8 months ago
16 
SVET Markets Weekly Update – February 19–23, 2024
On Week 8, Wall Street rallied on hopes for AI, with major world indexes following. Chinese markets were re-energized after the Lunar New Year break. Cocoa continued its unprecedented price rally. The crypto market was mostly flat, with BTC and ETH holding their two-year high levels.
Monday
As markets remained closed for the national holiday, EU stocks were steady due to an absence of directional signals for investors. Chinese traders returned from the Lunar New Year break energized by strong tourism activity data (+47.3% YoY), leading to a strengthened yuan. Still, aluminum prices fell on expected weaker Chinese demand for commodities. The crypto market was mostly in the green. ETH led the charge with a +3% increase, preparing to test the crucial 3K resistance level. BTC fluctuated around 52K, allowing traders to re-focus on major alts, leading to larger growth in Algorand (+3%), Stellar (+2%) and Cardano (+1%).
Crypto
The Bitcoin ETFs had a strong week, with net inflows exceeding £2.2 billion from February 12–16. BlackRock’s iShares Bitcoin Trust led with £1.6 billion, accounting for 50% of BlackRock’s ETF flows this year. Fidelity’s Wise Origin Bitcoin Fund and the Ark 21Shares Bitcoin ETF also saw notable inflows, while the Grayscale Bitcoin Trust experienced outflows.
World Markets
Equity markets in Europe were steady with the STOXX 50 index closing at a 23-year high. Investors are looking ahead to a busy week of economic data and central bank minutes. Positive tourism data from China also buoyed global investors. Temenos stock rebounded after falling Friday on a critical report.
The IBC-Br Index of Economic Activity in Brazil increased by 0.82% in December 2023, exceeding market expectations and signaling the strongest growth since April. This news suggests that the central bank may not need to cut interest rates as urgently and that industrial production, services output, and retail sales are all performing well, except for a slight contraction in retail sales.
Israel’s economy contracted 19.4% annually in Q4 2023, the steepest fall since Q2 2020 and the 2nd lowest in this century, as the conflict with Hamas severely disrupted business activity (displacement of citizens, military mobilization and restrictions on the entry of Palestinian workers), consumption (-26.9%), investment (-67.8%), and trade (export -18.3% / import -42%). Government spending surged on war expenses (+88.1%). For the full year 2023, GDP grew 2% versus 6.5% in 2022.
Currencies
The offshore yuan strengthened past 7.20 per dollar as traders returned from the Lunar New Year break. The currency was buoyed by a weaker dollar and positive Chinese tourism data during the holiday (+ 47.3% YoY). The PBOC left its policy rate unchanged at 2.5%. Markets now await the monthly loan prime rate fixing on Tuesday.
Commodities
Aluminum prices fell to a one-month low near $2.2K per tonne in February amid weak demand outlook. Weak data from top consumer China and uncertainty over EU sanctions on Russian aluminum weighed on prices. The UAE helped restore Guinea’s bauxite exports after an explosion disrupted logistics. Broader EU bans on Russian aluminum are called for as current restrictions only impact a small portion of imports.
Tuesday
On Tuesday, the CB economic index dropped, and stock followed suit with large tech companies leading the decline due to concerns over high valuations. Major retailers reported mixed earnings. In foreign markets, the CAC in France hit ATH, cocoa prices continued their rally reaching ATH due to poor weather conditions, while steel futures dropped on China’s economic slowdown. With Bitcoin still oscillating around 52K and Ethereum lingering just under 3K, the larger crypto market entered a short-term correction mode with Polkadot (-5%), Cosmos (-4%), and Solana (-4%) leading the retreat. In other news, 10 Autoglyphs were sold for 5K ETH.
Details
The Conference Board Leading Economic Index (LEI) decreased by 0.4% in January 2024, following a 0.2% decline in December 2023. Despite the decline, only four out of ten components were negative contributors over the previous six months, and the index does not currently signal a recession. However, real GDP growth is expected to slow to near zero percent in Q2 and Q3 of 2024.
Crypto
Coinbase International Exchange (launched in May 2023) hit a record $1 billion in daily trading volume for the first time, with the bulk of trades in Ethereum and Bitcoin. However, this figure is separate from the company’s main US exchange, which reported $3.2 billion in spot trading volume on the same day.
A complete set of 10 Autoglyphs has sold for 5,000 ETH, or about $14.6 million, marking the highest NFT sale in two years and the fifth-largest on-chain purchase. Autoglyphs have gained acclaim, being exhibited at prestigious venues and even donated to Europe’s largest modern art museum, Centre Pompidou.
World Markets
The CAC 40 hit ATH, rising 0.34% due to positive corporate news. Air Liquide and Veolia saw significant gains, while losses from Renault and ArcelorMittal moderated the increase. South Africa’s unemployment rate rose to 32.1% in Q4 2023, with job losses in community & social services, construction, agriculture, trade, and manufacturing. Employment fell, but finance, transport, and mining added jobs. The youth unemployment was 59.4%.
Mozambique’s economy grew by 5.36% YoY in Q4 2023, due to positive contributions from sectors like accommodation & food services, construction, transport & storage, information & communications, finance, agriculture, and fisheries. Despite a slowdown in the extractive industry and poor manufacturing performance, 2023 saw the strongest GDP growth since 2015, reaching 5%.
Currencies
The euro has strengthened (above $1.08) due to a weaker dollar and data indicating slower wage growth in the Eurozone. Despite decelerating wage growth, it remains above a level consistent with 2% inflation. ECB officials have expressed caution about rate cuts, suggesting they are likely this year but without giving a specific timeline.
The Mexican peso reached a one-month high around 17 per USD in February, benefiting from a weaker US dollar and the Bank of Mexico maintaining its record high interest rate. Banxico revised its inflation expectations upwards for most of 2024.
Commodities
Steel rebar futures dropped to CNY 3,750 per tonne in February due to low demand for ferrous metals. New home sales fell by 34% in major Chinese cities, leading to a surge in steel rebar stocks and a 4% increase in iron ore inventories. The PBoC’s loan prime rate cut did little to improve demand optimism.
Cocoa prices have reached a record high of over $6,030 per tonne due to concerns over crop conditions in West Africa, the leading cocoa-producing region. Fears of a fourth consecutive global deficit are growing as unfavorable weather conditions potentially reduce crop yields.
Wednesday
investors disregarded cautious Fed minutes hinting at a possible delay in interest rate cuts, leading to flat stock markets. Gold and oil prices increased due to geopolitical factors. The crypto market experienced a correction, with major altcoins such as Algorand (-4%), Solana (-2%), and Polygon (-2%) in the red, as BTC fell to $51.4K and ETH to $2.9K.
Details
30-year fixed mortgage rates increased to 7.06% in the week ending February 16th, hitting the highest level since early December, driven by rising Treasury yields and higher inflation. This marked a total increase of 28 bps over the previous three weeks. MBA’s chief economist Mike Fratantoni noted that potential homebuyers are sensitive to these rate changes as affordability remains strained due to limited supply and increased home values.
Crypto
VanEck’s HODL Bitcoin ETF witnessed a massive surge in trading volumes, surpassing its daily average by over 2,200%, as individual traders drove the activity. This comes on the eve of a fee reduction from 0.25% to 0.20%, positioning HODL as the third-largest Bitcoin ETF in the U.S. The surge reflects growing investor interest in Bitcoin and cryptocurrency markets, coinciding with Galaxy Digital receiving a buy rating and a 30% upside potential price target from an analyst.
World Markets
Nikkei 225 gained 1.1% and Topix Index rose 0.7%, approaching 34-year highs, as technology stocks surged following Nvidia’s positive earnings report. However, Japan’s private sector activity slowed in February, with services growth easing and manufacturing activity contracting further. Tokyo Electron, Advantest, SoftBank Group, Screen Holdings, and Disco Corp led the technology sector’s advance with significant gains.
In December 2023, Mexico’s retail sales declined 0.2% YoY, underperforming expectations, due to lower sales in auto vehicles (-9.9%), hardware & glass (-7.8%), and health items (-5.4%). However, e-commerce (+31.2%), self-service and department stores (+7.4%), and household goods (+5.7%) saw improvements. Month-on-month, retail sales fell by 0.9%, missing the consensus of a 0.2% rise.
Commodities
Gold prices rose to $2,024, marking the fifth straight session of gains, after the FOMC minutes indicated policymakers’ caution in easing policy. The Fed is expected to maintain rates in March and May but may cut borrowing costs by 25 basis points in June. Safe-haven demand for gold increased due to geopolitical tensions in the Middle East, as Houthi militants targeted US ships in the Gulf of Aden, disrupting shipping routes.
Thursday
Wall Street rallied on Nvidia’s strong earnings. The S&P 500 hits a new high, and the Nasdaq records its biggest gain since 2023. The Dow Jones breaches 39K for the first time. Nvidia’s stock soars 16.4%, and its market cap surpasses $1.9 trillion.
World markets are also fueled by AI optimism, with German DAX hitting ATH and China’s stock markets rising on a weekly basis after almost a year of continuous downfall. Nickel prices surged due to geopolitics.
The crypto market was mixed, with BTC and ETH slightly in the red but still holding their record 2-year levels. Some major altcoins, like Polygon, added more than 5%, while others, like Polkadot or Avalanche, closed flat.
Details
The number of people claiming unemployment benefits has decreased, with a low claim count of 201K, below market expectations but with sharp declines in California (-8,584), Kentucky (-3,655), and Michigan (-1,907). Overall, this suggests a strong labor market with low unemployment, giving the Federal Reserve leeway to hold interest rates higher if inflation remains high.
The Chicago Fed National Activity Index decreased in January, indicating contraction. Three of four broad categories of indicators decreased, with production-related indicators contributing the most to the decline.
The DAX 40 hits a record high at 17,370, boosted by tech rally post Nvidia forecasts. Mercedes-Benz raises dividend despite a sales decline, and lower earnings outlook. Delivery Hero drops 6% after terminating Foodpanda sale talks. Germany’s private sector contracts in February, led by a manufacturing output decline.
Crypto
BlackRock rapidly acquired 122,600 BTC, worth $6.31 billion in six weeks, becoming the 11th largest holder. This strategic move demonstrates broader acceptance of Bitcoin as an asset class.
World Markets
Shanghai Composite flat around 2,988, set for over 4% weekly gain. China’s policy measures and monetary easing boost investor confidence. Beijing implements market stabilization measures, PBOC cuts bank reserves and mortgage rates. Chinese tech stocks benefit from AI excitement. Gains from COL Group, Chengdu Hi-Tech, ChongQing Changan. Losses from Wuxi Apptec, PetroChina, Luxshare Precision.
February 2024 HCOB Eurozone Composite PMI increased to 48.9, signaling a slower decline in output. New orders fell as inflation rates rose but employment increased and business confidence improved on expectations of lower living costs and interest rates. Euro Area inflation rate stable at 2.8%; core rate at 3.3%. Inflation slowed for food and goods, while energy prices declined less. Monthly CPI dropped 0.4%.
February’s HCOB Flash Germany Manufacturing PMI fell to 42.3, the lowest in four months, showing lower output and new orders. Job losses were high, input prices down, and business sentiment turned pessimistic.
Currencies
Russian ruble steady near 2-month low (92 r/usd) as EU sanctions and US energy trade restrictions weigh. Tankers pause loading, Ukrainian attacks on refineries impact fuel production. Central Bank slashes current account forecast, key interest rate at 16%. Possible pause in rate hikes due to easing inflation risks.
Commodities
Nickel futures surged above $16,500 per tonne due to sanctions on Russia, boosting supply concerns. However, oversupply projections for 2024 and weak EV adoption dampened the bullish sentiment. Australia introduced stimulus measures to support local nickel producers amid mining plant shutdowns.
Friday
On Friday, stocks indexes closed near record highs, with the S&P 500 and the Dow Jones rising. Nvidia surpassed a $2 trillion valuation. Crypto market was mixed with BTC and ETH edging down about one percent while some major alts such as Bitcoin Cash, Polkadot, Cosmos and Cardano showing a positive dynamic with Uniswap rocketing up by more than 53% and closing above 11 at its 2-years highs.
Crypto
Uniswap’s $UNI token price surged by 50% due to a governance proposal rewarding token holders for staking. Uniswap’s Protocol emphasized efficiency in token swapping with minimal governance.
World Markets
Foreign investments into China decreased by 11.7% YoY in January 2024 but rose by 20.4% from the previous month. According to CPC 4,588 new foreign-invested enterprises were established, showing a 74.4% increase from the previous year. The FGV-IBRE Consumer Confidence Index in Brazil dropped to 89.7 in Feb, the lowest level since May 2023, driven by declining future expectations due to high interest rates and private debt. While lower-income households experienced a sharper decline, current conditions slightly improved.
Argentina’s Leading Economic Index fell by 6.79% in December 2023 compared to the same time the year before. The average index from 1993–2023 was 0.19%, with a peak of 14.39% in May 2020 and a low of -9.98% in March 2020.
Commodities
Gold above $2,020/ounce, supported by a weaker dollar and safe-haven demand. Uncertainty on Fed rate cuts. Waller suggests delay, citing inflation concerns. Geopolitical tensions in the Middle East also increase gold demand.
Week 9 focus: PCE price indexes, income & spending data, Fed speeches, ISM Manufacturing PMI, GDP, durable goods orders, consumer sentiment, home sales. International: inflation rates, GDP growth rates, manufacturing PMIs, interest rate decision from New Zealand, and unemployment rates for key countries.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update February 12th–16th, 2024
On Week 7, monthly inflation rose higher than expected, but the economy continued to show signs of slowing down, confusing traders and leading to a sideways move on stock markets. The Euro Area economy stagnated, while Japan entered a recession. Oil prices increased due to geopolitical tensions and the OPEC+ response. In the crypto markets, BTC hovered around 52K, and traders’ attention switched to ETH after Templeton filed for a spot Ethereum ETF.
