose, boosted by stronger-than-expected US economic data.
Friday
Stocks surged, fueled by improved consumer sentiment and a sharp decline in building permits, hinting at a possible Fed rate cut. Globally, gold reached a new all-time high, as predicted. BTC and ETH remain below 60K and 2.7K.
Details
Consumer sentiment improved in August, ending a five-month decline. Building permits dropped by 4% to an annual rate of 1.396M.
Crypto
Former President Donald Trump’s campaign has appointed co-chairs for his presidential transition team, known for its pro-crypto perspective.
World Markets
China’s foreign direct investment continued to decline in July, marking the lowest point since the 2009 financial crisis. Malaysia’s economy surged in Q2, growing 5.9%.
Currencies
The dollar index fell, nearing a seven-month low.
Commodities
Gold hits record high above 2.5K amid geopolitical tensions and Fed uncertainty.
On Week 34, traders’ focus will be on the FOMC Minutes, the S&P Global Composite PMI Flash, Existing Home Sales, as well as Fed Chair Powell’s speech. Internationally, key manufacturing and resource-producing countries, including Japan and Canada, will publish their inflation and industrial data.
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SVET Markets Weekly Update – August 5–9, 2024
On Week 32, stocks and crypto markets plummeted amid recession fears, with the Japanese indexes reaching 1987 lows. However, BTC staged a V-shaped recovery, climbing above 60K after a precipitous drop below 50K. Meanwhile, ETH remained suppressed at 2.5K. In global markets, the dollar and oil declined to seven- and six-month lows, respectively.
Monday
On Monday, stocks plunged at opening amid recession fears, despite a stronger-than-expected services sector report. Tech giants led the decline, with Nvidia, Apple, and Microsoft investors suffering heavily. Internationally, all major world markets are in the deep red, with Japanese stocks experiencing the worst one-day drop since 1987 as oil hit six-month lows and the dollar reached its seven-month bottoms. The yen and yuan grossly benefited, while the euro and rupee were undermined. BTC and ETH crashed, reaching 50K and 2K, respectively, as corporate traders panic-sold a broad range of risky assets, faced with the Fed’s incompetence and geopolitical instability.
Details
The services sector unexpectedly rebounded in July, with new orders and business activity picking up. Employment also increased, contradicting recent weak job reports. However, rising prices across various services remain a concern.
Business activity grew in July, led by services, but at a slower pace than initially reported. Manufacturing expanded slightly, while new orders and exports dipped. Job growth continued, but cost pressures eased. Business confidence slipped, though the future outlook remains positive.
World Markets
Eurozone producer prices rose sharply (+0.5%) in June, ending seven months of decline. Energy costs surged, driving the overall increase. While yearly inflation remains negative, monthly price growth accelerated across most sectors.
The Eurozone economy slowed in July. Growth was weak, driven mainly by services, but manufacturing contracted sharply. Demand fell, employment stagnated, and business confidence hit a low point. Inflation edged up slightly. Eurozone service sector growth is down. New business orders weakened, especially domestically, while backlogs declined. This led to slower job creation and tempered business confidence. Input costs rose, but price increases were limited by softer demand.
Turkey’s inflation rate dropped to 61.8% in July, down from 71.6% in June. This is the second consecutive slowdown, with prices falling across most categories. Food, transport, and clothing costs decreased significantly, while core inflation also eased. However, prices rose 3.23% compared to June.
Currencies
The dollar is falling sharply. This has increased expectations of interest rate cuts, especially after a disappointing jobs report. The market is now pricing in a significant rate cut for September.
The Chinese yuan strengthened to almost its 1-year lows (7.13) due to a weaker dollar, driven by concerns over a US recession. This helped offset weak Chinese economic data showing manufacturing contraction and slower service growth.
