On Week 37, stocks continued to rise, driven by strong performance in the tech and semiconductor sectors. Economic data, including inflation and the PPI, indicated signs of easing, bolstering expectations for a 50-point rate cut by the Fed. Internationally, gold reached a new ATH, and silver surged above USD 30 amid concerns about a slowing economy and potential rate cuts. BTC and ETH faced challenges in maintaining their positions ahead of the presidential debate. As investors anticipated a better performance from Trump, demand for digital assets slumped, causing BTC to dip below 57K. Meanwhile, ETH struggled to hold above 2.3K. However, both cryptocurrencies surged following MicroStrategy’s announcement of a USD 1B BTC purchase.
Monday
On Monday, stocks attempted to rebound after a rough week, driven by investor optimism about lower prices and a potential rate cut. Investors are now focused on Wednesday’s inflation data to gauge the Fed’s upcoming policy decision on September 18. Internationally, the Chinese yuan weakened as the latest inflation data showed weak economic performance despite the CPC’s efforts. BTC crossed above 57K, while ETH lingers above 2.3k, continuing to lag significantly behind BTC after three consecutive “red” months — the worst performance for ETH since 2018. In other news, El Salvador is marking the third anniversary of its BTC holdings, with more than 25% overall profits on its 5,800 BTC holding, placing it third in the world among governments.
Details
Consumer credit surged by 25.45B in July, exceeding expectations (12.5). Credit card balances and other loans both saw significant increases, indicating strong demand for credit despite economic concerns.
Crypto
El Salvador made its first BTC purchase on September 6, 2021, shortly before adopting BTC as legal tender. Since then, the country has significantly increased its BTC holdings. As of now, El Salvador owns over 5,800 BTC, with substantial profits (25.88% gain). The country is currently the third-largest government holder of BTC globally.
World Markets
Japan’s GDP grew by 0.7% at a stronger pace in Q2 2024 than previously expected, mainly due to higher wages and a recovery in the automotive industry. While private consumption and business investment increased, government spending and net trade contributed less to the growth.
Taiwan’s exports surged 16.8% in August, driven by strong sales of technology products. Shipments to the US, ASEAN, Europe, and China & Hong Kong all increased significantly. Overall, exports for the first eight months of 2024 were up 10.9% compared to the previous year.
Currencies
The dollar remained relatively stable as investors weighed the potential for a Fed interest rate cut on the upcoming September 18 meeting. The recent jobs report showed mixed results, with fewer jobs added than expected but a lower unemployment rate and steady wage growth. Investors will closely watch inflation data this week for more clues on the Fed’s decision.
The Chinese yuan weakened against the dollar (7.11) as inflation data revealed a modest increase in consumer prices but a sharper decline in producer prices. This indicates a challenging economic environment for China, with weak domestic demand and slowing growth.
Commodities
Natural gas prices dropped 4% due to an incoming storm expected to reduce demand in Louisiana. The storm could cause power outages and disrupt LNG exports. While past hurricanes impacted supply, today’s storms mainly affect demand as most US gas comes from inland sources. Oversupply and mild winter weather have also contributed to lower prices. Production cuts have helped stabilize prices.
Comment: What’s Up With Japan?
The Japanese yen has slipped toward 143 per dollar; however, it remains far from the record highs of 300 reached during the peak of Japan’s economic miracle in the 1980s, before the Plaza Accord, which devastated Japanese manufacturing.
Recently, the Japan Stock Market Index (JP225) achieved an all-time high (ATH) above 40,000, driven by a continuing appreciation of Japanese assets. Notably, this rise in asset values has not been accompanied by corresponding GDP growth, which has consistently stayed below 2% — a stark contrast to the impressive 8% growth experienced during the 1980s boom.
Traditionally, Japan’s unemployment rate has been very low, ranging from 2% to 3%, and was even below 2% during the 1980s. The rate tends to reach a maximum of approximately 5% during times of crisis, such as between 2007 and 2010. This low unemployment situation indicates a limited pool of additional labor resources available for Japanese entrepreneurs to enhance local productivity.
In terms of inflation, Japan has also historically maintained low annual rates. As of July 2024, the inflation rate was recorded at 2.8%. However, this is significantly lower than the peak inflation rates of around 25% in the 1970s and 10% in the 1980s. The Japanese central bank has sustained a very loose monetary policy, keeping interest rates below 1% since the 1990s, compared to an 8% rate in the 1980s. Despite this accommodative policy, economic growth has remained elusive.