Monday
On Monday, stocks were mostly flat near record highs ahead of the CPI release, as earnings season continued. The S&P 500 and Nasdaq 100 hit ATH again and then slightly declined. Investors awaited remarks from Fed officials for signs of potential interest rate cuts. On global markets, EU stocks reached record highs, following North American indexes, while oil and gold prices held steady, awaiting Fed comments and inflation data. The cryptocurrency market saw significant gains, with Bitcoin adding 4% and surpassing $50K for the first time since December 2021. Major altcoins followed suit, with Polygon and Ethereum leading the charge, each increasing by about 5%.
Details
The budget deficit decreased to $22 billion in January 2024, compared to $39 billion the previous year, due to record-high receipts and lower tax refunds. Outlays grew by 3% to $499 billion, while receipts increased by 7% to $477 billion. The deficit for the first four months of the fiscal year rose by 16% to $532 billion.
Crypto
Franklin Templeton files for spot Ethereum ETF, joining other asset managers seeking SEC approval. The ETF will reflect the price of ether, with Coinbase and Bank of New York Mellon as custodians. ERC-404 token market cap experiences high volatility, plunging 30% before partially recovering. The ERC-404 standard combines ERC-20 (fungible) and ERC-721 (non-fungible) token standards, linking tokens to NFTs.
Torrevieja, a coastal city in Spain, has initiated a plan to become Europe’s first “crypto-friendly” city. The Association of Small and Medium-sized Merchants of Torrevieja (APYMECO) and the Torrevieja City Council aim to transform the city into a blockchain hub through a three-phased plan, focusing on cryptocurrency trade, sustainability, and job creation.
World Markets
European stocks closed higher on Monday as markets evaluated new corporate earnings and anticipated macroeconomic data. The Eurozone’s Stoxx 50 and Stoxx 600 reached record highs. Financial companies led the gains, with Axa and UniCredit advancing close to 2%. Consumer goods also advanced, with strong performances by LVMH and L’Oreal. Saab jumped nearly 6%, while Siemens Energy advanced 5.7%.
India’s industrial production grew by 3.8% in December 2023, exceeding expectations, with manufacturing output increasing by 3.9%. Mining and electricity output slowed compared to the previous month. From April to December, industrial production rose by 6.1%. Manufacturing production averaged 5.82% growth from 2006 to 2023.
The Philippines saw a 27.8% year-on-year increase in net foreign direct investment (FDI) to a near two-year high of USD 1.05 billion in November 2023, driven by an expansion of net inflows for net debt instruments. Inflows dropped for equity capital (-52.5% to USD 0.09B). Equity capital mainly came from Japan and the United States, channeled to manufacturing, real estate, and construction industries.
Russia’s trade surplus in 2023 plunged by 2.4 times to USD 140 billion, with exports down 28.3% to USD 425.1 billion and the share of mineral products declining to 61.2%. Destinations shifted, with decreases to European (-68%) and South/North American (-40.4%) countries, but increases to Asian (5.6%) and African countries (42.9%). Imports rose by 11.7% to USD 285.1 billion. Among imports, machinery, equipment, and vehicles increased by 5.1 percentage points to 51.1%, and chemical products by 2.8 percentage points to 19.5%.
Currencies
The dollar index (DXY) rose slightly above 104 as investors awaited consumer inflation data, which may indicate interest rate trends. January’s headline inflation is expected to fall to 3%, while the core rate may reach 3.8%.
Commodities
WTI crude at $76.92/bbl, supported by Middle East tensions, but global supply and demand concerns limit further gains. Gold prices were subdued around $2,020 an ounce on Monday as many Asian markets were closed for holidays. Investors are awaiting key US inflation data that could impact interest rate expectations. Despite a smaller than expected increase in December CPI, gold did not gain ground. Markets still expect a possible Fed rate cut in May.
Tuesday
Yearly inflation continued to decrease (3.1%), but monthly core inflation rose higher than expected, coupled with technical indicators showing over-bought levels, causing markets to overreact, leading to all major stock indexes dropping sharply. Economic sentiments in the EU improved but the Euro hit a 3-month low due to lower chances of early rate cuts by the Fed. The crypto market was also in red, with BTC correcting more than 1% and ETH remaining flat. Litecoin (-6%), BCH (-4%), and Chainlink (-3%) declined more than the rest of the altcoin market. Additionally, CoinBase reported that 8.2 million residents (27% of all adults) in CA own crypto.
Details
Core consumer prices rose by 0.4% in January 2024, the highest increase since April 2023, driven by higher costs in shelter and transportation services. This challenges disinflation trends and supports FOMC hawks. The acceleration in costs of shelter and transportation services drove the increase, offsetting slowing inflation for goods such as used cars and trucks, apparel, and medical care commodities.
The annual inflation rate in the US decreased to 3.1% in January 2024 from 3.4% in December, although it was higher than market forecasts of 2.9%. Energy costs notably dropped, with gasoline declining by 6.4%, utility (piped) gas service falling by 11.8%, and fuel oil sinking by 14.2%. However, prices increased at a softer pace for food, shelter, new vehicles, apparel, medical care commodities, and transportation services, while the decline for used cars and trucks continued.
The NFIB Small Business Optimism Index dropped to 89.9 in January 2024, the lowest in eight months, due to labor quality and inflation concerns. Twenty percent of owners cited inflation as their top problem, while 39% reported unfilled job openings. Plans to create new jobs also softened, with a net 14% planning to hire in the next three months.
Crypto
The Blockchain Association (BA) opposes Senator Elizabeth Warren’s proposed Digital Asset Anti-Money Laundering Act (DAAMLA). A letter from 80 individuals, including former U.S. government and military officials, argues that digital assets are vital for the nation’s strategic advantage. The letter suggests DAAMLA would be ineffective against foreign illicit actors and could hinder innovation and economic growth in the digital asset industry. Additionally, it refutes Senator Warren’s claim that former defense, national security, and law enforcement officials were attempting to obstruct digital asset regulation.
Spot Bitcoin exchange-traded funds (ETFs) have experienced daily net inflows of approximately $125M during their first month. Grayscale’s Bitcoin Trust (GBTC) has seen significant outflows, but it remains a prominent player in the new product offerings. According to a 2023 research report 8.2M residents in California, accounting for 27% of the state’s adult population, own digital assets. Nearly 80% of these digital asset holders would be more likely to support pro-crypto political candidates. 40% of California crypto owners were aged between 18 and 34. Nationally, a majority (51%) of Millennials and Gen Z adults say they are likely to support crypto-friendly candidates in 2024.
Coinbase reported a 12% decline in its third quarter transaction revenue, amounting to $289 million. Despite this decrease, the company’s adjusted EBITDA, which represents earnings before interest, taxes, depreciation, and amortization, remained positive for the third consecutive quarter, totaling $181M. Some analysts predicted a 16% increase in Coinbase’s quarterly revenue, projecting it to rise from $674M to $784M YoY.
World Markets
The ZEW Indicator of Economic Sentiment for the Euro Area rose to 25 in February 2024, exceeding expectations. Analysts were split on economic activity forecasts, while the current economic situation improved. Inflation expectations decreased.
Currencies
The euro weakened to $1.07, its lowest since November 13th, as investors opted for the strong dollar after hotter-than-expected US inflation data reduced expectations of early Federal Reserve interest rate cuts.
Commodities
Mining production in South Africa increased by 0.6% YoY in December 2023, with growth in PGMs, coal, chromium, nickel, and non-metallic minerals. However, output declined for iron ore, metallic minerals, manganese ore, and gold. Monthly production decreased by 4.2% in December. Tin futures rose to around $25,500 per tonne due to supply risks. Delays in mine approvals in Indonesia and uncertain production in Myanmar led to reduced exports. Partial mining activities in Wa State may resume after the Chinese New Year, impacting the world’s 3rd largest tin producer.
Wednesday
The PPI came in lower than expected, and stocks rebounded with the Nasdaq climbing more than 1%. Semiconductors and crypto-related stocks, like Nvidia (+2.5%) and Coinbase (+14%), led gains. In the world’s markets, the Euro Area reported stagnation, as palladium prices rebounded from a low base. Crypto continued to surge as BTC increased by +4%, surpassing 52K and the $1T market cap mark. On the altcoins side, Avalanche (6%), Cardano (+6%), ETH (+5%), and Polygon (+5%) are leading the pack. In other news, the BlackRock ETF received an additional $0.5B in just one day.
Details
Producer prices (PPI) decreased 0.2% monthly in December 2023, more than initially estimated, while core PPI dropped 0.1%. Excluding food, energy, and trade, producer prices rose 0.2%. The BLS adjusts its seasonal factor annually to account for price movements. November and October figures were unrevised. Job openings rates fluctuated in several states in December, with some increasing and others decreasing. Nationally, the job market remained relatively stable with little change in job openings, hires, and separations rates.
Crypto
Bitcoin ETFs are seeing strong demand, with BlackRock’s iShares Bitcoin Trust receiving $493 million in inflows on a single day — this Tuesday — and now managing $5.1 billion in assets. This suggests strong investor interest in gaining exposure to Bitcoin through traditional investment vehicles.
World Markets
Luis de Guindos (ECB VP) speech summary: Economic activity stagnated in Q4 2023, with inflation driven by energy effects. Underlying inflation indicators are declining, reflecting a disinflationary trend. Financial stability concerns arise, especially for highly indebted corporates and real estate sectors. The Euro area banking system remains resilient, but vigilance is needed.
In Q4 2023, the Euro Area economy stagnated due to high inflation, borrowing costs, and weak demand. Germany contracted by 0.3%, while France’s GDP stalled. Spain and Italy saw growth, and the Dutch economy ended its three-quarter contraction. The Eurozone economy advanced by 0.1% year-over-year, and full-year GDP growth in 2023 was 0.5%, a significant decline from previous years.
Industrial production in the Euro Area rose 2.6% monthly in December 2023, exceeding expectations and marking the largest gain since August 2022. Durable consumer and capital goods output rebounded, but energy, non-durable consumer, and intermediate goods production decreased. Annual industrial activity increased 1.2%, the first yearly rise in ten months.
Commodities
Palladium prices rose above $900/ounce due to bargain buying amid recent price declines. Support also came from Eurozone avoiding recession and industrial production rebounding. Despite a surplus expected this year, major producers — South Africa (80th metric tons), Russia (74th mt.), Canada (17th mt.) and the US (14th mt.) — are maintaining output levels. Declining demand for catalytic converters due to EVs has impacted the market on the downside.
Thursday
On Thursday, stocks rose, with 10 out of 11 S&P sectors finishing higher, led by energy, real estate, and materials. Silver prices also rose. Treasury yields declined, and traders assessed weak retail sales data. The crypto market is mostly flat, with BTC at $52K and ETH at $2.8K, both slightly in the green.
Details
Retail sales fell 0.8% in January 2024, the largest drop since March, surpassing forecasted declines. Several sectors, including building materials and gasoline stations, saw significant decreases, while furniture stores and food services saw increases. The NY Empire State Manufacturing Index improved to -2.4 in February 2024 but remained in contraction territory. New orders and unfilled orders declined, while shipments rose. Employment was steady, and input price increases accelerated. Businesses were cautiously optimistic about the next six months.
The Philadelphia Fed Manufacturing Index rose to 5.2 in February 2024, surpassing forecasts. New orders remained negative, while shipments turned positive. Employment fell to its lowest since May 2020. Price increases were reported but remained below long-term averages. Indicators suggest optimism for growth in the next six months.
Crypto
Chainalysis reported 29.5% drop in crypto sent to launder-friendly services from $31.5 billion in 2022 to $22.2 billion. The decline in laundering outpaced the overall transaction decrease, indicating a potentially cleaner crypto landscape. Gibran Rakabuming Raka, son of Indonesia’s president, won the local elections with 60% of the vote, indicating the public’s growing embrace of digital technologies. His campaign promoted blockchain, crypto, AI, and cybersecurity, aligning with Indonesia’s goals to become a digital leader and bridge the divide.
World Markets
Peru’s GDP contracted by 0.74% in December 2023, against expectations. Declines were seen in fishing, financial & insurance, and manufacturing. Growth slowed in agriculture and mining, while utilities and accommodation & restaurants grew faster. The GDP for 2023 decreased by 0.55%. Tunisia’s economy contracted for a second straight quarter entering a technical recession, with declines in oil refining, manufacturing and agriculture offset slightly by growth in services like hotels, restaurants and finance; quarterly GDP rose slightly but annual growth was just 0.4% in 2023.
Commodities
Silver prices rose to $23/ounce due to Fed rate cut possibility. Retail sales fell, while jobless claims dropped. Chicago Fed Goolsbee expressed caution about waiting too long before cutting rates, citing inflation data and 2% target.
Friday
The PPI unexpectedly increased, and major stock indexes fell on concerns about delayed Fed rate cuts. The real estate, tech, and consumer discretionary sectors underperformed. The Japanese economy entered a technical recession, while oil prices increased on OPEC+ decision. Soybean prices hit a 2-month low after an increased stocks forecast. The crypto market continued its sideways movement, with BTC (+52K) and ETH (+2.8K) wavering at their 2-year highs. At the same time, altcoins’ bulls used that pause to push major coins higher, with BNB, Algorand, and Polygon continuing their 2-day surge by adding another +2.5%.
Details
Producer prices (PPI) rose 0.3% in January, the largest monthly increase in five months, driven by a 0.6% surge in service costs. Goods prices fell 0.2%, with gasoline dropping 3.6%. Year-on-year, PPI increased 0.9%, while core PPI rose 0.5% monthly and 2% annually, both above estimates. Housing starts dropped 14.8% in January 2024 to 1.331 million, the lowest since August, missing forecasts. Single-family starts fell 4.7%, and multi-unit starts plunged 35.8%. All regions experienced declines.
The University of Michigan consumer sentiment rose to 79.6 in February, a fresh high since July 2021 but below forecasts. Expectations improved, while current conditions dipped slightly. Inflation expectations for the year ahead increased to 3% and remained at 2.9% for the five-year outlook.
