2024: Every Day On Markets.

SVET Markets Weekly Update (April 13 - 17, 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.

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 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. (NyFed)

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. (source)

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. (Mospi)
• 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.

Comment: It's Wrong Every Way

From the plains of Ukraine to the seas of the Philippines, from Brazilian jungles to Middle Eastern deserts, from the ice lands of Finland to the grass plains of Africa, we can see that Boomer policy to create a worldwide elite bureaucracy, supported by aviacarriers, to rule the entire world has backfired massively.

We have authoritarians after authoritarians going public and promising us not a better future for ourselves or our children, but a war without borders, sense, or end - a war unleashed for a whole bench of weirdly wrong reasons.

Although everyone on the planet from Gen X, Millennials, and Gen Z, except of course some outlayers, do not want that future for themselves. The majority of Gen X, Millennial, and Gen Z have embraced new communication technologies since birth or young ages, and now all three generations have accumulated enough personal experience of communicating with total strangers from other parts of the world to not believe in Boomers' nonsense about "nationalities" and "separate paths to a bright future in an underground bunker".

There is no such thing. Humans have always been cross-pollinating, both physically and mentally, like crazy. In twenty-first century it makes "nationality", "state", or "border" purely inventions of megalomaniacs who use the primal fears of crowds to gain and maintain power no matter what.

Instead of what we are proposing is not "multi-polarity" (which means the several authoritarians and their families ruling us for eternity), but decentralization - meaning that we, the three generations, rid ourselves of megalomaniacs in power and govern ourselves with the tools we have created.

Yes, there may be wars, and they may even be bigger ones, but they will not result in the incredible misery and enslavement that Boomer-led governments promise us.

Eternal War or Decentralized Resistance. You choose!

On Tuesday, stocks rose a bit as investors digested the mixed inflation data. Producer prices climbed in April. 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 u, 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 bit, with many open positions unfilled. Sales outlook is still negative, though less so. Overall, cost pressures persist, and owners are pessimistic. (Nfib)
• 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. (BLS)
• 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. (NYFed)

Crypto

• Wisconsin became the first US state to invest in Bitcoin, buying nearly $100 million worth. (source)

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. (Zew)
• 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%. (ZA)
• 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%. (Pcbs)

Currencies

• 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. Dollar weakened against most major currencies except the yen and 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.

Comment: The Dawn of the Cortex Era

There's one striking difference between bones of Neanderthals found in Europe as well as in Asia up to the Altai Mountains and those of Homo Sapience found all across the world. Besides crane size and bone structure, which mark Neanderthals as smarter and much stronger than our early ancestors, more than 50% of all Neanderthals' remains have marks of violence imposed on them by other Neanderthals. On the other hand, Homo Sapiences' "domestic violence" percentage was much lower.

It doesn't mean that Neanderthals were just brutes. Not at all, they were remarkably tolerant too, but only to members of their own small groups. For the rest of the Neanderthals' world, they had only one means of communication - the weaponed aggression. Not surprisingly, then, that there had never been too many Neanderthals around. Estimates put their number to about 10 thousand at around 45,000-40,000 BC - same as the number of humans living at the same time. However, we are still here, and they are not. All because our genetic predecessors used much more apt adaptation and survival strategy - tribal cooperation.

If you are not persuaded, look to the mirror. Where are your big sharp teeth and other necessary appendages of aggression? They are gone with those who were stupid enough to use them against their own kind. A negative selection process was in play for millions of years. We are the proud result - a smart but defenseless and caring animal with a lot of friends. We have to stay such if we want to succeed in that survival game.

Yes, a hypothalamus with its urge to eat, to multiply or to fight or flight, is still right in the center of our brain, but so many of us act like it is the brain. It is not. Most of our brain mass is there for us to communicate, to interact and to invent.

So, yes, we had had "great" man-apes like Ashurbanipal, Genghis Khan or Napoleon grabbing huge pieces of land and exterminating millions of humans for the sake of their own egos. But their "empires" were short-lived and Romans or Persians, or Brits managed to build much longer world-wide presence based on a cooperation as much as on a violence. So, we - humans - are slowly but surely evolving from being hypothalamus-driven monkeys to cortex-led individuals.

Let's not stop there just because several aging ape-man on a top are currently enslaved by their primordial instincts rather than by better parts of their cranial cavity.

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. (BLS)
• 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. (Census)
• 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. (NYFed)

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. (source)

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. (EU)
• 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. (IN)
• 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. (Nig)

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.

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. (Census)
• 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. (Census)
• Jobless claims fell slightly to 222,000 but remain above average, suggesting a weakening labor market. (DOL)
• 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. (PhilFed)

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. (source)

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. (Osd)
• 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. (Istat)
• 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. (Cao)

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. (source)

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. (Estat)
• 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. IMF forecasts 3.2% growth for 2024, while the Ministry of Economy is more cautious at 2.8%. (Rstat)

Currencies

• 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 hair, 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 6 - 10, 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 ATH on ECB dovish comments, supplemented by Sweden's central bank cutting interest rates, while the BoE held its rates but signaled potential monetary easing.

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. (source)

World Markets

• The Eurozone service sector grew faster in April than 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. (SP)
• 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. (EC)

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.

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). (Technometrica)
• 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. (source)

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. (ES)

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.

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. (INE)
• 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%. (Ibge)

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.

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. (DOL)

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. (source)(source).

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. (BOE)
• 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. (BCB)

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.

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. (SCA)

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 440Th members to back a bipartisan group of candidates. (source)

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. (Ibge)
• 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. (ISTAT)

Currencies

• 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). 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.

On 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.

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. Else? Inflation going bad? If that's a choice between the higher prices for eggs and your liberty? How sure you'll be?

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 mentioned an insane rise in productivity) and deliver cheaper and better products to our tables. Puff, inflation is gone. Unless of course Mr.Kashkari prefers Marks to Adam Smith.

Why do we still keep this atrocious, tyrannic, not elected institution - 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.

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.

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. (FedD)

Crypto

• In a study of a probability of profiting with meme-coin researchers find out 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. (source)

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. (DeStat)
• Spain's inflation rose slightly to 3.3% YoY in April, driven by higher gas and food prices. Core inflation and that on monthly basis dipped, however, and remains below forecasts. (INE)
• 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. (EU)

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.

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. (BLS)
• Home prices surged in February, with the national index jumping 7.3% YoY, the fastest pace in months. San Diego 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. (SP)
• 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. (DFed)
• 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. (ISM)

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.
1. 46.8M wallet addresses have >$1;
2. 10K wallets - >$10M.
3. 100K wallets - >$1 million.
4. The top 105 wallets - 3 million BTC (15% of the total supply).
5. The top 2K wallets - 40% of the total supply (largest holds ~250K BTC). (source)

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. (EC)
• 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%. (ES)
• 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. (DEst)
• 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. (IStat)
• 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. (INE)
• 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. (CH)

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.

Comment: Is That Imminent?

It feels imminent. I'm sure that many feel that now. That's why there is so much passive acceptance of it as a fact across all types of media, even on those that are famous for being "rebellious" like Joe Rogan's.

In the 1980s, there was a gigantic movement against nuclear war. Street marches involved millions, thousands of books on the subject were published, hundreds of anti-war songs were sung, and dozens of blockbusters were released. It's even confirmed that Ronald Reagan called Gorbachev on a direct line and proposed to start a drastic nuclear warhead reduction program because he (Reagan, of course) was watching "The Day After" on TV.

Instead, what are we watching? Bloomberg? Crypto news? The Olympics? Everyone is living in someone else's bubble, thinking that they're changing the world but leaving the really important decisions to some dude in the office they disdain. No issues are raised about it. Not at all.

So it means only one thing: we have all already subconsciously accepted that we can do nothing about it despite our so-called "democratic system". So we are now going like cattle to slaughter, watching the latest episode of Dune on our smartphones. Why?

