SVET Markets Weekly Update — June 3rd – 7th, 2024 – Brave New Coin
SVET Markets Weekly Update – June 3rd–7th, 2024
On Week 16, markets were mixed as investors grappled with conflicting economic data, political events, and concerns about potential interest rate changes and economic slowdown.
The week began with stocks declining marginally as lower-than-expected PMI data pointed to a manufacturing slowdown, raising fears of a weakening economy. However, positive economic data and a tech rally on Wednesday propelled the S&P and Nasdaq to new all-time highs. Thursday saw a pause in stock gains as investors awaited interest rate clues, while Friday brought mixed results as higher unemployment numbers renewed slowdown concerns.
Global Markets React to Political Events: Indian bonds fell and the rupee weakened as Modi’s party didn’t secure a dominant parliamentary majority. The Mexican peso also weakened after the pro-government party won. South African stocks rose on the lessened possibility of a pro-Marxist party taking control. The ECB cut rates to 4% but raised inflation forecasts, while Eurozone GDP growth continued to slow.
Commodities and Energy: WTI oil prices fell after OPEC+ decided to increase production, while natural gas prices rose due to the hot summer.
Crypto Markets Remained Stable Until Friday: BTC and ETH remained steady around $70K and $3.7K for most of the week, with the broader crypto market fluctuating within narrow ranges. On Friday, BTC and ETH dropped by around 3–4% due to technical sales, while altcoins like Polygon, Uniswap, Polkadot, Algorand, and Cosmos fell by 7% or more.
Monday
On Monday, stocks declined marginally after a lower-than-expected PMI indicated a manufacturing slowdown. Investors shifted their focus from expecting interest rate cuts to fearing a weakening economy, with banks and industrial stocks leading the decline. The tech sector was mixed, with Nvidia gaining and Microsoft and Alphabet falling. Internationally, Indian bonds fell as Modi’s party was expected to win a large parliamentary majority, the Mexican peso weakened sharply after the pro-government party won, and South Africa’s stocks rose as investors reacted to the possibility of a pro-Marxist party taking control being lessened. WTI oil fell after OPEC+ decided to increase production. Meanwhile, BTC and ETH remained steady at their two-week levels (~70K and ~3.7K) as the majority of the crypto market fluctuated within relatively narrow ranges.
Details
The manufacturing sector showed continued improvement in May, with a PMI rising to 51.3. New orders grew, boosting production, though domestic demand lagged exports. Businesses grew more optimistic, hiring more staff and building inventories. Input costs rose at the fastest pace in a year, leading to higher prices.
World Markets
Mexico’s new president, Claudia Sheinbaum is from the same party as outgoing President Andres Manuel Lopez Obrador, who is not eligible for re-election. As a result, Mexico’s crypto policy is likely to remain unchanged (basically, no policy), as Sheinbaum has aligned herself with Obrador’s policies.
Eurozone manufacturing decline slowed in May. The PMI reached its highest level in over a year, indicating a slower decline in production. New orders, exports and purchasing activity also showed improvement. Business sentiment is at its highest level since early 2022.
Indian government bond yields hit a one-year low below 7% in June. Investors are optimistic about India’s strong economy and stable government after exit polls predicted a win for the incumbent party. This stability is expected to continue economic reforms and attract foreign investment.
Brazil’s manufacturing growth slowed in May (PMI 52.1) due to floods. Though new orders rose and hiring remained strong, production stalled and business confidence dipped. Despite flood challenges, expectations of future recovery kept the outlook positive.
South Africa’s stock market rebounded 1.4% after four days of decline. Investors reacted to local election results and global economic worries. The leading party (ANC) may form a coalition with a business-friendly party (DA), while talks with a more radical option (MK) seem unlikely.
Turkey’s inflation hit a new 18-month high in May at 75.45%, exceeding expectations. Housing costs skyrocketed, driving the surge. While food and most goods remained very expensive, some sectors like transportation saw a slight price slowdown. The core inflation rate also dipped slightly. Monthly price increases held steady.
Currencies
The Euro is down as investors expect the ECB to cut interest rates by 0.25% this week, for the first time in years (since 2016). This would widen the gap between European and US rates. The ECB will reveal its plans on Thursday, with markets still anticipating two rate cuts in 2024 despite recent inflation concerns.
Mexico’s peso weakened to a near 7-month low after the Moderna party’s big win in congressional elections. Investors worry the party’s control could lead to more government control of the economy and hinder reforms. This follows concerns over President-elect Sheinbaum’s plans to continue some of her predecessor’s policies.
Commodities
WTI crude oil prices fell sharply to 74.5 after OPEC+ announced a plan to slowly increase production by over 1.8 million barrels per day over the next year. This comes amid concerns about slowing economic growth and high interest rates, which could dampen demand for oil.
Tuesday
On Tuesday, stock indexes were uncertain after mixed economic data. Job openings fell sharply, but factory orders rose. Real estate and consumer staples led the gains, while energy stocks fell due to lower oil prices. On global markets, the Indian rupee weakened after initial election results suggested a tighter win for Modi’s party. BTC and ETH pushed up slightly, while some of the major coins such as Uniswap (+22%) outperformed.
Details
Job openings in the US dropped to an 18-month low in April, falling below expectations. The decline was widespread across most regions and industries, except for the South and private education.
Economic optimism dropped to a 6-month low in June (40.5). This index has been negative for over 2 years. Consumers feel worse about their finances (47.9) and government economic policies (36.7). However, there’s a slight improvement in the perceived short-term outlook (36.8). Investors are slightly more optimistic than non-investors.
Crypto
Thailand approved its first Bitcoin ETF, allowing wealthy investors to invest locally. This follows a recent rule change permitting investment in foreign Bitcoin ETFs through private funds. The new ETF, launched by One Asset Management, is set to begin trading soon.
World Markets
Germany’s unemployment stayed at a high 5.9% in May, the sixth month in a row. This is worse than expected, with the number of unemployed rising by 25,000 to 2.76 million. This continued increase points to a struggling German economy.
India’s stock market experienced a dramatic drop, reversing Monday’s gains, as early election results cast doubt on a strong win for Prime Minister Modi’s party. The key market index plunged nearly 6%, its worst one-day performance in years. This uncertainty about future policies could impact India’s recent economic boom.
South Africa’s economy grew at a slower pace than expected in Q1 2024, expanding by 0.5% compared to a year ago. This follows a previously reported higher growth rate of 1.4% in the last quarter.
Brazil’s GDP grew at an average annual rate of 2.45% over the past three decades. This year’s Q1 growth was 2.5%, but it fluctuated significantly, reaching a high of 12.4% in 2021 and a low of -10.1% in 2020.
Currencies
Indian currency weakened after initial election results suggested a tighter win for Prime Minister Modi’s party. Investors worry a weaker majority could stall economic reforms and raise spending, jeopardizing India’s strong fiscal position. Despite the currency dip, India’s GDP growth for the latest quarter exceeded expectations.
Brazil’s currency weakened due to worries about government spending. Despite economic growth, high spending on social programs raised concerns about inflation. This, along with a trade deficit, caused the Brazilian real to fall to its lowest point in almost a year.
Wednesday
On Wednesday, stocks surged, with the SP and Nasdaq hitting new ATHs, fueled by positive economic data and a tech rally. On world markets, natural gas prices are rising due to the hot summer. BTC and ETH continue to edge up slowly, with the rest of the crypto market keeping pace.
Details
Business activity jumped in May to a 14-month high, driven by a surge in new orders and growth in both manufacturing and services. Employment stayed flat, and inflation continued to rise.
Mortgage applications dropped significantly in May, down 5.2% from the prior week. This extends a downward trend, due to rising interest rates that have been above 7% for two months. Refinancing applications, highly affected by rate changes, saw a steeper decline of 7%. Home purchase applications also dipped by 4%.
Private sector hiring slowed in May, adding only 152K jobs, below expectations. Service industries led growth, while information and business services saw job losses. Manufacturing and mining also declined. Wage growth remained steady, but job-changers saw smaller pay increases. Economists noted a slowdown but say the labor market is still strong.
Car sales edged up to 15.91M in May from 15.78M in April. This is still far below the peak of 21.71M sales in October 2001, but above the record low of 8.48M reached in April 2020.
Crypto
Turkey won’t tax stock or crypto profits, but is considering a small tax on buying and selling them. This aims to broaden their tax reach, after previously reducing stock market tax to 0%.
World Markets
Eurozone producer prices continued to fall in April, marking the 12th month of decline. The drop of 5.7% was bigger than expected, with energy prices leading the decrease at 14.7%.
Eurozone economic activity accelerated in May to a 1-year high of 52.2, driven by stronger demand and business optimism. This increase is near the long-term average since 1998. While inflation eased, it remained above pre-pandemic levels.
Brazil’s business activity grew in May but at a slightly slower pace than April. This is still a strong performance, with the service sector leading the way. Despite some regional weakness and rising costs, sales increased at a near two-year high.
Russia’s monthly GDP growth compared to previous year rose to 4.40% in April from 4.20% in March. Historically, it averaged 1.74%, with a high of 11.60% in May 2021 and a low of -11.80% in May 2009.
Commodities
Natural gas prices are rising due to hot summer weather expected across the country, especially in Texas and the East Coast. This is pushing prices closer to a 6-month high. Production is high and stockpiles are full, but rising demand and LNG exports are keeping prices up for now.
Thursday
On Thursday, stocks paused after recent gains, with investors waiting for clues on interest rates. Internationally, the ECB cut its rate to the expected 4% but raised its inflation forecast. BTC and ETH hold their levels.
Details
Jobless claims rose above expectations to a 2-month high, reaching 229K. This suggests a cooling labor market, potentially leading to Fed rate cuts. The overall trend remains slightly positive with the 4-week average down.
Employers announced fewer job cuts in May than in April or the prior year. However, hiring also dropped to its lowest level in a decade, suggesting less movement in the job market. This comes despite overall job cuts being lower year-over-year.
World Markets
The European Central Bank cut interest rates by 25 basis points to 4% for the first time in nine months as inflation eased but remained above target. They lowered rates to fight inflation while keeping an eye on future economic data. Inflation forecasts were actually revised upwards, with growth expected to pick up slowly in the coming years.
Euro area retail sales did not grow in April compared to the same month last year, despite a small increase in March. This was lower than expected forecasts.
Russian car sales jumped 150% in May, likely due to a low sales base in 2022 following sanctions.