World Markets
European stocks close higher, with the Eurozone’s Stoxx 50 reaching a 23-year high and the broader Stoxx 600 jumping to ATH. Tech shares, led by ASML, and industrial companies, including Safran, BASF, and Air Liquide, fueled the gains. Additionally, ECB member de Galhau emphasized the rationale for an initial interest rate cut, while NatWest surged over 7% following strong results and a new CEO appointment.
Japan’s Q4 2023 GDP unexpectedly shrank by 0.1%, missing forecasts and leading to a recession. Private consumption declined for the third consecutive quarter, capital expenditures were muted, and public investment decreased. However, net trade contributed positively due to stronger export growth.
The CBR kept its key rate at 16% in February, halting a series of hikes. Inflation has eased to 6.6% annually, and the CBR predicts it will fall below 4.5% by year-end, nearing the 4% target. Despite this, inflation risks remain, and the economy, impacted by sanctions and labor shortages due to mobilization, grew by 3.6%, above expectations.
Commodities
WTI crude futures hit a 3-month high at $79.19, supported by Middle East tensions, OPEC+ supply cuts, and a weaker dollar. However, the IEA warned of slowing global oil demand, revising its 2024 forecast downward, and anticipating a larger supply increase.
Soybean futures are bearish at $11.7 per bushel, near the lowest levels since December 2020, due to increased US grain stocks forecast. Weakened Chinese demand, strong South American competition, and favorable rainfall in Argentina and Brazil contribute to the negative outlook.
On Week 8, investors will focus on FOMC minutes and global flash PMIs, including the US, Eurozone, Germany, France, UK, Japan, and India. Germany’s Ifo Business Climate, Turkey’s interest rate decision, and Canada’s inflation rate will also be closely watched.
SVET Markets Weekly Update (February 5–9, 2024)
Summary: During Week 6, major stock indexes reached ATH with the S&P 500 marking 14 consecutive weeks of gains, a 50-year unprecedented record. Commodities, including oil, gold, and coffee, were on the rise due to the developing Middle East situation. Crypto markets rebounded with major alts leading the charge, and BTC shot over $47K, again.
Monday
Stock indexes closed lower as upbeat PMI data and Fed comments dampened hopes of a March rate cut. Meta declined on profit taking, Boeing dropped due to weaker outlooks after reworking 50 737 Max jets, Nvidia hit ATH while Tesla dropped to a 10-month low. On the global scene, Eurozone PMI rose while PPI dropped 10% YoY. Cocoa continues to reach record highs on lower crops. The crypto market is mostly in red, with BTC declining 1% and ETH remaining flat. Only ChainLink continued to gain, adding another 5%, and Polkadot followed with a 1% increase. Additionally, data showed that the Web3 industry funding rebounded in 2023, with a total of $9 billion.
Details
The January Composite PMI was confirmed at 52.0, up from 50.9 in December, signaling the fastest expansion since July 2023. Growth was driven by services as manufacturing contracted again. New orders increased at the fastest pace in 7 months despite falling export orders. Input price inflation eased to the lowest level since May 2020, while business confidence hit a 20-month high.
Vehicle sales declined by 6.9% to 15.00 million annualized units in January, down from December’s revised figure of 16.12 million. This follows an average of 14.79 million units from 1976 to 2024, with a record high of 21.71 million in October 2001 and a low of 8.48 million in April 2020.
Crypto
The Web3 industry rebounded strongly in 2023. Total funding reached $9.043 billion, with enterprise infrastructure and wallets favored. Ethereum’s developer numbers grew by 66%, and compliance and social sectors gained importance. HashKey Capital led investments in infrastructure, DeFi, and other sectors in the Asia-Pacific region.
World Markets
The Eurozone Composite PMI rose in January to a 6-month high but still below 50, indicating a slower decline in business activity. Still, France and Germany’s PMI are below 50 and degrading. New orders fell at the slowest rate in 7 months, helping stabilize employment in the Eurozone. Both input costs and output prices increased at their fastest pace in 8 months while future growth expectations improved to their strongest in 9 months.
Brazil’s Composite PMI rose to 53.2 in January 2024, marking the fastest expansion in 15 months. Both services and manufacturing activity accelerated, leading to a sharp increase in sales. Job creation also picked up pace, with manufacturing companies hiring more than service providers. Input cost pressures eased while charge inflation quickened, with services seeing higher inflation rates.
Commodities
Cocoa futures hit record highs above $5,100 per tonne amid worries that harsh Harmattan winds are severely damaging crops in top producer Ivory Coast, potentially reducing yields for the April mid-crop. Ivory Coast has halted 2024/25 forward sales as shipments so far this season are down 36%. Poor crops in Ivory Coast and Ghana are expected to lead to a large 2023/24 global cocoa deficit.
Tuesday
NY Fed data showed that consumer debt hit a record, stocks were mixed, with the S&P 500 flat, the Nasdaq down, and the Dow Jones up. Investors adjusted their expectations following chairman Powell’s remarks. Earnings season continued, with Palantir surging 30% on profit outlook. Internationally, Euro area retail sales decreased by -1.1%, and Argentina’s industrial production slumped to a 2-year low. The crypto market is mostly on the rise, with BTC showing a small gain, while ETH added 3%. Polygon increased by +2%, and Uniswap jumped +4.5%. Monero crashed by -35% after Binance announced that it was delisting XMR. Also, the Nigerian Naira corrected sharply (-10%) to both BTC and ETH after devaluing almost 40% relative to those currencies during a month, due to the general weakness of the Naira (NGN/USD is up 30% YoY).
Details
Consumer debt hit a record high of $17.50 trillion in Q4 2023, increasing by $212 billion (1.2%) from the previous quarter. Mortgage balances rose to $12.25 trillion, while credit card debt surged by 4.6% to $1.13 trillion. Auto loan balances increased to $1.61 trillion, and other balances (including retail cards) grew by $25 billion. Student loan balances were effectively flat at $1.6 trillion. Non-housing balances grew by $89 billion. Delinquency rates and the transition into troubled status both increased amid the debt surge.
Crypto
Solana, after almost a year of uptime, suffered a major outage halting transactions. This prompted criticism of its scalability. Developers released a patch and requested validator operators to update, but the network restart was still ongoing.
World Markets
In December 2023, Euro area retail sales decreased by 1.1% MoM, surpassing market expectations of a 1% fall. High inflation and borrowing costs negatively impacted demand, causing sales of food, drinks, and tobacco, as well as non-food products, to decline. Online trade also experienced its largest decrease since July 2021. Yearly, retail sales contracted for the 15th consecutive month with a 0.8% decline.
Argentina’s industrial production fell 12.8% YoY in December 2023, the biggest decline since May 2020, with seven straight months of decline. Key sectors like basic metals, machinery, and food and beverages saw significant drops. Monthly, it decreased 5.4%, extending November’s 0.6% fall.
In January 2024, total sales of new cars and light commercial vehicles in Russia reached 65,200 units (83,000 including alternative supply channels). Sales growth compared to January 2023 was 64%. Market dynamics were influenced by factors such as market saturation in the crossover segment and the impact of a significant increase in the key rate, disposal fee, and other factors, including seasonal ones, leading to customers postponing new car purchases.
The Central Bank of Kenya raised its benchmark rate to 13% to anchor inflation expectations and address exchange rate pressures. Inflation climbed to 6.9% in January 2024, nearing the upper end of the target range, while the economy is expected to remain strong in 2024.
Commodities
Gold remained near $2,020 an ounce as economic data and the Fed’s hawkish stance reduced expectations of interest rate cuts. Stronger-than-expected US services sector growth and job additions, along with Jerome Powell’s reaffirmation of no March rate cut, have lowered the odds for rate cuts this year, impacting gold’s price.
Wednesday
US mortgage applications increased, indicating an improving economy and higher Fed rates for longer, but stocks climbed on strong corporate reports, with the S&P 500 hitting ATH and Nvidia, Microsoft, and Meta showing significant gains. Internationally, China’s vehicle sales slowed while Japan’s leading economic index rose. The crypto market was in a mildly positive mood with Algorand increasing 3% and BTC showing less than a 1% rise. Monero recovered 30% of yesterday’s dump, to $133.
Details
Mortgage applications increased 3.7% in the week ending February 2nd, the fourth rise this year, despite a minor 2bps rise in average rates to 6.80%. Refinance applications jumped 12.6%, while home purchase applications fell 0.6%, following a weekly decline.
Crypto
MicroStrategy has consistently bought Bitcoin since 2020, becoming the global leader in corporate Bitcoin holdings. In 2023 and 2024, it added more to its stash, purchasing 850 bitcoins for $37.5 million in January, bringing its total to 190,000 BTC, worth $8.41 billion. Galaxy Digital Holdings holds 17,518 bitcoins in comparison, valued at $775 million.
A study found crypto investors earned $887 on average in 2023, up greatly from 2022 when the market fell and investors lost over $7,000 on average amid crypto firm failures and a bear market.
World Markets
China’s vehicle sales increased 47.9% YoY to 2.44 million units in Jan ’24, with NEV sales making up 29.9% and growing 78.8% YoY. However, both total and NEV sales decreased from Dec ’23. Passenger vehicle sales dropped 37.9% YoY and 40.4% MoM, the worst since the early 2000s, due to a housing slump and market downturn.
Japan’s leading economic index rose to 110.0 in Dec ’23, above forecasts, due to falling unemployment and improved consumer morale. This is the highest reading since Oct ’22, rebounding from a 7-month low of 108.1 in Nov ’23. Consumer confidence also reached a 1-year high in Dec ‘23.
France’s trade deficit expanded to €6.83 billion in Dec ’23, surpassing expectations of €6 billion. Exports increased 1% to €50.2 billion while imports rose 2.5% to €57 billion. The deficit in investment and intermediate goods rose, but the energy shortfall narrowed. The deficit for 2023 decreased by €63.1 billion due to lower imports and higher exports of energy and manufactured goods.
The Reserve Bank of Australia left its cash rate at 4.35% in its 2024 meeting, following a 425bps rate hike to curb inflation. Inflation remains high, but cost pressure is easing. Future tightening depends on data and risks, with a focus on returning inflation to the 2–3% target range by 2025. The board will monitor global and domestic trends, maintaining the Exchange Settlement rate at 4.25%.
Thursday
US unemployment claims dropped, but major indices closed higher from the previous session with the S&P 500 reaching a new ATH at 5,002. Traders seem to be focusing on strong earnings, discounting the higher-for-longer narrative. On the world’s markets, in South Africa, manufacturing production rose, and cocoa continued to soar due to poor harvest expectations. Cryptocurrency-wise, Cardano saw a 5% gain, while BTC remained barely in the green, with ETH hovering near 2,4K in red, following a mini-rally at the start of this week.
Details
Unemployment claims fell slightly to 218K (-9K) after a revise-up, close to expectations, yet still above the past two-month average. Continuing claims dropped by 23K to 1.87m. Despite this, the labor market slowdown is evident with the four-week average up 3,750. States like Oregon, Ohio, and California saw decreases, but Missouri and Texas had increases.
World Markets
South Africa’s manufacturing production rose 0.7% YoY in December 2023, the slowest growth in three months. Major declines from vehicle parts, chemicals, and textiles were offset by increases in beverages, petroleum, and paper. Monthly output decreased by 1.7%, with a 0.4% rise for the full year.
Commodities
Cocoa futures rose for 7% in 24 hrs hitting a record $5,500/ton as supply concerns grow due to low stocks in top producers Ivory Coast and Ghana. Poor weather and crop diseases in the region have led to a 39% drop in shipments from Ivory Coast and a 35% decrease in Ghana’s arrivals, causing prices to soar.
Friday
Stocks closed mixed, with the S&P 500 and Nasdaq reaching ATH once again, driven by gains in megacap companies. The Dow, however, fell due to declines in the energy and industrial sectors. The revised December Consumer Price Index (CPI) showed minimal change, supporting the ongoing disinflation. Earnings results showed significant shifts, with megacap companies like NVIDIA up and PepsiCo, Pinterest, and Expedia down due to disappointing reports. In global markets, European stocks closed near record highs, and oil prices rose due to the worsening situation in the Middle East. The crypto market also saw gains, with Avalanche (+6%) and Bitcoin (+4%) leading the charge. Uniswap and Cosmos increased by 3%, while Ethereum and Cardano added 2%. Monero continued to retreat, decreasing by 5%, after correcting by 30% post-crash. Among major currency pairs, BTC-to-Turkish Lira and BTC-to-Brazilian Real outperformed the rest of the market with a 3% increase.
Details
Core consumer prices, excluding food and energy, remained steady with a 0.3% increase in December 2023, matching November’s figure and market forecasts. Service prices excluding energy services slowed, while shelter and medical care costs rose more. Goods prices saw a rebound in apparel, new vehicles, and alcoholic beverages, but used cars, medical care commodities, and tobacco dropped.
World Markets
European stocks closed near record highs, with the Stoxx 50 hitting a 23-year high and Hermes performing well after strong sales results, but L’Oréal fell after below-forecast sales. Germany’s inflation hit a two-year low of 2.9% in January.
Italian industrial production rose 1.1% MoM in December 2023, beating expectations and recovering from a revised 1.3% fall in November. Output increased for consumer, capital, and intermediate goods, while energy output fell less sharply. Yearly output fell 2.1%, the smallest decline in four quarters, and 2023 saw a 2.5% drop compared to a 0.4% rise in 2022.
Currencies
The Russian ruble traded near 90 per US dollar, its lowest level in a month, pressured by weakening seasonal tax factors and the central bank head signaling interest rate cuts in 2024 while disagreements between the bank and government on capital controls added uncertainty.
Commodities
Wheat futures dropped to $5.9, near three-week lows, due to higher global supply projections and lower US consumption. The USDA’s WASDE report showed increased global wheat production, particularly in the Middle East, reducing imports for the top importer. Russia’s record-high wheat production, near 91 million tons, and near-record exports signal a supply surge. US demand fell due to reduced food demand.
WTI crude futures closed at $76.84, up 6% and 3% from previous days, due to Middle East geopolitical tensions, Israel’s ongoing operations in Gaza, and the US drone strike in Baghdad, affecting oil demand. US gasoline inventories dropped dramatically, while crude stocks rose, contrasting market expectations.
