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SVET Markets Weekly Update – July 8–12, 2024

On Week 28, stocks experienced a sharp decline with the Nasdaq and S&P crashing due to a classic WS move of ‘selling the news’ after an unexpected drop in the core inflation rate to a three-year low of 3.3% in June. This decline in inflation has amplified calls for an urgent rate cut by the Fed. BTC and ETH saw slight recoveries following Germany’s sale of 13K BTC. Meanwhile, prediction markets now estimate a 65% chance that Biden will drop out of the presidential race after a disappointing NATO conference performance, where he addressed Zelinskiy as Putin.

Monday

On Monday, the stock market closed with the S&P and Nasdaq setting new records again, while the DJ dropped. Inflation expectations fell for the second month in a row. Internationally, the French election outcome brought relief to investors, as no party won a majority, reducing concerns over extreme fiscal policies. BTC (56K) and ETH (2.9K) are lingering at levels not seen in more than six months after the massive crash, blamed by different sources on panicking whales, MG’s sell-offs, and the German government.

Details

Consumers expect inflation to fall across most categories in the next year, with one-year expectations down to 3% in June from 3.2% in May. This decrease is accompanied by a rise in expected earnings growth.

Crypto

There’s a lot of talk about Germany selling BTC (13K sold from 37K BTC in total), but it’s a small part of the overall market. Even if they sold everything, it would only account for a fraction of recent trading. In fact, many governments hold BTC, with the US leading the pack with 213K BTC. Messari is publicly criticizing the SEC for failing to prevent crypto fraud and argues new technology can provide better oversight. They’re cutting ties with the SEC and plan to challenge their authority through lawsuits, media, and lobbying Congress. This aggressive move has been supported by many in the crypto community.

Commodities

Steel prices in China plunged to a 7-year low in July on weak economic data. Investors are doubtful that government stimulus will boost demand for steel used in construction. Home sales and building activity are down, and despite hopes for infrastructure spending, the outlook for steel remains grim. This is due to efforts to control housing prices, which could hurt struggling property developers, a major source of steel demand.

According to the latest mass-media reports, the French legislative elections, with 577 seats of the 17th National Assembly at stake, which was held on June 7, 2024, resulted in a “deadlock”.

The left-wing New Popular Front emerged victorious, securing 182 seats and overshadowing Macron’s centrist alliance, which garnered 168 seats, and the far-right National Rally party, which obtained 143 seats.

NFP (New Popular Front — a broad left-wing electoral alliance launched on 10 June) secured 182 seats (289 is needed for a majority), 168 seats were passed to Ensemble parties (a liberal political coalition created by Macron), 143 — to RN-supported candidates (Rassemblement National or National Front from 1972 to 2018, far-right party, described as populist and nationalist, headed by Marine Le Pen), and the rest — to smaller parties, including, LR (The Republicans, a liberal conservative party, largely inspired by the tradition of Gaullism).

The fact that no one won a majority of seats in the National Assembly made the main-stream commentators panic and cry for “unity” and “capability to govern”. Instead, they have to embrace new opportunities which this French “involuntary decentralization” provides.

Hopefully, now, instead of dictating their dear leaders’ rush “ordinances” to “stupid masses”, some politicians of this over-centralized state will start learning the basics of listening to what 90% of their own population have been telling them over the past 20 years.

Tuesday

On Tuesday, the SP and Nasdaq hit new highs, while the Dow Jones fell after Powell’s testimony, despite him reiterating the Fed’s plan to stick to reaching a 2% inflation target. Internationally, Mexican inflation unexpectedly jumped to a one-year high. BTC and ETH continued to fluctuate near 58K and 3K levels, with bulls searching for an opening in the bears’ defense in hopes of a fast retaliation.

Details

Small business confidence unexpectedly rose in June, but remains below average. Inflation is the top concern, pushing firms to raise prices and wages. Despite some relief from backlogs, pessimism lingers about the coming months.

Crypto

Flatcoins address the issue of inflation in stablecoins. They maintain purchasing power by tracking the consumer price index, making them resistant to inflation. Coinbase Ventures investor Brian Armstrong sees flatcoins as a necessary update to the financial system, offering a medium of exchange that doesn’t suffer from inflation.

World Markets

Mexico’s inflation jumped to a 1-year high of 4.98% in June, exceeding expectations. Food, restaurants, and education costs rose the most. This is likely due to post-election jitters weakening the peso. Core inflation, excluding volatile items, continued a year-long decline.

As of the June 2024 elections in the UK, the Labour Party achieved a significant victory over the Conservatives. Here are the results in numbers:

The voter turnout was approximately 72%, reflecting a high level of public engagement in this pivotal election. These results mark a decisive shift in UK politics, with the Labour Party gaining a strong mandate to implement their policies.

Following the Labour Party’s significant victory over the Conservatives in the June 2024 elections, the major outlines of their policies include:

These policies reflect the Labour Party’s commitment to largely pro-big-government, inflationary measures under the umbrella of focusing on social justice and human rights.

FYI: The British Parliament consists of two houses: the House of Commons and the House of Lords. The House of Commons has 650 seats, each representing a geographical area of the UK known as a constituency. The House of Lords does not have a fixed number of seats, as it is comprised of appointed life peers, bishops, and hereditary peers, with its membership varying over time.

Wednesday

On Wednesday, stock markets soared to new records, with the S&P topping 5600 for the first time, fueled by big tech and traders’ positive perceptions of Powell’s congressional testimony. Internationally, Brazil’s inflation rose for the second month. BTC and ETH stayed at 60K and 3K respectively, still suppressed by negative sentiments despite being technically oversold.

Details

Average interest rates for 30-year fixed mortgages dipped slightly to 7% for FHA loans in the week ending July 5th. Jumbo loan rates edged up a bit.