I think it's because that's how history works. No one can do anything because everyone subconsciously knows that it's finished anyway. Everything around is wrong and must be changed. There are millions of peaceful ways to change things, but we are wired to choose the shortcut: war.

The war we'll get then.

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. (FED)
• 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. (ISM)
• 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. (BLS)

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. (source)

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. (SP)
• 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. (AIG)

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.

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 rumored to 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. (CH)
• 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. (DOL)
• 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. (Census)

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. (source)

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. (PMI)
• 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. (Istat)
• 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.(Bcra)

Currencies

• Dollar rebounded slightly after a steep drop on Wednesday. The Fed hold interest rates steady and signaled future cuts, despite most analysts expected 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.

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). (BLS)
• 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. (BLS)
• Private sector grew at a slower pace in April compared to March (51.3 vs 52.1). 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.(PMI)
• In April, the ISM Services PMI fell to 49.4, signaling the first decline in activity since December 2022 and missing market forecasts (52). 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. (ISM)

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. (source)

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%. (EC)
• 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. (IBGE)
• 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. (FAO)

On Week 12, a few macroeconomic data is issued with 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.

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, resulting in stagnation or even deflation.

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.

SVET Markets Weekly Update (April 22 - 26, 2024)

On Week 17, BTC and ETH moved sideways, mostly recovering from a mid-week ~4% slump. Stock indexes closed with their first bullish candle in 5 weeks, propelled by good corporate reports, while expectations for a Fed rate cut dissipated. Globally, the yen weakened to generational lows due to dollar strength and the BOJ's dovish stance, while oil and other commodities continued their rise on geopolitical worries coupled with renewed expectations for China's recovery.

On Monday, stocks started strong as short-term traders stepped in to buy amid technical overselling, bolstered by a perceived geopolitical relief. However, most investors are still on the sidelines, watching key economic data and earnings reports from major companies this week. Globally, gold and the dollar dropped on hints of easing tensions in the Middle East. BTC and ETH followed stocks into the green zone, reaching above 66K and 3.2K, respectively. The rest of the crypto market also performed well, with Avalanche, Monero, and Uniswap increasing by more than 5%.

Details

• The Chicago Fed's economic activity index rose to a 5-month high in March (+0.15), exceeding expectations (+0.09). Employment and production indicators increased, while housing and consumption showed slight declines. (ChFed)

Crypto

• Hong Kong's securities association is proposing a self-regulatory model for the city's crypto firms. They believe this will improve industry oversight and maintain Hong Kong's competitiveness as a financial center. The proposal involves crypto firms monitoring each other and suggests delegating some licensing power from the regulator to the industry itself. (source)
• NYSE is considering a shift to 24/7 trading hours, similar to cryptocurrency markets. This follows a surge in retail investor activity and the popularity of round-the-clock trading platforms.(source)

World Markets

• Eurozone consumer confidence held steady at -14.7 in April below expectations of -14.0 but near a two-year high, on hopes of lower interest rates in the future.
• China's central bank kept key lending rates steady despite stronger GDP growth and a weakening yuan. This suggests ongoing support for the economy facing headwinds from property and trade, even though recent loan data fell short of expectations. (PBC)
• Macau tourist arrivals jumped 39% in March to 2.72 million, nearing to 80% of March 2019 level. Mainland Chinese visitors surged 94%, while Hong Kong and Taiwan also saw increases. International arrivals are still recovering (584Th, 68% of 2019 level). (MO)
• Lebanon's inflation rate dropped significantly to 70.4% in March, the lowest in nearly 4 years. This follows a broad slowdown in most categories, including food and housing. Prices are still rising slightly month-to-month, but at a much slower pace.

Currencies

• The dollar weakened slightly but remained near a six-month high. Strong economic data and hawkish Fed comments are leading investors to believe the Fed will delay or even avoid interest rate cuts this year. Key economic reports this week will be watched for further clues
• The euro held on 1.06, near a five-month low against the dollar. Investors are waiting for economic data to see if the ECB and Fed will cut interest rates as planned. Recent signs of inflation and a strong US economy are making rate cuts less likely.
• The British pound fell to a five-month low (1.23) versus the dollar as dovish comments from Bank of England officials dampened expectations of an imminent rate cut.

Commodities

• Gold prices plunged over 2% to around $2,330 per ounce on Monday. This drop comes after tensions in the Middle East eased and investors shifted to riskier assets. Additionally, comments from a Fed official dampened hopes of imminent interest rate cuts, reducing the appeal of gold. Investors are now looking ahead to US economic data for clues on future rate decisions.
• Oil prices hovered near four-week lows around $82 a barrel on Monday. Investors weighed the uncertain situation in the Middle East against plentiful oil supplies. While Iran downplayed recent attacks, the US imposed new sanctions targeting Iranian oil exports. Additionally, rising inflation concerns and higher US crude stockpiles dampened hopes of an interest rate cut, leading investors to hold off on oil purchases.

On Tuesday, stocks rose, led by communication services, industrials, and healthcare, while PMI data indicated a slowdown in the manufacturing and services sectors. Internationally, gold continued its slide due to dollar strength and reduced negativity from geopolitical news in the media. BTC and ETH chilled above 66K and 3.2K, respectively, while the rest of the crypto market remained mostly flat.

Details

• Service sector weakened in April (according to the Richmond Fed) with falling revenue and spending. However, demand rebounded and firms remain optimistic about the future, despite rising costs. (RFED)
• Building permits fell again in March to a 6-month low, despite a small rise in the West. This drop reflects continued weakness in the housing market due to high borrowing costs. Single-family permits also declined. (Census)
• Private sector barely grew in April according to a key SP PMI survey. Both manufacturing and services slowed down, with new orders falling and employment declining for the first time in almost 4 years. This suggests rising interest rates and inflation are hurting the economy.(SP)

Crypto

• A group in Switzerland is proposing a law change to add Bitcoin to the Swiss National Bank's reserves. This would require collecting signatures for a public vote and potentially changing the country's constitution. It's a way for citizens to propose changes to laws or the constitution. People collect signatures on a petition, and if enough are gathered, the proposal goes to parliament for a vote. (source)

World Markets

• Germany's manufacturing PMI edged up slightly in April but remains in contraction. New orders fell sharply, and demand remains weak. However, there are signs of improvement, with slower production declines and rising optimism. (PMI)
• France's factory activity contracted for the 15th month in April, worse than expected. New orders plunged, output fell, and employment continued to decline. Manufacturers are also facing rising input costs and are pessimistic about the future. (PMI)
• India's business activity grew at the fastest pace in nearly 14 years in April. Both manufacturing and services boomed, with record highs in new orders and foreign sales. Employment rose slightly, and businesses remain optimistic about the future. However, inflation continues to be a concern. (PMI)

Currencies

• Dollar weakened after data showed a slowdown in manufacturing and services sectors, renewing expectations of interest rate cuts by the Federal Reserve later this year. Investors are watching key economic data this week for confirmation.
• The Japanese yen hit a new 34-year low (154.8) against the dollar, raising concerns about excessive weakness. Finance Minister Suzuki warned of potential intervention, while BOJ Governor Ueda left the door open for future rate hikes to combat inflation. Investors are watching the BOJ's policy meeting this week for further clues.

Commodities

• Gold prices plunged to a three-week low below $2,300 per ounce. Easing tensions in the Middle East and a strong dollar fueled the decline. Investors are waiting for key US economic data for further clues on rate cuts.

On Wednesday, stocks are mostly in the red as economic reports continue to send mixed signals, reflecting deteriorating fundamentals but still showing strong consumer morale. Internationally, commodities are still on the rise, with copper reaching a two-year high. BTC suddenly plunged by 4% prompting the rest of the crypto market to follow suit, with Bitcoin Cash, Cardano, Avalanche, Chainlink, and Solana decreasing by 4% or more.