Comment: on Governments
I try to avoid discussing political topics unless they directly impact the price levels of key asset groups such as stocks, commodities, and currencies, including cryptocurrencies, which I monitor daily. However, I sometimes can’t resist sharing my thoughts. Today is one of those days. During the past week, three Boomers (two of whom happen to be in charge of thermonuclear weapons) and the head of a large resource-producing country delivered key speeches. I won’t name them to avoid hurting anyone’s feelings. Use your imagination, pls.
One of these Boomers, who previously demonstrated a strong presence of mind and character, is now showing obvious signs of physical decay, putting everyone, even their most loyal supporters, in a difficult position trying to justify their continued presence in power.
At the same time, separating this relic of the past era (as well as his supporting cohort) from the instruments of power they love to wield is an insurmountable task. This must raise a fundamental observation in most minds: the current, hyper-centralized governance system is no longer adequate for our technological civilization. Instead, it has fueled a strong desire to replace one relic with another.
The second Boomer’s public speech, addressed to a group of journalists, demonstrated a remarkable resolve in following a path that, although substantiated by reasonable assumptions, has already led to the unimaginable suffering of countless innocent people, and surprisingly, no one can do anything about it. I am sure that the majority would argue with me that the overly centralized governance system is not one of the major causes of this.
The third Boomer, by chance does not possess a suitcase with a red button to press, but he is in charge of the economy, which has been in decline for almost two decades, despite this individual holding power all that time. However, his speech delivered in front of a large body of people’s representatives contained nothing but new empty promises to improve people’s lives.
It all raises the question: why still maintain such drastic centralization of power when its possessors cannot do much good for any of us during decades but can do almost unlimited harm to everyone within a few minutes?
Evidently (not to majority, of course), those systems were created to keep us under the control, like animals in a zoo, of a few megalomaniacs. Sure, so-called “social scientists” would give you thousands of reasons why the centralized system of governance is our “natural state”. Otherwise, without that control, we all get crazy and start exterminating each other. It’s just “human nature” they say.
That is what we have heard from them for the past 200 years or so, yet it was governments that started to exterminate us in hundreds of millions using the latest advances in technologies — people by themselves are much less ambitiously bloodthirsty than governing bureaucrats.
Not even the largest crowd of flesh-eating monsters are able to do so much harm as one indistinguishable bureaucrat with a right button to push. After 20th centuries global wars it has become an indisputable fact. Still, people watch thrillers and vote to place new rulers on top to protect them from imaginary threats and to expose them to the very real and momentary extermination.
Until when?
On Week 7, investors will track inflation, retail sales, Fed speeches, and earnings from Coca-Cola, Airbnb, among others. Meanwhile, the UK, Japan, and others report Q4 GDP, inflation, and unemployment. International highlights include UK and India’s inflation, Switzerland’s unemployment, and Germany’s ZEW sentiment.
SVET Markets Weekly Update – Jan 29 — February 2, 2024
On Week 5, the Fed kept the rate unchanged at 5.5%, but hinted at no cuts in March. This didn’t stop the stock market from reaching ATH on all major indexes, with Meta showing a record 20% growth over one day. Simultaneously, manufacturing activity continues to slow down, and job cuts are increasing in the private sector at a record pace. However, government data shows job increases and unemployment remaining stable at 3.7%.
On the world stage, China’s stocks continued to deteriorate due to traders’ pessimism towards the local economy and CPC’s stimuli. Gold, silver, and coffee rose due to geopolitical tensions in the Middle East. The Euro Area registered a slight uptick in GDP YoY, despite the German economy entering a technical recession.
At the same time, BTC and ETH slowed down significantly as traders’ attention shifted to other major cryptocurrencies, leading to a sharp rise of Chainlink, Avalanche, and Polkadot.
On Monday, the Dallas Fed Index hit an eight-month low, and traders reacted by pushing stocks higher, with the S&P 500 and Nasdaq reaching new heights. Tech and consumer staples gained, while energy lagged. Meta hit an all-time high. However, most traders showed caution anticipating the Fed decision and 19% of the S&P 500 reporting this week. On the world stage, China’s industrial profits declined due to a weakening economy. Oil, gold, and silver are on the rise following Houthi rebels’ missile attacks. The crypto market is in deep green, with Cardano outperforming the rest of the major tokens, adding more than 7%. Solana and Polkadot increased more than 5%, while Chainlink, Avalanche, and Polygon made +3%. BTC and ETH lagged the overall market with under 3% growth.
Details
The Dallas Fed’s manufacturing index dropped to -27.4 in January 2024, indicating a deeper contraction. The production index hit its lowest since mid-2020, while new orders and shipments also declined. Employment fell to its lowest since mid-2020. Despite this, wage and input costs continued to rise while selling prices remained flat. However, the future production index increased to 21.7, suggesting optimism for future growth. Most other forward-looking indexes also improved.
Crypto
Crypto-focused funds globally experienced a significant $500 million in net weekly outflows, primarily linked to Grayscale’s bitcoin ETF transition. Grayscale’s GBTC sees a $2.2 billion net outflow, overshadowing $1.8 billion inflows into new U.S. bitcoin ETFs. The United States, Switzerland, and Germany, with outflows totaling USD 409M, 60M, and 32M respectively, lead the global outflows. Bitcoin, Ethereum, Polkadot, and Chainlink witness notable outflows, raising concerns across the crypto investment landscape.
Binance’s survey in France, Italy, Spain, and Sweden shows strong bullish sentiment among European investors in the face of recent crypto volatility. 73% express optimism about crypto’s future, with 55% exclusively engaging in digital assets. High returns (20%), decentralization (18%), and innovation (17%) are cited as key adoption drivers. Additionally, 55% use cryptocurrencies for daily transactions.
World Markets
Shanghai Composite drops 0.92% to 2,883, and Shenzhen Component falls 2.06% to 8,582 as healthcare and tech stocks decline. US bill proposing a ban on Chinese biotech firms collaborating with the US government raises concerns, impacting sectors like semiconductors and AI. WuXi Apptec, Zhongji Innolight, and TCL Zhonghuan lead losses. Chinese regulators suspend lock-up share lending for short selling to stabilize equity markets.
China’s industrial profits declined 2.3% YoY to CNY 7,685.83 billion in 2023, marking a second consecutive annual fall amid economic challenges. State-owned firms see a softer profit shrinkage (-3.4%), while the private sector experiences growth (2.0%). Specific sectors, including chemical manufacturing, face notable declines, while others, such as ferrous metal smelting, show substantial profit increases. In December, industrial profits rise by 16.8% YoY, marking the fifth consecutive monthly increase.
Ibovespa fell 0.5% below 128,400 due to caution before monetary decisions by Brazil’s central bank and the US Fed. Vale’s shares dropped 1.8% amid management concerns and Evergrande’s impact, affecting the mining sector. Gol faced the day’s worst performance, impacted by US judicial issues and a credit downgrade. Meanwhile, Magazine Luiza rose 2.8% following a R$1.25 billion private capital increase.
Pakistan’s central bank maintains a 22% key interest rate for the fifth time, citing improved external accounts and increased reserves. Inflation, expected to decline faster from March, is projected at 23%-25%, with a medium-term target of 5%-7% now set for September 2025. The GDP growth target remains 2%-3%.
Zimbabwe’s annual inflation rose to a ten-month high of 34.8% in January 2024, up from 26.5% in December. Food, services, and currency depreciation contribute, with the local unit losing over a third of its value against the dollar this year. Monthly consumer prices surge by 6.6%, the highest in seven months.
Currencies
The dollar index rose to 103.7, approaching mid-December levels, as traders anticipated the Fed’s policy decision. The focus is on potential hints about the timing and pace of interest rate cuts. Betting odds for a 25bps rate cut in March and May are approximately 49% and 50%, respectively. Increased buying against the Euro is driven by expectations of ECB rate cuts in April. The dollar also strengthened against the British pound ahead of the Bank of England’s decision.
The Indian rupee hovers around 83.1 per USD, slightly weaker than a mid-January high. Traders await the federal budget for potential reforms, with the Finance Ministry optimistic about 7%+ growth, backed by structural reforms. The central bank intervenes to prevent the rupee from falling below its record low of 83.4.
Commodities
Gold rises to nearly $2,030/ounce amid Middle East tensions. Houthi rebels’ missile attack on an oil tanker and drone attack on US forces drive safe-haven demand. Cautious investor sentiment prevails ahead of the US Federal Reserve’s policy decision, with expectations of a steady interest rate. Strong US economic data and hawkish Fed comments reduce the likelihood of a March rate cut to 48%, down from 86% in December. Silver prices steady near $23/oz as investors await Fed meeting and US economic data, including jobs report. Traders hope for signs of a cooling labor market and softer Fed tone. Silver remains supported by geopolitical risks in the Middle East, including attacks on US service members and commercial shipments.
On Tuesday, job openings increased, while the Dallas Fed reported a drop in service sector activity and home prices continued to rise, dampening hopes for a 25bps rate cut by the Fed. As a result, stocks were mixed: the S&P 500 and Nasdaq declined, while the Dow Jones edged slightly higher. Corporate earnings were also mixed, with UPS sinking and GM soaring. Microsoft, Nvidia, and Meta hit all-time highs.
On world markets, the German economy entered a technical recession, while the EU zone still showed barely perceptible growth. The Mexican economy slowed. The crypto market was mostly in green, with Chainlink surging above 4%, followed by Solana at +3.5%. Ethereum showed a +3% increase, while Bitcoin’s gain was less than 1%.
Details
The number of job openings in December 2023 surged to 9.026 million, up 101K from the previous month and above consensus. Professional and business services saw a gain, but wholesale trade experienced a decrease. Job openings increased in the South (+115K) and Northeast (+12K) but decreased in the Midwest (-22K) and West (-4K).
The Dallas Fed’s service sector index for Texas fell to -9.3 in January, suggesting worsening business conditions. The outlook and revenue indexes also declined, while labor market measures showed continued employment growth with shorter work weeks. Input and selling price pressures eased, while wage growth remained unchanged.
Home prices rose 5.4% year-on-year in November, but fell 0.2% month-on-month, with Detroit and San Diego reporting the highest gains and Portland the only city with declining prices. Seattle (-1.4%) and San Francisco (-1.3%) had the largest declines MoM.
Crypto
Blockchain analysts report that Grayscale has slowed BTC transfers to Coinbase, amid a rising price for the asset. The current BTC value from the recent transfer is below $200 million, representing less than half of last week’s average daily volume.
World Markets
The Euro Area had a small gain in Q4 2023 while the overall trend has been down since January 2022. France (0.7%) and Italy (0.5%) leading the expansion and Spain (2%) and Portugal (2.2%) experiencing strong growth. Germany’s economy shrank while Ireland (-4.8%) recorded a steep decline. Germany’s economy shrunk by 0.2% in Q4 2023, in line with expectations, and entered a technical recession due to rising prices and borrowing costs. Mexico’s GDP expanded by 2.4% in Q4 2023, slower than expected and lower than the previous quarter. Primary, secondary, and service sectors saw slower growth, with 2023 growth at 3.1% compared to 3.9% in 2022.
Commodities
Nickel futures continued their downward movement even after China’s stimulus announcement and Nornickel’s production forecast. The overall trend remains bearish due to excess supply from the world’s top exporters, Indonesia, Philippines, and China. As the International Nickel Study Group forecasts, in 2023 metal’s excess supply was 223K metric tons and is expected to widen to 239K in 2024.
On Wednesday, the Fed kept the rate unchanged at 5.5% but hinted at no cuts in March; as a result, stocks tumbled, with the Dow, S&P 500, and Nasdaq showing deep losses in the communication services, tech, and energy sectors. In the world markets, China’s manufacturing is unexpectedly stable, while Brazil’s Central Bank cut its rate to 11.25%, and South Korean exports surged due to a more than 50% increase in chip sales. The crypto market is in the red, following Wall Street, with Solana and Polygon dropping 3% and 2%, respectively. Both BTC and ETH are down 1%.
Details
The Fed maintained the funds rate at 5.25%-5.5% in January 2024, as expected. Policymakers indicated rates would not be reduced until inflation moves sustainably towards 2%. Powell suggested rate cuts may begin this year, but not in March. The Fed removed reference to further rate hikes and noted inflation has eased, but remains elevated. Mortgage applications in the US decreased by 7.2% in the week ending January 26, 2023. Applications to buy a home dropped by 11.4%, while those to refinance a home loan increased by 1.6%. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 6.78%. Low existing housing supply is limiting options for prospective buyers and keeping home-price growth elevated, which is constraining home purchase activity.
Private businesses added 107K jobs in January 2024, below expectations. Leisure and hospitality led the growth with 28K jobs followed by trade, transportation and utilities (23K), construction (22K), education/health services (17K) and financial activities (7K). Pay growth slowed, with job-stayers seeing a 5.2% increase and job changers a 7.2% gain. The Chicago PMI fell to 46 points in January 2024, down from 47.20 points in December 2023. This was below the historical average of 54.66 points, indicating a contraction in manufacturing activity. The index had reached a record high of 81.00 points in November 1973 and a record low of 20.70 points in June 1980. (ISM)
Crypto
Coinbase and Ripple are major donors to the Fairshake super PAC, which supports pro-crypto politicians. Coinbase has contributed $24.5 million, with CEO Brian Armstrong donating an additional $1 million. Ripple has donated $20 million, while Andreessen Horowitz and Electric Capital have donated $20 million and $500,000 respectively, according to Bloomberg.
Bitcoin miners transferred over 4,000 BTC (~$173 million) to cryptocurrency exchanges, marking the largest single-day selling since May 16, 2023. However, the selling pressure did not impact mining portfolio reserves, which have remained stable since January, according to on-chain analytics firm CryptoQuant. Binance has regained its position as the world’s most dominant crypto exchange, capturing nearly 50% of the global market share. The resurgence can be attributed to a spike in trading volume fueled by Binance’s zero-fee promotion in December 2023 and the hype surrounding the United States Securities and Exchange Commission (SEC) approving several spot Bitcoin exchange-traded funds (ETFs).