The Indian rupee hit a record low of 84 to the US dollar in August due to global economic uncertainty. Despite a recent US dollar decline and a conservative budget, the Reserve Bank of India is likely intervening to weaken the rupee and boost exports. This strategy aims to counterbalance the impact of a stronger rupee on Indian goods in international markets.
The Euro is soaring to 1.09 against a weakening dollar as investors bet on Fed rate cuts. While the Eurozone faces inflation challenges, economic growth in Q2 exceeded expectations, led by France, Italy, and Spain. Germany, however, contracted.
Commodities
Oil prices plummeted to a six-month low (72.94) due to recession fears. Despite Middle East tensions, weak US and Chinese economies, and rising unemployment are driving down oil demand, overshadowing geopolitical risks.
Tuesday
On Tuesday, major stock indexes rebounded but failed to close Monday’s gap after steep declines in previous days. Investors celebrated strong earnings from tech and industrial giants like Palantir, Uber, and Caterpillar. Internationally, Japanese stocks also surged, boosting market sentiment. BTC and ETH attempted to recover slightly after their dramatic crash, gaining 2–3%.
Details
Consumer optimism edged up in August but remains low overall. While views on the next six months improved, confidence in personal finances and government policies dipped. Investor optimism fell, contrasting with rising sentiment among non-investors.
The logistics sector continues to expand, driven by transportation recovery. Transport prices surged, outpacing capacity for the third month, signaling a potential end to the freight recession. Warehousing remains strong, but inventory levels are declining as retailers lean out while others build up stock for anticipated demand.
World Markets
Eurozone retail sales dropped 0.3% in June compared to the previous year. Sales have been volatile, hitting a peak in 2021 and a record low during the pandemic.
Wednesday
On Wednesday, stocks went down, reversing yesterday’s gains. Investors remain cautious about the economic outlook and company earnings. Tech and consumer stocks led the decline, with Tesla, Airbnb, Super Micro, and Disney posting significant shortfalls. Despite earnings, concerns about its park business dragged Disney down. Meanwhile, internationally, Japan’s central bank’s pledge to hold rates eased investor worries. BTC and ETH traders continued to follow the stock trades, dragging prices below 55K and 2.4K.
Details
Mortgage applications jumped 6.9% last week, fueled by a 27bps drop in 30-year mortgage rates to a 15-month low. Refinance applications surged nearly 16%, while purchase applications saw a modest 1% increase. The overall rebound erased the previous two weeks of declines.
Crypto
In the past month, BTC whales have been buying substantial amounts of the cryptocurrency amid a market decline. Recent on-chain data shows that more than 404,448 BTC, worth around $22.8B, has been transferred to long-term holding addresses.
World Markets
Japan’s 10-year bond yield fell to around 0.86% from 1.1% after Bank of Japan Deputy Governor Shinichi Uchida signaled no immediate rate hike. Rising wages fuel inflation expectations, leading to market bets on two rate hikes this year. Earlier, yield tumbled on recession fears and yen carry trade unwinding, but this selloff seems overdone.
Currencies
The Mexican Peso has weakened, surpassing 19.3, fueled by expectations of a hawkish central bank and a broader emerging market upswing. Despite recent export woes, investors await inflation data and a potential rate cut. While opinions on a rate cut are divided, a general easing trend is expected, supported by anticipated Fed rate cuts.
The Brazilian real strengthened to 5.6 (from a low of 5.75), as positive global risk sentiment and hawkish central bank expectations emerged. July’s inflation rate dropped to 4.45%, prompting a year-end 2024 inflation forecast adjustment to 4.12%. President Lula’s new appointments may impact monetary policy and spark anticipated rate hikes. Additionally, Brazil’s PMI reached its highest growth since June 2022, driven by strong expansion in both the manufacturing and service sectors, reinforcing the case for prolonged higher interest rates.