Crypto

Goldman Sachs is launching three projects by year-end to turn real-world investments into digital tokens. This caters to client demand and could revolutionize investing. The project’s target is US funds and European debt, aiming for faster transactions and broader investment options. This reflects growing institutional interest in tokenization, similar to BlackRock’s successful +500M BUIDL fund.

World Markets

Brazil’s inflation rose to 4.23% in June, exceeding a slight dip in May but staying below forecasts. This two-month rise follows a period of decline. While below the central bank’s limit, some policymakers worry rising costs and spending could push inflation higher. Food, transportation, and healthcare saw the biggest increases. Russia’s inflation hit a 16-month high of 8.6% in June, exceeding expectations. This rise is likely due to a combination of supply chain issues and increased consumer spending. Food prices saw the biggest jump at 9.8%. Ukraine’s inflation hit a record high in June (4.8%) due to ongoing Russian attacks. This caused significant price increases, especially for housing, utilities, transportation, and healthcare. There was some relief for food prices, however.

Currencies

The British pound jumped to its highest level in four months due to inflation worries. The Bank of England suddenly signaled a delay in rate cuts, even though they’ve been considering them. It might be explained by the Labors’ unexpected ascent to power, which promises upcoming inflationary spendings.

Thursday

On Thursday, stocks were in deep red with Nasdaq and S&P crashing in a classic WS move of ‘selling the news’ on an unexpected drop in the core inflation rate, which factually supports mounting public voices, including senatorial ones, for the Fed’s urgent rate cut. With that, the Dow surged as traders favored traditional stocks over tech, as concerns rose about tech earnings. In world markets, gold jumped, nearing an ATH as the dollar weakened, following increasingly dovish statements from Powell and growing disarray in the DEM’s presidential campaign. BTC and ETH were stopped short in their post-Germany-dump recovery by the abrupt selloffs on the Street.

Details

Core inflation, excluding fluctuating items like food and energy, dipped to a 3-year low of 3.3% in June, below expectations. While housing costs remain high, price increases for other categories are slowing down. Monthly core inflation also hit a multi-year low, suggesting inflation might be cooling down.

Crypto

Prediction market traders now estimate a 65% chance that Biden will drop out of the presidential race, up from 59% yesterday. This follows his first press conference in months and concerns about his age and cognitive health. His chances of becoming the Democratic nominee have also fallen to 38%, while his chances of winning the presidency have dropped to 10%.

World Markets

Brazil’s retail sales jumped 8.1% in May, exceeding forecasts and reversing a slowdown in April.

Commodities

Gold prices surged past $2,410 per ounce, reaching a new high, as US economic data showed inflation slowing to a one-year low and labor market softening. This strengthened expectations for the Federal Reserve to cut interest rates, with 85% of investors betting on a June cut. The trend is consistent with other major central banks, making gold a more attractive asset.

Friday

On Friday, stocks recovered on technicals, closing near record highs. Hopes for a rate cut, boosted by the latest economic data, are mixed with fears of significant overbought markets, especially in big tech. The Dow continued to rally, closing above 40000 again. Internationally, Indian industrial production surged unexpectedly. BTC and ETH oscillated near two-month lows as traders remain uncertain about economics and politics.

Details

Core producer prices surged 3% YoY in June, exceeding forecasts and marking the highest jump since April 2023. Michigan Consumer confidence dropped again in July, hitting a 7-month low of 66. This is the fourth month in a row of decline. People are worried about inflation and the upcoming election. Even expectations for future inflation are down slightly.

Crypto

Germany sold a big chunk of its BTC (down to 6,894 BTC). El Salvador keeps buying (now at 5,808 BTC) and could soon have more BTC than Germany if Germany keeps selling.

World Markets

India’s industrial production in May exceeded expectations, surging 5.9% YoY. This is the highest growth since October 2023. Manufacturing, especially pharmaceuticals and metals, led the increase. Output also grew in mining and electricity. Brazil’s industrial confidence index (ICEI) falls to 14-month low in July, reflecting pessimism about the economy.

Currencies

The South Korean won weakened to 1.38 due to rising global tensions. South Korea is taking a strong stance against North Korea with new laser weapons and is maintaining high interest rates to fight inflation. However, the central bank might cut rates later this year to align with the Fed.

On Week 29, big companies like GS and Netflix report earnings, while the Fed and China’s economic data are in focus. Inflation, unemployment, and trade figures will be released globally, with consumer confidence data coming from the UK.

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SVET Markets Weekly Update – July 1st–5th, 2024

On Week 27, stocks reached new highs as unemployment rose to the highest in nearly three years. Meanwhile, BTC crashed below $54K due to prolonged selloffs by whales amid increasing geopolitical worries, particularly after a significant shift in the UK government where pro-crypto politicians lost their positions following the Labour Party’s win. ETH also declined despite positive ETF news.

On world markets, the French stock market dipped, reflecting broader European trends, as investor caution before key elections overshadowed slightly lower inflation data. Brazil’s real weakened, nearing an all-time low, amidst political turmoil despite a robust private sector and labor market. President Lula Da Silva called for prioritizing economic realities over financial demands, criticizing high interest rates.

Monday

On Monday, stocks opened the second half of the year. Tech giants led the way, with Tesla surging ~6% and Meta seeing gains despite EU regulatory concerns. The ISM Manufacturing PMI showed a slower contraction in the sector, and traders will monitor key indicators this week to assess the monetary policy outlook. In global markets, EU manufacturing activity worsened, the Brazilian real is reaching record depreciation levels amid the growing feud between Lula and the Central Bank, while crude oil climbed to two-month highs on Middle East geopolitical tensions. BTC and ETH surged to their highest levels in a week, driven by rate cut expectations.

Details

Manufacturing PMI edged down to a 3-month high of 51.6 in June. New orders and production kept growing, but at a slower pace. Employment surged to a 21-month high. Price hikes slowed down, but business sentiment weakened due to soft demand.

Crypto

Filipinos can now use USDT, a digital currency pegged to the US dollar, to pay for their social security contributions. This new option applies to the government-run SSS program, which offers financial aid to employees and administers social security and employee compensation benefits.