World Markets
China’s Caixin Manufacturing PMI remained unchanged at 50.8 in January 2024, beating market expectations of 50.6. This marked the third consecutive month of growth in factory activity. The reading indicates that manufacturing activity in China is expanding, as a PMI above 50 indicates growth, while a reading below 50 indicates contraction.
Brazil’s central bank cut the Selic rate by 50 bps to 11.25% in January 2024, as expected. The committee noted economic activity indicators align with an anticipated slowdown and consumer headline inflation continues to decrease. Committee members anticipate a similar reduction in upcoming meetings to sustain the necessary contractionary monetary policy for disinflation. The total easing cycle’s magnitude will depend on factors such as inflation dynamics and long-term expectations.
Japan’s 10-year government bond yield rose above 0.7%, hitting its strongest level in six weeks, as BOJ Governor Kazuo Ueda’s comments revived speculation about a possible shift in monetary policy. Ueda suggested that the BOJ will reexamine its massive stimulus program if wage rises continue to increase the likelihood of achieving the 2% inflation target. However, the BOJ maintained its ultra-loose monetary policy at its first meeting this year, keeping its key short-term interest rate at -0.1% and retaining the 1% upper limit on the 10-year Japanese government bond yield. Japan’s unemployment rate fell to 2.4% in December, while domestic industrial production and retail sales grew less than expected.
In December 2023, Spain’s retail trade grew by 3.1% YoY, marking the 13th straight month of growth, driven by non-food sales, particularly personal equipment and other goods. Annual retail sales increased by 6%. However, on a monthly basis, retail trade decreased by 0.7% — the 5th month of a slowing growth rate.
Italy’s unemployment rate fell to 7.2% in December 2023, the lowest in 16 years, beating market forecasts of 7.6%. Youth unemployment also declined to 20.1%, the lowest since July 2007, pointing to a resilient labor market.
Brazil’s Q4 2023 unemployment rate fell to 7.4%, below the expected 7.6%, marking the lowest rate since February 2015. The number of employed individuals reached a record high of 100.985 million, with the employment rate rising to 57.6%.
South Korean exports in January 2024 rose 18% YoY, beating expectations, due to a surge in semiconductor exports. Sales of chips, cars, display products, and home appliances increased. Exports to the US and China grew, reversing a decline in 2023 caused by falls in chip sales and global economic uncertainties.
Currencies
The Russian ruble weakened past 89 per USD, near its lowest level in three weeks, due to uncertainty caused by conflicting views between the Central Bank and the government on currency controls. While the government proposed extending capital controls until the end of the year, the CBR officials declined the idea. The ruble remained supported by the central bank’s FX interventions and reduced demand for yuan and greenback due to seasonal factors.
On Thursday, recent data showed rising jobless claims accompanied by drastically increased cuts in the private sector and slowing labor cost growth. Stocks reacted with a moderate rise. Financials underperformed while communication services outperformed. On the world’s markets, the Euro area’s inflation declined to 2.8% while unemployment held at 6.8% with Spain recording 11%. Also, the BoE kept its rate at 5.25% and the Nigerian Naira plummeted on the central bank’s factual devaluation. On the crypto market, traders followed WS buying in the dip and brought most popular tokens into the green with Chainlink leading the charge with a 9% increase. BTC and ETH growth is much less pronounced (around +1%).
Details
US employers announced 82,307 job cuts in January 2024 — a 136% increase from the 34,817 cuts announced in Dec 2023, the most in 10 months and the highest January total since 2009. The financial (23238) and technology (15806) sectors experienced the most job cuts. Layoffs were driven by economic trends, anticipated policy changes, and increased automation and AI adoption. Unemployment benefit claims rose for a second week to 224K, the highest since November, with California, NY, and Oregon experiencing the most significant increases. Continuing claims also rose, reaching a nine-week high, indicating a soft slowdown in the labor market.
The ISM Manufacturing PMI improved to 49.1 in January 2024, the highest since October 2022, indicating a less severe contraction in the manufacturing sector. Demand and output stabilized, while inventories fell.
Crypto
Ethereum has seen a price and activity resurgence, with data showing 101K new ETH addresses created daily alongside 484K interacting, 28% faster than three months ago. This growth signals a thriving ecosystem for the second-largest cryptocurrency. Polygon Labs laid off 60 employees, about 19% of its workforce. Departing staff received severance packages while remaining employees will get at least a 15% raise starting in 2024, reflecting continued web3 job market demand.
World Markets
The Euro Area inflation rate declined to 2.8% YoY in January 2024, meeting expectations. The core inflation rate eased to 3.3%, still reaching the lowest level since March 2022. On a monthly basis, consumer prices fell 0.4% after rising 0.2% in December. FYI: Euro Area (Zone) is a monetary union, that accepts EURO as its currency. Euro Area excludes: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden.
The Euro Area unemployment rate held steady at a historically low 6.4% in December 2023, as expected, with youth unemployment dipping to 14.4%. The number of unemployed fell by 17 ,000 in the month to 10.909 million. Spain had the highest jobless rate at 11.7%, while Germany had the lowest at 3.1%.
Bank of England kept the Bank Rate unchanged at 5.25% for the fourth consecutive time, in line with expectations. Two policymakers preferred a 25bps increase, while one preferred a decrease. The central bank acknowledged more balanced inflation risks and expected GDP growth to gradually pick up. CPI inflation is projected to temporarily hit the 2% target in Q2 2024 before increasing again in Q3 and Q4.
Currencies
The Nigerian naira hit a record low of 1,250.5 per USD, nearing the parallel market rate, after the central bank revised its exchange rate methodology, marking the currency’s second devaluation in seven months. This steep drop defies efforts by the central bank and government to boost forex liquidity despite a backlog of $7 billion in matured forwards. The bank warned banks against underreporting transactions amid risks of misinformation and manipulation. About $2.5 billion of the backlog has been paid across key sectors, though dollar shortages persist for Africa’s largest economy.
On Friday, the latest data shows that unemployment remains steady at 3.7%, and the economy continues to add jobs at an increasing rate. Despite this, stocks have reached record highs again, boosted by strong results from tech giants. Meta surged a record +20%, Amazon gained ~8%, and Nvidia rose ~5%. On the world’s markets, Chinese stock indexes continue to decrease due to trader pessimism regarding the effectiveness of government stimulus and the ongoing Evergrande turmoil. Cryptocurrencies were in the green again with Chainlink leading the market with a +7% increase, followed by Avalanche (+6%). However, BTC (-1%) and ETH (-1%) paused as investors reallocated into other major cryptocurrencies.
Details
Total nonfarm payroll employment rose by 353K (projected 180K) and the unemployment rate remained steady at 3.7% in January 2024, below the forecasted 3.8%. The activity rate was the same at 62.5%, the lowest since February 2023. The number of unemployed decreased by 144 thousand to 6.12 million, while employed individuals dropped by 31 thousand to 161.15 million. The U-6 unemployment rate, accounting for all forms of unemployment, rose to 7.2% in January 2024 from 7.1% the prior month. Consumer sentiment (according to the University of Michigan) rose to a 2.5-year high in January as expectations improved (mostly because of a sharp rise in consumer expectations), though assessments of current conditions weakened somewhat. Longer-term inflation expectations edged up but remained relatively subdued.
Crypto
Tether Holdings reported a record-breaking Q4 2023 net profit of $2.85 billion (beating JP Morgan), contributing to a $6.2 billion annual net profit. The company removed secured loans from token reserves, achieving 90% cash backing, and invested $1.45 billion in sustainable energy, Bitcoin mining, data infrastructure, AI, and P2P telecommunications technology.
DeFi’s Daily Unique Active Wallets hit a record 5.3 million with a 262% surge in social dapps. The DeFi sector’s Total Value Locked reached $110 billion. NFT trading volume was at $1.5 billion, with Blur leading but focusing on high-value NFTs. $41 million in crypto assets were lost to hackers. Polkadot experienced exceptional growth in Q4 2023, with a 93% increase in active parachain addresses and a 150% surge in Cross-Consensus Mechanism Format transfers. This highlights the growing adoption of Polkadot’s specialized blockchains and enhanced interoperability.
World Markets
The Shanghai Composite and Shenzhen Component fell 1.46% and 2.24% respectively, hitting a four-year low due to economic uncertainties and negative investor sentiment. Despite stimulus measures, concerns over Evergrande’s liquidation and potential US bans led to significant losses in growth stocks. In December 2023, Brazil’s Industrial Production rose 1% YoY, surpassing 0.1% forecasts and November’s 1.3%. Historically, the average annual growth rate is 1.68%, reaching 37.20% in 1991 and -27.70% in 1990.
Comment: About the Secretary of Labor interview on the Reuters channel.
Watching all markets across the world at once and trying to gauge how it reflects on crypto every day for more than one year has put me in a non-enviable position. This is especially true when I have also constantly listened to political commentaries coming from top-positioned bureaucrats, notably those responsible for economic conditions in the country. One of those emanated from the Secretary of Labor today.
That person came full throttle, congratulating the government for the amazing results they achieved by keeping employment so low, inflation high, and GDP growing. Then, the journalist asked, ‘Why then do people not feel that – which reflects in upcoming elections polls?’ Like, yes, what about the sky-high mortgage rates, unbelievable costs of food and housing, evaporated bank accounts, mounting lay-offs, and complete destruction of whole sectors of the economy like SME banks, start-ups and innovations, SME finance, and crypto to name just a few?
And, yes, “thanks” to the Boomers’ outstanding smear campaign against crypto, we still have 95% of the population absolutely oblivious to the decentralized governance and income-earning alternatives we have created for them during the past 15 years.
It was absolutely dumb striking to see how the Secretary started to mumble words to the effect of, ‘We work so hard, but people are just too stupid to not recognize that.’ That speaks volumes about the soundness of the current political system, which acts now like a dystopian movie about gigantic moving cities which fight each other on the face of dilapidated Earth led by straightforward delusional and mentally deficient megalomaniacs and their small cliques.
These “elected officials” completely ignore reality outside of their high-raised, bulletproof cockpits, driving with eyes wide shut, without front-windows, relying on their medieval dials board. All those “legitimated gangsters” do now is keep cheering the crowd with only one goal in mind — to prolong their stay in power for as long as they could, whatever the cost for the rest of us.
And by the way, all alternatives on the so-called elections (and I am talking worldwide, where more than 50% of the world’s population will come into voting booths this year) are not a tiny-bit better. So, investors, buckle your seatbelts. So much fun ahead.
On Week 5, traders focus on major corporate earnings and FED’s insights. Globally, attention turns to interest rates, inflation, trade data, and economic indicators from countries like Australia, India, China, and Germany.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update Jan 22–26, 2024
During Week 4, the economy expanded by 3.3%, and core PCE prices rose by 2.9% year-on-year — the lowest in three years — while Wall Street’s major indices hit record highs. On the global stage, European stocks rose to a five-week high on strong earnings, but the ECB’s decision to keep interest rates at record highs created some confusion among traders. At the same time, Chinese stocks saw overall gains after Beijing’s fresh policy support. In the commodities market, oil and coffee prices continued to rise due to geopolitical tensions. Meanwhile, BTC and ETH experienced sharp declines, only to bounce back on Friday as bulls counterattacked, attempting to liquidate bears’ short positions.
On Monday, Wall Street’s major indices, including the S&P 500, Dow Jones, and Nasdaq 100, hit record highs. Notable performances came from Apple and Nvidia. However, technical graphs show that stock indexes are starting to show weakness. Investors await key economic data on Q4 GDP growth, PCE, and S&P Global PMIs. Meanwhile, BTC has broken downward through an important resistance level at 40K, suggesting that short-sellers are trying to crash it further following the BTC ETF approval.
Crypto
Major banks, including Morgan Stanley, face an uncertain future as the dollar’s dominance in global reserves is questioned. Diversification by economies like the EU and China, coupled with the rise of cryptocurrencies and stablecoins, sees Morgan Stanley and other big banks feigning concern over their future, portraying crypto as a “threat to the global financial system.” In reality, the challenge lies in the shifting dynamics favoring decentralized currencies and stablecoins, unsettling traditional banking establishments.
World Markets
South Korea’s Producer Price Inflation rose (Bank of Korea) to 0.10% in December 2023, up from -0.40% in November. The monthly average from 1965 to 2023 is 0.46%, with a peak of 14.50% in February 1974 and a low of -2.30% in November 2008.
Commodities
Silver prices fell to $22.5/ounce as the dollar strengthened, and investors scaled back expectations of prompt Fed easing. Robust US retail sales in December reduced the chances of a March rate cut. Governor Waller’s stance against rapid rate cuts influenced sentiment, prompting anticipation of additional Fed remarks for clarity. China’s lower-than-expected Q4 GDP growth has negatively impacted the industrial outlook for metals.
On Tuesday, the Richmond Manufacturing Index unexpectedly fell, while retail sales were reported to be rising, leading some traders to play technicals and start shorting indexes. Consequently, US stocks, including the S&P 500 and Nasdaq 100, were mixed but remained near record levels, still buoyed by strong corporate results. United Airlines, Verizon, Procter & Gamble, and Alibaba saw significant gains, although the Dow Jones was weighed down by 3M’s disappointing guidance.
Meanwhile, Bitcoin and Ether experienced sharp declines on Wall Street’s active shorting, with Ether down almost 5%. They led a downturn among major cryptocurrencies, with others such as Polygon, Avalanche, Polkadot, Algorand, and Solana declining by more than 3%.
Details
The composite manufacturing index in the US Fifth District area dropped to -15 in January, indicating sluggish manufacturing activity. New orders and employment declined, while shipments and backlogs also fell. Firms remained pessimistic about local business conditions and expect prices to moderate. (Richmond Fed)
The US Redbook Index rose by 5.2% in the week ending January 20, 2024, compared to the same week the previous year. Historically, it averaged 3.59% from 2005 to 2024, with a peak of 21.9% in 2021 and a low of -12.6% in 2020. The index tracks weekly retail sales, excluding autos and parts. (Redbook Research)
Crypto
FINRA, overseen by the SEC, reported that 70% of member firms’ communications about crypto may have breached rules by making unfair or misleading claims, likening crypto to cash or regulated assets. A sweep reviewing 500 retail communications found widespread non-compliance, with a few firms responsible for most potential violations.