In July, China’s exports grew by 7.0% YoY, down from 8.6% in June and below the 9.7% forecast. This was the slowest growth since April, with exports totaling 300.56B. Despite this, it marked the fourth consecutive month of rising sales, boosted by global demand. Notable increases were seen in exports to the US (8.1%), Taiwan (23.1%), and the EU (8.0%). For the first seven months of 2024, exports rose 4.0% to 2.07T.
Thursday
On Thursday, stocks continued to recover, fueled by better-than-expected jobless claims data. Tech and chip stocks led the gains, with Nvidia, Broadcom, and AMD soaring. In global markets, indexes were in the green in the EU, Latin America, and Africa, while most were in the red in Asia. South Africa’s manufacturing sector shrank, and Argentina’s industrial production plummeted by more than 20%. BTC outperformed ETH, jumping to $60K, while the latter still lingers around $2.5K.
Details
Jobless claims fell slightly to 230K but remain elevated, suggesting a cooling labor market. While still historically tight, the market has softened from its post-pandemic peak. Continuing claims rose, indicating more people are receiving benefits.
30-year mortgage rates plummeted to a 15-month low (6.47%), driven by recession fears and falling Treasury yields. This sparked renewed interest in home buying and refinancing, as purchasing power increased and refinance applications surged.
Wholesale inventories increased in June, but at a slower pace than in May. Nondurable goods, especially petroleum, drove growth while durable goods, particularly computers, professional equipment, and metals, declined. Overall, inventory growth remains modest compared to the previous year.
Crypto
A new policy group proposes a BTC tax-free digital zone to boost the economy. The group aims to make the country a global crypto leader by attracting investors and businesses with tax breaks on BTC trading. This move is seen as a way to secure America’s financial future.
World Markets
The Reserve Bank of India holds interest rates steady at 6.5%, aligning with market expectations. Inflation rose to 5.08% but remains within target. Economic growth forecast unchanged at 7.2% for the year. RBI maintains a cautious stance on inflation, revising projections upward for upcoming quarters.
South Africa’s manufacturing sector is in decline (-5.2% YoY), with production falling sharply for the second consecutive month. Key industries like metals, motor vehicles, and food production are struggling. The overall industrial output also contracted, defying expectations.
Mexico’s inflation spiked in July to 5.57%, driven by soaring food prices. This is the fifth straight month of acceleration. While core inflation eased, overall prices rose faster than expected.
Mexico’s central bank unexpectedly cuts interest rates to 10.75% despite rising inflation. Economic growth remains weak, but core inflation eases. Peso weakens and bond yields rise amid global economic slowdown. Central bank aims to reach a 3% inflation target by 2025.
Argentina’s industrial production plummeted 20.1% in June YoY. This is the sharpest decline since the peak in 2020. Overall, the country’s industrial output has been volatile, with highs and lows over the past three decades.
Friday
On Friday, stocks rose marginally, with no major economic reports or earnings announcements. Notable movers included Expedia, which surged nearly 9% after strong earnings. Globally, China’s inflation increased, driven by Beijing’s stimulus efforts, while its vehicle sales fell. BTC reversed its gains slightly after a record surge the previous day, remaining above 60K, while ETH continued to linger around 2.5K.
Crypto
In a Zoom meeting, 20 crypto industry executives — DEM supporters — confronted White House officials regarding the Fed and SEC’s stringent regulations. The discussions aimed to shape future crypto policies amid a tough crackdown by the Biden administration. While an adviser to Kamala Harris was present, she chose to remain silent during the discussion.
World Markets
Turkey’s industrial production plummeted 4.7% in June, marking the third straight decline. Manufacturing led the drop, while mining and energy sectors grew. This contraction is the steepest since early 2023.
Italy’s annual inflation rose to 1.3% in July, up from 0.8% in June. Prices increased for food, drinks, clothing, and services like restaurants and hotels. However, inflation eased for housing, utilities, and communications. Monthly inflation reached 0.4%.
Brazil’s inflation rose for the third straight month in July, reaching 4.5%. This is near the central bank’s target but sparks concerns about rising prices. Housing and transportation costs increased, while food prices eased slightly.