Details

• Orders for durable goods like machinery and vehicles jumped 2.6% in March, exceeding expectations. This was the biggest increase since last November. Transportation equipment led the surge, with strong demand for civilian aircraft and autos. Even categories with prior declines saw improvement. Business spending plans also showed a slight increase. (Census)
• Mortgage rates continued to climb for the third week in a row, reaching a 5-month high of 7.24% for a 30-year fixed-rate loan. This increase tracks with rising Treasury yields as investors bet on the Fed delaying or avoiding interest rate cuts. (MBA)

Crypto

• The market for borrowing and lending cryptocurrencies using NFTs as collateral reached $2 billion in Q1 2024, up 44% from the prior quarter. NFT holders are using these loans to invest in other assets, but analysts expect the money to eventually flow back into established cryptocurrencies and blue-chip NFTs. (source)

World Markets

• Germany's business confidence rose for the third month in a row, hitting a 1-year high (89.4) in April. This is likely due to hopes of lower interest rates from the ECB and some easing of inflation. Manufacturers and service providers are more optimistic, while traders and constructors remain downbeat. (IFO)
• UK manufacturers are feeling more optimistic, with expectations for rising output reaching a six-month high. However, costs remain high and are expected to keep rising, potentially pushing up prices for consumers.
• Indonesia's central bank raised interest rates to a record high (6.25%) to fight inflation (increased to 3.05% in March) and support the weakening rupiah currency. This is the first rate hike this year and aims to keep inflation within target. (BI)

Currencies

• Dollar held after felling following data showed slowing US growth, adding to expectations of Fed rate cuts. A strong euro, British pound, and Australian dollar due to positive economic data in those regions also pressured the greenback. Investors are watching key US economic reports this week for clues on future interest rates.

Commodities

• Copper prices are nearing two-year highs due to supply disruptions. A major mine closure and Western sanctions on Russia limited copper concentrate. However, high prices are curbing some Chinese demand, and some investors are taking profits. A weaker dollar due to slower US business activity is also supporting copper prices.

On Thursday, stocks recovered after falling at opening as GDP growth came in much weaker than expected at 1.6%, while inflation remained high. Disappointing earnings from Meta and IBM added to the morning's dump. Globally, the yen hit a new high at 155, faced with a rising dollar, while Brent stabilized at 88 due to a temporary pause in the Middle East situation. BTC and ETH lingered above 64.7 and 3.1 after Wednesday's slump. The rest of the crypto market was mostly in the green, with Uniswap and Polygon adding up to 3%.

Details

• The economy grew slower than expected in Q1 2024, at an annual rate of 1.6%. Consumer spending, especially on goods, weakened. Business investment slowed too while spending on services increased. Government spending remained positive. Trade also contributed to the slowdown as exports fell and imports jumped. (BEA)
• Core inflation rose faster than expected in Q1, hitting 3.7% annualized. This is up from 2% in the prior quarter and exceeds forecasts (3.4%). Overall inflation also rose, reaching 3.4% annualized. (BEA)
• Jobless claims unexpectedly fell to a 2-month low of 207,000, further indicating a tight labor market. This gives the Fed more flexibility to delay rate cuts and focus on controlling inflation. (DOL)
• The Kansas City Fed's manufacturing index plunged in April to -13 from March's -9, with production and new orders down. Activity weakened across durable and non-durable goods. Despite the slowdown, businesses are slightly more optimistic about the future, especially regarding production. (KFed)

Crypto

• Turkey leads the world in using stablecoins, relative to its GDP. This is because the Turkish lira is volatile. The report suggests this trend is happening in other countries with unstable currencies, like Georgia. (source)

World Markets

• UK car production dropped 27% in March due to factory adjustments for new electric car models. This is despite steady domestic demand. Exports fell sharply, but electric vehicles still make up a significant portion of production. The industry expects continued volatility as factories shift to electric vehicle production. (SMMT)

Currencies

• The Japanese yen hit a new 34-year low (155) against the dollar as the Bank of Japan meets. While the BOJ is expected to hold rates steady, comments from the Governor Ueda suggest future hikes if inflation rises or the yen weakens further.
• The Mexican peso weakened to a five-month low (17.1) against the US dollar. This comes as Mexican inflation rose and economic activity surged, suggesting the Bank of Mexico might raise interest rates. However, investor focus is on the US Fed's hawkish stance due to high US inflation and a strong job market, which strengthens the dollar.

Commodities

• Oil (Brent) prices held steady around $88 a barrel after dropping earlier. Investors are unsure how delayed US rate cuts might affect oil demand. Strong US economic data suggests the Fed may hold rates higher. Focus is now on US GDP and inflation data this week. Despite this, a surprise drop in US oil stockpiles and easing tensions in the Middle East are providing some support to oil prices.

On Friday, stocks increased after positive earnings reports from tech giants, putting major indexes on track for their first green week in five as consumer sentiment fell below expectations. Internationally, the yen reached heights not seen since the 1990s, while copper increased a two-year high. The crypto market traded sideways mostly, with BTC and ETH hovering above 63.5K and 3.1K.

Details

• PCE inflation rose to a 4-month high of 2.7% YoY in March, exceeding expectations (2.6%). This follows a historical trend of inflation averaging 3.3% over the past decades, with peaks as high as 11.6% in 1980 and lows of -1.47% in 2009. (BEA)
• Consumer confidence fell slightly in April to a 2.5-year high, driven down by a more negative outlook on the future, according to the University of Michigan. Inflation expectations rose modestly. Consumers are uncertain about the economy but not worried about global events yet. (SCA)

Crypto

• BTC investments are slowing down with investors pulling $218M out of the ETF products after a key economic report showed weaker growth. This reduces expectations of Fed interest rate cuts, which typically make investors avoid riskier assets like Bitcoin. This comes after a strong start following the launch of several Bitcoin ETFs in January. (source)

World Markets

• Spain's unemployment rate jumped to a one-year high of 12.29% in Q1, exceeding expectations (11.8%). The number of unemployed rose and the labor force participation rate dipped. (INE)
• Russia's central bank kept interest rates at a record 16% to fight inflation. Strong economic growth and limited production capacity are pushing prices up. Labor shortages due to mobilization are making it worse. The bank expects inflation to stay high this year and keeps rates high, even though the economy is doing better than expected.

Currencies

• DXY rose after inflation data came in higher than expected, strengthening expectations of continued high interest rates. However, a weaker-than-expected GDP report later caused some uncertainty. Strong underlying inflation and a tight labor market cloud the picture for potential rate cuts in 2024.
• The Japanese yen hit a 34-year low (156) against the dollar as the Bank of Japan kept interest rates unchanged. Despite rising inflation forecasts and a healthy economy, the BOJ's dovish stance weakened the yen. Authorities are watching for signs they might intervene to stop the yen's decline.

Commodities

• Copper prices continued to soar reaching 2-years high due to supply concerns. Mine shutdowns in Panama, Zambia, and South America threaten production. China, a major producer, plans to cut output. Strong demand for copper in electric vehicles is fueling the price increase.

On Week 18, The Fed interest rate decision is the main event, followed by key jobs and manufacturing data. Earnings reports from major companies like Amazon and Apple will also be watched closely. Internationally, inflation data from various countries and GDP figures for several economies are on the agenda. Manufacturing data from China and other countries is also being released.

Comment: Coins With the Face.

Watching meme coins rise and rise on the Solana layer made me salute Adam Smith and his "invisible hand" once again.

After staying in crypto for 10 years, I thought I had seen it all, but new, younger, and bolder generations of degens can't stop astonishing me with their sturdiness and adaptability. The Boomers high-post in governments and corporations continue to throw shell after shell at them in the form of regulations, registrations, and limitations with the sole purpose of forcing them to live the same dumb and obedient lives their parents lived. However, degens keep inventing new ways to live fast and fully.