Business confidence in Japan has been notably weak, rarely surpassing the 20 mark and remaining mostly below zero since the 1990s. Similarly, consumer confidence has been on a downward trend on average since the 1980s, declining from a level of 50 to recent figures of approximately 20 to 30.
In summary, the Japanese economy serves as a poignant example of how countries with limited natural resources but high-value human capital and excellent technological capabilities can mismanage their economic potential. This mismanagement is often driven by ingrained nationalistic tendencies and overly conservative political attitudes that shy away from “risky” initiatives and revolutionary social and political reforms.
Tuesday
On Tuesday, stocks traded mixed, with tech stocks outperforming banking shares as investors reacted to lower earnings expectations. The market awaited a crucial inflation report that could influence Fed rate cuts. Internationally, China’s car sales declined amid an ongoing economic slowdown. BTC strengthened its position slightly prior to the presidential debate, as investors anticipated Trump’s better performance and fueled demand for digital assets. However, BTC trading fluctuated based on how well the debates were unfolding, dipping below 57K. Meanwhile, ETH continued to struggle to maintain a price above 2.3K.
Details
The NFIB Small Business Optimism Index fell to 91.2 in August, its lowest level in three months. Inflation remains a major concern for small business owners, as sales expectations decline and costs rise. Uncertainty among owners is increasing, and fewer expect improved business conditions in the future.
Crypto
Wealth advisers (as opposed to TradeFi) are rapidly adopting BTC ETFs, despite their overall flows being overshadowed by other investors. BlackRock’s BTC ETF has attracted significant inflows.
World Markets
China’s car sales declined YoY by 5.0% in August but outperformed expectations. New energy vehicle sales continued to grow strongly, accounting for nearly half of total car sales. Overall, vehicle sales for the first eight months of 2024 increased slightly.
The Reuters Tankan sentiment index for Japanese manufacturers declined to +4 in September due to concerns about sluggish Chinese demand and a global electric vehicle slowdown. Manufacturers anticipate further deterioration in sentiment over the next three months.
Brazil’s inflation rate slowed in August to 4.24%, falling below expectations. Prices for transportation, housing, health, and personal expenses declined, while food prices rose.
Currencies
The Brazilian real weakened past 5.66 against the dollar due to a stronger dollar and concerns about Brazil’s fiscal policy. Inflation eased slightly in August, but rising inflationary pressures have prompted the central bank to maintain a hawkish stance. Political tensions have also impacted the currency, contributing to economic uncertainty.
Commodities
Urals oil prices fell sharply to a four-week low of 66 due to concerns about rising oil supply. Libya’s potential oil production resumption and OPEC’s planned output increase are adding pressure to prices.
Wednesday
On Wednesday, stocks rallied, led by tech stocks, as inflation eased. The S&P and Nasdaq surged, with chipmakers driving the gains. However, core inflation rose, suggesting a smaller Fed rate cut. Internationally, the British economy stagnated for the second month in a row as Chinese stocks approached their yearly lows. Meanwhile, BTC and ETH continued to dip after Trump’s lackluster performance during the debate.
Details
Inflation slowed in August to a 3-year low of 2.5% (from 2.9). Energy prices fell, while food and transportation inflation eased. However, shelter costs rose. Core inflation remained steady, but monthly core inflation increased slightly.
Thursday
On Thursday, stocks continued to rise, fueled by strong performance in the tech and semiconductor sectors. Economic data, including the PPI, showed signs of easing inflation, supporting expectations for a 25-point rate cut by the Fed. Globally, gold reached a new ATH, while silver surged due to China’s revised green technology prospects. BTC and ETH remained at 58K and 2.3K, respectively, suppressed by political uncertainties.
Details
Factory gate prices (PPI) rose slightly in August, driven by increases in services costs. Producer price inflation slowed year-over-year, but core inflation increased slightly.
Friday
On Friday, stocks continued to rise on momentum, fueled by expectations of a 50-basis-point Fed rate cut due to lower inflation and rising unemployment. Tech and semiconductor stocks led the rally. Internationally, gold reached a new ATH while silver surged past 30 as industrial production in the Eurozone declined. BTC climbed above 60K, while ETH broke past 2.4, following MicroStrategy’s announcement of purchasing 1B worth of BTC.
Details
The University of Michigan’s consumer sentiment index rose in September, reaching its highest point since May. Consumers’ optimism about future financial conditions and the economy improved, while inflation expectations for the coming year declined.