World Markets

Eurozone manufacturing activity worsened in June, with production falling at the fastest pace in 2024. Despite a slight upward revision in the PMI to 45.8, it remains below the long-term average. New orders, employment, and purchasing all dropped. Businesses raised prices due to increasing input costs. However, there is a positive outlook for production in the next year.

Japan’s manufacturing PMI dipped slightly in June but remained in expansion for the second month. Output rose for the first time in a year, but new orders fell due to weak foreign demand. Employment continued to grow, but purchasing activity declined. Price pressures intensified, with both input and output costs rising significantly. Business sentiment improved to its highest point this year.

China’s factory activity grew faster than expected in June, reaching a two-year high. Production, new orders, and stockpiles increased, but export growth slowed. Employment stabilized and backlogs rose. Input price inflation surged, while factories raised prices for the first time this year. Business optimism declined due to competition and market uncertainty.

Indonesia’s inflation rate dropped to a 9-month low of 2.51% in June, beating expectations. Food prices led the decline, while transport and furnishings saw some increase. Core inflation also dipped slightly. This keeps inflation within the central bank’s target range.

India’s manufacturing sector grew faster in June than in May, fueled by strong demand. Hiring surged to a 19-year high, and companies stockpiled materials. Prices remained elevated, but rose at a slower pace. While manufacturers expect continued growth, their near-term production outlook dipped slightly.

Spanish manufacturing grew for a fifth month in June, but at a slower pace than May. This was due to positive demand conditions being outweighed by some uncertainty following European elections. Businesses added staff but reported rising input costs and lower confidence than earlier in 2024.

Italy’s manufacturing PMI remained in contraction territory in June, though it rose slightly from May. New orders and output fell sharply, but job cuts slowed. Supplier delays eased, but material costs soared. Despite cost pressures, firms lowered prices to stay competitive. A majority of manufacturers expect production to increase in the next year.

French manufacturing PMI continued to decline in June, marking 17 months of contraction. New orders, production, and employment all fell. Despite the downturn, manufacturers are cautiously optimistic about future growth, though less so than previously. Prices rose at a record pace due to rising input costs.

German manufacturing dipped again in June, despite a small upward revision in the PMI. Production and new orders contracted at a faster pace, and companies continued to reduce stockpiles. Employment also declined as firms completed work faster than they received new orders. Although price pressures eased slightly, the outlook for the sector improved somewhat.

Tuesday

On Tuesday, major stock indexes hit new highs, fueled by gains in big tech despite a slight increase in the JOLTS report and Powell signaling continued high rates. Tesla surged +10% after strong deliveries. In global markets, uranium hit a two-week high as many countries announced their intention to triple their nuclear power by 2050. BTC and ETH dipped again slightly, along with the rest of the crypto market, due to continuing investor uncertainty on rates.

Details

Job openings unexpectedly jumped in May to 8.1M, exceeding expectations. This reverses a prior downward trend. Job growth occurred in government and manufacturing sectors, while leisure and education saw declines. Regional openings increased in most areas except the South.

Economic optimism gained ground in July, reaching a 6-month high of 44.2. This was driven by improvements in consumer outlook for the next 6 months (up 10.6%) and personal finances (up 8.4%). However, the index remains in negative territory overall, extending a 35-month stretch.

Crypto

Crypto VC investments (92) dipped in June compared to May (153), with fewer projects (down 40%) and less money raised ($697M, down 30% from $990M). However, there’s a positive twist: both figures are still higher (+42%) than June 2023 ($480M).

World Markets

Eurozone inflation dipped to 2.5% in June, lower than May’s 2.6%. This matched expectations. Price increases slowed for food and energy, but core inflation remained unchanged at 2.9%, despite forecasts of a decrease. Inflation varied across countries.

Eurozone unemployment hit a record low of 6.4% in May, but the number of unemployed people increased. Spain has the highest rate (11.7%), while Germany has the lowest (3.3%). The rate was 6.5% a year ago.

The French stock market (CAC 40) dipped 0.7%, mirroring European trends. Investor caution again ahead of key elections overshadowed slightly lower inflation data. Opponents of France’s National Rally (RN) intensified their efforts to prevent the far-right party from gaining power, with more candidates announcing they would withdraw from this weekend’s run-off election to avoid dividing the anti-RN vote.

Wednesday

On Wednesday, stocks rose in a shorter session, with the S&P and Nasdaq hitting new all-time highs as weaker economic data fueled investor belief in an interest rate cut by the Fed. The data showed a slowdown in services and job growth. Tesla continued its strong performance. On global markets, gold is up as the dollar is down. BTC fell to $60K again, possibly due to upcoming repayments by Mt. Gox and whales preparing for geopolitical volatility.

Details

Job cuts decreased in June compared to May, but were still higher than a year ago. This is the highest June number since 2009 (excluding 2020). Consumer products and tech saw the most cuts. Construction cuts surged in June.

Private businesses added 150K jobs in June, lower than expected. Service sectors led growth, while manufacturing and mining declined. Leisure and hospitality hiring surged, preventing a weaker report. The economist noted uneven job growth, and a slowdown in wage increases for those switching jobs.

Jobless claims unexpectedly rose to 238K in late June, near a 10-month high. Continuing claims also climbed to 1.86 million, the most since November 2021.

Services sector unexpectedly contracted in June, hitting a 4-year low (48.8 PMI). This is worse than forecasts (52.5) and May’s reading (53.8). Business activity and new orders also dropped. Survey results show a general slowdown and ongoing job cuts. Inflationary pressures remain, though some price increases have eased.

Crypto

According to DARPA, governments are taking action focusing on areas where quantum computing might bring benefits, like materials science, but the technology’s effectiveness in nonlinear differential equations remains uncertain.