Boomers think it's just a bunch of teens sitting in their mother's basement, lured by dangerous and mostly foreign strangers into nefarious schemes of printing funny money and pyramid schemes in their way to an undeserved fortune.

Nothing could be further from the truth. In fact, if you follow the lifecycle of many meme coins, you can watch the human dramas developing in new "virtual settings", but still ruled by the same iron law of "supply and demand", just as in the slow-moving "business-lives" of Boomers and X-Gens but at a lightning-fast speed.

Take, for example, the story of Slerf ($SLERF) developers who "burned the LP and the tokens that were set aside for the airdrop" while "mint authority was already revoked." The developer also added, "Guys, I f***** up. There is nothing I can do to fix this. I am so f****** sorry."

In the Boomer-infested world, it is equivalent to not paying promised dividends to your shareholders because you accidentally burned your bank with an army-issued flamethrower. So, Boomers would sell it. However, the next day, this meme coin did the opposite – it rallied and rallied hard to a market cap of over $400 million with trading volumes on Solana exceeding $3 billion in two days.

You can argue that this is madness, but I say you are wrong. It's a teamwork. A team of thousands of degens read the post and trusted that this developer was just a human prone to mistakes – not a crook, as Boomers would think him to be before publicly crucifying him and sending him off to Sing-Sing or somewhere.

Nope. Those thousands of degens were smart enough to understand in split seconds that this is a real business they are running, and it is in their best interest to keep it going, no matter what happens. So, they bought instead of selling.

If you now start moralizing and saying that these small pieces of code are worthless and "produce nothing," and that these degens should "find a job" instead of "speculating", I would kindly remind you that Boomers have managed to build and defend a world that provides those degens – mostly Gen Z – with zero jobs, zero cash, zero equities, zero hope, and the vision of three upcoming apocalypses – AI, Climatic and Thermonuclear.

So, please, keep your opinions to yourself before you understand why degens are in such a hurry to live their lives to the fullest, like billions of beautiful but one-season-only butterflies.

SVET Markets Weekly Update (April 15 - 19, 2024)

On Week 16, the stock market was down significantly. The S&P has had its worst week in six months, wiping out almost all its gains since the beginning of the year. Economic growth concerns around the world conflict with persistent inflation worries in major economies, underscored by the Fed's indecisiveness towards rate cuts and worsening geopolitical situations, especially in the Middle East. BTC and ETH are down to their critical support zones on 59-62K and 2.9-3.2K, correspondingly. Many investors suggest that, unlike in 2020, 2016, and 2012, this time the halving event had already been priced in by corporate funds, which have effectively monopolized the BTC market since the ETF listing.

On Monday, stocks dipped to their month-low levels due to rising retail sales and a marginally stabilizing manufacturing slowdown. Globally, commodities continued to rally amidst worsening geopolitics, particularly with price rises for aluminum (due to new sanctions), tin, and rice. BTC and ETH attempted to recover after the weekend's crash stemming from the Middle Eastern conflict escalation, but remained under 64K and 3.1K, respectively, under bearish pressure, fearing a repetition of the 2021 BTC double top pattern.

Details

• NY manufacturing showed some signs of improvement in April, but remained in contraction (-14.3). New orders, shipments and employment kept falling. Prices rose and businesses are cautiously optimistic about the future. (NYFed)
• Retail sales rose modestly in March (0.7%), exceeding expectations (0.3%). Sales at non-store retailers, gas stations, and building material stores led the gains. Sales fell for electronics, clothing, and autos. Overall, consumer spending remains resilient. (Census)

Crypto

• A surprising number of survey participants (over half from 2.4th crypto investors surveyed by Kpmg) invest heavily in digital assets, putting more than a quarter of their wealth into them. While some (34%) feel secure about these investments, Bitcoin (91%) and Ethereum (78%) remain the clear favorites. (Kpmg)

World Markets

• El Salvador's inflation continued to slow down in March 2024, reaching a 15-month low of 0.77%. This was driven by falling prices for healthcare, miscellaneous goods, furnishings, and communications. However, food, restaurants, and housing prices rose slightly. Overall, monthly inflation remained low at 0.06%.

Currencies

• The US dollar surged to a five-month high (106) on Monday. Strong US retail sales and inflation data fueled expectations that the Fed will hold off on interest rate cuts. Geopolitical tensions initially boosted the dollar's safe-haven appeal, but eased as tensions subsided.

Commodities

• Aluminum prices soared 10% to 2.7K to a new high on supply worries due to sanctions. The US and UK banned new Russian aluminum, aiming to curb Russia's war funding. But analysts say this might not stop sales and could create market uncertainty.
• Rice prices jumped to a near-term high on worries about limited supply (4.9 million tonnes in the 2024/25 season). Bad weather and export curbs from India are causing concern, despite a slight increase in global rice production expected this year. The market is hopeful things will improve after India's election and a global rice surplus is expected next season.
• Tin prices jumped to a new high since June 2022 due to limited supplies. Sanctions on Russia, along with disruptions in DR Congo, Indonesia and Myanmar, squeezed supply. Strong factory data in the US and China fueled demand for tin and other base metals.

On Tuesday, stocks showed mixed performance due technical factors following yesterday's slump and to low housing numbers. Uncertainty was heightened by Powell's comments about the Fed's "restrictive policy" possibly continuing. Internationally, dollar, gold and oil keep rising, China reported an unexpected GDP advance accompanied by dismal growth in manufacturing and retail sales, highlighting a potential divergence in Fed and CBC rate policies. This divergence was also reflected in the Brazilian real's depreciation. In crypto markets, BTC and ETH prices continued to drift remaining above 62K and 3K, respectively. Meanwhile, the broader crypto market saw further declines, with coins like Bitcoin Cash, Uniswap, Avalanche, and Solana forfeiting up to 4% of their value.

Details

• Building permits unexpectedly dropped by -4.3% (it was expected +2.3%) in March, reaching the lowest level since July 2023. This decline reflects a slowdown in housing market activity, likely due to high borrowing costs. All regions except the West saw permit declines, with the Midwest and Northeast experiencing the biggest drops. (Census)
• Housing starts tumbled 14.7% in March, the most in 3 years, as high mortgage rates discouraged potential buyers. This is the lowest level of housing starts since last August. All regions except the West saw declines, with the Northeast and Midwest hit the hardest. (Census)

Crypto

• DePIN startups have raised over $1 billion but only bring in about $15 million annually. This technology uses blockchain for real-world infrastructure, attracting venture capital despite a lack of customers. Analysts recommend DePIN projects that address existing needs with a clear customer base. (source)

World Markets

• The IMF upgraded its global growth outlook for 2024 to 3.2%, citing surprising resilience. Inflation is expected to fall steadily, especially in the US. The USA (+2.7%), India (+6.8%), and some other economies received higher growth projections, while forecasts for Europe (+0.8%) and some European countries were slightly downgraded.
• China's economy grew by 5.3% in Q1 2024, surpassing expectations (+5%) as stimulus measures and spending for Lunar New Year boosted growth. Despite a strong start, industrial output and retail sales fell short in March, indicating a need for further policy support. The fixed investment also saw a significant increase, signaling positive momentum towards achieving the GDP growth target of around 5% for the year. However, the jobless rate remained high at 5.2% in March. Youth unemployment, which hit a record 21.3% in June 2023, was not included in the recent data release. (CH)
• China's factory growth slowed dramatically in March (+4.5% YoY), missing expectations (+5.4%). All sectors cooled down, leading to the weakest expansion in industrial output in almost a year. Despite this, the first quarter still saw a solid increase of 6.1%. (CH)
• China's retail sales growth sputtered in March (+3.1% YoY), missing expectations (+4.5%) and marking the slowest gain in eight months. Car sales and jewelry purchases were hit especially hard, while spending on food and home goods remained more robust. Overall, retail spending rose slightly for the first quarter. (CH)
• The Israeli economy shrank by 21% in Q4 2023, deeper than earlier estimates, due to the impact of the war. Private consumption (-26.9%) and investment (-67.9%) dropped significantly, while government spending increased (+83.7%). Overall, the economy grew by 2% in 2023, down from 6.5% in 2022, with expectations set at 3.5% before the conflict began in October.