In the past 30 days, Cardano (ADA) surpassed Polkadot (DOT) and Kusama (KSM) to claim the highest blockchain development activity. Santiment’s list of top crypto coins by GitHub commits includes Cardano, Polkadot, Kusama, Optimism (OP), Ethstatus (SNT), Hedera (HBAR), Cosmos (ATOM), Dfinity (ICP), Chainlink (LINK), and Ethereum (ETH). The shift in rankings implies varying levels of developers’ commitment to these networks.
World Markets
The Bank of Japan maintained its interest rate at -0.1%, lowered its 2024 CPI forecast to 2.4%, and expects 1.8% core inflation in 2025. The 2023 GDP growth projection was reduced to 1.8%, while the 2024 outlook was raised to 1.2%. Bank of Japan governor Ueda indicated any rate hike would aim to support the economy with minimal disruption. European stocks, including the STOXX 50 and STOXX 600, slightly declined by 0.3% as investors awaited central bank meetings. Construction stocks dropped, while mining stocks rebounded. Logitech faced a sales decline, leading to a 9% decrease in shares. Volkswagen, on the other hand, saw a 5% increase in shares after positive analyst calls.
In November 2023, Argentina’s monthly GDP YoY decreased to -0.90%, down from 0.60% in October. The average monthly GDP YoY from 2005 to 2023 was 2.31%, with a high of 30% in April 2021 and a low of -24.40% in April 2020. (Instituto de Estadística).
The Shanghai Containerized Freight Index hit a high since September 2022 at 2,239 points due to over 2,300 ships rerouting to avoid potential Houthi attacks in the Red Sea, increasing voyage costs and raising concerns of trade disruptions and inflation. It added an additional 10 days and $1 million in fuel costs for each voyage between Asia and Europe.
Commodities
Raw sugar futures reached a one-and-a-half month high of over 23 cents per pound due to expectations of lower demand. Hot weather in Southeast Asia affected crops, and investors were concerned about a possible export ban from India. Brazil’s sugar supply was also being monitored, with dryer weather causing issues, although recent data showed increased sugar output and record-high exports.
Aluminum futures rose to $2,230 per tonne from a one-month low after reports of a potential EU ban on Russian aluminum imports. The EU previously banned certain aluminum products, and a broader ban is now considered, while China’s possible rescue package for its equity market boosts base metal demand.
Currencies
The dollar index reached a six-week high above 103.7 due to stronger-than-expected US economic data and hawkish signals from Federal Reserve officials. Retail sales for December and consumer sentiment were also positive. The probability of a March rate cut decreased to 40% from 63% a week ago. The British pound remains strong at $1.27 and hits a four-month high against the euro, with BoE rate cuts expected later than Euro Area and US. UK’s smaller December budget deficit could allow March tax cuts, despite recession risks and inflation concerns, with markets pricing a 50% chance of a May BoE rate cut.
Comment: on FINRA’s Negative Crypto Report
In the aftermath of the eradication of crypto freedom, a disturbing revelation unfolds as corporate shackles tighten their grip, orchestrated by malfeasant politicians using SEC and its smaller counterparts as a weapon in their internal scrabbles.
The so-called guardians of financial integrity, like FINRA, claim to uphold fair and balanced communication with the public. However, their own report lacks a definition of “fair and balanced” and how it relates to how many “exaggerated, promissory, unwarranted or misleading” communications are issued outside of crypto. This raises serious questions about the regulatory body’s effectiveness in curbing misinformation and maintaining transparency.
The thematic patterns identified by FINRA include misleading comparisons of crypto to traditional assets like stocks, further underscoreing a systemic issue. The misrepresentation of federal securities laws or FINRA rules in the context of crypto adds another layer of concern, revealing a regulatory framework struggling to adapt to the evolving landscape of digital assets.
It is noteworthy that FINRA, overseen by the Securities and Exchange Commission (SEC), initiated this sweeping review in November, ostensibly to ensure compliance. Yet, the report paints a picture of a flawed system where a handful of firms exhibit a multitude of potential violations, questioning the efficacy of such oversight.
In scrutinizing 500 retail communications, FINRA’s attempt to ensure fairness and balance appears feeble at best. The revelation that some firms were the primary culprits in these potential violations only amplifies the skepticism surrounding the regulatory process.
In conclusion, the regulatory crackdown on crypto communications, as reflected in FINRA’s findings, not only exposes a deficiency in oversight but also raises concerns about the broader implications for the future of financial freedom and autonomy in the digital age.
On Wednesday, macroeconomic data showed that January business activity increased, and the S&P 500 and Nasdaq 100 hit fresh records, driven by strong corporate results. Netflix shares soared 10% after beating revenue forecasts and increasing subscribers. Chipmakers gained, with Nvidia, Microsoft, and Meta shares reaching all-time highs (ATH). Microsoft crossed the $3 trillion valuation mark due to continuing AI excitement.
Meanwhile, European stocks hit a 5-week high on strong earnings. Oil and coffee prices continued to rise due to geopolitical tensions.
On the crypto side, BTC and ETH were slightly up on technical recovery from Tuesday’s crash, as the rest of the crypto market also showed minor growth. Algorand, Solana, and Bitcoin Cash recovered up to 3%.
Details
The S&P Global US Composite PMI rose to 52.3 in January 2024, signaling the fastest growth in business activity since June 2023. Service sector activity expanded while manufacturing output fell slightly. New business increased sharply, but new export orders declined. Job creation slowed, while input cost inflation and average prices charged eased. Business confidence was at its highest level since May 2022, due to hopes of improving demand conditions and investment in new machinery and service lines. (SP Global)
Crypto
In 2023, the crypto universe saw a decrease in stolen funds to $1.7 billion, from $3.7 billion in 2022, despite an increase in cyber incursions from 219 to 231. The decline in DeFi platform breaches, down 63.7%, suggests improved security measures. However, major heists, such as Euler Finance and Curve Finance, losing $197 million and $73.5 million respectively, highlight ongoing challenges.
World Markets
Shanghai and Shenzhen stocks rose on news of Beijing’s potential 2 trillion yuan rescue fund and measures to boost market confidence, with strong gains from major firms and positive sentiment from Jack Ma’s Alibaba share purchase. European stocks closed sharply higher, driven by strong earnings from major companies in the Eurozone. The Stoxx 50 and pan-European Stoxx 600 rose by 2% and 1.1%, respectively, with several companies beating forecasts and raising hopes for future growth.
The Eurozone Composite PMI slightly increased to 47.9 in January 2024, indicating a slower rate of business activity decline. Manufacturing production contraction eased, while services activity declined. New orders and exports decreased at a slower pace. Employment slightly increased, and both input costs and selling prices rose. Business optimism improved due to hopes of reduced cost of living pressures and lower interest rates. (SP Global)
South Africa’s annual inflation rate fell to 5.1% in December 2023, below market predictions. Lower food and transportation costs drove the decrease, while housing, utilities, and other expenses rose. Core inflation remained steady at 4.5%. Monthly consumer prices were unchanged, compared to a 0.1% drop in November.( Statistics South Africa)
Nigerian stocks hit a record high above 100,000 points, driven by consumer goods and oil & gas sectors amid strategic pre-earnings buys to mitigate the effects of rising inflation and currency woes. Mexico’s economic growth slowed to 2.3% in November, below expectations, due to the Bank of Mexico’s tightening efforts and amid industrial slowdown and agricultural contraction, despite two years of expansion and quicker services sector growth; monthly activity dipped by 0.5%.
Russia’s producer price inflation decreased to -3.10% in December 2023, down from -0.10% in November. The average producer price inflation from 1994 to 2023 was 1.62%, with a record high of 21.00% in January 1995 and a record low of -8.40% in November 2008. (Rosstat)
Commodities
WTI crude futures rose to $75/barrel on falling US stockpiles, China’s economic stimulus, and geopolitical tensions. China’s central bank reduced bank reserve requirements, and US stockpiles saw a large withdrawal of 9.2 million barrels.
Natural gas prices rose to $2.6/MMBtu after a month-low of $2.31 as production recovery was slow following the Arctic freeze. Output decreased to 102.8 bcfd in January, and exports to Mexico increased to 5.7 bcfd. Despite this, heating demand is expected to remain subdued due to above-average temperatures. Arabica coffee futures rose towards $1.90/pound due to geopolitical tensions in the Red Sea affecting shipping costs, causing delays and increased freight rates. Despite this, the International Coffee Organization (ICO) projects a 5.8% increase in global coffee production for 2023/2024 and a 2.2% rise in consumption, resulting in a 1 million bag surplus.
Cocoa futures reached a 46-year high of $4,700/tonne due to supply constraints in West Africa, with production expected to only increase slightly in the upcoming season. Supply chain disruptions and aging tree stocks are affecting crops in top producing countries, while soaring prices may reduce demand.
In Germany, electricity prices surged 382.20% YoY in Jan 2024, reaching an all-time high of 699.44 in Aug 2022.
Currencies
The British pound strengthened on robust PMI data, suggesting the Bank of England may slow down on cutting rates. Private sector growth hit a seven-month peak, with potential for March tax cuts, despite poor retail sales and rising inflation.
Comment: On The Decrease In Crypto Hacking
The objective data highlights the stupidity of government regulations in the crypto market, and how free market forces are more effective in driving innovation and technological progress. The fact that there’s a decrease in the total value stolen, demonstrates that regulatory measures have nothing to do in preventing hacking incidents as DeFi remains largely untouched by bureaucrats.
The 63.7% decrease in the total value stolen on DeFi platforms suggests that these platforms are becoming more secure due to the forces of competition and innovation, rather than government regulations. This highlights the importance of allowing free market forces to drive innovation and technological progress, rather than relying on government intervention, which can only hinder progress and increase costs for consumers.
Hard facts prove again and again that free market forces are more effective than governments in driving innovation and technological progress in the markets. At the same time, politicians remain immune to facts — with personal ambition and systemic corruption being the only forces that really drive them.
On Thursday, the economy expanded 3.3% due to rising exports, surpassing the 2% forecast, while PPI growth slowed. Unemployment claims increased, and the Kansas Fed Composite Index fell, indicating worsening economic conditions and leading to mixed stock performances: the S&P and Dow rose, but the Nasdaq remained flat as investor confusion persisted. Tesla’s stock dropped over 12% due to lower earnings, whereas IBM’s surged 9% thanks to an AI-driven revenue increase. On the macroeconomic side, oil prices surged on strong GDP data and the ECB kept its key rate unchanged at 4.5%. In the cryptocurrency market, BTC and ETH are slightly up, but Chainlink, Avalanche, and Cardano experienced more than a 2% decline due to technical factors. Monero surged almost 3% to $157.
Details
The economy expanded 3.3% in Q4 2023, exceeding forecasts of a 2% rise, with consumer spending slowing and private inventories contributing less to growth. Exports accelerated and non-residential investment increased, led by equipment and intellectual property products. Full-year 2023 growth was 2.5%, compared to 1.9% in 2022.
The new orders for manufactured durable goods were unchanged in Dec 2023, missing expectations of a 1.1% increase. Excluding transportation, orders rose 0.6%, and excluding defense, they increased 0.5%. Primary metals contributed to the increase.(Census Bureau)
Unemployment claims rose by 25K to 214K in the week ending January 20th, with continuing claims also increasing, suggesting that unemployed individuals are taking longer to find jobs. The data contrasts with recent hot labor figures and challenges the view that the labor market will remain historically strong.
Durable goods orders excluding defense rose 0.5% in Dec 2023 after a 6.9% increase in Nov. The series has an average of 0.34% from 1992 to 2023, with a high of 28% in July 2014 and a low of -20.9% in Aug 2014.(Census Bureau)
The personal consumption expenditure price index grew 1.7% in Q4 2023, slowing from 2.6% in Q3 and marking the weakest growth since Q2 2020. The Kansas Fed Composite Index fell to -9 points in January 2024 from -1 points in December 2023, with an average of 5.49 points from 2001 to 2024. The index reached a high of 32 points in March 2022 and a low of -30 points in April 2020. (Kansas Fed)
Crypto
The UK government is proceeding cautiously on a CBDC, with no launch decision yet. While they exploring the feasibility, design, & develop criteria for a UK digital pound there remains no immediate plans for a UK central bank digital currency. UK governments are traditionally influenced by City Of London moguls, so it’s no wonder they have cold feet about CNBC, which will disintermediate all those banks.
Tesla’s Q4 2023 report reveals a consistent crypto strategy, maintaining its 9,720 BTC holdings valued at $386 million. The company’s stock declined in after-hours trading, despite exceeding delivery predictions for Q4 with 484,507 vehicles sold. However, Tesla fell short of analyst estimates with adjusted earnings per share at $0.71 and revenue at $25.17 billion, missing expectations of $0.73 and $25.87 billion, respectively.
In 2023, 62.1M users joined crypto, with Ethereum leading with 15.4M acquired users, followed by Polygon with 15.2M and Bitcoin with 10.7M. Solana, which saw a resurgence, acquired over 45% of its new users in May and December.
Chinese investors continue to invest in Bitcoin despite the government’s ban since 2021, as China’s global ranking in terms of peer-to-peer trade volume jumped from 144th to 13th in 2023. The Chinese crypto market recorded an estimated $86.4 billion in transaction volume between July 2022 and June 2023, surpassing Hong Kong’s $64 billion in crypto trading. The proportion of large retail transactions in China nearly doubled the global average of 3.6%.
World Markets
The European Central Bank maintained interest rates at record highs in its first 2024 meeting, pledging to keep them restrictive until inflation reaches 2% despite concerns of a recession. The main refinancing operations rate stays at 4.5% for the third time, and the deposit facility rate remains at 4%. President Lagarde said officials agreed it’s too early to discuss rate cuts. The ECB ended its rapid rate-hiking cycle in September but remains hawkish due to underlying price pressures and geopolitical uncertainties
The number of initial jobless claims in France decreased by 6.6 thousand in December 2023 from the previous month, with an average of -0.85 thousand claims from 1996 to 2023. Highs and lows were 818.6 thousand in April 2020 and -203.9 thousand in June 2020, respectively.