In July, China’s vehicle sales fell 5.2% year-on-year to 2.49 million units, a larger decline than the previous month’s 2.7%. However, new energy vehicle sales surged by 27%. To address the downturn, the Chinese government announced cash subsidies for vehicle purchases would be doubled to CNY 20,000, retroactive to April. From January to July, vehicle sales rose 4.4%, a slowdown from 7.9% in the same period of 2023, aided by a 31.1% increase in new energy vehicles.
In July, China’s inflation rate rose to 0.5% from 0.2% in June, surpassing the expected 0.3% and marking the highest level since February. This increase followed six consecutive months of consumer inflation rise, driven by Beijing’s stimulus efforts. Food prices stabilized after a year of declines, while non-food prices continued to rise. Core consumer prices, excluding food and energy, rose by 0.4% year-on-year, the smallest increase in six months. The CPI also saw its first monthly gain since April.
Currencies
The British pound rose to $1.276, but is still set to decline for the fourth consecutive week, its longest losing streak since September. The Bank of England’s interest rate cut and potential for further cuts have put pressure on the pound. Weak US economic data and UK unrest have also weighed on the currency, causing market uncertainty and fears of more rate cuts.
On Week 33, investor’s focus will be on inflation, Fed speeches, and retail trends. Europe releases key economic indicators like GDP and inflation. Asia reports on growth, inflation, and consumer sentiment. Central banks in New Zealand, Philippines, and Norway set interest rates.
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SVET Markets Weekly Update (July 29 — August 2, 2024)
On Week 31, the Fed kept interest rates steady at a 23-year high of 5.25%-5.50% for the eighth consecutive meeting, citing progress on inflation but acknowledging ongoing risks. The unemployment rate unexpectedly rose to 4.3% in July, the highest since October 2021.
In the Eurozone, inflation increased to 2.6% in July, driven by surges in energy and goods prices, which offset slower rises in services and food costs. Additionally, Eurozone unemployment ticked up to 6.5% in June, ending a previous downward trend.
In the cryptocurrency market, BTC faced heavy selling pressure after yet another attempt to breach the 70K barrier, following a historic Trump’s speech.
Monday
On Monday, stocks saw a slight downtick, driven by tech giants ahead of earnings reports. Investors await the Fed’s decision on interest rates this week, with hopes for a potential rate cut in September. Despite recent market volatility, some companies reported strong earnings, offering a glimmer of optimism. Internationally, oil dipped despite Middle East tensions, as investors worried about a cooling global economy. BTC and ETH prices are diverging again, with ETH continuing to recover after the previous week’s dump, while BTC was sold heavily following yet another attempt to breach the 70K barrier after Trump’s historic pro-crypto speech in Nashville.
Details
Texas manufacturing continued its decline in July, with production, orders, and shipments falling sharply. Despite plunging backlogs, demand remains weak. Wages surged, but employment recovered slightly. Rising raw material costs led to modest price increases.
Crypto
El Salvador has proposed using BTC for trade with Russia to circumvent sanctions. Russia is open to the idea but faces hurdles due to its crypto ban. While El Salvador is a Bitcoin advocate, practical challenges remain for both nations in implementing a crypto-based trade system.
Commodities
Oil prices dropped sharply on Monday due to weakening demand, primarily from China. Despite rising tensions in the Middle East, which typically supports prices, the overall market sentiment was bearish as concerns about global economic health overshadowed supply fears.
Tuesday
On Tuesday, stocks tumbled, led by a sharp decline in chipmakers, erasing early gains. Investors are cautious ahead of the Fed’s decision tomorrow. The Nasdaq and S&P suffered significant losses, while the Dow managed to hold its ground. Concerns over the sustainability of the AI boom and disappointing earnings from tech and healthcare giants contributed to the market’s weakness. Internationally, the German economy shrank unexpectedly, while steel prices reached a six-year low due to China’s manufacturing weakness. BTC and ETH stayed in the red, testing their support levels at 65K and 3.2K, respectively.