Currencies

• The dollar surged to a five-month high on Tuesday, fueled by strong US economic data and hawkish comments from Fed Chair Powell. Powell suggested interest rates might stay high for longer, dampening hopes for cuts in 2024. This drove the dollar up against major currencies like the Euro, Pound, and Yen.
• India's rupee hit a record low (83.6) against the strong dollar in April, following a sell-off in Asia. Concerns about China's currency and expectations of higher US interest rates fueled the decline. Despite the drop, India's strong economic growth helped limit the damage.
• The Brazilian currency hit a new low (past 5.18) in April due to global tensions and expectations of lower interest rates by Brazil's central bank. This contrasts with the US Federal Reserve's hawkish stance. Despite a rise in unemployment, strong retail sales and a trade surplus helped limit the real's depreciation.

Commodities

• Gold prices continued to rise higher after a brief correction following ATH (>2.4K) reached at Friday. Investors are less confident about interest rate cuts from the Fed, reducing the appeal of gold. Despite this, demand from central banks and safe-haven buying limited the decline.

On Wednesday, the mortgage rate hit a 4-month high, and stocks closed lower as Powell's hawkish remarks and mixed earnings reports weighed on the market. The S&P 500 and Dow hit multi-month lows. In the world's markets, aluminum prices spiked on sanctions and major currencies, including the Indonesian rupee, continued to fall as the dollar gained strength. BTC and ETH dipped below their key supports at 60K and 3.0K, respectively. The rest of the crypto market followed suit, cutting prices by up to 4% and causing significant decreases in market caps for major coins such as Polygon, Polkadot, Cardano, Algorand, Cosmos, and Solana, with a 30% drop on a monthly basis. Avalanche and Uniswap depreciated by more than 40% (MoM) in what were the most drastic crypto crashes in the past 6 months.

Details

• Mortgage rates reached their highest level (to 7.13%) since early December this week, according to the Mortgage Bankers Association. Rates rose for both regular and jumbo loans. Even with these increases, some borrowers are still applying for mortgages, possibly to lock in a rate before they go even higher. (MBA)

Crypto

• DeFi exploded in Q1 2024, surpassing stablecoins in daily transactions and tripling locked-in assets. This surge in users activity (+291% QoQ), dubbed "DeFi Summer part 2," is driving optimism despite regulatory hurdles. (source)

World Markets

• South Africa's inflation dipped to 5.3% in March, a relief from recent highs. While some items like food saw price drops, others like education and utilities kept inflation above the target range. The core rate, excluding volatile items, also eased slightly. Overall, prices are rising, but at a slower pace than before. (Stat)
• Russia's producer inflation dipped slightly in March (to 19.1% from 19.5%) but remained high, especially for miners (45.8% vs 46.4%) due to rising fuel costs. Overall producer prices rose at the fastest pace in six months. (ROS)

Currencies

• The Indonesian rupiah hit a four-year low against the dollar due to rising USA interest rates, Middle East tensions, and a weak Chinese economy. Capital flight and a widening current account deficit are putting further pressure on the currency. Indonesia's central bank is intervening to stabilize the rupiah.

Commodities

• Aluminum prices soared to their highest level since early 2023, reaching $2,560 per tonne. This surge is due to sanctions on Russia, a major producer, limiting supply at key exchanges. Concerns about future restrictions and ongoing supply chain issues in China are also contributing to the price increase.

On Thursday, stocks were mostly in the red after a 5-day slide for the S&P 500 and Nasdaq. Interest rate worries were emphasized by strong Philadelphia manufacturing data and flat jobless claims but conflicted with corporate earnings and falling home sales. On global markets, the central banks of the USA, Japan, and South Korea held an urgent meeting to address the weak yuan, while the dollar remained super-strong and commodity prices continued rising, with tin and copper reaching two-year highs. BTC and ETH attempted a sluggish recovery, closing above 63K and 3K a day before halving, but without changing the overall bearish technical picture. They were joined by the rest of the crypto market, with Solana, Uniswap, and Chainlink adding more than 6%.

Details

• Jobless claims remained flat at 212K, indicating a tight labor market. This data, below expectations, suggests the unemployed are finding jobs at a healthy pace. The Fed may hold off on interest rate cuts to address inflation due to this strong labor market. (DOL)
• The Philly Fed Manufacturing Index surged to 15.5 in April, exceeding expectations by a wide margin. This indicates growth in the manufacturing sector, with new orders and shipments rising sharply. However, employment continued to decline, and businesses reported ongoing price increases. (PHIL)
• Existing home sales fell 4.3% in March to 4.19M units, after a February jump. Rising mortgage rates and limited price movement are seen as reasons for the slowdown. Sales rose only in the Northeast, while other regions dipped. Inventory increased, but remains tight relative to demand. The median sales price rose 4.8% to $393.5K. (NAR)

World Markets

• Eurozone construction dipped YoY in February 2024, down 0.4%. Building and specialized activity declined, but civil engineering grew. Construction varied by country, with Spain and Germany gaining while Netherlands and France fell. Monthly output however, rose 1.8%. (Eurostat)
• European car sales fell 5.2% in March, the first decline of 2024, blamed on Easter timing: Germany (-6.2%), Spain (-4.7%), Italy (-3.7%), and France (-1.5%). This follows a strong February. Sales dipped in most major markets, including Germany and France. Electric car registrations (13% of the market) also dropped, but remain up slightly for the year compared to 2023.

Currencies

• The dollar held steady around a five-month high of 106 after earlier dips. This comes despite some positive economic data as the Fed prioritizes fighting inflation and keeps investors guessing about future rate cuts.
• The Chinese yuan strengthened against the dollar after falling to five-month lows. China's central bank and state-owned banks are intervening to support the yuan. Despite stronger-than-expected GDP growth, weaker economic data and a rising USA dollar are keeping pressure on the currency.
• The South Korean won strengthened after weakening to an 18-month low. This follows a trilateral meeting between the US, Japan, and South Korea where they agreed to cooperate on currency markets. The Bank of Korea is also prepared to intervene to support the won, but China's weak currency limits their options. The won has been pressured by a strong dollar.
• The Japanese yen held steady around a 34-year low versus the dollar despite US concerns about currency weakness in Asia. This comes after a meeting between US, Japanese, and South Korean officials. The difference in monetary policy between Japan's dovish central bank and the hawkish Fed is keeping the yen weak.

Commodities

• Tin prices skyrocketed to a near two-year high of $32,750 per tonne due to supply worries. Export delays in Indonesia, a major producer, and disruptions in Myanmar worsened existing shortages. Meanwhile, rising demand from China and the US, fueled by manufacturing growth and expectations for AI technology, put additional strain on supply.
• Wheat prices dropped below $5.4 per bushel, near a 3-month low, due to a global supply glut. Bumper crops from the Black Sea and the US pushed prices down. The USDA predicts record Russian exports, further pressuring prices despite lingering concerns about potential shipping disruptions.
• Copper prices soared to a near two-year high in April at over $4.4 per pound. This surge comes from a combination of factors: concerns about limited copper supplies due to mine shutdowns and smelter slowdowns in China, along with signs of increasing demand from Chinese factories.

On Friday, stocks are deep in the red due to escalating tensions in the Middle East, with tech and communication sectors leading the decline. Geopolitical games have negatively impacted markets worldwide, with gold reaching to its ATH again. Meanwhile, BTC continued its sluggish pre-halving surge, rising to 65.2, with the rest of the crypto market following suit uneasily.