World Markets

The Eurozone service sector grew for a fifth month in June, but at a slower pace. New business slowed due to weaker export demand, but domestic orders remained strong. Employment growth eased but stayed positive. Price pressures declined but haven’t reached pre-pandemic levels. Business confidence improved.

The Eurozone economy grew slowly in June, with services barely expanding and manufacturing contracting. New orders fell, and job growth eased. Though price hikes slowed, businesses remained optimistic about future service sector activity. This is a revised reading, up slightly from a preliminary estimate.

Russia’s unemployment rate reached a record low of 2.6% in May, even though the number of unemployed people went up. This rate was better than expected, but still higher than May 2023’s 3.2%.

Thursday

On Thursday, while the largest stock markets are closed for a national holiday, the UK’s index rose as general election polls suggested the Labour Party may secure a majority. In global markets, the Brazilian real strengthened after Lula promised to address fiscal imbalances. BTC dipped below $57K, its lowest in two months. Potential sell-offs by Mt. Gox creditors receiving long-awaited payouts are adding to the whales’ sell pressure.

Crypto

Long-term BTC investors (holding over 155 days) have been cashing in on profits recently, with their Spent Output Profit Ratio (SOPR) metric hitting highs above 10. This surge in profit-taking by these typically resilient holders might have contributed to the recent BTC price drop below $57K.

World Markets

The UK’s FTSE 100 index rose. Meanwhile, the UK’s general election was ongoing, with early polls suggesting the Labour Party may secure a majority, ending the Conservative Party’s 14-year rule.

Currencies

The Brazilian real strengthened to over 5.5 per USD after President Lula da Silva’s meetings with ministers aimed to address fiscal imbalances. The president directed a cut in mandatory expenses and committed to a new fiscal framework, which will aim for balanced public accounts.

Friday

On Friday, stocks hit new records after June jobs data showed a slowdown. Internationally, gold and silver surged on renewed hopes for rate cuts. BTC continued its descent, dipping below $54K due to whales’ protracted selloffs amid increasing geopolitical worries. This was underscored by a fundamental change in the UK government, where almost all pro-crypto politicians lost their jobs overnight following the Labour Party’s groundbreaking win. ETH followed despite positive ETF news.

Details

Unemployment rose to 4.1% in June, the highest in nearly 3 years. This is despite adding 116,000 jobs. More people are entering the workforce (participation rate up to 62.6%), but not finding jobs as quickly.

Crypto

Britain’s big election shakeup could hurt crypto. The new government’s priorities likely won’t include crypto, and key industry supporters lost their seats. This means less regulatory clarity and a potentially less crypto-friendly environment.

World Markets

Eurozone retail sales in May 2024 barely rose (0.3%) compared to last year, a significant slowdown from the historical average growth of 1.07%. This follows record highs in April 2021 and lows in April 2020.

Eurozone construction slumped in June, with PMI hitting a new low (41.8) since mid-2020. Falling orders led to job cuts, lower material purchases, and a cautious outlook for the future.

Spain’s factory output grew a modest 0.4% in May, below expectations (1.4%). Production rose for consumer goods but fell for energy and capital goods. This follows a weak April (0.2% increase).

Currencies

The British pound rose to $1.28, its highest level in three weeks, after the Labour party won the parliamentary election, ousting the Conservative party after 14 years. Labour’s emphasis on economic stability and strict spending guidelines boosted market confidence, making the pound a “safe haven” asset. Analysts predict a rate cut in August and expect this political shift to benefit British investments.

After presidential debates season began on both sides of the Atlantic, it has become increasingly obvious that a middle way, pursued by “moderate” political parties, led by 70–80 year olds, has proved to be absolutely ruinous.

The wave of Resentment now threatens to flatten the economic and social terrain to the level of the 1930s by reintroducing strict government control over our economic and social lives.

All of this is underlined by rapidly growing geopolitical tensions, which look like a bad replica of 19th century imperial powers conflicts over resources and global dominance. None of it makes any sense except that it redirects government powers to the most violent part of the Boomer’s ruling class.

We have to lay the blame for that madness at the feet of Moderate Boomer politicians, who in their endless arrogance simply forgot to materially compensate 90% of the population for the emotional trauma and hardships of the world’s open economy, where severe competition led to a sharp rise in inequality.

Boomer politicians disregarded a primitive psychological phenomenon, which makes most humans discontent and stressed not because they are hungry or physically threatened but because someone else lives much better than them.

Instead of urgently introducing Universal Basic Income (UBI) and making radical steps by allowing some small but politically dangerous parts of society to go their own ways, even if they want to found their new, independent countries, Boomers continued to force-feed their “unification” agenda to everyone on Earth without any regard to reality on the ground.

Yes, we could have had several small aggressive states led by atrocious regimes. That’s bad enough but still tolerable. Instead, now we risk having the largest economies in the world led by unrestrained ideologues.

The List of Boomer’s Blunders:

Here are potential consequences of the Boomer’s policies:

It’s the price people have to pay because several ruling Boomers didn’t even consider the possibility of global decentralization, which, of course, greatly limits their “authorities” but which might have been helping now to avoid a 1930s repeat.

On Week 28, investors are watching inflation data, Fed Chair testimony, and consumer sentiment. Europe holds elections, while several countries announce interest rates and inflation figures. The UK releases GDP and retail data. China and India share economic updates.

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SVET Markets Weekly Update  – June 24th–28th, 2024

On Week 26, markets reflected a mix of economic and geopolitical concerns. Q1 GDP growth slowed to the lowest since early 2022, PCE inflation dipped, and manufacturing activity contracted sharply. Meanwhile, new single-family home sales dropped, as high prices and mortgage rates hinder affordability.

In the crypto market, BTC and ETH plunged as investors continued pulling out funds for the second consecutive week. BTC experienced the most significant outflows, followed by ETH.

Internationally, French stocks declined briskly amid rising concerns about the upcoming election, with polls suggesting Le Pen might win but potentially needing a coalition with the left. In China, steel prices fell to a two-month low due to a slump in the property market.