Commodities
Oil prices rose over 2% for a second day, reaching $75.6 per barrel. This increase follows the European Central Bank’s interest rate cut and speculation of a similar move by the Federal Reserve in September. The Fed rate cut is seen as likely to boost economic activity and oil demand.
Friday
On Friday, stocks are mixed as higher unemployment surprised markets renewed fears of a slowdown. Internationally, the Eurozone’s GDP growth continued to slow, showing a marginal increase of 0.4%. Both BTC and ETH dropped by approximately 3% and 4% respectively due to technical sales. The rest of the crypto market tumbled, with Polygon, Uniswap, Polkadot, Algorand, and Cosmos down 7% and more.
Details
The unemployment rate unexpectedly rose to 4% in May, the highest since January 2022. This is a sign of a weakening labor market as both employment levels and labor force participation declined.
Crypto
DeFi’s total value locked jumped 17% in May to $192B, the highest since February 2022, due to rising crypto prices and trading activity. However, despite this growth, fewer users participated, with the number of active wallets dropping 21%.
World Markets
Eurozone’s GDP grew modestly at 0.4% compared to the previous year, picking up pace after a sluggish period.
Brazil’s car production dropped sharply in May, down 24.9% from April and 26.8% from a year ago. This is the second lowest production month this year.
Mexico’s inflation rose to 4.69% in May, the highest in four months. Food and transportation prices increased the most. However, core inflation, which excludes volatile items, continued to decline to a 16-month low of 4.21%.
Next week – the Fed rate decision and inflation numbers are key, while Europe and Asia report on growth, industrial output, and trade. China, India, Brazil, and Russia also reveal inflation data. Watch for business confidence in Australia and a rate call from Japan’s central bank.
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SVET Markets Weekly Update May 27–31st, 2024
On Week 22, stock markets ended slightly in the red as economic uncertainty and political developments dominated investor sentiment. The GDP growth was revised sharply down to 1.3%. Inflation remains above the Fed’s targets. Eurozone inflation unexpectedly accelerated, with major economies in the region continuing to decelerate. This combination of rising inflation and slowing growth hints at the onset of stagflation in Europe. Economic signals from China were mixed. The IMF raised its growth estimates, but other data showed slowing business activity. Commodities continued their upward trend, with aluminum hitting a two-year high.
The crypto market paused amidst mixed news. BTC and ETH remained within narrow trading ranges, close to their ATHs. Market sentiment appears to be cautious as investors await clearer signals.
Monday
On Monday, stock markets closed for the Memorial Day holiday, and the dollar is on hold while BTC and ETH took a pause after revisiting 70K and 3.9K, respectively. The rest of the crypto market continued to grow with Chainlink adding 10%, while Polygon, Solana, Avalanche, and Algorand grew by 4% or more.
Crypto
Officials from Argentina and El Salvador met to discuss El Salvador’s BTC experience and explore approaches to using crypto in their economies.
World Markets
Turkish manufacturing confidence dipped in May after a 9-month high. The outlook for production and exports weakened. Assessments of current conditions also declined for orders, finished goods, and investment spending. However, there was a slight improvement in hiring expectations and overall business sentiment. German business sentiment was mixed: current conditions dipped but future expectations rose. Manufacturing, trade & construction show recovery, while services dipped.
Johannesburg’s stock exchange dipped to a mid-May low (78,921) as pre-election jitters and an upcoming rate decision dampened investor confidence. South Africa is set to hold national and provincial elections on May 29, with polls suggesting the ruling African National Congress (ANC) may lose its majority for the first time since Nelson Mandela’s leadership in 1994. The central bank might hold rates despite inflation concerns. Note: the South African election on May 29 is led by incumbent President Cyril Ramaphosa’s ANC, facing challenges from John Steenhuisen’s DA (focus on middle-class interests), Jacob Zuma’s MK (military, anti-corruption), and Julius Malema’s EFF (the Marxist-Leninist). The ANC may lose its overall majority, requiring coalitions.
Currencies
The dollar is on hold with most investors on holiday. This week’s key data points are US inflation numbers and inflation reports from other countries. This will influence how aggressively central banks raise interest rates in the coming months. The Mexican peso is gaining strength (around 16.65 per USD) as the US dollar weakens. This comes ahead of Mexico’s upcoming election this upcoming weekend and high inflation. The central bank is likely to keep interest rates high to fight inflation. Note: The Mexican general election on June 2 is led by Claudia Sheinbaum of Morena (scientist and former Mexico City mayor), the incumbent party aiming to continue President AMLO’s agenda (“Fourth Transformation” focused on social programs and infrastructure projects), and Xóchitl Gálvez (former senator and tech entrepreneur) of the opposition coalition vowing change (security, anti-corruption, and middle-class policies). Over 100 million voters will elect the president, Congress, and state officials amid violence. Sheinbaum is favored to become Mexico’s first elected female president, but Gálvez hopes to counter AMLO’s reforms.
The Indian rupee rose to near a two-month high in May. Strong government finances and a positive economic outlook attracted foreign investment, boosting the currency. The central bank’s limited intervention further strengthened the rupee, pushing its foreign exchange reserves to a record level.
Tuesday
On Tuesday, the stock market was mixed. The Dow fell on hawkish comments from the Fed. The S&P remained flat, while the Nasdaq reached a new high due to strong gains in chip companies. On the world’s markets, silver surged again, nearing an 11-year high. BTC and ETH are still holding within their week-old zones of 68–70K and 3.7 — 3.8K, respectively. The rest of the crypto market is in the red, with Bitcoin Cash, Polkadot, and Avalanche down by up to 4%.
Details
Home prices jumped 7.4% YoY in March, the highest since October 2022. San Diego, New York and Cleveland saw the biggest gains, while Portland saw the smallest. Monthly gains were also strong, up 1.6% in March, the most in nearly a year. Texas manufacturing activity weakened in May according to the Dallas Fed. Their index hit a 4-month low, suggesting a decline in production, shipments, and capacity utilization. Despite some positive signs for new orders, employment also dipped slightly. In April, the M2 money supply increased by $25.8B to $20.87T, the biggest jump in 13 months. Overall, M2 money supply in the US has been steadily rising, reaching a record high of $21.7T in April 2022 (a record low of 286.60B in Jan 1959).
Crypto
Since the start of 2024 US BTC miners have already spent $2.7B on electricity, enough to power nearly 2 million homes for a year or to charge every electric vehicle 87.52 times. A new Grayscale survey shows 41% of respondents are paying attention to crypto up from 34% in November 2023. 77% of voters want politicians to understand crypto.
World Markets
Brazil’s producer prices dropped 3.08% in April compared to April 2023. Historically, these prices have fluctuated widely, averaging 200.07% change with a high of 6719.66% (April 1990) and a low of -14.02% (July 2023).
Currencies
The dollar recovered after the Fed’s hawkish comments promising to hold off on cutting rates until there are notable improvements with inflation. Investors are waiting for inflation data this week now expecting the first rate change in December.
Commodities
Silver prices are soaring, nearing the 11-year high of $32 touched on May 21st. This surge is due to a combination of factors: lower interest rates globally, strong industrial demand for silver (especially in solar panels), and continued inflation. Despite robust growth, investors still expect the Fed to cut rates, further boosting silver’s appeal.
Platinum prices surged near a recent high (1100) due to a mix of factors. Favorable economic conditions boosted investment in precious metals, while industrial demand stayed strong. Despite inflation concerns delaying Fed rate cuts, expectations of looser policies from other central banks lowered the cost of holding platinum, contributing to a price increase. Interestingly, sanctions on Chinese electric vehicles indirectly benefited platinum usage in traditional gasoline cars.
Wednesday
On Wednesday stocks are down after a surge in bond yields spooked investors. On world markets, aluminum hit a 2-year high as the IMF raised China’s growth outlook for 2024 to 5% from 4.6%. BTC and ETH declined by about 2%, still staying inside their weekly side-ranges. Most of the crypto market is marginally down, with Uniswap dropping 11%.
Details
10-year Treasury note yields jumped to 4.63% due to strong economic data and inflation worries. Rising interest rate expectations led to a global bond sell-off. The Fed signaled continued hikes, and markets now predict a single rate cut this year. Manufacturing activity in the Fifth (Richmond) District rose in May, reaching its highest level in seven months. Shipments and new orders improved, but employment declined. Prices that manufacturers paid increased slightly, while prices they charged for their products went down. Overall, businesses remained cautiously optimistic about the future. Texas service sector businesses reported a significant decline in May, with the Dallas Fed index hitting a one-year low. Both business activity and company outlook worsened. Despite rising wages and continued revenue growth, uncertainty remains high.
Crypto
BlackRock’s new BTC ETF, with $20B in assets, is now the biggest BTC fund globally. This dethrones Grayscale’s long-standing trust.
World Markets
Business loans in the Eurozone inched up 0.3% in April 2024 to €5.13 trillion, following a slightly larger increase in March. Overall, lending has fluctuated around €4.38 trillion since 2003. Germany’s inflation rose slightly to 2.4% in May, exceeding expectations and ending a five-month decline. Service and food prices rose, while goods eased. Energy prices continued to fall despite policy changes. Core inflation remained at 3%. The EU-harmonised rate also climbed to 2.8%, the highest in four months. Spain’s retail sales growth slowed down in April to just 0.3% compared to a year ago. This is the weakest growth since November 2022. Both food and non-food spending increased at a slower pace than the previous month. Monthly sales, however, rose 0.8% in April.
Chinese stocks rebounded on Wednesday after the IMF raised China’s growth outlook for 2024 to 5% from 4.6%, thanks to a strong start to the year and government support. The Shanghai Composite edged up slightly, while the Shenzhen Component saw a more moderate gain. Italian manufacturing confidence edged up in May, exceeding forecasts. While still below pre-pandemic levels, the decline in orders eased and production expectations improved. Backlogs grew at a slower pace, but the production downturn accelerated. Businesses are cautiously optimistic about new orders and the economic outlook, despite rising inflation concerns.
UK car production dipped 7% in April, continuing a two-month decline. This drop is linked to factories shifting towards electric vehicles (EVs). Automakers are investing heavily in EVs to meet the country’s 2050 net zero goal. Exports, a major factor in the decline, fell 12.7%. Despite the slump, production of electric and hybrid vehicles rose to 40.5% of the total.