Crypto

• A new IMF's study examined BTC's cross-border transactions. It found BTC use is widespread globally, especially in areas with limited traditional financial options. The study also highlights the difference between on-chain and off-chain transactions, with on-chain transactions being larger. Bitcoin's ability to bypass capital controls suggests it will play a role in shaping future regulations. Policymakers need to oversee both traditional and crypto activities. (IMF)

World Markets

• Japan's core inflation eased slightly to 2.6% in March but remains above the central bank's target. This comes despite a recent policy shift to raise rates and end negative rates. The weak yen and high global prices keep inflation elevated, and the Bank of Japan is expected to take a cautious approach to further tightening. (StatJP)
• Malaysia's economy grew faster than expected in Q1 2024, reaching 3.9%. This is the strongest growth in a year, driven by all sectors, especially services. Construction and manufacturing also improved, while agriculture slowed. However, the economy shrank slightly compared to the previous quarter.
• Argentina's trade balance swung dramatically positive in March 2024, reaching a surplus of $2.1 billion. This reverses a trend of deficits and comes mainly from a sharp drop in imports (down 36.7%) due to lower purchasing power. Exports also rose slightly (11.5%) on the back of increased sales of agricultural products and energy. (Indec)

Currencies

• The British pound stayed weak around $1.24 due to sluggish retail sales and lingering Middle East worries. Despite lower inflation, strong wage growth keeps the Bank of England from cutting rates. The strong dollar, backed by hawkish Fed, adds pressure.

Commodities

• Gold surged above $2.4K , hitting record highs again. This is due to rising tensions in the Middle East, following an Israeli missile attack on Iran. The focus on geopolitics overshadowed recent hawkish comments from the Fed about keeping interest rates high.

On Week 17, GDP, inflation, and earnings reports are key. PMI data will gauge manufacturing and services health in major economies. Consumer confidence and interest rate decisions in several countries will also be watched closely.

SVET Markets Weekly Update (April 8 - 12, 2024)

On Week 15, stocks and crypto continue their downward trend, influenced by technical, economic, and geopolitical factors. Wednesday's CPI increase and Thursday's spike in the dollar intensified this decline. Both stock and crypto markets appear more bearish on a daily basis. However, BTC and ETH are holding above critical support levels at 60-62K and 2.9-3K, respectively. Yet, if negative geopolitical factors persist, these support zones may be tested next week.

On Monday, stocks finished flat ahead of a data-heavy week. Investors are awaiting inflation data, consumer sentiment, and Fed clues on rate cuts. Earnings season starts Friday. Tesla surged 3% on robotaxi news, but Apple, Nvidia, and others fell. In the world's markets, Israel held interest rates amidst the war, copper prices rose on EU and China manufacturing resurgence hopes. Both BTC and ETH were in positive territory. Ether was leading the surge with an impressive gain of over 9%, while Bitcoin was up by more than 4%. It feels like traders have started to steer the market preparing for the "sell the news" event after the upcoming BTC halving.

Details

• Consumers expect inflation to stay around 3% for the next year, unchanged for 3 months. This is a 3-year low. They anticipate higher costs for necessities like gas, food, and healthcare, but steady home price growth. Long-term inflation expectations are mixed, with 3-year views edging up and 5-year views down. (NEFed)

Crypto

• BlackRock and Fidelity's Bitcoin ETFs (IBIT & FBTC) were launched 59 days ago, they've seen continuous investment, outperforming 99.9% of all ETFs ever launched since the market began (1990s). This surge is likely due to growing institutional interest in crypto, inflation concerns, and a desire for alternative investments in a shaky global economy. (source)

World Markets

• The Philippines kept interest rates at a 17-year high (6.5%) to fight inflation. Inflation is rising, especially rice prices, but remains within the target range. The central bank upped its 2024 inflation forecast to 4% but left its 2025 view unchanged at 3.5%. (BSP)
• Turkey's Industrial output surged 11.5% YoY in Feb, the fastest pace in 2 years. Mining and manufacturing led the gains. Despite a slowdown in electricity production, this marks a strong rebound from January's decline. (Tuik)
• Israel held interest rates steady at 4.5% for a second meeting. This aims to boost the economy and control inflation despite war-related uncertainties. While current inflation is within their target range, future expectations are rising. Policymakers are cautious due to war, a weakening shekel, and rising oil prices. GDP growth is still projected at 2% for 2024 and 5% for 2025.

Commodities

• Copper prices soared to a 14-month high (over $4.25/lb) on strong global manufacturing data. Positive PMI readings from Germany, China, and the US signaled rising demand for copper. Supply disruptions in Africa and production cuts by Chinese smelters further boosted prices.

On Tuesday, stocks surrendered their gains, with financials, industrials, and tech sectors leading the decline, while real estate remained positive. Small business confidence plummeted to levels not seen since the 2007-08 depression. Internationally, commodities continued their upward trajectory, driven by gold with tin prices reaching year-highs. BTC (-4%) and ETH (-5%) retreated sharply after encountering resistance levels at 72K and 3.7K, respectively. The rest of the crypto market followed suit, with Litecoin (-7%) and Avalanche (-6%) leading the downward trend.

Details

• Small business confidence plunged to a 12-year low (88.5) in March. Inflation is the top concern, followed by a tight labor market. Owners are pessimistic about sales growth and hiring plans are slowing down. (Nfib)
• Economic optimism dipped to a 4-month low in April (43.2). All sub-indices fell except confidence in federal policies (up). Investors remained optimistic (54.9) while non-investors grew more negative (36.6). (Technometrica)

Crypto

• Overall, spot Bitcoin ETF volumes have been on a decline since its peak (early March). Grayscale's main spot ETF saw a large outflow ($303 million), but other spot ETFs like Bitwise and BlackRock's had inflows. This creates a net outflow of $224 million overall. However, looking at a broader timeframe, nearly $1 billion flowed into Bitcoin ETFs last week, mostly into BlackRock's product. Despite the recent spot ETF outflows, overall interest in Bitcoin investment vehicles remains strong. (source)

World Markets

• Saudi Arabian industrial output declined 7.7% YoY, the smallest drop in 8 months. Mining, especially oil production, dragged down the sector. However, manufacturing rose 2.1%, driven by growth in items like metals, paper, and beverages. Overall, industrial production edged up 1% monthly. (SA)

Currencies

• DXY is stuck near 104.2 as investors wait on key inflation data and Fed minutes. Strong jobs data and hawkish comments from Fed officials lowered expectations for rate cuts this year (60 basis points vs prior forecast of 75). The dollar is steady but could weaken against the yen, potentially inviting intervention from Japan.

Commodities

• Gold keeps rising 8th day in a row, reaching over $2,350 an ounce. Strong demand from central banks and safe-haven buying are fueling the rally. China keeps adding to its gold reserves, and analysts predict prices could hit $3K by 2025. Geopolitical tensions and inflation add to gold's appeal. Investors await Fed minutes and US inflation data for clues on interest rates.
• Tin prices hit a 15-month high of nearly $30,000 per tonne, mirroring other base metals. Strong global demand and worries about supply are behind the surge. Indonesia, a key exporter, restarted mining but future regulations cast a shadow. Positive manufacturing data in China adds fuel to the fire for base metals. FYI: World's leading tin producers: China, Indonesia, Peru, Myanmar and Bolivia.

On Wednesday, stocks plunged as inflation worries flared in a major upset to tech bulls, dimming hopes of Fed rate cuts. The Fed funds rate is now seen staying high in June (76.8% vs 42.6% yesterday) and July cuts are less likely. All sectors fell, with tech giants like Apple and Microsoft leading the decline. Globally, the race in commodities continued with copper prices reaching a one-year high. BTC and ETH reacted to the hot CPI print by dipping down ~2% but then recovering. However, the rest of the crypto market remained in the red, with Polkadot, Algorand, and Polygon slashing 3%, while Bitcoin Cash corrected down by almost 10%.