Monday

On Monday, stocks dipped, with tech leading the decline. Investors are waiting on inflation data and Fed comments this week. Energy stocks rose while Nvidia fell further. Internationally, oil is rising due to geopolitical tensions, the dollar is at a two-month high, and the yen dropped to a 34-year low. BTC price fell below $60K, its lowest in two months, as investors pulled money out of BTC ETFs due to doubts about interest rate cuts. Major sell-offs by the German government and Mt. Gox added to the price decline.

Details

Texas manufacturing contracted at a slower pace in June. While production ticked up and orders improved, factories utilized less capacity and employment dipped slightly. Despite ongoing price and wage pressures, manufacturers are more optimistic about future activity.

Crypto

Investors are pulling money out of crypto for the second week, totaling $1.2B. BTC saw the most outflows ($630M), ETH ($58M) also faced a downturn. Some altcoins saw inflows (Solana, Litecoin, and Polygon — $2.7M, $1.3M, and $1M), with investors viewing their recent price slump as a buying chance.

World Markets

German business confidence fell in June, with a surprise drop in the Ifo Business Climate Index. The decline reflects pessimism among companies, particularly in manufacturing and trade. This suggests the German economy is struggling to gain momentum.

Argentina’s economy contracted by 5.1% in Q1, its worst performance since 2020. The decline was driven by significant drops in manufacturing, construction, retail, and financial services. However, the agriculture sector rebounded with a 10.2% growth due to an end to a historic drought that affected grain production. On a quarterly basis, GDP fell 2.6%, following a 1.9% decline in the previous quarter.

Currencies

The dollar dipped to 105.6 after rising the previous week. The strong economy and the Fed’s wait-and-see approach on rate cuts are pushing the dollar to near two-month highs. Solid business activity data, particularly in services, is fueling investor concerns about continued Fed’s high rates compared to recent easing by other central banks. Now traders are waiting on inflation data and Fed comments to decide if interest rates will be cut.

The Japanese yen weakened near a 34-year low (160 to USD) as the central bank debates raising interest rates. Some want a hike to fight inflation, but others are cautious. The bank will provide a plan to unwind its stimulus program next month.

Commodities

Oil prices rose over 1% to $81.63 per barrel. Strong summer demand, worries about supply disruptions due to Middle East tensions and attacks on refineries, and a potential drop in global oil stocks are driving prices higher. A stronger dollar is limiting gains, but a force majeure declared by Ecuador on oil exports is adding upward pressure.

Steel prices in China hit a two-month low in June (below CNY 3,400 per tonne) due to a slump in the property market. Home sales and prices are down significantly, and government efforts to revive the market are raising doubts due to limited funding.

Tuesday

On Tuesday, the stock market was mixed after a tech sell-off. S&P and Nasdaq rose, while Dow Jones fell. Tech and communication services led gains, while materials and industrials lagged. Internationally, EU stocks stabilized at their monthly levels after two weeks of volatility. Cryptocurrencies are up, with BTC leading after a rebound of over 2%.

Details

A Chicago Fed index rose to a 3-month high in May, driven by stronger production. Despite some mixed signals, the overall trend suggests a slight improvement in economic growth.

Home prices rose 7.2% YoY in April, but slightly slower than March. San Diego led the gain, while Portland lagged. The national average also rose, hitting a new high despite a slowdown. This mirrors 2023’s strong start before a summer cool-down. The market is currently at an all-time high, raising questions about its ability to maintain momentum.

Manufacturing activity in the Fifth District (Richmond) contracted sharply in June, missing expectations. New orders and shipments fell significantly. Despite lower backlogs, companies cut jobs due to rising wages. However, expectations for future orders and shipments remain positive.

Crypto

A major Japanese survey shows that 54% of institutional investors plan to buy crypto in the next 3 years. This is driven by inflation concerns and potential relaxed regulations on crypto investments, though some remain cautious. Bitcoin and Ethereum are seen as the most promising options.

UK young adults (34%) see crypto as a major voting issue in upcoming elections. A survey by Zumo found they’re more interested in crypto than older adults, with many (38% of 18–24 year olds) already invested and seeing it as a long-term financial opportunity.

Private blockchains (e.g., JPMorgan’s Onyx), used mainly by big banks, handle over $1.5 trillion monthly of secure loan deals (repos, where cash is borrowed against securities, often Treasuries) in permission-based, under-the-radar repo ledgers. This “under-the-radar” application is proving to be one of blockchain’s biggest successes.

World Markets

European stocks fell. Airbus’s profit target cut caused a 10% drop in its share price. However, healthcare stocks rose sharply, with Novo Nordisk and Zealand Pharma surging on positive drug news.

Spain’s economy grew faster than expected in Q1, reaching 2.5% YoY. This is an improvement over the previous quarter’s 2.1% increase. Domestic factors drove most of the growth, with some contribution from foreign demand.

Wednesday

On Wednesday, stocks closed slightly higher ahead of an economic report. Amazon and Tesla rose, while Nvidia remained volatile. In global markets, French stocks are down due to Le Pen’s projected win, and the Japanese yen depreciated to 1986 levels. BTC and ETH are holding their levels at 61K and 3.3K, respectively, after Monday’s plunge and a slight rebound.

Details

New single-family home sales dropped 11.3% in May, reaching an annualized rate of 619K. High prices and mortgage rates are affecting affordability. Sales fell across all regions, with the Northeast experiencing the largest decline. The median price was $417.4K, lower than last year’s $421,200, while the average price was $520,000. There were 481K homes listed for sale, representing a 9.3-month supply.

Building permits fell 2.8% to 1.399 million in May, the lowest since June 2020. Multi-family permits dropped 5.2% to a 10-year low, while single-family permits decreased 2.1% to a 10-month low. Permits declined in the Northeast and South but increased in the Midwest and West. The total number of permits was revised higher than initially reported.