Currencies
The euro hovered around $1.086, as markets awaited the ECB’s decision on interest rates the next week. German inflation rose slightly, but not enough to prevent a possible rate cut by the ECB. The British pound dipped below 1.275 after a brief rise. The US dollar strengthened as investors bet on slower interest rate cuts by the Fed. Despite UK inflation easing, it was still higher than expected, delaying a BoE rate cut. The surprise announcement of a UK election in July further reduced the chances of a June cut.
Commodities
Aluminum prices soared in May, hitting a two-year high (2793) due to supply disruptions. Gas shortages forced Rio Tinto to limit shipments, adding to concerns after weather issues in China threatened production. Stockpiles in Malaysia also dropped, reflecting trading activity after sanctions on Russian aluminum. This could limit supplies for some buyers.
Thursday
On Thursday the stock market declined, led by tech and consumer services. Disappointing earnings from Salesforce and others dragged the market down. GDP growth came in lower than expected, raising talks about interest rate cuts again. On world markets, business confidence in the Eurozone edged up. BTC and ETH are holding their week’s levels, with the rest of the crypto market hanging out.
Details
The US economy grew at a slower pace than expected in Q1 2024, down to 1.3%. This is the weakest growth since mid-2022. Consumer spending, especially on goods, was lower than initially estimated. Business investment was mixed, with stronger spending on buildings and ideas, but slower growth in equipment. Government spending and trade both increased slightly.
Core PCE price for Q1’24 was 3.6%, a touch lower than the forecast. Historically, it averaged 3.24%, reaching a high of 11.90% in 1974 Q3 and a low of -0.80% in 2020 Q2. Pending home sales dropped 7.4% in April 2024 compared to the same time last year. This is despite a long-term average of -0.52%. April 2021 saw a peak of 52.4%, while October 2022 saw a record low of -36.8%.
Corporate profits dipped 1.7% in Q1, after a strong Q4, missing expectations. However, profits were still 6.4% higher compared to the same period last year. Net dividends continued to rise, but at a slower pace. Unemployment benefit claims rose slightly to 219K for the week ending May 25th. This is a sign of a cooling labor market, as claims are up from the February-April average.
Crypto
A major Singapore bank was identified as a major holder of ETH worth over $650 million. This could be DBS holding client funds, not the bank’s own investment. DBS has been involved in cryptocurrency for a while, offering related services.
World Markets
Eurozone unemployment hit a new low of 6.4% in April, down from 6.5% previously. Youth unemployment also fell. Spain has the highest rate (11.7%), while Germany enjoys the lowest (3.2%). Business confidence in the Eurozone edged up in May, reaching a 4-month high, driven by optimism in services despite a slight manufacturing slowdown. Consumers were also feeling less pessimistic. While price hike expectations rose in most sectors, they fell slightly in services.
Spain’s inflation likely hit a one-year high of 3.6% in May, exceeding forecasts. Rising electricity prices and slower fuel price drops compared to last year are to blame. Core inflation, excluding volatile items, also nudged up. This trend is mirrored in EU-harmonized inflation data.
Italy’s unemployment rate dropped to a record low of 6.9% in April, beating expectations. This strong labor market gives the European Central Bank more flexibility on interest rates.
Mexico’s unemployment stayed low at 2.6% in April, even though it increased from a temporary dip in March. The job market is much stronger than in 2023, with fewer unemployed people and more people working. This means the central bank is less likely to cut interest rates quickly.
Friday
On Friday, stocks were uncertain, with the S&P gaining slightly. The Dow surged on a rebound in Salesforce. Investors focused on lower PCE inflation. For the week, most indexes were down slightly. On global markets, according to the latest GDP reports, India became the world’s fastest-growing major economy (+7.8%). BTC and ETH are barely changed, with the crypto market on pause among mixed news.
Details
After rising in March, PCE inflation rate slowed to 2.7% in April, as expected by analysts. This is still within the historical average of 3.3% for the PCE price index since 1960. Chicago PMI plunged to 35.4 in May, the steepest decline since May 2020 lows. This suggests a stagflation as a reaction to the Fed’s unreasonably tight monetary policy.
Crypto
A KPMG report states that the prevailing sentiment among digital asset stakeholders is that different digital money forms will exist alongside each other, not replace each other. Users will choose the most efficient option, creating a diverse digital currency landscape in the coming decade.
World Markets
Eurozone inflation rose to 2.6% in May, the first time in 5 months, exceeding forecasts. Energy prices rose and core inflation climbed. Inflation also accelerated in several major European economies. China’s manufacturing sector contracted in May for the first time since February. The official PMI fell below expectations to 49.5, with new orders and foreign sales shrinking. Despite some signs of stabilization in delivery times and employment, rising input costs and weaker business confidence point to ongoing challenges.
India’s economy surged past expectations, growing at a robust 7.8% in the last quarter, solidifying its position as the world’s fastest growing major economy. This strong performance was driven by a significant jump in manufacturing, construction, and services sectors. Though inflated by taxes, the overall growth for the financial year reached an impressive 8.2%.
Turkey’s economy grew at a faster pace in Q1 2024 (5.7%) compared to Q4 2023 (4%). Construction, manufacturing, and information & communication led the growth across sectors. Household spending also jumped, while exports rose and imports fell. The economy gained momentum on both yearly and quarterly bases.
On Week 23, jobs data is key, while interest rates and inflation are in focus for Europe, India, and several emerging economies. Also investors will be watching manufacturing and services data for China, Europe, and others, alongside trade figures for major countries. Germany sees factory orders, production, and unemployment reports.
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SVET Markets Weekly Update – May 20–24, 2024
On Week 21, the major event was the sudden approval of the ETH ETF, which is widely seen as a result of political pressure from the White House on Gary Gensler to attract votes from crypto holders for the DEM campaign. This exciting development underscores the growing strength of the crypto community. Major stock indexes were mixed, with the Nasdaq continuing to surge on AI advancements, while the Dow dropped sharply due to a manufacturing slowdown.
On global markets, commodities surged during the week due to geopolitical developments and expectations of a Chinese economic rebound fueled by CPC promises to sustain the real estate sector.
Overall, central bankers are in a corner. Their reckless rate hikes have primarily affected the consumer sectors, undermining people’s savings and drastically cutting their sources of revenue. Meanwhile, corporations continue to proliferate, adding to inflationary pressure, supported by growing government expenses and continued price growth, coupled with a surge in productivity thanks to an influx of cheap labor and advancements in technology.
Government bankers now face a dilemma: whether to continue holding or even hike rates in a fruitless attempt to curb inflation to their illusionary targets of 2%, risking drastic increases in revolts among lower-income groups, or to cut rates, risking a further surge in inflation.
Monday
On Monday, tech stocks, led by Nvidia, fueled the rally, with the Nasdaq hitting a new record high. However, the Dow Jones dipped due to a decline in JP Morgan Chase shares. World markets were hit by a major commodities rally on the perceived political destabilization in Iran, with gold and copper surging to new ATH and silver reaching decades-old records. BTC charged up by 5% in a buying frenzy, joined by ETH, which jumped by more than 10%, followed by Uniswap (+12%), Solana (+8%), and Avalanche (+7%).
Details
Interest rates may stay high for a while, warns Fed officials. Bostic predicts rates similar to the 1990s and sees only one cut possible this year despite inflation slowing. Barr agrees, calling recent inflation data “disappointing” and advocating for holding rates steady.
Crypto
Meme coins are surging, racking up year-to-date gains between 80% and 1,800%. Trading volume is also booming, tripling year-over-year to a hefty $11 billion weekly.
World Markets
Italian construction growth slowed in March 2024 to 3.8% year-over-year, the least since May 2023. Monthly activity dipped slightly too. However, the quarter still saw a modest 1.5% expansion compared to the prior three months. Spanish consumer confidence hit an 8-month high of 84.5 in April, it reflects both growing optimism about the future (up from 89.1 in March) and a slight improvement in satisfaction with the current economy (77.6 vs 76).
Mexican retail sales took an unexpected dip in March, falling 1.7% compared to last year. This missed analyst predictions and followed the previous month’s gain. E-commerce and clothing sales suffered the most, while groceries and department stores saw a slight increase.
Chile’s economy unexpectedly boomed in Q1, growing 2.3% year-on-year. This is their strongest performance since mid-2022. Both domestic demand (investment & consumption) and exports rose, while imports grew at a slower pace.
Currencies
The dollar rose against other currencies after hawkish comments from Fed officials, and expectations for a rate cut in September dipped slightly. Brazil’s currency strengthened to 5.1 on the central bank’s hawkish stance on interest rates (to fight inflation) and a strong trade surplus are attracting investors. Positive signs from China’s economy add to the boost.
The Mexican peso got stronger reaching a one-month-high at 16.6 due to the central bank’s hawkish stance on high interest rates (11%) to combat rising inflation (4.65%). This might delay a rate cut despite a slight dip in core inflation (4.37%).
Commodities
Gold prices skyrocketed to a new record high of 2,440 fueled by heightened geopolitical tensions following a perceived Iranian power crises and the Saudi crown prince’s postponed trip. Strong central bank buying, especially by China, added to the gold rush.
Silver hit a decade high of $32/oz, fueled by rising gold, expected Fed rate cuts, safe-haven demand due to Mideast tensions, and strong solar panel industry growth.
Copper prices soared to a new ATH of $5.15 per pound on worries about shortages. Strong demand and limited supply due to China’s efforts to combat a housing crisis and focus on infrastructure projects fueled bullish sentiment. Tight supply in China, the world’s top producer, further intensified concerns.
Natural gas prices soared to a 4-month high (2.75) on rising demand for cooling and exports. Production dips due to lower activity by companies, but stockpiles remain well above average.
Tin prices hit a new high above $34K per tonne, driven by strong demand and supply disruptions. Indonesia’s licensing delays and unrest in Myanmar and DR Congo are squeezing supply, while China’s growing appetite for the metal in AI chips adds fuel to the fire.
Aluminum prices skyrocketed, nearing a two-year high, due to a global supply squeeze. Stockpiles in Malaysia dwindled after sanctions on Russia, and potential power shortages in China added to concerns about aluminum availability.
Tuesday
On Tuesday, major stock indexes hit new records, again, despite mixed news. Investors weighed strong earnings reports against cautious comments from the Fed and disappointing outlooks from retailers. Internationally, commodities continue to rise due to geopolitical factors, with aluminum prices reaching a two-year high. BTC and ETH paused, hovering above 70K and 3.7K respectively, after an intense one-day rally sparked by a sudden resurgence of ETH ETF approval hopes.