Details
Job openings remained steady in June despite slight declines in manufacturing and government. While hires and separations were little changed, the number of workers quitting jobs hit a new low since 2020. Overall, the job market shows signs of cooling after a prolonged period of tightness. Home prices continue to rise (+6.8% YoY), according to the S&P CoreLogic Case-Shiller index. While growth has slowed from peak levels, prices are still increasing at a faster pace than seen in recent years. New York, San Diego, and Las Vegas led gains, while Portland saw the smallest increase. Texas’ service sector remained in negative territory while showing modest improvement in July, with revenue rising and business outlook more optimistic. However, employment declined and remains a concern. While input costs eased, companies reported stable selling prices. Overall, the sector is slowly recovering but still faces challenges.
Crypto
The BTC mining industry is set to reach $20B in the next five years. US companies are challenging Chinese dominance with advanced chip technology. Block and Auradine are leading the charge, investing heavily in new mining equipment. Growing network activity is expected to boost hardware demand, fueling industry expansion.
World Markets
Germany’s economy unexpectedly shrank 0.1% in Q2, continuing a year-long slump. Investment plummeted due to high interest rates, and industrial output remains weak. While a slight recovery is predicted for 2024, growth will be slow and limited due to ongoing economic challenges. The Eurozone economy grew faster than expected in the second quarter, expanding 0.6% compared to the same period last year. This marks the strongest growth in five quarters. Eurozone economic sentiment dipped slightly in July but remains below February’s peak. This aligns with the ECB’s loosening of monetary policy. Both industry and services sectors reported declining confidence, though consumer pessimism eased.
Commodities
Steel rebar prices plummeted to a six-year low amid oversupply and weak demand in China. New quality standards and a struggling property market have exacerbated the crisis. Excess supply and deflationary pressures limit government intervention, fueling concerns over economic slowdown.
Wednesday
On Wednesday, stocks surged on technicals as the Fed held rates steady but hinted at a possible cut. Chipmakers rallied, with Nvidia and AMD leading the charge. However, Microsoft stumbled amid cloud woes. On global markets, Eurozone inflation unexpectedly jumped while China’s manufacturing sector continued to contract. Oil jumped as traders turned back to the Middle East conflict. BTC and ETH slumped further on weak technicals and a lack of whales’ support at key resistance levels.
Details
The Fed kept interest rates unchanged at a 23-year high of 5.25%-5.50% for the 8th consecutive meeting, citing progress on inflation but acknowledging lingering risks. While the economy continues to grow and job gains moderate, the central bank remains cautious about rate cuts, emphasizing the need for sustained inflation decline before considering easing monetary policy. Job growth slowed in July, with only 122K new jobs added, the least in 6th months, missing forecasts. Wage gains also cooled, suggesting inflation pressures may ease. While some sectors added jobs, others shed positions. This follows a recent trend of declining job growth and wage increases. Chicago’s economic contraction deepened in July. The Chicago PMI fell for the eighth straight month, indicating continued weakness. Production, new orders, and employment declined sharply, offsetting slight improvements in supplier deliveries. Prices continued to ease. Pending home sales declined 2.6% YoY in June, a slight improvement from May. While sales have fluctuated historically, the current trend suggests a continued cooling in the housing market.
Crypto
Stablecoin market capitalization has surged 2.11% to $164B in July, marking ten consecutive months of growth. This, combined with new developments in the crypto space, has boosted stablecoin dominance to 6.93%.