Details

• Inflation jumped to a 7-month high of 3.5% in March, exceeding forecasts. Energy costs rose, especially gasoline, but some utilities and fuel oil eased. Food inflation held steady, but shelter, transportation and apparel prices jumped. The monthly CPI increase (0.4%) matched February's but missed expectations. Core inflation remained unchanged at 3.8% (both monthly and annually). (BLS)
• 30-year fixed mortgage rates jumped to a 5-week high (7.01%) in the week ending April 5th. Fed officials signaling a cautious approach to rate cuts, strong jobs data, and persistent inflation are blamed for the rise. Rates for jumbo loans and FHA loans also increased. (MBA)

World Markets

• Fitch Ratings downgraded China's credit outlook to negative (from stable) citing concerns about its finances. China's debt is rising as it moves away from a real estate-focused economy. Other major rating agencies have China at A+ (S&P) or A1 (Moody's) with mixed outlooks.
• Brazilian inflation continued to cool, hitting a 9-month low of 3.93% in March. This drop below the central bank's target (4.5%) paves the way for further interest rate cuts. Transportation costs led the decline, with falling fuel prices. Food prices rose slightly. The monthly inflation rate was also minimal, the smallest in 8 months. (IBGE)

Currencies

• Stronger-than-expected inflation data (3.5% YoY) sent the dollar soaring (up 0.7%). This suggests the Fed will hold off on rate cuts. The data, including steady core inflation and a higher monthly CPI, follows a strong jobs report. The market now expects less rate easing from the Fed (50 bps vs 60 bps) with no cuts until September.
• The Euro tumbled below $1.08. Investors flocked to the dollar as expectations of a Fed rate cut faded. In Europe, markets awaited the ECB's policy meeting. Though rates are expected to hold steady.
• The Japanese yen reached a 32-year low (152.7 yen per dollar). Hot inflation data is fueling expectations that the US Fed will maintain high interest rates, widening the gap with Japan's near-zero rates. This is a boon for carry traders borrowing cheap yen to buy higher-yielding dollars. Japan's central bank is watching closely, hinting at intervention if the yen weakens excessively.

Commodities

• Copper prices soared to a 15-month high (over $4.30/lb) due to supply worries and rising demand. Chinese smelters are planning output cuts, adding to supply woes caused by mine disruptions in Africa and South America. This coincides with signs of a manufacturing rebound in the US and China, boosting demand for copper.

On Thursday, stocks rebounded on technical over-sold indicators after yesterday's slump despite rising PPI and falling unemployment. The rise was led by Apple and Nvidia (up over 3%). The Fed likely wants to see further improvement before cutting rates. Internationally, the ECB holds its rate steady at 4.5%, prompting depreciation of the EURO on dovish comments, while oil is edging up due to growing tensions in the Middle East. BTC and ETH lingered just above 70K and 3.5K, respectively. Most of the crypto market is in the red, led by Uniswap, which dropped 10% on an SEC prosecution.

Details

• Producer prices (PPI) rose modestly (0.2%) in March, the least since December. This follows a larger increase in February. Prices for services remained steady, but goods prices dipped slightly due to lower gasoline costs. Despite the monthly slowdown, annual producer inflation reached a 10-month high (2.1%). (BLS)
• Jobless claims dropped to a 1-month low (211th) in the week ending April 6th, defying expectations. This reversal follows an upward revision in the prior week's data. The tight labor market aligns with the strong jobs report, potentially giving the Fed more room to keep interest rates high to fight inflation. (DOL)
• 30-year fixed mortgage rates hit a 1-month high at 6.88% on April 19th, up slightly from the prior week. This rise mirrors a similar increase in Treasury yields. Inflation data may seem stable, but financial markets are wary. Mortgage rates were significantly lower (6.27%) a year ago. (Fred)

Crypto

• Grayscale's Bitcoin ETF saw a surprisingly small outflow ($18 million) on Wednesday, a record low. This follows comments from the CEO suggesting selling pressure is fading. Analysts point to lower bankruptcy-related sales and high fees (1.5%) as reasons for the shift. (source)

World Markets

• The ECB kept interest rates at record highs (4.5%) for a fifth month. While inflation is easing, the bank remains cautious due to high service prices. They might cut rates if they're confident inflation is on track to their 2% target. Future decisions will depend on data. (ECB)
• China's consumer inflation slowed sharply in March, rising only 0.1% YoY vs expectations of 0.4%. Food prices led the decline, falling due to lower pork and vegetable costs. Non-food inflation also eased. This comes after a larger increase in the previous month. Monthly CPI saw its biggest drop in 3 years. (CH)
• Brazilian retail sales defied expectations, rising 1% in February (following a revised 2.8% jump in January). This suggests consumer strength despite high interest rates. Sales growth was driven by pharmaceuticals, furniture & electronics, and personal care items. However, lower sales of food and fuel limited a steeper increase. Year-on-year, sales surged 8.2%, the highest in nearly two years. (IBGE)
• Argentina's central bank cut interest rates again (down to 70%) despite raging inflation (over 275%). This is the 3rd cut since December. It is prompted by Milei's libertarian ideology, which aimed at maintaining the competition among producers rather than cutting off their money sources. While inflation has slowed recently, the country still faces recession and rising poverty despite positive investor sentiment. (BCRA)

Currencies

• The euro dropped to a 2-month low ($1.07) after the ECB held rates steady. The ECB hinted at future rate cuts if inflation keeps falling. Investors are now expecting a small rate cut in June and a bigger one by year-end.
• China's Yuan strengthened (7.25) after the central bank set a stronger exchange rate (7.0968) and data showed lower inflation. This follows a weakening due to hot inflation data from oversees. Strong car sales suggest recovering consumption.

Commodities

• Oil prices stayed above $86 per barrel on worries of a wider Middle East conflict disrupting supply. Stalled peace talks between Israel and Hamas and potential Iranian retaliation for suspected Israeli attacks are fueling concerns. This comes despite a larger-than-expected US oil inventory build.

Comment: Markets Are Markets

Hearing "meme-coins" raises the brows of many. However, markets are markets and there is no "easy money" in any of them. Doubts? Just take a look at what experienced meme-coin traders are advising their followers:

1. Rely on past successes. Find meme coins that are 1st on their blockchain;
2. Buy when nobody else wants to buy;
3. Set aside 20%-30% of your profits in a separate wallet.
4. Be in the 1% minority;
5. Have patience and conviction;
6. Don’t blindly cut losses quickly if you have a sound thesis;
7. Make contrarian plays.
(source)

Want more pragmatic advises? Here you go:

1. Not constantly rotating capital
2. Utilizing sniper bots
3. Following insiders
4. Maintaining small bets
5. Adhering to a consistent strategy
6. Sticking with winning trades while cutting losses
(source)

So, basically, they are advising prudent capital management, thorough research, sticking to winners while cutting others short, and contrarian thinking. So much for "a Gen-Z casino" :) I bet even the old Warren would be proud :)

On Friday, import prices rose as consumer confidence dipped, serving as a catalyst for a major stock technical sale. This was compounded by big banks' disappointment with earnings and China's anti-foreign-processor policy which worried tech investors. Tech stocks were hit especially hard, with AMD and Intel down sharply. In the world's markets, the dollar, gold, oil (including gasoline), and other resources continue to surge due to intensifying geopolitical risks and traders' uncertainties towards economic policies. BTC and ETH significantly dipped, with BTC briskly touching 65K and ETH reaching 3K. The rest of the crypto market plunged heavily, with some coins including ChainLink, Cardano, Algorand, Polkadot, Avalanche, and Polygon depreciating by 15% or more.