Crypto
In a surprise turn of events, the SEC seems ready to approve spot ETH ETFs (19b-4s), in a stark contrast to their previous stance. Companies scramble to understand this sudden shift, some suggesting political motives. While the trading division embraces approval, lacking coordination within the SEC raises questions about internal disagreements on the matter.
BTC ATMs are on a slight dip. Globally, 280 machines vanished in May (the total number of ATMs fell from 37,902 to 37,621), with the US leading the decline. Law enforcement crackdowns on illegal activity might be a factor (the theft of $1.5M BTC from ATM operators was registered).
World Markets
Brazil’s bond yield dipped below 11.62% after hitting a 6-month high at 11.83%. Investors expect a central bank rate cut due to rising inflation, a weak economy (0.34% contraction), and global worries. This suggests a dovish shift by Brazil’s central bank.
South Africa’s business confidence dropped sharply in March by 1.9%, the biggest fall in 19 months. This follows a smaller increase the prior month. Fewer building permits and slowing car sales were the main reasons for the decline. However, wider interest rate spreads and rising export commodity prices offered some positive signs.
Russian bond yields are dropping to 14.1% after a recent spike to its highest level since 2001. Investors are waiting for government auctions and watching the central bank’s next move on interest rates. Inflation is high (at a 14-month high of 7.8% in April), though, keeping pressure on yields and suggesting the central bank might stay hawkish.
Currencies
The dollar is flat at 104.6 after mixed messages from the Fed. While Waller hinted at future rate cuts, Bostic suggested they might hold steady at higher rates for a while. Investors are less confident about a rate cut this year, with September and November possibilities down slightly (61% and 73%, below 64% and 77% in the beginning of the week). Everyone’s waiting for the Fed’s minutes for more clues.
Commodities
Aluminum prices rose to a two-year high (2675) in May due to supply disruptions. Gas shortages and uncertain weather in China limited production, while sanctions on Russia restricted deliveries. Stockpiles also shrank after new trading rules, raising concerns about future availability.
Wednesday
On Wednesday, tech stocks surged after Nvidia’s strong earnings. The broader market remained cautious as Fed minutes signaled potential interest rate hikes to fight inflation. Cryptocurrency prices are taking a dip. Bitcoin and Ether are both down.
Details
Existing home sales dipped 1.9% in April to a 3-month low, despite rising overall prices. The high-end market thrived with more inventory and a 40% sales jump. Overall stock rose, pushing supply to a 3.5-month level.
World Markets
Indonesia kept interest rates high (6.25%) to control inflation and currency stability. The domestic economy grew 5.11% in Q1 2024, but the currency (Rupiah) weakened due to global uncertainties. South Africa’s inflation dipped again to a 4-month low of 5.2% in April, but remains above the central bank’s target. Food price increases slowed, while some categories like restaurants and transportation saw price hikes. Core inflation excluding food and energy also fell slightly.
Currencies
The dollar surged to a one-week high (104.9) as Fed minutes signaled continued high interest rates. Worried about inflation, the Fed expects a longer road to control it, pushing down chances of a rate cut this year. This hawkish stance strengthened the dollar against major currencies.
The Euro weakened against the dollar as the Fed signaled continued high interest rates, while the ECB eyes a rate cut in June. Europe’s inflation cools (down from 7% to 2.4%) and avoids recession, potentially boosting the Euro later.
Commodities
Gold prices are down. Fears of the Fed raising interest rates are outweighing factors that usually boost gold (safe-haven demand, central bank buying). Fed minutes show they’re worried about inflation staying high, making rate cuts unlikely.
Thursday
On Thursday, stocks dropped as strong economic data fueled worries about continued high interest rates. Despite the broader sell-off, Nvidia continued to soar on impressive earnings and a stock split announcement. Boeing, however, plunged into production woes. In world markets, gold is sharply down on new dollar strength propelled by the unexpectedly hawkish tone of the FOMC minutes. Crypto prices plunged, with BTC leading the decline by nearly 3% and touching 67K. The broader market mostly followed BTC, with the exception of ETH, which held above 3.7K.
Details
The Chicago Fed Index dipped to a 3-month low in April, with production, employment, and consumption all declining. Despite this, the sales and inventories category showed slight improvement. Jobless claims dropped below expectations to 215K for the week ending May 18th. This suggests some improvement in the labor market. However, a rise in continuing claims and the 4-week average indicates a slowdown in the job market recovery. Trend: Down
Business activity reached a 25-month high. The service sector led the charge, while manufacturing also expanded. Businesses are feeling more optimistic despite job cuts, and prices are rising but haven’t hit concerning levels yet. Trend: Up
Crypto
Investment in BTC ETFs hits a new high. Holdings in U.S. funds surpassed 850B for the first time, exceeding the previous record earlier this year. Grayscale and BlackRock lead the pack, holding 289,300 tokens worth more than $20 billion and 283,200 and $19.6B, accordingly.
World Markets
Eurozone May’s PMI at a 1-year high (52.3) shows faster growth and rising business confidence. Inflation eased but remains elevated. Services lead the charge, while manufacturing stabilizes after months of decline. Trend: Down
Germany’s manufacturing sector is still contracting, but the decline in factory activity slowed significantly in May. New export orders are stabilizing, and business sentiment is at a 26-month high. However, job cuts and falling prices remain concerns. Trend: Down
UK business activity grew slower than expected in May (52.8 vs 54 forecast). Manufacturing remained steady, but service sector growth eased. Despite this, new orders and exports kept rising, suggesting a continued expansion. Businesses reported slower price increases, likely due to lower input costs and a slowdown in wage growth. Trend: Down
France’s business activity unexpectedly contracted in May (PMI 49.1 vs expected 51). Service industries led the decline, while manufacturing remained weak. Despite the downturn, new orders rose for the first time in a year, suggesting some internal strength. Employment also continued to grow. Trend: Down
Japan’s manufacturing rebounds after a year. Their PMI rose above 50 (50.5) in May, indicating slight growth for the first time this year. Prices rose, but output and orders are shrinking less, suggesting a potential turnaround. Trend: Down
India’s business activity is up. A key index hit a near 14-year high in May, fueled by surging services and strong exports. Even though manufacturing slowed, it’s still growing faster than services. Companies are hiring at record rates to keep up, and future expectations are the strongest in over a decade. Trend: Up
Taiwan’s retail sales growth slowed in April 2024, dropping to 1.6% year-on-year. This is the weakest performance since December 2023, with spending down in clothing, leisure goods, and some other categories. Sales growth also decelerated for most sectors, while electronics and vehicles saw a slight uptick. Monthly sales also dipped after a strong March. Trend: Down
Argentina’s economy took a nosedive in March, contracting 8.37% compared to last year. This is much worse than expected and the steepest decline since 2020. Most sectors fell, especially construction and manufacturing. There were some bright spots in agriculture and mining, but overall, it’s a worrying sign for the country’s economy. Trend: Down
Mexico’s economic growth slowed to 1.6% in Q1, the weakest in 3 years. Historically, Mexico’s GDP growth has swung wildly, from a high of 21.9% in 2021 to a record low of -20.7% in 2020. Trend: Side
Currencies
The Japanese yen is weakening to 157 due to a strong dollar and the Fed’s hawkish stance on inflation. Despite some Japanese firms wanting a rate hike, the Bank of Japan seems unlikely to follow suit, keeping the yen attractive for carry trade investors. Meanwhile, Japan’s private sector showed surprising strength in May with expanding manufacturing.
Commodities
Brent oil prices are sinking for four days straight (below $82/barrel). The Fed might tighten policy, hurting demand. Oil stockpiles unexpectedly grew, adding to the pressure. Russia plans to fix its production overshoot, while OPEC+ might extend output cuts at their June 1st meeting to prop up prices. Trend: Side
Friday
On Friday, the stock market was mixed. S&P rebounds and Nasdaq rises, fueled by AI stocks, especially Nvidia. Dow is stagnant after a big drop. Consumer confidence data eases inflation fears. On global markets, Chinese foreign investments continue to decline. BTC and ETH are both flat, hanging below 69K and 3.8K despite ETH ETF approval. The rest of the crypto market is mostly in the green, with Uniswap surging 12%.
Details
Consumer confidence is down (69.1, lowest in 6 months) despite slight revisions. Inflation worries remain high (3.3% expected this year), but long-term outlook is steady. Upbeat views on current conditions couldn’t offset concerns about future business climate, job security, and income growth. Rising interest rates also dampen sentiment. Trend: Up
Orders for durable goods like machinery and electronics grew 0.7% in April, exceeding expectations and marking 3 straight months of gains. Demand for transportation equipment (cars, planes) was particularly strong (1.2% increase). This suggests continued investment in manufacturing and business spending.
Crypto
The SEC quietly approved Ethereum ETFs without a public vote, raising questions about transparency. Some experts say it’s a standard process and won’t be overturned, while others point to technical details suggesting a longer road ahead. Regardless, this move paves the way for more crypto ETFs in the future.
World Markets
China’s foreign investment is down to CNY 360.2B YoY. It plunged 27% in the first 4 months of 2024, with April hitting a new low. Tech manufacturing saw some investment, while hospitality boomed. Investments from Spain and Germany are rising, but overall, things are cooling down. Trend: Down
Brazil’s consumer confidence plunged to a 1-year low (89.3) in May due to recent floods and a central bank rate hike. While current conditions held steady, worries about the future (down from 102.2) dragged sentiment down. Trend: Up
Spanish factory prices (PPI) continue to drop for 14 months straight. April saw a 6.6% plunge year-over-year, driven by cheaper energy and materials. However, consumer and capital goods prices rose slightly. Trend: Up
Nigeria’s economy grew at a steady 2.98% YoY in Q1 2024, extending its expansion streak to 14 quarters. Still it is lower than the 3.46% growth recorded in the previous 3 months. Oil continued to lead growth, though at a slower pace. The non-oil sector, driven by services, also grew solidly. However, agriculture weakened due to weather and security concerns. Trend: Down
Commodities
Natural gas prices are down due to a supply surge. Production is rising as drillers react to earlier high prices, leading to stockpiles exceeding the 5-year average. Warmer weather forecasts for later this week may further reduce demand. Trend: Up
Comment: World’s PMI Update
This week’s world’s PMIs confirmed what we have already known.