Crypto

NFT trading plunged 45% in Q2 to $4.1B, despite a Q1 rise. Wash trading, where investors inflate prices, is a major concern, making up over half of all NFT transactions.

World Markets

French stocks (CAC 40) are down as worries rise about the upcoming election. Polls suggest Le Pen might win, but without a majority, forcing a coalition with Macron.

France’s unemployment spiked in May, adding 2.8 thousand jobs. The jobless rate is now 2.8 million. This is misleading information though, as the unemployment rate (2.8 million) is the total number of unemployed people, not the increase in unemployment. The monthly increase was 40.9 thousand.

Russia’s industrial sector surged 5.3% in May, exceeding forecasts (2.5%) and accelerating from April’s growth (3.5%). Manufacturing led the way (9.1%), offsetting a slight decline in mining (-0.3%).

Currencies

The Euro fell near a two-month low on expectations of more ECB rate cuts and weak economic data from Europe. Investors are also cautious ahead of key inflation reports and the French election, which could cause market swings depending on the outcome.

The Mexican peso is weakening beyond 18.2, nearing a 15-month low. This is due to a stronger dollar and investor wait-and-see approach before Mexico’s central bank meeting. Despite high inflation, Mexico’s economic activity is supporting the peso somewhat.

The Brazilian real hit a new low (5.5) in June due to high inflation and a strong dollar. Inflation above 4% raised concerns about government spending and its impact on prices. This could prevent the central bank from raising interest rates to fight inflation. Additionally, weaker demand from China and lower commodity prices hurt Brazil’s export forecast.

The Indian rupee hit a new low near 83.6 per USD due to a broad weakness in Asian currencies and a stronger dollar. China’s weakening economy added pressure. Despite India’s strong growth outlook, the RBI couldn’t intervene heavily to support the rupee as it risked hurting exports.

The Japanese yen hit a 38-year low against the US dollar, pressured by the Bank of Japan’s easy money policy compared to the Federal Reserve. Despite warnings and intervention efforts, the yen continues to weaken, raising concerns for Japan’s economy.

Thursday

On Thursday, stocks edged higher, propelled by sluggish economic growth data and lower bond yields on hopes of future rate cuts. The consumer discretionary and communication services sectors led gains, while staples and financials lagged. In global markets, the EU’s economic sentiment indicator declined, and steel prices reached a two-month low due to China’s construction slowdown. BTC and ETH moved up slightly, while some key coins such as Solana, Polkadot, and Avalanche jumped by more than 8%.

Details

Q1 GDP grew 1.4% — the lowest growth since the first half of 2022 — with slow consumer spending (1.5%). Investment rose (4.4% non-residential), exports grew faster than expected (1.6%), and imports were revised lower (6.1%).

Durable goods orders edged up 0.1% in May, defying expectations of a decline. This four-month growth streak was fueled by strong demand for transportation equipment (up 0.6%) and computers (up 1.3%). However, orders for business investment (excluding aircraft) fell 0.6%, suggesting some caution from companies.

Jobless claims dipped to 233K (down from 243K), but remain high compared to this year. This suggests a slight easing in the tight labor market, though it’s still tougher for unemployed workers to find jobs.

Pending Home Sales dropped 6.6% YoY in May, showing a slight improvement from the previous month’s decline. This follows a long-term average of a small decrease but remains below the peak in April 2021.

Manufacturing activity weakened in June. The Kansas Fed Index dropped to -8, down from -2 in May. This is still above the historic low of -30 in April 2020, but lower than the average of the past few decades.

Crypto

Hackers switched targets in Q2 2024, focusing on centralized finance (CeFi) which suffered a massive 984% increase in stolen funds, while DeFi’s ones decreased by 25%.

World Markets

The Euro Area’s economic sentiment indicator fell to 95.9 in June, missing forecasts. Businesses across various sectors, including services, industry, retail, and construction, reported worsening sentiment, driven by concerns over demand and inventory levels. Consumer confidence also weakened slightly. However, expectations for selling prices improved in some sectors, including construction and retail.

The French stock market (CAC 40) is down for a third day (7,531). Inflation worries ahead of key reports and the upcoming France elections continue to weigh on investors.

Spain’s retail trade grew 0.2% YoY in May, slower than the 0.3% growth in April. Non-food spending rose 2%, up from 1.1% in April, while food spending decreased 0.6%, following a small increase in April. On a monthly basis, retail sales fell 0.6% in May, after a 0.8% rise in April.

Commodities

Steel rebar prices in China plunged to a two-month low (CNY 3,360) due to worries about a construction slowdown. Falling home prices, slumping developer sales, and weak government efforts to boost the market all point to lower demand for steel, a key metal in construction.

Friday

On Friday, stocks closed down even though inflation data hinted at a rate cut, as tech (Amazon -2.3%) fell. Despite the daily drop, June was a strong month with the S&P up ~3% and the Nasdaq up ~4%. In global markets, the Brazilian real weakened due to disagreements between Lula and the country’s Central Bank over a 10.5% interest rate. BTC plunged below $61K regardless of the pro-Bitcoin winning the first presidential debate.

Details

PCE inflation rate dipped to 2.6% in May, matching expectations. This is down slightly from the previous two months and below the long-term average.

Crypto

Bolivia lifted its crypto ban, potentially opening a $10 million monthly market. While exciting, it creates regulatory hurdles for businesses and users. However, this move could spark wider crypto adoption in Latin America, a region seeking financial alternatives due to economic woes.

World Markets

Germany’s unemployment rate hit a 3-year high of 6% in June, exceeding expectations and marking the 18th straight month of joblessness climbing. This rise reflects a sluggish German economy.

Spain’s inflation eased slightly to 3.4% in June, below forecasts. This dip is mainly due to falling fuel prices, with some moderation in food price increases. However, recreation costs rose more than last year. Core inflation remained steady at 3%.