Commodities
Brent crude futures rose over 3% to above $82 per barrel due to increased demand expectations, falling inventories, and positive market sentiment. US economic growth exceeded forecasts at 3.3% in Q4, and China’s decision to reduce banks’ reserve ratios contributed to the increase. Supply disruptions were also a concern, with US and UK forces striking against Houthi fighters in Yemen.
Comment: On the Fed’s Ineffectiveness
In recent economic reports, concerning trends have emerged, calling into question the effectiveness of the Fed’s current policies. The data suggests that urgent action is needed, advocating for a shift towards free market forces to rejuvenate the economy. The Fed must promptly lower interest rates before irreversible damage occurs.
The rise in unemployment claims by 25K to 214K and the decline in the Kansas Fed Composite Index to -9 points in January 2024 from -1 points concurrently paint a concerning picture. Such negative indicators necessitate a reevaluation of the Federal Reserve’s approach. The central planning and bureaucratic interventions often lead to unintended consequences, hindering economic prosperity rather than facilitating it.
Durable goods orders excluding defense, which rose by 0.5% in December 2023 following a significant 6.9% increase in November, underscores the volatility of the current economic landscape. This volatility, when coupled with the Fed’s apparent hesitancy to adapt swiftly, demands a rethinking of the prevailing monetary policy. Allowing the invisible hand to guide economic activities leads to a more efficient allocation of resources, fostering sustainable growth.
The Personal Consumption Expenditure Price Index growing at 1.7% in Q4 2023, a decline from the 2.6% in Q3, adds another layer to the argument for immediate rate cuts. Bureaucratic interventions often distort market signals, leading to artificial price fluctuations. A return to free market principles is a remedy to such distortions, allowing for a more natural and responsive economic equilibrium.
In the era of technological progress and AI, the Fed’s role is becoming obsolete. The dynamism of modern economies requires adaptive and agile measures, characteristics often associated with free market mechanisms. The Fed’s interventions, far from being a panacea, might contribute to economic stagnation, particularly in times of rapid technological advancement.
In conclusion, the recent economic data signals a pressing need for the Fed to reconsider its current stance and promptly lower interest rates. Central planning and bureaucratic ambitions can inadvertently undermine economic stability.
On Friday, core PCE prices rose 2.9% YoY — lowest since Feb 2021 — hinting at potential Fed cuts and pending home sales jumped. However, stocks fluctuated, with the S&P 500, Nasdaq and the Dow traded near flat hindered by technicals and slower-than-expected core PCE inflation rate already priced in. Also investors are preparing for FED’s rate decision next week. At the same time, Crypto was on a rise with Avalanche leading the pack with ~9% increase, followed by Solana (~+7%) and BTC (~+6%).
Details
The Core PCE prices (excluding food and energy) rose by 0.2% in December 2023, slightly exceeding November’s increase. Year-on-year, core PCE prices rose by 2.9%, lower than the expected 3%, marking the lowest reading since February 2021. The data indicates a drop in inflation, hinting at potential rate cuts this year. Overall PCE prices, including food and energy, increased by 2.6% from the previous year, meeting expectations. The pending home sales jumped 8.3% in December 2023, surpassing expectations and posting the largest gain since June 2020. This uptick, seen in the Midwest, South, and West, signals a positive start for the housing market, attributed to lower mortgage rates and stable prices, with forecasts suggesting significant sales growth in the coming years.
Crypto
BlackRock’s spot Bitcoin ETF, iShares Bitcoin Trust, has exceeded $2 billion in assets, as Bitcoin’s value surged to $42,000. Fidelity’s spot Bitcoin product follows closely with over $1.7 billion in assets. However, a cooling trend in inflows and trading volume for these ETFs has been observed in recent days.
AI-powered trading bots are expected to have a $145 million market value by 2029, growing at a 37% CAGR from an estimated $22 million in 2022. The growth is driven by the complexity and fast-paced nature of cryptocurrency markets, but experts warn of regulatory uncertainties, risks, and the high cost and technical expertise required for these bots.
In 2024, Bitcoin will likely play a leading role due to spot ETF approvals and the impending halving, with price predictions ranging from $80,000 to $1 million. Tokenization of real-world assets, including real estate, will become a defining trend, with 72% of finance leaders planning to adopt it within three years. Additionally, GameFi is expected to overcome current challenges and gain widespread adoption, with triple-A blockchain games potentially reaching 1 million users.
Ether options trading volume reached an all-time high of $17.9 billion in January, with a put-call ratio of 0.31 indicating bullish sentiment in the market.
Polish researchers expanded their simulation of early life origins by using the Golem network, a peer-to-peer computing platform, to run 11 billion reactions. This cost-effective method required only $38K worth of GLM tokens, compared to a projected $80K with traditional cloud services, showcasing a novel application of distributed computing in scientific research.
World Markets
European stocks hit multi-year highs, with the Stoxx 50 reaching a 23-year peak, driven by luxury sector gains after LVMH reported strong sales. Despite weak German consumer confidence and tech stocks’ slight decline, luxury counterparts Hermes and Kering surged, underscoring resilience amid economic slowdown concerns.
Mexico’s trade surplus soared to $4.242 billion in December 2023, greatly exceeding expectations. This was despite a slight drop in exports, as imports fell sharply, driven by a significant decrease in oil imports. The annual trade deficit also narrowed by 79.7%. (INEGI)
Currencies
The euro fell towards $1.08, the lowest since mid-December, amid a strong dollar bolstered by solid US GDP data and the ECB’s decision to maintain interest rates, with President Lagarde indicating it’s too early for rate cuts. Concerns about Germany’s economy deepen as consumer and business morale decline.
Comment: on Golem’s use in scientific research.
The actions of the SEC’s Gensler and the Senate’s Warren are not only detrimental to the growth and success of SMEs, but they are also hindering the progress of non-corporate science. By imposing strict regulations and limitations on the use of cryptocurrency and blockchain technology, these individuals are stifling innovation and preventing groundbreaking research from being conducted.
The Polish scientists’ successful use of the Golem network to simulate the origins of life on Earth is just one example of the potential that decentralized networks have in advancing scientific research. It is important for policymakers to recognize the benefits of this technology and create an environment that fosters its growth, rather than hindering it.
During Week 5 the focus will be on the FED’s interest rate decision, employment data, manufacturing and service sector activity, consumer sentiment, and factory orders, alongside earnings from major companies. Internationally, attention will turn to the Bank of England’s monetary policy, GDP figures from several countries, global inflation data, manufacturing PMIs, and various jobless rates.
SVET Markets Weekly Update – Jan 15th–19th 2024
On Week 3, the major stock indexes rallied, most reaching all-time highs, driven by the continued outperformance of the technology sector. Traders maintained optimism despite increasingly bearish comments from FOMC members, anticipating the expected Fed rate hikes. In contrast, EU markets slowed down due to hawkish remarks from ECB chiefs, while uranium and oil saw a sharp increase amid worsening geopolitics. Meanwhile, BTC dipped as some traders actively shorted their positions following the approval of a BTC ETF. The rest of the crypto market followed BTC into the red.
On Monday, Martin Luther King Jr. Day saw BTC and ETH trading flat at $42.7K and $2.5K, respectively, as markets remained closed. In the EU, stocks were marginally in the red as regional industrial production fell. In commodities, natural gas prices corrected slightly after a sudden +20% surge due to weather reports showing the Arctic front engulfing North America.
Crypto
Analysis from Morgan Stanley highlights the significance of CBDCs and stablecoins in global finance. The interaction of traditional fiat currencies, Bitcoin, e-money, and stablecoins will shape international trade and finance. CBDC-enabled smart contracts offer innovative solutions, signaling a transformative shift in global finance.
Solana-based memecoins continue to attract over-hyped investors. Myra — another Solana-based dog coin surged almost 69,000% within 24 hours of trading, aiming to join Solana’s top memecoins such as Bonk and dogwifhat. Dubbed as “the woman behind MYRO,” the meme cryptocurrency has seen over $4.5M in trading volume.
Digital asset investment products saw US$1.18bn inflows last week, with trading volumes at a record high of US$17.5bn. The US had US$1.24bn of inflows, while minor outflows were seen in Europe. While high, this inflow did not break the record set at the launch of the futures-based Bitcoin ETFs.
World Markets
Euro Area industrial production fell by 6.8% in November 2023, Eurostat surpassing market forecasts and marking the ninth straight month of decline. The average from 1991 to 2023 was 0.99%, with a high of 41.70% in April 2021 and a low of -28.30% in April 2020.
In November 2023, the Euro Area trade surplus was EUR 20.3 billion (Eurostat), with imports falling by 16.7% and exports decreasing by 4.7%. The European Union also had a trade surplus of EUR 25.5 billion, with imports declining by 16.1% and exports remaining stable. Notably, the trade deficit narrowed with Russia and China.
The CAC 40 index dropped 0.72% to close at 7,411 amid cautious sentiment in Europe. Investors are monitoring global economic and monetary policy outlook, with attention on the World Economic Forum in Davos. Hopes for accommodative borrowing conditions were dampened by suggestions that the ECB might refrain from cutting interest rates this year.
Commodities
US natural gas futures fell 5% to $3.15/MMBtu on Monday, after a 14.5% increase last week. Traders are closely monitoring weather and demand forecasts due to a bitter Arctic cold front engulfing North America, with record-breaking low temperatures expected. However, gas in storage currently exceeds the seasonal average by 11.6%, and meteorologists forecast warmer temperatures for Jan. 22–26 in the US.
Comment: World Economic Forum 2024 — Analyzing Key Themes and Unaddressed Realities.
The World Economic Forum 2024 is set to tackle four major themes: the Fractured World, Jobs, AI, and Climate. The first theme delves into geopolitical tensions, with a spotlight on conflicts in Ukraine and the Middle East. The US election’s potential impact adds a layer of uncertainty.
The second theme explores concerns about job displacement due to automation, rising inequality, and issues of inclusion. A notable session on crypto, titled “Clear-Eyed about Crypto,” hints at anticipated calls for more stringent regulations.
The third theme, AI, encompasses various tech-related topics (the Tokenization Economy, TradeTech’s Trillion-Dollar Promise, Quantum’s Black Swan, The Battle for Chips, Biology as Consumer Technology, etc), raising questions about the role of technology in shaping our future.
The fourth theme, Climate Change is addressed with usual topics like Brazil’s Sustainable Transformation and Working in Harmony with Nature.
However, amidst these discussions, a critical question emerges: How can meaningful change occur within the current centralized economic regime controlled by misanthropic megalomaniacs? One glaring omission in the forum’s agenda is a lack of self-reflection and acknowledgment of responsibility for the issues they aim to address. The Forum appears hesitant to confront the systemic problems that may contribute to global challenges. Moreover, the absence of discourse on altering governance mechanisms, particularly the concentration of presidential authorities, raises concerns.
The oversight of the World Economic Forum is not addressing the root causes of the challenges discussed. There’s a reluctance to consider alternatives to the current governance structures, which are central to the chaotic state of affairs worldwide. Obviously, things may worsen before improving.
On Tuesday, major stock indexes are mostly lower, with the S&P 500 and Dow Jones down, while Nasdaq remains flat. Comments from Fed’s Waller about a gradual decrease in inflation suggest no rush for rate cuts, leading to a rise in the dollar and Treasuries. Hawkish remarks from ECB policymakers also emerged. Apple’s stock fell after the company offered iPhone discounts in China, and financials are down due to a warning of lower margins. In the crypto sector, Bitcoin’s price fell below $43,000 after the ETF approvals, yet institutions like BlackRock capitalized on the opportunity, purchasing 11.5k BTC amid the dip. Ethereum maintains a bullish pattern, holding steady at $2.5K.
Details
The NY Empire State Manufacturing Index hit a record low of -43.7 in Jan ’24, signaling a steep decline in manufacturing activity (source) New orders and shipments also plunged. Employment and workweek decreased modestly. Unfilled orders and delivery times shrank significantly. Price increases picked up slightly. Optimism rose slightly, with firms expecting improvement in the next six months. Capital spending increased, indicating improved investment plans.
Crypto
Bitcoin’s price fell after ETF approval, but institutional investors like BlackRock (bought 11.5k BTC) (source) saw this as an opportunity to accumulate. Will this stockpiling have a positive impact on Bitcoin’s price?
World Markets
European stocks dipped after ECB officials at Davos suggested it’s too early for rate cuts, citing persistent inflation and regional conflicts. Ocado Group saw Q4 revenue growth, while Hugo Boss missed Q4 EBIT forecasts. In January, Germany’s ZEW Economic Sentiment rose to +15.2, higher than expected, indicating increased optimism and anticipation of ECB rate cuts. US rate cut expectations are even stronger, while the current German economic assessment is stable but low.
Commodities
Platinum below 950 USD/t.oz, near weakest in a month, due to US dollar strength and rate cut bets. However, a supply deficit is projected, with the market anticipated to have a shortfall of 0.54 million ounces in 2024, as demand continues to outpace supply. Risks include electricity shortages in South Africa and sanctions on Russia.
Palladium nears a 5.5-year low, pressured by the stronger dollar and potential market surplus of 300,000 ounces in 2024 due to faltering automotive demand. The demand for catalytic converters declining as EVs share grows and manufacturers use cheaper materials.
Currencies
The dollar index hit a nearly monthly high of 103.3 on Tuesday, as investors scaled back bets on interest rate cuts. Fed’s Waller sees no reason to move quickly on rate cuts. The euro and pound fell due to hawkish ECB remarks and weak data, increasing the likelihood of interest rate cuts.