North America is showing large corporate services sector expansion with manufacturing and SMEs otherwise under heavy pressure from high Fed rates. With that, the overall PMI still results in slight growth, which, however, serves as a basis for upbeat over-exaggerated political rhetoric and the Fed continuing its restrictive policies for an indefinite time.
At the same time, the EU economic dynamic is the opposite. Although PMI data from the major economies of Germany, Britain, and France continues to fluctuate up and down on both services and manufacturing sides, the general trend is down. However, ECB politicians keep changing their stance with more regard to the Fed than to their own local economic conditions.
On the other hand, Asian economies, which largely depend on their exports to America and the EU, are mixed. Indian PMI is growing steadily as more enterprises re-shore from neighboring China, while Chinese economic prospects go up and down depending on news from the CPC, which periodically pledges government support for the country’s still struggling construction and private equity sectors.
The two biggest South American economies, those of Brazil and Argentina, are going in separate directions, with the former growing from 2021 lows on increasing demand and prices for its staple exports — food and energy — while the latter contracts, battling record-high inflation.
The situation in Africa’s leading economies of Nigeria, South Africa, and Egypt, stringent in their food supplies and heavily dependent on world resource pricing, is not looking good on the inflation side and widely fluctuating on the resource side, leading to generally not optimistic outlooks for this continent.
Overall, the world’s production and services picture remains mixed with the EU visibly underperforming, which puts pressure on Asia, South America and Africa, while North America is incapable of dragging the rest of the world without substantial growth in the Chinese economy.
On Week 22, economic data releases dominate the financial landscape. Focus is on inflation, spending, and GDP growth. Globally, inflation, GDP, and unemployment are key for major economies like Europe, Canada, and Brazil. Japan releases consumer confidence, industrial data, and BOJ Governor’s comments.
SVET Markets Weekly Update May 13th–17th, 2024
On Week 20, major stock indexes reached all-time highs, despite worsening macroeconomic data worldwide hinting at a looming recession. Traders are buoyed by expectations that the Federal Reserve will respond to the deteriorating economic conditions with rate cuts sooner than anticipated. However, this optimism is not confirmed by Fed officials, who continue to emphasize a “higher for longer” stance on interest rates.
On the global markets, there is a frenzy in commodities driven by a mix of geopolitical tensions and ongoing tariff wars, compounded by expectations of increased stimulus from China to support its struggling real estate market and consumers.
Meanwhile, the crypto markets experienced a rejuvenation after over a month of bearish declines. This sudden spike followed a rise in stocks, spurred by macroeconomic data indicating a slowdown in inflation, which traders interpreted as a potential catalyst for Fed rate cuts.
Monday
On Monday, stocks paused as investors wait for inflation data. Apple surged on news of a potential integration with ChatGPT. Globally, copper prices continued to rise on increased demand expectations, while the Euro keeps depreciating against the dollar on expectations of ECB cuts. BTC surged above 63K on sudden buying, while ETH remains under 2.9K. The rest of the crypto market is mixed, with Solana adding 2% while Avalanche dropped 1%.
Details
Consumers expect prices to rise faster in the next year, with inflation forecasts hitting a 6-month high of 3.3%. This applies to everyday items like groceries and gas, as well as housing and education. Long-term inflation views are mixed, while wage growth expectations dipped and job security worries rose.
Crypto
Financial advisors rarely talk about crypto with clients (only 1%) due to legal worries. Even though most (89%) have never given crypto advice, a large portion of crypto owners (67%) want professional guidance, especially those looking to grow their holdings or hedge against inflation. As younger, tech-comfortable investors enter the market, demand for crypto and other digital assets is likely to grow.
World Markets
India’s yearly inflation dipped to a new low of 4.83% in April, staying within the central bank’s target. Housing and clothing costs slowed, but food prices rose. This suggests the central bank might keep interest rates steady. Angola’s inflation hit a 7-year high in April 2024, reaching 28.2%. This ongoing surge is linked to a weaker currency and rising food prices. The government’s efforts to control foreign exchange haven’t helped either.
Currencies
The dollar dipped to 105 as investors awaited US inflation figures that could impact Fed interest rate decisions. Fed officials signaled a wait-and-see approach on rate cuts, despite rising inflation expectations. With mixed economic data, markets are looking to April’s inflation report for clues on future rate changes. The Euro is strengthening as investors wait for economic data that will influence central bank decisions. The European Central Bank is expected to cut rates sooner than the US Federal Reserve, which might keep the Euro strong. The Bank of England might also follow suit with a rate cut later this year. The Chinese yuan weakened against the dollar due to a mix of factors. Inflation is rising slightly, while other economic data is weak. The US tariff announcement added pressure. China’s central bank may cut rates to counter this, independent of US actions.
Commodities
Copper prices continue to surge in May (4.76 per pound), hitting a two-year high due to strong demand for electric vehicles, renewable energy and automation. Growing concerns about future shortages fueled the rise as mine production struggles to keep pace. China, a major consumer, continues to import copper despite high prices, while limited supplies squeeze smelters. This trend could lead to a 10% drop in global copper output in 2024.
Tuesday
On Tuesday, stocks rose slightly as investors digested the mixed inflation data. Producer prices climbed in April. Fed chairman Powell cautioned about inflation and advised staying patient with rate hikes. However, markets still expect cuts by September. Meme stocks like GameStop and AMC soared. On the world markets, copper prices continued to edge up, while German investors’ confidence increased on GDP growth expectations. BTC fluctuated back to 61K, dragging most of the crypto market into the red again. At the same time, meme-coin Pepe surged again by more than 3% (+30% in the past seven days).
Details
Small business confidence ticked up slightly to 89.7 (previous 88.5) in April, but remains low. Inflation is still the top concern, but fewer plan price hikes. Hiring is up a little, with many open positions unfilled. Sales outlook is still negative, though less so. Overall, cost pressures persist, and owners are pessimistic.
Core producer prices, excluding food and energy, surged 2.4% year-over-year in April, the highest in 8 months. However, a 3.9% rise in cost for portfolio management was a main factor. Monthly prices also jumped sharply, exceeding expectations. Consumer debt hit a record $17.69 trillion in Q1 2024, up $184 billion from the previous quarter. Mortgages and auto loans drove the increase, while credit card balances dipped slightly. Delinquency rates rose to 3.2%, but are still lower than pre-pandemic levels.
Crypto
Wisconsin became the first US state to invest in Bitcoin, buying nearly $100 million worth.
World Markets
German economic confidence jumped to a two-year high in May (to 47.1 from 42.9), exceeding expectations. Both current conditions and future outlook improved, fueled by strong Q1 GDP and positive signs in Europe and China. Sectors like construction and domestic spending are seeing a brighter future.
South Africa’s unemployment hit a new high of 32.9% in Q1 2024, with over 8 million jobless. Job losses were widespread, except in trade and manufacturing. The broader unemployment rate, including discouraged workers, is even higher at 41.9%. Youth unemployment remains stubbornly high at nearly 60%.
Palestine’s inflation dropped to 33.5% YoY in April, down from a record high 37% in March. Prices for some goods like food decreased, while others like tobacco increased more quickly. Monthly inflation fell to -1.9%.
Currencies
The dollar dropped after mixed inflation data. Producer prices surged, but a prior month’s revision offered some ease. Fed Chair Powell signaled holding rates despite inflation concerns. Markets now look to tomorrow’s CPI data for clues on future rate cuts. The dollar weakened against most major currencies except the yen and the Euro.
The Chinese yuan hovered near a two-week low of 7.24 against the dollar before a key Chinese interest rate decision. The central bank is likely to hold rates, but economic signals are mixed. Import growth surprised analysts, while exports remained steady.
Commodities
The price of Brent crude oil stayed around $83.50. It rose slightly the day before due to worries about Canada’s wildfires impacting their oil production. Iraq reversed course and said they’ll follow OPEC+ production cuts, easing some supply concerns. Investors are now waiting for reports this week for a clearer picture of the oil market.
Wednesday
On Wednesday, stocks rose sharply on a low core inflation surprise, supported by the decline in retail sales. The S&P and Nasdaq hit new all-time highs, with tech stocks leading the gains. Globally, silver reached a 10-year high due to a weaker dollar. BTC reacted strongly to the stock rise, jumping up 6%, while other coins followed suit, with Solana, Polkadot, and Avalanche adding more than 7%.
Details
Core inflation, excluding food and energy, fell to a 3-year low of 3.6% in April, down from 3.8% previously. Housing costs remain high but are rising slightly slower. Overall inflation is moderating, matching forecasts. CPI rose to a new high of 3.4% in April (313.55, averaged 123.74 points 1950–2024, ATH 313.55 in Apr 2024, ATL 23.50 in Feb 1950), below expectations. This follows a slightly higher increase in March.
Retail sales unexpectedly stalled in April after a weak March. This indicates a slowdown in consumer spending, with some categories like clothing showing growth but others like furniture dropping. Core retail sales, rose slightly. Manufacturing in New York contracted further in May (Empire State Index -15.6). New orders and employment continued to fall, but businesses are cautiously optimistic about a future rebound.
Crypto
El Salvador mined nearly 474 Bitcoin worth $29 million using geothermal energy from the Tecapa volcano since 2021, boosting its national crypto holdings to over $354 million.
World Markets
The Eurozone bounced back in Q1 2024, growing 0.3% after a period of stagnation. This is the strongest quarter since late 2022, with key economies like Germany and France showing improvement. The outlook is positive with inflation easing and growth expected near 0.8% for the year, fueled by consumer spending and trade. However, investment growth might slow down.
India’s trade gap widened to $19.1B in April, exceeding expectations and reversing March’s improvement. Imports surged 10.3% year-over-year despite a weaker rupee, driven by expensive gold, oil, and electronics. Exports grew at a slower pace (1.1%), with some gains in electronics and chemicals.
Peru’s economic growth came to a halt in March, dropping 0.28% compared to last year. This follows two months of gains. Construction and several service sectors led the decline, while agriculture and hospitality continued to grow. Mining slowed but remained positive.
Inflation in Nigeria keeps rising, hitting a 28-year high of 33.69% in April. This is due to a weaker naira and subsidy removals. Food prices surged the most, but housing, utilities, and transportation also climbed. Even core inflation (excluding volatile items) hit a record high. While the monthly price increase slowed slightly, inflation remains a major challenge.
Currencies
The dollar index fell to a five-week low on renewed Fed cuts hopes, again. The Euro strengthened to a five-week high on expectations of central banks in both the US and Europe cutting rates.