Currencies

Brazil’s currency weakened (past 5.56 BRL/USD) due to political tension between President Lula and BCB’s President Campos Neto over a 10.5% interest rate. Despite a strong job market (unemployment at the lowest since 2015), concerns about government spending and inflation are hurting the real.

On Week 27, key events include jobs data, Fed minutes, and PMI readings globally. European elections in France and the UK will be watched closely. Inflation updates and industrial data from major economies like Germany are also on tap.

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SVET Markets Weekly Update June 17th–21st, 2024

Week 25 was positive for stocks despite disappointing building permits and a declining Philly Fed index pointed to economic softness, with the Nasdaq and S&P gaining on tech giants. At the same time, we saw significant volatility across global markets, with oil prices surging to a 7-week high due to Middle East tensions, and declining coins with BTC reaching below 64K.

European stocks initially rose but fell amid fears of a far-right victory in the French elections. Meanwhile, Eurozone inflation climbed to 2.6% in May due to rising service costs. The Swiss central bank’s interest rate cut to 1.25% contrasted with the dollar’s rise driven by mixed economic data and Fed rate cut expectations.

In China, housing market troubles intensified with the steepest price decline in nearly a decade, undermining government stabilization efforts. The Chinese yuan weakened past 7.28 per dollar, reflecting monetary policy leniency.

Monday

On Monday, stock markets climbed, with the S&P and Nasdaq hitting new records. Tech stocks led the gains, while investors awaited economic data and Fed speeches for clues on future interest rates. The NY Empire State Manufacturing Index showed some improvement but still indicated a slight decline in activity. Internationally, EU markets renewed their fall as oil prices hit a monthly high. BTC and ETH are holding their levels at 66K and 3.5K, respectively, after a week’s downfall, while most of the crypto market continued to correct, with Solana, Polygon, and Algorand falling by 4% or more.

Details

The New York manufacturing sector showed signs of improvement in June, with a smaller decline in activity than previous months. While prices and new orders remained mostly flat, there’s cautious optimism for the future as business conditions are expected to pick up in the coming months. Despite ongoing job losses, this is the most optimistic outlook in over two years.

Crypto

The TON blockchain’s total value locked (TVL) surged to $600 million, a 130% increase in a month. This growth is likely due to rising investor interest and popular mini apps like Notcoin, which has over 35M users.

World Markets

European stocks erased most early gains. Worries about French elections and a potential far-right win overshadowed initial optimism. The broader European market ended flat, while Adidas shares plunged after bribery allegations emerged.

China’s new home prices are falling at the fastest pace in nearly a decade (by 3.9% YoY), despite government efforts. Prices dropped in 68 out of 70 major cities in May, with some cities like Guangzhou experiencing steeper declines than others. This marks the 11th straight month of decline, raising concerns about the effectiveness of China’s real estate rescue plan.

Currencies

The British pound is at a one-month low due to upcoming economic data and the Bank of England meeting. The Bank of England might cut interest rates despite inflation meeting their target. This comes amid political uncertainty as Prime Minister Sunak’s party struggles in polls before the general election.

Commodities

Gold prices fell to $2,320 per ounce despite a recent gain. This drop is likely due to rising interest rates and investor uncertainty about the Fed’s plans. Upcoming economic data will be closely watched for clues about the Fed’s next move. Weak demand in key markets like China also contributed to the price decline.

Oil prices hit a six-week high at nearly $80.3 per barrel, driven by hopes of summer demand despite economic jitters in China. The rise follows OPEC+ production cuts and Saudi Arabia’s promise to manage supply.

Aluminum prices fell below $2,500 per tonne in June, a two-month low. This drop mirrors a decline in other base metals due to weak demand and increased supply. Heavy rain in China boosted hydropower, allowing smelters to ramp up production and reach record highs in May. Despite some supply disruptions, overall output rose due to improved conditions in China and weak demand weighed on the market.

Tuesday

On Tuesday, the S&P nearly hit a new record high, boosted by Nvidia’s surge past Microsoft to become the world’s most valuable company. The broader market is mixed, with investors watching economic data and Fed comments for clues about future interest rates. Internationally, EU inflation rose. BTC (65K) and ETH (3.4K) traded lower, with the rest of major coins falling more than 4%.

Details

Retail sales grew 2.3% in May 2024 compared to last year, but the monthly growth was slow at 0.1%. This comes after a downward revision to April’s numbers. Retail sales grew slowly in May (0.1%) after a revised April drop. This missed forecasts and suggests cautious consumers. Sales rose in sporting goods, clothing and some stores, but fell at gas stations, restaurants and furniture stores. Overall growth was weak, even excluding gasoline.

Industrial production surged in May, exceeding expectations by growing 0.9% after flat growth in April. Manufacturing, a major sector, also rose 0.9%.

Crypto

Fewer short-term investors are jumping into crypto (35% of the realized cap, compared to over 70% during previous market peaks), which could slow down the market’s growth. An expert points out that short-term ownership of Bitcoin is lower than past highs, suggesting more experienced investors are holding on, which might create a steadier market.

World Markets

Eurozone inflation rose to 2.6% in May, driven by services costs. Energy prices also rebounded, while food and goods saw slower growth. This aligns with forecasts and prompted the ECB to adjust its inflation expectations upwards for the next three years.

Eurozone economic sentiment reached a 29-month high in June, fueled by optimism about lower inflation and interest rate cuts by the ECB. This positive outlook comes after a slowdown in the European economy during 2022 and 2023.

Commodities

Natural gas prices jumped to 2.9 after a cold streak, driven by an expected heat wave in the Northeast. This surge in demand for cooling could push prices even higher, especially since power plants rely heavily on natural gas. However, some areas in Texas might see temporary relief from a tropical cyclone.

Price of US cotton futures falls below 70 cents a pound for the first time since 2020. Strong dollar, good weather boosting cotton yields, and a global production increase are driving the price down.