Crypto
PolitiFi meme coins, inspired by political figures, have experienced a significant price drop after a strong first half of 2024. Despite the upcoming US elections and growing political interest in crypto, these tokens have lost nearly 90% of their peak value.
World Markets
Industrial production in the Eurozone fell by 2.2% in July YoY. This marks a decline from the average growth rate of 0.89% since 1991. Chinese banks increased lending in August but remained below expectations. The Russian ruble weakened past 91 as the central bank raised interest rates to combat rising inflation.
Commodities
Gold hit a record high (2580) due to a weaker dollar and lower bond yields. Silver prices surged past 30 due to speculation of a larger-than-expected Fed rate cut.
On Week 38, investors will focus on the Fed meeting at Wed, Sept 18 as well as central banks worldwide announcing interest rate decisions. Economic data releases will focus on inflation, retail sales, manufacturing activity, housing indicators, and GDP growth.
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SVET Markets Weekly Update – September 2–6, 2024On Week 36, global stocks took a hit, driven by concerns about a weakening labor market and a slump in the tech sector. Locally, job cuts increased significantly, while the unemployment rate remained steady. Crude oil prices plummeted to a thirteen-month low amid fears of a global economic slowdown. In the Eurozone, private sector activity strengthened, except in Germany. BTC and ETH plunged, targeting 50K and 2K, respectively, as the Ethereum Foundation increased its selling activity.
Tuesday
On Tuesday, stocks plunged, led by technology and economic concerns, with Nvidia and other chipmakers suffering significant downs. Communication services stocks also underperformed. Weak factory data added to the market’s woes, raising concerns about the economy and Fed’s potential actions. Globally, crude oil prices dipped to a nine-month low due to a weakening world economy. Meanwhile, BTC is around 57.6K and ETH is around 2.4K, both continuing to show red, signaling bearish trends.
Details
The ISM Manufacturing PMI rose slightly in August but remained below 50, indicating continued contraction. New orders, production, and employment all declined, while input costs increased at a faster pace than expected. These results suggest that the Federal Reserve’s interest rate hikes are having a negative impact on the manufacturing sector.
Crypto
A poll shows that 50% of cryptocurrency holders intend to vote for Donald Trump, while only 38% favor Kamala Harris. Among non-crypto voters, Harris leads with 53% compared to Trump’s 41%. The survey indicates that 15% of voters own cryptocurrencies or NFTs, with a notable representation of young and racial minority groups among these users.
World Markets
The Brazilian economy grew faster than expected in the second quarter, driven by increased consumer spending and government investment. However, net exports were a drag on growth due to higher imports and lower commodity prices. This stronger-than-expected performance may support the case for a rate hike by the Brazilian central bank.
Currencies
The dollar rose slightly as traders weighed economic data. The ISM Manufacturing PMI showed that factory activity continued to contract, raising concerns about the impact of interest rates. Investors are looking for more economic data to inform the Fed’s expected rate cut. The dollar gained against the Australian dollar but lost ground against the yen.
Commodities
Crude oil prices plunged to a nine-month-low, below 71, driven by weaker-than-expected Chinese economic data and lower oil demand in the U.S. and China. Meanwhile, OPEC signaled plans to increase production in the fourth quarter. Gold prices dipped below $2,500 as investors awaited economic data to gauge the likelihood of a Fed rate cut. While recent inflation data has tempered expectations for a significant cut, markets still anticipate a total of 100 bps in rate cuts this year. In Europe, the ECB is also expected to lower rates due to slowing inflation.
Wednesday
On Wednesday, stocks traded mixed but closed slightly in the green, correcting upward after Monday’s drop, the sharpest seen since early August. A decline in job openings to a four-year low raised expectations of a larger Fed rate cut. Energy and tech stocks underperformed. Globally, oil prices continue to drop due to fears of a global recession. BTC and ETH were almost unchanged, technically remaining bearish, with 50K and 1.7K as the next targets.
Details
Job openings declined in July for the first time in two years, falling to the lowest level since 2021. This decrease was primarily driven by fewer openings in healthcare, government, and transportation sectors. While hires and separations remained relatively stable, job quits decreased to a two-year low. Factory orders rebounded strongly in July, increasing by 5% and exceeding expectations. This growth was driven by a surge in durable goods orders, particularly for transportation equipment. However, excluding transportation, orders grew at a much slower pace. Despite all “re-shoring” rhetoric, the trade deficit widened in July to its highest level in two years. Exports reached a record high, but imports grew even faster, driven by technology goods and intellectual property. The deficits with China and Canada also expanded.