World Markets
Eurozone inflation unexpectedly jumped in July to 2.6%, defying forecasts. Energy and goods prices surged, offsetting slower rises in services and food costs. Core inflation held steady, indicating persistent price pressures. Germany and France saw inflation accelerate, while Spain eased. China’s manufacturing sector contracted for the third straight month in July. New orders, exports, and purchasing activity declined. Factory output grew but at a slower pace. Prices fell, with input costs decreasing and output prices dropping faster. Unemployment remained high, and while business sentiment was positive, it weakened. The Bank of Japan has tightened monetary policy by raising interest rates to around 0.25% from the prior range of 0 to 0.1% it set in March and reducing bond purchases. This marks a departure from its ultra-loose stance. While inflation is expected to ease, economic growth forecasts have been downgraded. The central bank aims to gradually normalize its balance sheet. France’s annual inflation edged up slightly in July due to soaring energy costs, especially gas. While services and food prices slowed, manufactured goods prices stalled. Monthly inflation remained steady, driven by transport and accommodation costs. Overall, inflation came in below expectations.
Currencies
The dollar index retreated after an initial spike, as traders assessed the Fed’s stance. While the central bank held rates steady, it signaled an upcoming rate cut. Powell indicated a potential September cut but stressed the need for more data. The yen strengthened significantly after the Bank of Japan tightened policy. The offshore yuan gained ground after recent Chinese government pledges to boost the economy. However, new data shows manufacturing contracted sharply in July, and service sector growth slowed. These conflicting signals highlight China’s economic challenges.
Commodities
Oil prices spiked more than 4% driven by technicals as well as by escalating Middle East tensions and unexpected inventory declines. However, weakening Chinese demand capped gains, as concerns over global economic slowdown persist.
Thursday
On Thursday, stocks plummeted after economic data signaled weakening manufacturing and rising unemployment. Despite lower labor costs and Fed hints at potential rate cuts, investor concerns about the state of the global economy grew. Market calamities were exacerbated by rising Middle East tensions. Internationally, Eurozone unemployment increased, while the Bank of England cut its interest rate. BTC and ETH are in deep red, preparing to test 60K and 3.0K, as traders were affected by the stock market’s rampage.
Details
Jobless claims unexpectedly jumped to a near-year high, signaling a weakening labor market. The increase bolsters expectations of a Federal Reserve interest rate cut. This comes as continuing claims also rose, indicating a broader trend of job losses. Manufacturing continued its sharp decline in July. The ISM Manufacturing PMI plunged below expectations, marking the 20th contraction in 21 months. New orders and production plummeted, while employment fell for the second straight month. Rising input costs added to the sector’s woes. Job cuts declined in July 2024 compared to June, but still exceeded the previous year. The tech industry led layoffs, reflecting industry changes and overhiring. Overall job cuts are down slightly this year compared to last.
Crypto
Kamala Harris’ odds of winning the presidential election on Polymarket have reached a new high, with her chances now at 45%. This comes as her campaign gains momentum. In contrast, Donald Trump’s odds have decreased to 53%, marking a drop of 10 percentage points since July 21st.
World Markets
Eurozone unemployment ticked up to 6.50 percent in June, ending a downward trend. While this is a slight setback from a recent low, it’s still far below the crisis-era peak. Eurozone manufacturing continues to struggle. July’s PMI held steady at a low 45.8, indicating contraction. New orders plummeted, forcing cuts in jobs and production. While input costs rose, factories absorbed the burden instead of raising prices. Overall, the outlook remains bleak. The Bank of England cut its interest rate by a quarter-point to 5%, but remains cautious. While inflation is cooling, the central bank is concerned about persistent price pressures. The decision was closely divided, reflecting the delicate balance between curbing inflation and supporting economic growth. Italy’s unemployment rate unexpectedly climbed to 7% in June, defying forecasts. While still historically low, this marks a slowdown in job growth. The number of unemployed increased slightly, offset by a small rise in employment. Youth unemployment remained stubbornly high at 20.5%.
Commodities
Gold prices dipped slightly to around 2440 today after recent gains, hovering near record highs. A potential easing of interest rates and escalating Middle East tensions are boosting gold’s appeal as a safe haven investment.