Commodities
Silver prices surged to 10-years-highs above $29 due to weaker-than-expected inflation data. Slower price increases and stalling consumer spending raise hopes for a Fed rate cut in September.
Thursday
On Thursday, stocks seesawed and closed in the red, still holding near record highs as housing and industrial data hinted at a recession. GameStop and AMC plunged. On the world’s markets, EU stocks held around the flatline despite easing inflation as the Japanese economy contracted. BTC (-2%) and ETH (-3%) declined.
Details
Building permits dropped 3% in April, missing expectations. Permits for apartments sank to a 4-year low, while single-family permits also declined. Only the South and Northeast saw permit increases, with all other regions experiencing decreases.
Housing starts rebounded in April (5.7%) but missed expectations (1.42M). High costs continue to dampen the market, with single-family starts dipping. Construction rose in some regions but fell in others. Jobless claims fell slightly to 222,000 but remain above average, suggesting a weakening labor market.
The Philly Fed manufacturing index fell sharply in May, missing expectations. New orders and shipments contracted for the first time in months. Despite some positive signs in employment indicators, factories are still shedding jobs. Prices remain elevated but below historical averages. Businesses are cautiously optimistic about future growth.
Crypto
Tokenized treasuries, digital versions of government bonds on blockchains, are surging in popularity. About $1B in treasury notes has been tokenized on blockchain. The launch of a major tokenized treasury fund by BlackRock is seen as a key driver, with data showing a sharp rise in tokenized treasuries since then.
World Markets
Turkey’s vehicle sales plunged to a 16-month low of 75,919 units in April, down significantly from March’s 109,828. This follows a record high of 158,653 units in December 2023. Italian inflation dipped to 0.8% in April 2024, down from 1.2% in March. This suggests the ECB’s policies are working as inflation falls across most goods and services. Energy prices continue to decline, except for regulated energy.
Japan’s economy shrank more than expected in Q1 2024, contracting 0.5%. Weak consumer spending, down for a fourth quarter, and a drop in capital expenditure led the decline. Despite a quake and production cuts, net trade wasn’t a major drag.
Friday
On Friday, after record highs mid-week, stocks were flat. Investors are weighing potential interest rate cuts against mixed economic signals. While some sectors gained, meme stocks continued to slide. Mega-cap tech saw mixed results, but major indexes are still up for the week. Globally, silver jumped, closing a statistically rare 90x gap with gold, while nickel, aluminum, and copper continued to rise on a mixture of supply concerns and hopes for rate cuts. BTC was pushed up again to +66K by optimistic bulls, staking in a continuation of the stock rally. ETH went over 3K for the first time in two weeks. SOL, LINK, AVAX, and BCH increased by 4% or more.
Crypto
South Korea’s crypto market is booming with 12.9% of the population actively trading (6.45M traders). DailyTsurged 24% and market cap rose 53% in a year (KRW 43.6T). However, the volatility (61.5%) remains high.
World Markets
Eurozone inflation remained stable at a 3-year low of 2.4% in April, down significantly from 7% a year prior. Services and some goods saw price slowdowns, while food and energy prices showed mixed movement. Core inflation, excluding volatile items, hit a 26-month low, and the European Commission expects inflation to fall further in 2025.
Russia’s economy grew faster than expected in Q1 2024 (5.4%), but concerns linger. The rise is fueled by war spending, raising doubts on long-term health. High inflation and workforce loss due to mobilization threaten further growth. The IMF forecasts 3.2% growth for 2024, while the Ministry of Economy is more cautious at 2.8%.
Currencies
The Chinese yuan weakened to 7.23 after mixed economic data. Factory output surprised on the upside, but consumer spending remained weak. Real estate investment continued to decline. To counter this, China launched a stimulus program by auctioning special bonds.
Commodities
Silver surged to a decade high of $30 per ounce, driven by strong investor and industrial buying. Physical demand is high, while investment funds remain on the sidelines. The gold-to-silver ratio is narrowing (from 90 to 70, suggesting silver could climb further if the US economic data stays positive and interest rates fall.
Copper prices soar near record highs (5.13) on worries about tight supply and rising Chinese demand fueled by stimulus and infrastructure spending. Speculation of limited mine expansion due to mergers and acquisitions further intensifies supply concerns.
Aluminum prices hit a near two-year high in May at $2.6K per tonne due to concerns about tight supply. Sanctions on Russia, logistical problems, and potential power issues in China all fueled the price increase.
Nickel prices jumped to an eight-month high (21K) due to unrest in New Caledonia, a key producer. Protests and riots there threaten to disrupt nickel mining, raising concerns of shortages despite a projected surplus. This, along with inflation fears and green energy optimism, fueled the price increase.
On Week 21, Fed members’ speeches and global central bank decisions will be in traders’ cross hairs, PMI readings for manufacturing and services across major economies, plus inflation updates and retail sales data are expected. Earnings season winds down with reports from key companies.
SVET Markets Weekly Update May 6th–10th, 2024
On Week 19, stocks went up on renewed hopes of Fed cuts, while BTC went down due to a continuing correction. On the world’s markets, EU major indexes surged to all-time-highs on ECB dovish comments, supplemented by Sweden’s central bank cutting interest rates, while the BoE held its rates but signaled potential monetary easing.
Monday
On Monday, stocks rose at the start of the week, extending gains on hopes of a Fed rate cut in September, still fueled by Friday’s weak jobs data. Investors will look for clues from Fed officials and earnings reports. Internationally, copper reached a two-year high, while China’s economy sends mixed signals. BTC and ETH drifted sideways, while most of the major alts were in the red, with Polkadot and Polygon sliding by about 2%.
Crypto
A 2030 forecast by Vodafone predicts a massive rise in both smartphones (8B) and crypto wallets (5.6B), potentially reaching 70% of the world’s population. Despite financial challenges like Vodafone Idea’s debt situation, Vodafone Group has partnered with Microsoft on AI services in 2024.
World Markets
The Eurozone service sector grew faster in April than at any time in almost a year, with rising sales and hiring. Backlogs grew slightly for the first time in months, but business confidence stayed high. Prices rose a bit, but remained subdued overall. Eurozone producer prices continue to fall, down 7.8% YoY in March. Energy prices led the decline, while inflation for other goods slowed. Monthly prices also fell slightly.
Currencies
China’s offshore yuan weakened past 7.22 per dollar after a strong dollar and anticipation of rate comments. The Chinese central bank is trying to stabilize the currency, while some economic data showed mixed signals: manufacturing improved slightly, but services dipped a touch.
Commodities
Copper prices surged near a two-year high (4.6) due to a weaker dollar and worries about supply. A softer jobs report and dovish Fed signals weakened the dollar, making copper cheaper for foreign buyers. This amplified existing supply concerns due to mine suspensions, lower smelter output, and industry consolidation.
Tuesday
On Tuesday, stocks paused after a 4-day winning streak as investors awaited Fed comments following mixed economic data. Disney slumped on weak earnings, while Peloton soared on buyout rumors. Palantir tumbled after disappointing forecasts. Internationally, the Euro reached a one-month high, anticipating ECB easing. BTC holds above 63K, while ETH is trading slightly higher than 3K, with traders uncertain about market direction as the rest of the major alts are mixed.
Details
Economic optimism plunged to a five-month low in May (41.8), with both consumer views of the future (35.7) and confidence in government policies (38.5) dropping sharply. Interestingly, personal financial outlook improved slightly (51.3). Optimism fell more among investors (46.3) but rose slightly for non-investors (40.1). 10-years note yields fell to a one-month low at 4.43% as investors bet (68%) on an interest rate cut from the Fed later this year. Fed comments and a big bond auction this week are in focus, with hopes for a September rate cut standing at 68%.
Crypto
Crypto.com, a crypto exchange, hit 100 million users globally. This follows a period of growth fueled by marketing campaigns and sponsorships, like the Formula 1 Miami Grand Prix. The company emphasizes its focus on security and regulation alongside this milestone.
World Markets
After a corrected 0.5% loss the previous month, retail sales in the Eurozone increased by 0.7% YoY in March, representing the first increase in retail sales since September 2022.
Currencies
The British pound held steady around $1.25. Investors are now expecting the US Fed to cut rates sooner (September) due to weak US jobs data. Despite UK inflation falling to a 16-month low (3.2%), the Bank of England is likely to keep rates steady in May, with a cut possible in August. The Euro rose near a one-month high (1.07) in early May on expectations of central bank easing. The Fed is likely to cut rates this year, while the ECB is expected to start cutting in June. Eurozone inflation remains steady at 2.4%, and the economy grew modestly in Q1.
Commodities
Brent prices stalled around $83.50 a barrel despite ongoing Israeli-Palestinian conflict. Ample global supplies and muted worries about wider war in the Middle East kept prices in check. OPEC’s top producer, Saudi Arabia, even raised oil prices, hinting at production cuts continuing.
Wednesday
On Wednesday, the stock market ended in a light green after a volatile day. Investors mulled mixed messages from officials and earnings reports. In world markets, the dollar strengthened on Fed comments, while the krona fell after Sweden’s central bank cut interest rates. BTC turned red, edging to 61K, with ETH going under 3K, and the rest of major alts declining up to 5% (SOL, BCH).
World Markets
Spain’s factory output dropped 1.2% in March compared to last year, reversing a small gain the previous month. Production fell in most sectors, including durable goods like cars and energy. This is the first decline in industrial activity in three months. Brazil’s retail sales in March 2024 were 5.70% higher than in March 2023, which is higher than the average annual growth of 3.24%.
Currencies
The dollar strengthened, reaching a one-week high. A hawkish Fed official signaled interest rates might stay elevated for a while, and investors are waiting for more clues on future rate changes. The Swedish krona fell to 10.9 after Sweden’s central bank cut interest rates (3.75%) to fight slowing economic growth. Inflation has dropped significantly since last year (4.1%), but the economy remains weak.
Thursday
On Thursday, stocks recovered, with most indexes up slightly. Rising jobless claims hint at a cooling labor market, potentially prompting a Fed rate cut. Housing, energy, and materials led gains, while Airbnb shares slumped after outlooks fell short. Tech giants were mixed. Globally, the Bank of England held its rate at 5.25%, signaling potential cuts soon, which led to EU stocks rallying. BTC is back up to 62K, while ETH remains at 3K. The rest of the crypto market is mostly in light green, with SOL (+3%), LINK (+2%), and BNB (+1%).