Crypto
El Salvador’s President Nayib Bukele, a strong supporter of BTC, has acknowledged that his cryptocurrency initiative hasn’t gone as intended. In a recent interview, Bukele admitted that “Bitcoin hasn’t had the widespread adoption we hoped for.”
World Markets
The Eurozone’s private sector activity strengthened in August for the sixth consecutive month, led by services. However, manufacturing remained weak, and new orders, employment, and business confidence declined. While input costs fell, output prices rose. France and Spain contributed to the overall improvement, while Germany experienced a second consecutive decline. The German private sector contracted at a faster pace in August, driven by a sharp decline in manufacturing. New business and exports fell significantly, while job cuts increased. Inflation rose slightly, but cost pressures eased. Business confidence weakened, particularly in manufacturing.
Commodities
Crude oil prices fell sharply, reaching the lowest level in 10 months (68). Concerns about rising supply, a potential deal to restart Libyan oil production, and weak economic data from China and the US contributed to the decline.
Thursday
On Thursday, stocks traded mixed as investors anticipated Friday’s employment report. Private payrolls data showed weaker-than-expected job growth, but falling unemployment claims provided some optimism. Overall, conflicting economic signals raised concerns about a potential recession and the Fed’s monetary policy. Internationally, the Eurozone construction sector continued to contract. BTC and ETH dropped marginally to 56K and 2.4K, reinforcing bearish sentiments.
Details
Job cuts surged in August, reaching a five-month high. Tech companies led the layoffs, reflecting growing economic uncertainty. This aligns with other indicators suggesting a softening labor market, supporting the case for lower interest rates. Initial unemployment claims decreased slightly but remained elevated compared to earlier this year. The decline suggests a marginally improving labor market, but it remains historically tight. Outstanding claims also fell, and the four-week moving average decreased. The ISM Services PMI rose slightly in August, surpassing expectations. While new orders and employment showed growth, production slowed, and the backlog of orders decreased. Prices continued to rise at a faster pace, driven by increased costs in various sectors.
Crypto
Private Telegram groups are not private anymore. The corresponding statement was removed today from TG FAQ. Telegram generates substantial revenue from cryptocurrency-related activities. Despite an overall loss, the company reported $342.5 million in revenue in 2023, with over 40% stemming from its cryptocurrency wallet and collectible sales.
World Markets
The Eurozone construction sector continued to contract in August, with new orders falling sharply. This led to a decline in activity, employment, and purchasing. All three segments of the construction sector experienced contractions, with housing and commercial construction seeing the steepest declines. While input prices rose slightly, inflation remained below long-term averages. Despite this, construction companies remain pessimistic about the future.
Friday
On Friday, stocks plunged due to concerns about a weakening labor market and tech sell-off. Major tech companies and chipmakers suffered significant downside. The August jobs report and Fed comments further fueled market anxiety, leading to the worst weekly performance since early 2023. Globally, oil dropped to its yearly lows on global economy slowdown concerns. BTC and ETH were followed by stocks preparing to test 50K and 2.0K, correspondingly, again.
Details
The unemployment rate decreased to 4.2% in August from 4.3% in the prior month, matching expectations. The number of unemployed people remained stable, with a slight decrease in temporary layoffs. Long-term unemployment persisted, accounting for over 20% of the unemployed.
Crypto
The Ethereum Foundation has substantial ETH reserves ($650 million worth of funds) but has been selling some (1K ETH just today) to fund operations and support the ecosystem. This has caused controversy within the community. Vitalik has also been selling Starknet tokens for similar reasons.
World Markets
The FAO Food Price Index declined in August, primarily due to lower cereal and sugar prices. Wheat prices fell amid weak demand and increased competition from Black Sea exports. Sugar prices dropped due to improved production prospects. Meat prices also decreased slightly. However, vegetable oil prices rose due to higher palm oil costs. Dairy prices increased due to strong import demand and limited supplies.
Commodities
WTI crude oil prices fell sharply this week due to OPEC+ delaying production increases, weak economic data in China and the U.S., and potential supply increases from Libya. However, a significant drop in U.S. oil inventories provided some support. Overall, oil prices experienced their worst weekly decline in months.
On Week 37, global investors will be closely watching local inflation data as well as that from Euro Area, China, Mexico, Brazil, Russia, and India. Other important releases include the ECB interest rate decision as well as trade data, consumer confidence surveys, GDP growth, and unemployment rates in various countries.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest in your bright future without hassle. For more reports: https://evernomics.com/