Wednesday

On Wednesday, cryptocurrencies are on the rise, while the stock market is closed for a holiday. ETH is slightly outperforming BTC with an increase of approximately 2%. The rest of the major coins showed growth of up to 4%. In global markets, oil is rising due to increasing geopolitical tensions.

Details

Homebuilder sentiment dropped to a 6-month low in June due to high mortgage rates and construction costs. Builders report fewer buyers and lower sales expectations in the coming months.

World Markets

European stocks fell after gains earlier in the week. Investor worries about political instability returned, especially in countries criticized by the EU for high debt. French upcoming elections added to the concern. Chipmakers and healthcare companies were hit the hardest, but gains in British mining stocks limited the overall decline.

South Africa’s inflation held steady at 5.2% in May, a four-month low but still above the target rate. While some categories like food saw slower price increases, transport and others rose. Core inflation also remained steady at 4.6%. Overall, price hikes are slowing down slightly.

Commodities

Oil prices are near a 7-week high at $85.3 per barrel due to worries about supply disruptions. Drone strikes, potential conflict in the Middle East, and solid demand forecasts are pushing prices up. While US oil stockpiles rose, key producers are sticking to output plans, keeping supply concerns alive.

Thursday

On Thursday, Nasdaq and S&P retreated after reaching record highs. Tech giants like Nvidia are down as investors cashed in. The Dow, less reliant on tech, managed a small gain. Data showed the economy cooling down with building permits dropping, jobless claims rising, and business activity falling. Internationally, the Swiss National Bank cut its rate, indicating a divergence from the Fed’s austerity policies, as the Bank of England kept its rate at 5.25% with some members advocating for a decrease. BTC and ETH are holding their levels at 65K and 3.5K, with the rest of major coins climbing a bit, with max gains of ~3%.

Details

Building permits dropped in May, below expectations. Permits for apartments and single-family homes fell compared to prior months. The decline was widespread except for Midwest and West regions which saw increases.

Jobless claims in fell slightly but remained high, suggesting a cooling labor market. New claims totaled 238,000, exceeding expectations, and ongoing claims hit a multi-month high. This could push the Federal Reserve to cut interest rates to boost the economy.

The Philly Fed manufacturing index dipped in June, signaling a slowdown for the second month in a row. New orders and shipments declined, and employment remained low. Despite this, price pressures persisted, and future growth expectations stayed positive.

Crypto

South Korean crypto trading dropped sharply, falling from $35 billion to $6 billion weekly between Q1 and Q2. This decline is linked to investor risk aversion and US inflation.

World Markets

The Bank of England held interest rates steady at 5.25% despite falling inflation and some support for a cut. While growth is strong, concerns about future inflation kept policy restrictive. The Bank will watch data closely and adjust rates as needed.

The Swiss central bank cut interest rates again by 25 bps to 1.25% in June. This follows similar moves in March. Inflation is expected to stay low, around 1% in coming years. The bank predicts moderate economic growth with some job losses. The franc rose recently due to European instability.

Indonesia’s central bank kept interest rates at a record high of 6.25% to tame inflation and support the Rupiah currency. Inflation is within target, but capital outflows due to US policy changes are pressuring the Rupiah. The bank also maintained overnight deposit and lending facility rates.

Turkey’s consumer confidence dropped to a 6-month low in June (78.3). People felt less optimistic about the economy, finances, and spending on big purchases. However, they were slightly less worried about job security, while inflation concerns grew.

Currencies

The dollar is nearing a six-week high as economic data mixed with expectations of future Fed rate cuts. While some indicators were weak, bets on the Fed cutting rates later this year remain high. This, along with central banks in Britain and Switzerland keeping rates steady or cutting them, boosted the dollar.

The Chinese yuan weakened significantly, falling below 7.28 per dollar for the first time in months. This follows the central bank’s decision to allow a weaker exchange rate and keep interest rates low, suggesting concerns about China’s economic recovery.

South Korean won hit a new low (past 1,385) in June, pressured by a weaker Chinese yuan and global dollar strength. Despite strong exports, the central bank is taking steps to slow the decline using foreign exchange reserves.

Commodities

Silver surged to a two-week high above $30, mirroring gold gains. Weak economic data fueled bets of interest rate cuts by the Fed, joining other central banks easing policy. However, concerns about slowing industrial demand, particularly in China’s solar panel industry, limited investor enthusiasm.

Friday

On Friday, major indexes barely budged, with tech stocks like Nvidia and Apple dipping, but consumer staples like Amazon rising. Data showed improving business conditions, which confused investors who had seen a weak economy earlier in the week. In global markets, the dollar surged as business growth in the Eurozone slowed down. BTC continued its drop, hitting 63.5K, with ETH settling at 3.5K. Consequently, the crypto market was in the red, with the largest market cap coins sliding by about 2%.

Details

Business activity hit a 16-month high in June, driven by a surge in services. Manufacturing grew too, but at a slower pace. Companies are hiring again due to rising demand and optimism, and inflation pressures seem to be easing.

Home sales dipped slightly in May, hitting a 4-month low. This comes despite record high home prices. Rising inventory suggests a shift in the market, with experts expecting more sales and potentially slower price growth soon.

Crypto

ChatGPT-4 predicts ETH’s price could hit $9K by mid-2025, depending on factors like new regulations and institutional investment. A more likely range is $4.5K to $6K, with a chance of staying around $3K.

World Markets

Business growth in the Eurozone slowed down in June, but remained positive for the fourth month. Services held steady while manufacturing dipped. New orders fell, and hiring slowed. Inflation for materials used in production eased, allowing companies to raise prices at a slower pace.

Currencies

The dollar hit a seven-week high as business activity increased. This could delay the Fed’s rate cuts compared to other central banks that are already easing.

Commodities

Oil prices dipped slightly to $80.73 per barrel due to a strong dollar, despite positive signs like rising demand and lower stockpiles.

On Week 26, investors will focus on prices, spending and housing data, with Fed speakers eyed. Globally, interest rates and inflation are key, along with consumer confidence in major economies.

Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For m

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