Details
Unemployment claims unexpectedly spiked to a nine-month high of 231K, raising concerns about the labor market’s health. This surge breaks a trend of lower claims and suggests the Fed may need to reconsider its monetary policy plans.
Crypto
Crypto markets boomed in Q1 2024, fueled by institutions, friendlier regulations, and rising retail interest in blockchain tech. Robinhood is capitalizing by adding new crypto options and improving trading features. It has $26 billion in digital assets under its custody.
World Markets
The Bank of England kept interest rates high (5.25%) but signaled potential cuts soon. Inflation forecasts are down, while economic growth is predicted to be slow. The Bank aims to bring inflation back to target (2%) but remains cautious due to global uncertainty. Brazil’s central bank cut interest rates to 10.5% as expected. Worries about global issues and high inflation at home led to a cautious decrease. The bank aims to bring inflation closer to its target in the future, despite a strong economy and easing headline inflation.
Currencies
The Euro jumped to a one-month low against the dollar (1.077) as investors bet on slower interest rate cuts by the European Central Bank compared to the Federal Reserve. The ECB might cut rates in June, while the Fed is on hold and unsure about September.
Commodities
Oil (WTI crude) prices climbed above $79 per barrel after stockpiles shrank, hinting at less supply. Refinery activity picked up and hopes of Fed rate cuts boosted the market. However, prices stayed near lows due to eased tensions in the Middle East and uncertainty surrounding OPEC+’s production plans.
Friday
On Friday, stocks gave up some early gains as inflation worries and Fed caution emerged. Despite the pullback, all three major indexes are on track for a strong weekly gain. Communication services and consumer discretionary stocks did poorly, while financial and materials stocks performed well. Globally, EU stocks surged to ATH on ECB rate cut expectations, while gold and the dollar rose on renewed geopolitical tensions and negative Fed comments. BTC tumbled again, closing around 60K, with ETH dipping below 2.8K and nearing its 200-day moving average on a daily graph. The crypto market turned red, with Chainlink, Uniswap, and Bitcoin Cash decreasing by up to 4–6%.
Details
Consumer confidence plunged in May to a six-month low (67.4) on worries about rising inflation (3.5% expected year-ahead), potentially higher interest rates, and unemployment. Both current economic views and future expectations fell sharply.
Crypto
Crypto nonprofit Stand With Crypto has launched a PAC to support pro-crypto politicians in the 2024 elections. The organization aims to raise funds from its 440,000 members to back a bipartisan group of candidates.
World Markets
ECB minutes show growing support for rate cuts due to falling inflation forecasts, especially with lower energy prices. However, concerns linger about domestic price pressures and the need for more data. A clearer picture by June’s meeting will be crucial for deciding the path forward. Brazil’s inflation dropped to a 10-month low of 3.69% in April, closer to the central bank’s target of 3.5%. This trend suggests the possibility of further interest rate cuts, despite rising fuel costs.
India’s industrial growth came in at 4.9% in March, missing expectations. Still, manufacturing rose 5.2%, driven by strong gains in metals, electronics, transportation equipment, and furniture. Mining and electricity output also increased. Italy’s industrial production fell 3.5% in March compared to the previous year. This is despite a long-term average of 0.07% growth, with a previous high of 80.1% in April 2021 and a low of -43.7% in April 2020.
Currencies
The dollar rose this week (up 0.3%) despite expectations of Fed rate cuts. Consumer confidence is low due to inflation fears, and jobless claims jumped. Fed officials remain cautious about cutting rates, but markets still see cuts coming later this year (odds suggest a 62% chance of a rate cut in September and 75% in November). Elsewhere, rate cuts are likely in both Britain (BoE) and Europe (ECB).
Commodities
Gold surged past $2,350, its highest level since April 19th. This jump reflects investor bets on a Fed rate cut in September due to signs of a slowing US jobs market. Next week’s inflation data will be key for confirming the Fed’s stance. Gold’s rise comes after months of gains fueled by strong investment and geopolitical jitters.
Oil prices fell by more than 1% to 78 USD, as worries about high interest rates and weak US consumer confidence overshadowed signs like rising Chinese demand and tensions in the Middle East. Steel rebar prices in China plunged to a one-month low, hurt by weak domestic demand and a property market slump (new home sales from China’s 100 biggest developers decreased by 45% annually in April). The CPC acknowledged the crisis and vowed to control oversupply, further dampening construction prospects. Steel mills, facing overcapacity, flooded foreign markets despite lower prices and trade investigations.
Comment: Self-Imposed Tyranny
Bloomberg interviewing Minneapolis Fed’s Kashkari on the Milken Conference: “We are going to hold the rate until consumers adjust their behavior”. Translation: You have to do what I want you to do. Is inflation going bad? If that’s a choice between the higher prices for eggs and your liberty?
Also, in the non-totalitarian, not centrally planned, not North Korean type economy, manufacturers will simply increase their production capacities (we are not living at the start of 20th century and we have more than enough of excess resources, not to mention an insane rise in productivity) and deliver cheaper and better products to our tables. Puff, inflation is gone. Unless of course, Mr. Kashkari prefers Marx to Adam Smith.
Why do we still keep this atrocious, tyrannical, not elected institution — the Fed — delegating our birth-rights to a couple of power hungry individuals dictating what we do with our money? Shall we allow them “to cool us down” (read “to make us poor”) when they think it’s appropriate? Still, I suppose you’ll hold your opinion while I will hold mine.
During Week 12, investors will be waiting for inflation, retail sales, and Fed talks. Earnings reports from giants like Walmart and Home Depot are also on tap. China’s industrial output and retail sales data will be watched alongside global GDP figures from Japan and Russia. Inflation in India and business confidence in Australia round out the busy week.
Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle. For more on SVET Value: https://evernomics.com/
SVET Markets Weekly Update – April 29 — May 3, 2024
On Week 16, the Fed held its rate at 5.2%, shifting to the hawkish side once again. This resulted in stocks and crypto markets moving sideways and downward until Friday when an unexpected surge in unemployment prompted a comeback attempt. Globally, the Japanese yen drama unfolded as the Bank of Japan heroically withstood selling pressure from international traders who flocked to the dollar after the Bank ended its negative interest rate policy.
Monday
On Monday, stocks are mixed as investors monitor key earnings reports this week and await the Fed’s rate decision on Wednesday. No rate change is expected. Comments on inflation will be closely followed. Tesla surged after receiving approval for its driver-assistance system in China. Internationally, the yen sharply rebounded, purportedly after BoJ intervention. BTC and ETH continued to drift lower, with the rest of the crypto market lazily following suit.
Details
Texas manufacturing continued to struggle in April, with a key index flat at -14.5. However, there are signs of potential improvement. New orders rose, and production, capacity utilization, and shipments indexes turned positive. While companies remain cautious, their outlook improved, and they expect future production to pick up.
Crypto
In a study of the probability of profiting with memecoins, researchers found that over 99.5% of memes created on the Runes platform have not gained traction. Analysts say most are acquired through airdrops or cheap “fair launch” minting.
World Markets
German consumer prices rose 0.5% in April, slightly lower than expected. This follows a similar increase in March. Historically, German inflation has averaged a low 0.21% monthly increase, with past highs and lows far outside the recent range.
Spain’s inflation rose slightly to 3.3% YoY in April, driven by higher gas and food prices. Core inflation on a monthly basis dipped, however, and remains below forecasts. Business confidence in the Eurozone fell in April, with manufacturers especially pessimistic, reaching a 2-year low. Service providers, retailers, and constructors also saw morale decline. However, consumer sentiment edged up slightly. Inflation expectations also dipped a bit. Business sentiment worsened in France and Italy, but improved in Spain, Germany, and the Netherlands.
Currencies
The Japanese yen rebounded after falling to a 34-year low. This suggests possible intervention by Japanese authorities to curb the yen’s weakness. The Bank of Japan kept interest rates low, making the yen less attractive compared to higher-yielding currencies.
Tuesday
On Tuesday, stocks slumped as stronger wage data fueled inflation fears ahead of a key Fed decision on Wednesday. As a consequence, the dollar index rose to its five-month high. Internationally, this was compounded by an unexpected surge in the EU’s GDP, leading to European markets dumping on fears of the ECB revising its dovish stance. This selloff extended fiercely into the crypto market, with BTC (-5%) dropping to 60K and ETH falling below 3K. Major altcoins are in deep red, with Solana and Avalanche decreasing by more than 9%.
Details
Worker compensation grew faster than expected in Q1 2024, rising 1.2% QQ. Both wages and benefits saw a slight increase. This continues a year-on-year trend of 4.2% growth, which remains elevated.
Home prices surged in February, with the national index jumping 7.3% YoY, the fastest pace in months. San Diego (11.4%) led the gains, with prices spiking over 11%. Most cities saw monthly increases as well, with San Diego and San Francisco experiencing the biggest jumps. Other cities with record prices growth were Chicago (8.9%) and Detroit (8.9%). Only Tampa saw a decline.
Texas’ service sector weakened significantly in April according to a key business survey. The index dropped to a 5-month low, with revenue growth stagnating and employment declining slightly. Businesses reported a less optimistic outlook and ongoing price pressures, though input costs eased slightly. Chicago’s business activity contracted for a fifth month in April, falling at the fastest pace since November 2022. The Chicago PMI index dropped to 37.9, lower than expected, indicating a significant slowdown in economic activity.
Crypto
The top 0.1% of wallets control over 40% of all Bitcoin. This means wealth is concentrated among a small number of holders, with the vast majority owning very little.
- 46.8M wallet addresses have >$1;
- 10K wallets →$10M.
- 100K wallets →$1 million.
- The top 105 wallets — 3 million BTC (15% of the total supply).
- The top 2K wallets — 40% of the total supply (largest holds ~250K BTC).
World Markets
Eurozone growth surprised economists, rising 0.4% compared to the previous year. This is 2x stronger than expected (0.2%) following slow growth in the past two quarters.
Eurozone inflation stayed flat at 2.4% in April, as expected. Prices for some goods like food rose slightly, but non-energy industrial goods and services saw slower inflation. Energy prices decreased but at a slower pace than the previous month. Core inflation, excluding food and energy, dipped to 2.7%.
Germany’s economy grew slightly (0.2%) in Q1, beating expectations but still contracting YoY (-0.2%). This marks a technical recession, with construction and exports fueling the small gain despite a drop in consumer spending.