On Wednesday, mortgage rates continued to fall, retail sales jumped thanks to auto and industrial production, resulting in 20-Y Bonds increasing to 4.423%. As a result, stocks traded lower as traders tempered their expectations of March Fed rate cuts, with the S&P 500 down ~1%, Nasdaq off ~1%, megacaps like Alphabet, Amazon and Nvidia down over 1%, and Apple losing 0.7% on a ban of certain watch sales in Germany. On the macroeconomic side, China’s economy grew but China’s population continued to decrease. EU inflation ticked up leading among other things to increasing 10-Y UK Treasuries (Gilts) prices. Gold prices dropped as the dollar index rose. BTC and ETH are experiencing around 3% declines both on technical indicators showing volatility.
Details
The average contract interest rate for 30-year fixed-rate mortgages fell to 6.75% as mortgage applications grew to 10.4% (MBA) in the second week of 2024, the lowest rate in three weeks, following Treasury yields lower. As a result, housing market sentiment improved in January 2024, driven by expectations of a rate cut by the Fed.
Retail sales jumped 0.6% in December, exceeding forecasts, driven by auto sales (Census Bureau). Core retail sales, excluding autos, gas, building materials, and food services, saw a robust 0.8% increase. Industrial production unexpectedly rose 0.1% in December (Fed), driven by manufacturing and mining gains. Capacity utilization remained unchanged at 78.6%. For Q4, industrial production fell 3.1% and manufacturing output decreased 2.2% at an annualized rate.
Crypto
FYI: MiCA, which is set to come into effect on December 30, 2024, will establish a prohibitive regulatory framework for cryptocurrencies across the EU (source). It will mandate that crypto service providers — including crypto exchanges, payment processors, miners, custodians, brokers, crypto ATM operators, and token issuers — in all 27 member countries obtain national licenses and adhere to over-stringent financial compliance standards. These standards include increased share capital requirements, which will wipe off smaller and medium-sized enterprises from the market. Essentially, this will result in major financial corporations dominating the cryptocurrency industry within the EU, relegating small and medium-sized crypto enterprises to gray areas or outside of EU. It will lead to the flourishing of DeFi and the emergence of groundbreaking innovations that could subvert what they refer to as ‘regulations’ — Draconian restrictions that, once again, may only favor a select few at the top, to the detriment of humanity.
Binance Labs invested in over 25 Web3 projects in 2023, including Optimism, LayerZero, Celestia, Aptos, Mysten Labs, Trust Wallet, Neutron, Helio, Radiant, Pendle and Arkham.
World Markets
China’s economy grew a seasonally adjusted 1.0% in Q4 2023 (5.2% YoY in Q4 of 2023, faster than the 4.9% YoY growth in Q3 but less than market forecasts of 5.3%), matching expectations but slowing from an upwardly revised 1.5% in Q3, the 6th straight quarterly expansion though still dragged by property sector weakness, while government stimulus is limited by debt concerns though some infrastructure spending and PBoC liquidity injections continue; the China statistics bureau said effective policies are needed to vitalize the economy and consolidation recovery momentum.
China’s population declined by 2.08 million in 2023 to 1.409 billion, the second straight annual drop since 1961, with births at 9.02 million the lowest since 1949, as the pandemic and economy impacted the birth rate; the working-age population was 61.3% of the total and those over 60 were 21.1%, the male population totaled 720.32 million and the female population 689.35 million. (China’s Statistics Bureau)
In December 2023, the Euro Area’s inflation rate rose to 2.9% from November’s 2.4% (Eurostat), driven by energy-related effects. Czechia led the race with 7.6 percent. The core rate fell to 3.4%, its lowest since March 2022, while consumer prices increased by 0.2%. At the same time, in December 2023, the core inflation rate, excluding food and energy, dropped to 3.4%, the lowest since March 2022. It averaged 1.89% from 1991–2023, peaking at 5.70% in March 2023.
European stocks fell 1–1.2% to multi-week lows as hawkish ECB comments tempered expectations for near-term rate cuts, with rate-sensitive real estate companies hit hard, while investors also reduced hopes for early Fed cuts following strong US retail sales data and Britain’s inflation rose to 4% in December.
Commodities
Gold prices dropped to around $2,020 as a hawkish US Fed official’s remarks bolstered the dollar and yields, reducing the likelihood of a March rate cut.
WTI crude fell below $72 as a stronger dollar, due to reduced expectations of a March Fed rate cut, outweighed Middle East tensions affecting oil shipments.
Currencies
The dollar index rose for a third day to 103.5 Wednesday as better-than-expected retail sales reinforced expectations the Fed may not cut rates as early as thought, with March cut bets now at 56% versus 77% earlier, while Fed officials like Waller see no need to cut rapidly with inflation falling gradually; the dollar saw biggest gains versus the yen, franc and Aussie.
On Thursday, Stock indexes rose on volatility, with the Nasdaq-100 hitting ATH of 16,969, led by tech companies, amid ongoing market analysis of economic data and despite negative Fed commentary. Apple shares performed particularly well. Hawkish Fed signals and strong labor market data influenced Treasury yields and rate cut expectations. EU markets are up as overseas traders took cues from Wall Street. At the same time, the dollar, oil, and uranium are on the rise, “helped” by geopolitical risks.
Meanwhile, BTC surpassed silver in the ETF market. However, BTC and ETH are in a decline of over 2%, with Bitcoin preparing to test its important support zone at 41–40K, fueling speculation that it might repeat its plunge from January 2018 after the approval of the first BTC futures trades, which prompted many Wall Street players to start aggressively shorting Bitcoin.
Details
Jobless claims fell 16K to 187K (DOL), the lowest since Sept’22 and below the 207K forecast. Continuing claims fell 26K to 1.806M, the lowest since Oct’23. Data shows a tight labor market, allowing the Fed to stay hawkish. Non-seasonally adjusted claims plunged 29,543 to 289,228, largely due to a big NY drop (-17,176) in transportation, warehousing, construction & information.
Building permits rose 1.9% to 1.495M in Dec (Census Bureau), beating the 1.48M forecast. Multi-unit rose 2.2% to 501K; single-family up 1.7% to 994K, highest since May’22. Permits rose in South (8.4% to 860K), Midwest (4.7% to 199K) & Northeast but dropped in West (-16.3% to 335K).
Philly Fed Business Conditions fell to -4 in Jan, the lowest since May’23 & down from an upwardly revised 12.6 (PhilFed). The average is 34.5 since 1968, with a high of 91 in Sept’75 & low of -39.7 in Dec’73. At the same time, the Philadelphia Fed Manufacturing Index improved slightly in January 2024 to -10.6 from 12.8 in Dec 23 but remained negative for the 18th time in the past 20 months.
Crypto
BTC surpasses silver in the ETF market. BTC ETFs, gaining approval, outpaced silver ETFs, ranking second only to gold-focused ETFs. Grayscale Bitcoin Trust’s conversion led to nearly USD 30B in BTC ETF assets, exceeding silver ETFs’ USD 11B. Gold remains the top commodity with around USD 95B.
Tokenized US treasuries experience a remarkable 657% annual growth (source), reaching $863.6 million in market cap as of Jan. 18.
World Markets
Construction output in the Euro Area fell 2.2% y/y EuroStat in Nov, the sharpest since Feb’21 and worse than Oct’s 0.7% drop. This shows the impact of ECB tightening as the appetite for big buys/projects fell. Building fell 2.4% vs Oct’s 0.7% & civil engineering fell 1% vs Oct’s 0.2%. Output fell 1% m/m. Building plans approved in major South African cities fell 26.6% y/y in Nov (SA Statistics), the 5th straight drop. Non-residential & residential plans fell 41.6% & 28.1% respectively. Permits for additions/alterations fell 10%.
Commodities
Uranium prices hit $106 per pound, the highest since 2007, due to supply setbacks and rising demand. Kazakhstan’s production issues, Cameco’s outlook downgrade, and Western shunning of Russian uranium contributed to the surge. Ambitious decarbonization goals, particularly in China and Japan, boosted demand.
Brent crude rose above $78 amid Middle East tensions and US strikes in Yemen. North Dakota oil output fell due to extreme cold. OPEC and IEA revised up global oil demand forecasts for 2025 and 2024, respectively.
Wheat futures dropped below $5.9 per bushel in January due to ample global supply. Favorable winter crop conditions in the US, upward revisions to global supply estimates, and strong harvests in major exporting countries contributed to the decline. Despite higher consumption estimates, expectations of large exports from Ukraine and Russia weighed on prices.
Currencies
The dollar index rose to 103.6 due to stronger economic data, signaling a less dovish Fed. Lower jobless claims and better-than-expected housing data boosted the dollar. Market expectations for a March rate cut decreased. Dollar gained the most against the Swiss franc and the Euro.
On Friday, the Michigan consumer sentiment index reached 2021 highs, and inflation expectations fell. Stocks rallied on strong earnings and economic data, with the technology sector leading the gains. Nvidia, Advanced Micro Devices, and Texas Instruments surged. The S&P 500 reached an all-time high, while the Nasdaq and Dow also gained.
EU stocks were down on ECB remarks. Asian stock markets continued to be dragged down by the Chinese economy, with the exception of Japanese stocks propelled by the independently efficient BoJ’s policy. In Africa, markets are in the red, while in South America, it’s in equilibrium.
In commodities, uranium and oil continue to rally on geopolitics, while natural gas is in deep red due to oversupply.
In currencies, the Russian ruble and the Pakistani Rupee continue to depreciate against USD.
On the crypto side, BTC and ETH are slightly in the green but continue to fluctuate close to their critical support levels. Most of the crypto market trades in the red, with MATIC, Avalanche, and Polkadot down by more than 3 percent. Meanwhile, Chainlink and Litecoin both surged by more than 5%.
Details
According to the University of Michigan, consumer sentiment (78.8) soared to its highest level since July 2021 in January 2024, driven by optimism about inflation and income. Inflation expectations fell to the lowest level since December 2020. All five index components rose, pointing to a strong start to the year.
Existing-home sales fell 1.0% in December 2023 to the lowest level since August 2010, missing expectations. Sales were down in the Midwest and South, but up in the West. Annual decline of 6.2%. NAR Chief Economist sees potential upturn due to lower mortgage rates and expected inventory increase. (NAR)
Crypto
The Bitcoin network achieved a hash rate of 500 exahashes per second, processing 5 billion computations per second for every star in the Milky Way galaxy. According to a Chainalysis crypto crime report, 99% of crypto is legal as the total value of cryptocurrency sent to illicit addresses dropped in 2023 to $24.2 billion from $39.6 billion in 2022. The 2022 figure was inflated by $8.7 billion in FTX creditor claims. In 2023, illicit cryptocurrency transactions accounted for just 0.34% of all cryptocurrency volume, down from 0.42% in 2022 and a significant decrease from 1.3% in 2019.
Spot Bitcoin ETFs led by Fidelity and BlackRock saw nearly $1.2 billion influx within the first five days of trading, but a net outflow of $131.6 million due to Grayscale’s converted fund. Bitcoin’s price has been affected, with potential further pressure from profit-taking by GBTC investors.
World Markets
Foreign direct investment in China decreased by 8% to CNY 1.13 trillion or $157.1 billion in 2023. It fell in manufacturing and services but rose in high-tech industries, construction, and R&D. Investment increased from several countries, including France, the UK, and the Netherlands (according to China’s Ministry of Commerce).
EU stock markets are mostly in red, led by the Greece market (down by almost 2%). The EU Central Bank published its “Account of the ECB meeting held on 13–14 Dec 2023” (ECB). It shows that the ECB maintained high interest rates and signaled an end to bond purchases to combat inflation. Inflation is projected to remain elevated in coming years. No rate cuts were discussed, and future decisions will be data-dependent. The ECB’s projected inflation: 5.4% (2023), 2.7% (2024), 2.1% (2025), 1.9% (2026). The core rate: 5.0% (2023), 2.7% (2024), 2.3% (2025) and 2.1% (2026).
South American markets are in an equilibrium with the Argentinian Merval surging almost 4% but Brazil’s Ibovespa falling 0.3% to a one-month low below 126,900 due to uncertainty over payroll tax exemption and rising interest rates. Fiscal challenges and an impasse on tax reform plans intensified the decline, impacting consumer sentiment. Discretionary stocks like Casas Bahia and Magazine Luiza. Vale and Petrobras also retreated despite recovering commodity prices, leading to a weekly decline of over 3.4%.
Asian markets are mostly down led by China-related stocks (f.e. HK50 is 3% in red) with the exception of Japanese stocks, with the Nikkei 225 up 1.4% at 35,963 and Topix gaining 0.72% at 2,510. Easing inflation in Japan reinforced a dovish outlook on monetary policy. Strong corporate earnings in the US boosted technology stocks, driving gains in Tokyo Electron, Advantest, Disco Corp, Renesas Electronics, and SoftBank Group. The Nikkei and Topix finished the week 1.08% and 0.63% higher, respectively.
In Africa markets are in a negative territory mostly except the Zimbabwe Stock Index (ZSI Industrials) which rose by 56.97%, gaining 386,194 points since the start of 2024, propelled by high inflationary expectations.
Commodities
Uranium prices continue to rally, adding another 14% and hitting $106 per pound, the highest since 2007, driven by supply issues in Kazakhstan, setbacks in key mines, and geopolitical tensions affecting Russian imports.
Urals Oil rose 5.59% to $3.34 per barrel since the start of 2024, tracked through a contract for difference (CFD). US natural gas futures hit a two-week low at $2.5/MMBtu, with over 20% weekly losses, driven by smaller storage draw, reduced demand, increased output, and low LNG export flows.
Currencies
The Russian ruble weakened to around 89 per USD, influenced by profit-taking after a recent rally on positive oil dynamics. The finance ministry’s forex sales aim to prevent further depreciation. Among other daily records is the Pakistan Rupee, which continues to depreciate against USD with a historical high of 307.75 in September 2023.
Busy Week 4 ahead: US GDP, PCE, income/spending data, durable goods, PMIs, home sales, and earnings. Rate decisions in Euro Area, Japan, Canada, and others. Manufacturing and Services PMIs in several countries. Germany Ifo and GFK indices, Australia NAB Business Confidence.
Bengali (Bangladesh) · 
English (United States) ·