Friday
On Friday, stocks continued to plummet, led by tech. A disappointing jobs report fueled recession fears. Amazon and Intel tanked on earnings misses. On global markets, the dollar dipped to a 4-month bottom, oil touched a 2-month low, and gold hit a new ATH. BTC and ETH are in deep red again, as traders succumb to bearish market sentiment.
Details
Unemployment unexpectedly jumped to 4.3% in July, the highest since October 2021. This surpasses forecasts and signals potential economic slowdown. Labor force participation slightly increased. U-6 unemployment, which includes discouraged workers, hit 7.8% in July. This broader measure has fluctuated over the years, averaging 10.12%, peaking dramatically to 23% during the pandemic and reaching a low point of 6.5% in late 2022. Factory orders unexpectedly plunged in June, driven by a sharp drop in transportation equipment orders. While some sectors saw growth, the overall decline raises concerns about manufacturing activity and potential economic slowdown. Vehicle sales increased to 15.82 million in July, up from 15.18 million in June. This follows a long-term average of 14.8 million since 1976, with sales peaking at 21.71 million in 2001 and plummeting to 8.48 million during the 2020 low.
Crypto
NFT market remains subdued. A new CoinGecko survey shows that over half of crypto investors don’t anticipate an NFT resurgence. Only 19.4% of respondents expressed optimism. Despite this, gaming and metaverse NFTs are seen as the most promising sector.
World Markets
Brazil’s industrial output unexpectedly surged in June, reversing the previous month’s decline. This growth exceeded market forecasts, signaling a potential economic upturn after a period of weakness. Mexico’s unemployment rate ticked up to 2.8% in June, exceeding expectations. While the number of employed rose, so did the number of unemployed, pushing the jobless rate higher than last year. This slight increase signals potential economic softening. Global food prices dipped slightly in July, first time in 5 months, mainly due to cheaper cereals. However, increases in vegetable oil, meat, and sugar costs offset some of the decline. While wheat harvests improved in North America, production issues in Brazil pushed up sugar prices. Dairy prices remained relatively stable.
Currencies
The dollar index plummeted to 4-months lows of 103.7 after a disappointing jobs report fueled expectations of Federal Reserve rate cuts. The weaker-than-expected labor market data contrasted with a surprise rate hike in Japan, boosting the yen and further pressuring the dollar.
Commodities
Gold hit a record high at 2474 as fears of a recession grew. A weaker-than-expected US jobs report fueled bets on aggressive Fed rate cuts. Economic data and corporate earnings painted a gloomy picture, boosting safe-haven demand for gold amid geopolitical tensions. Oil prices decreased 3%, hitting a two-month low. Weak economic data, including US job losses and manufacturing declines, overshadowed Middle East tensions. Iran’s potential response to recent attacks adds uncertainty to the market.
On Week 32, there will be released service sector and trade data while major companies report earnings. China, Europe, and several emerging markets will unveil inflation, trade, and growth figures. Central banks in Australia, India, and Mexico will set interest rates.
Comment: Back to USSR.
It’s both funny and distressing to see how gullible even the most sophisticated investors become under the growing pressure of biased mass-media ‘analysts’. The current market drop came as a ‘surprise’ to them.
When you have politically engaged lawyers sitting in Fed with no practical experience in real markets and trying to run the economy like the USSR Politburo did — by ‘decrees’ and based on a ‘mandate from the people’ as well as ‘scientific forecasts’ done by academicians who have never run a business — what results do you expect?
Declaring a ‘war on inflation’ and hiking rates to moon-highs with zero effect on the sources of inflation, which are purely geopolitical and supply-chains-based, was bound to became a circus. Now, these same individuals are starting to ‘worry about rising unemployment’:)
Centralized financial systems coupled with USSR-type authoritarian decision-making are the major sources of the world’s growing calamities.
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