Italy’s economy grew 0.3% in the first quarter of 2024, exceeding expectations. This is an improvement from the previous quarter and aligns with stronger growth in the Eurozone. The rise was driven by exports, but domestic demand fell. This could give the European Central Bank more flexibility on interest rates. Spain’s economy grew faster than expected in Q1 2024, expanding by 0.7%. Household spending rose slightly, while government spending fell. Exports and investment also increased. Overall, the annual growth rate rose to 2.4%, beating expectations.
China’s factory activity grew slightly in April, marking the second month of expansion. However, the pace of growth slowed, with new orders, foreign sales, and employment all rising at a weaker pace. Input costs rose to a seven-month high, while businesses became slightly less optimistic about the future.
Currencies
The dollar rose close to its five-month high as strong economic data, including rising employment costs, fueled expectations of the Fed keeping interest rates high for longer. This outlook weakened the Japanese yen, further boosting the dollar.
Wednesday
On Wednesday, stocks rebounded following the Fed’s decision to hold its rate steady at 5.2–5.5%. Manufacturing activity continued to edge down as job openings reached an 18-month low. On the world’s markets, oil dropped on hopes of easing tensions in the Middle East, while the yen depreciated against the dollar despite alleged interventions by the BoJ. BTC dropped sharply, falling by more than 4% to below 57K and breaking an important technical support level at 60K. The rest of the crypto market was mixed, with some major coins such as Polkadot gaining more than 5%.
Details
The Fed held interest rates steady at 5.2–5.5% again in May due to high inflation and a strong job market. While inflation has eased slightly, progress towards the Fed’s 2% target has stalled. The Fed won’t cut rates until it’s confident inflation is on a steady path down.
Manufacturing activity (ISM) contracted in April after a brief period of growth. New orders and employment fell, especially in textiles, food, and machinery. However, production remained positive despite lower backlogs. Additionally, prices paid by manufacturers surged to a 22-month high due to rising costs for oil and materials. Job openings fell to an 18-month low of 8.4 million in March, missing expectations (8.7). Construction and finance sectors saw the biggest drops, while education jobs increased. Openings fell sharply in most regions except the Northeast.
Crypto
Hong Kong’s new BTC and Ether ETFs flopped in their debut week, trading just $11.2 million. This pales in comparison to the $4.6 billion traded by similar ETFs on the first day in the US.
World Markets
Japan’s manufacturing PMI fell slightly to 49.6 in April, but it’s the slowest decline in 8 months. Factory activity is still contracting, but the rate of decline is easing, with output and new orders shrinking less severely. Export orders, especially to China and the US, remain weak. Despite this, businesses are cautiously optimistic due to improving demand.
Australia’s manufacturing activity contracted further in April. Manufacturers face rising costs and weak demand, with some regions seeing sluggish exports. While the chemicals sector remains in a slump, the minerals & metals industry showed signs of recovery, despite ongoing challenges.
Currencies
Japan’s yen weakened again to near 158 per dollar. An earlier rally fueled by suspected government intervention (up to USD 35B) was short-lived. Officials haven’t confirmed intervention but signaled potential action. The weak yen is due to Japan’s ultra-low interest rates and strong US wage data boosting expectations of tighter Fed policy.
Commodities
Oil prices fell below $80 a barrel in May, the lowest in a month. This drop is due to a larger-than-expected increase in US stockpiles and rising hopes for peace in the Middle East. US oil production also jumped, adding to the supply glut. Investors are still watching the Fed’s policy decisions for clues on future oil demand.
Thursday
On Thursday, stocks rose as traders were relieved by a less hawkish Fed statement. However, a timeline for cuts remains unclear, while economic data continued to show resilience in the job market accompanied by a continuing slump in manufacturing. Internationally, the yen re-depreciated after a short relief related to rumors of BoJ interventionist efforts. BTC attempted to recover, forming a triple bottom on the 1H chart. The rest of the crypto market was also in the green, with Polkadot and Polygon up more than 4%.
Details
Job cuts fell 28% in April to 64,789, the lowest in 14 months. This is despite expectations of slower hiring and potential future cuts due to rising labor costs. The auto industry led the cuts, primarily due to Tesla’s workforce reduction. Jobless claims remained near a two-month low at 208K, below expectations. This ongoing labor market tightness gives the Fed room to delay raising interest rates to fight inflation. Factory orders increased 1.6% in March, as expected, with durable goods leading the gain. Transportation equipment, like cars and airplanes, saw a strong rise in orders. Excluding transportation, the increase was more modest.
Crypto
There was a record outflow of money from spot BTC ETFs, with over half a billion dollars leaving funds. This comes after a period of slowing demand and a recent dip in BTC’s price. Fidelity Investments’ ETF saw the biggest outflow, while BlackRock’s had its first ever. Analysts suggest some investors are taking profits after Bitcoin’s strong start to the year.
World Markets
Manufacturing activity in the Eurozone continued to contract in April but at a slightly slower pace than in March. New orders fell sharply, but output decline eased and employment remained steady. Despite lower prices, business sentiment improved to a 14-month high.
Italy’s factory output prices fell less steeply in March, down 9.6% compared to a year ago (10.8%). This is the smallest decline in 9 months. Lower energy costs due to new supply chains are the main reason for the ongoing deflation. However, some sectors like consumer goods saw small price increases.
Argentina’s central bank cut interest rates by 10 points to 50%, the fifth cut since December. This follows a slowdown in inflation and aims to boost the economy. The government is prioritizing spending cuts to further reduce inflation, aiming for 3.8% by September.
Currencies
The dollar rebounded slightly after a steep drop on Wednesday. The Fed held interest rates steady but signaled future cuts, despite most analysts expecting hawkish declarations from Powell.
The Japanese yen weakened again (155.5) after briefly strengthening to 153 on suspected intervention by Japanese authorities. This is the second intervention this week, but Japan won’t confirm their actions. To fight the weakening yen, Japan might offer tax breaks to companies that convert profits back to yen.
Commodities
Oil (WTI crude) prices held around $79 as the reserves are replenished at that price. However, prices are still near lows due to hopes for peace in Israel and rising oil stockpiles.
Friday
On Friday, an unexpected increase in the unemployment rate, combined with a significant slowdown in the services sector, led to a large upward gap in the stock market at the opening. Globally, the UK market reached an ATH, and Hong Kong indexes surged on hopes of China’s revival. BTC led the crypto market with an increase of more than 7% due to a sudden resurgence in stocks. ETH, Polkadot, Solana, and Polygon each rose by about 4%.
Details
There were 175K jobs added in April, a sharp slowdown from March (315K). Healthcare and social assistance led job growth. This is less than economists expected and trails the average monthly gain over the past year (242K).
The unemployment rate rose to 3.9% in April from 3.8%, exceeding expectations. Average hourly earnings for all employees on private nonfarm payrolls have increased by 3.9% over a year in April, following a 4.1% rise in March and slightly below market estimates of a 4% increase. It was the slowest growth in average hourly earnings since June 2021.
The private sector grew at a slower pace in April compared to March (51.3 vs 52.1). The service sector grew at its slowest pace in 6 months. Manufacturing stalled. New orders fell and employment dipped for the first time in years. Despite this, business output continued to expand slightly. Prices rose but at a slower rate, and business confidence softened a bit but remained optimistic for the next year.
In April, the ISM Services PMI fell to 49.4, signaling the first decline in activity since December 2022 and missing market forecasts. This was the second decrease since the pandemic in 2020 and may be linked to Fed borrowing costs. Slower growth in new orders and production resulted in layoffs. Rising prices, driven by increased expenses for chemicals, metals, fuels, and food, highlighted the extensive inflationary pressures affecting the economy.
Crypto
Hong Kong’s spot crypto ETFs saw a trading volume increase on May 3rd (total: HK$48.91M, ETH ETFs: HK$5.5M; BTC ETFs: HK$43.41M), but it’s dwarfed by the US market. While Bitcoin ETFs led the way in Hong Kong, their daily volume is far below what’s seen in the US (almost $1.72B on May 2nd). Analysts are cautious about future growth due to Hong Kong’s smaller market size, restrictions on mainland China investors, and less competition compared to the US. Investors used to lower fees in the US might also be discouraged by Hong Kong’s higher costs.
World Markets
Eurozone unemployment remained at a record low of 6.5% in March YoY (6.6% previous). Youth unemployment also fell to 14.1%. Spain has the highest jobless rate at 11.7%, while Germany enjoys the lowest at 3.2%.
Hong Kong’s Hang Seng index extended its winning streak to nine days, the longest since 2018. It closed up 1.5% on Friday, fueled by positive futures and hopes of China easing housing regulations. UK FTSE 100 surges to a new ATH (8236) on positive corporate news and hopes of a sooner Fed rate cut. Anglo American jumps on takeover rumors.
Brazil’s industrial production fell 2.8% in March compared to a year earlier (+5.4%), marking the first contraction since July 2023. This is below market expectations of a 2.6% drop. Turkey’s inflation hit a 16-month high of nearly 70% in April, driven by rising costs in housing, transport, and many consumer goods. Food inflation slowed slightly, but overall price increases remain high. The core inflation rate also edged up.
Currencies
Jobs data triggered a dollar sell-off (the index dropped to 104.6). The weaker numbers led investors to believe the Fed will cut rates sooner, in September instead of November.
Commodities
The FAO’s food price gauge ticked up slightly in April despite YoY decline. This rise was driven by higher meat (up 1.6%) and vegetable oil (up 0.3%) prices, while cereals and dairy products saw small decreases.
Comment: 2%?
Powell aims for low inflation around 2% and economic growth at 2–3%. However, achieving this may be challenging given current economic realities. For over 30 years, the global expansion of US corporations and economic growth relied on the weaknesses of currencies in Asia, Latin America, and Africa. This allowed the US treasury to print money and export inflation. However, this dynamic has changed.
In the present circumstances, Powell’s goal of 2% inflation may only be possible if the economy enters a recession. While factors like cheap labor from Mexico have helped in the past, geopolitical tensions and shifts in global manufacturing may impact future pricing dynamics.
If Powell continues to prioritize a 2% inflation target, it could lead to stagflation, where economic growth is limited by rising prices.
On Week 12, a few macroeconomic data points are issued with a focus on consumer confidence and Fed talks. Big companies like Disney and Shopify report earnings. Globally, interest rate decisions and economic data dominate, with China and Europe in the spotlight for PMI readings, inflation, and trade figures.
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/