Details

• Import prices rose for a third month straight (0.4% in March), the most since mid-2022. Fuel imports led the increase (up 4.7%), while non-fuel imports were slightly higher (0.1%). Overall, import prices are now slightly higher than a year ago for the first time in over a year. (BLS)
• Consumer confidence (Michigan Consumer Sentiment survey) dipped in April, below expectations. This follows a recent high in March. People are cautious due to the upcoming election's potential effect on the economy. Inflation expectations are also ticking up slightly. (SCA)

Crypto

• A fifth of BlackRock's new ETF investments this quarter went into their Bitcoin ETF (IBIT). This Bitcoin fund attracted $13.9 billion, the fastest-growing ETF ever for BlackRock, despite only launching in January. Overall, BlackRock saw strong inflows across its ETFs, with $67 billion entering in the first 3 months. (source)

World Markets

• China's trade surplus fell sharply in March (to $58.55 billion) compared to last year, missing expectations. Exports dropped more than imports (7.5% vs 1.9%). Despite the monthly decline, China still has a surplus of $183.71 billion for the first quarter, driven by a slight increase in both exports and imports. (CN)
• India's annual inflation dropped to a 10-month low of 4.85% in March, better than expected. Food inflation eased, with vegetables leading the decline. Prices for clothing, housing, and fuel also saw slower increases. (Mospi)
• Brazilian currency hit a new low in April due to global tensions and expectations of lower interest rates. Despite this, lower inflation and strong retail sales suggest a resilient Brazilian economy.
• Spain's inflation rose slightly in March (3.2%) after hitting a 6-month low in February. Housing, utilities (due to VAT increase), transportation (fuels), and recreation costs all saw price increases. Food inflation slowed down. Core inflation also dipped (3.3%) to its lowest level since February 2022. Both national and EU-harmonized inflation rose slightly compared to February. (INE)
• Italian factory sales plunged 3.1% in January, the biggest drop in almost 4 years. This follows a small rise in December. Both foreign and domestic demand fell. Sales were down across all categories, from car parts (intermediate goods) to furniture (consumer goods). This extends a year-long trend of declining factory sales. (Istat)

Currencies

• Dollar (DXY) reached a near 5-month high (106) in April on expectations of higher interest rates and geopolitical tensions. The dollar rose across the board, with the biggest gains against the Australian, New Zealand dollars, Euro and British Pound.

Commodities

• Believe it or not but cocoa prices continued its crazy and absolutely unprecedented 6 months run, hitting a new record high (over $10,800/tonne, 5x compare to Nov 23). It is blamed on worries about lower supply. Extreme weather lead to poor harvests in West Africa, a key producer. Traders are concerned about the upcoming mid-crop season in Ivory Coast, where dry weather could further limit output. Data shows cocoa shipments from Ivory Coast are already down significantly year-on-year.
• Gold prices soared to a new record high (over 2.4K) in April due to safe-haven demand amid fears of war in the Middle East. Strong physical demand from China also bolstered gold prices.
• Gasoline prices surged in April to a one-year high(2.82 per gallon) on fears of war in the Middle East. Despite a surprise rise in domestic gasoline supplies, concerns about oil disruptions from the region outweighed this, pushing prices up.

On Week 16, earnings season kicks off with big names like Goldman Sachs and Netflix reporting. Retail sales and Fed speeches are also on tap. China's GDP and Europe's inflation rate are key global events to watch.

Comment: The World Divided Two Ways

This week illustrates the politics-over-economics trend as global regions, "The East" and "The West," diverge politically and financially. Central banks' policies reflect these shifts.

"The East," serving as a low-cost manufacturing hub for "The West," experiences faster inflation declines due to lower production costs, primarily food and energy. Conversely, "The West's" reduced consumption, influenced by higher Fed rates and energy prices, slows Eastern manufacturing growth.

Despite its population size, Eastern markets lack wealth and infrastructure, hindering governments' ability to stimulate economies with cheap credit, like China's past efforts, where disparity, notably in real estate, persists.

Meanwhile, the West excels in services, aided by technology, specially in USA, while manufacturing stagnates, particularly evident in leading EU economies like Germany and France. As a result, America's stubborn inflation surprises Fed officials.

Adding "The South-East" and "The South-West," politically aligned with East and West respectively, complicates matters. "The South-West" benefits from preferential treatment, lowering local inflation. Conversely, "The South-East" struggles due to inadequate Eastern demand for exports and sheep imports.

Non-aligned countries like India and Saudi Arabia play their resource card to stabilize economies amid tariff threats. However, this strategy's sustainability is questionable.

The economic divide deepens as political confrontations intensify (even leading to kinetic, military clashes) impacting central bank rates, budgets, investments, and trade. The West's advantage lies in broader market instruments (treasures, debts) liquidity, allowing expansive government spending without sharp currency devaluations.

Conversely, the East moves towards government-steered economies, consolidating monopolies and controlling consumer habits. This shift, coupled with potential currency independence, challenges Western investors and leads to prolonged price pressures.

Tariff wars exacerbate these tensions, worsening Western consumer markets. Bitcoin, gold, and other anti-inflationary assets signal anticipation of economic upheaval amidst geopolitical strife.

SVET Markets Weekly Update (April 1 - 5, 2024)

On Week 14 the streak of five consecutive months of gains in both stock and crypto markets came to an end, signaling a possible shift in trend. Jobs data fluctuated, leaving analysts bewildered. Meanwhile, Fed officials added to the confusion with their mixed messages on rate cuts.

Globally, tensions between aging world leaders led to a downturn in commodities such as oil, gold, silver, zinc, and aluminum. Additionally, food prices, including meat and dairy, saw increases. Central banks, including the ECB in Frankfurt, sought to prop up struggling EU economies, while counterparts in China and India moved to devalue their currencies for competitive advantage. In Central and South America, as well as much of Africa, inflationary pressures persisted, forcing policymakers to maintain high interest rates despite lackluster economic performance.

The crypto market, largely influenced by North American corporate investors, mirrored the stock market's volatility, resulting in BTC and ETH experiencing a classic bearish double-top formation on daily charts. However, this pattern could shift to a bullish continuation flag if geopolitical tensions ease.

On Monday, stocks dipped after Q1 gains as manufacturing surprisingly grew, keeping the Fed on hold as inflation eased. Tech stocks rose (Microsoft, Nvidia, Amazon, Meta) while utilities lagged. Globally, China PMI surprised on the upside; oil remained steady. The dollar rose on manufacturing data, while the Turkish lira fell on local election results. Crypto markets plunged, with BTC forfeiting 3% and ETH dropping more than 5%. Major alts saw even steeper cuts, with Bitcoin Cash, Solana, Polkadot, and Polygon sliding more than 7%.

Details

• The manufacturing sector grew marginally in March after 16 months of decline, exceeding expectations (PMI to 50.3). New orders and production rose, but employment continued to fall. Prices kept rising due to high material costs. (ISM)

Crypto

• Milei's election win in November 2023 was met with excitement by digital asset supporters who hoped for a BTC-led future for Argentina. However, despite initial promises, Milei's government has disappointed the crypto community by implementing new registration requirements for crypto firms in line with FATF rules. The National Securities Commission of Argentina has introduced a Registry of Virtual Asset Services Providers, requiring crypto firms to register or risk being banned from the country.(source)

World Markets

• The Caixin China General Manufacturing PMI rose to 51.1 in March 2024, surpassing market expectations and marking the fifth consecutive month of factory activity growth. This was fueled by increased new orders domestically and abroad, with foreign sales reaching a year high and output seeing the largest increase since May. However, employment continued to decline as firms remained cautious about costs. (PMI)
• Spain's new car sales dipped 4.7% in March after a strong February. Despite the March decline, sales for the first quarter are still up 3.1% year-on-year. (Anfac)
• Mexico's manufacturing PMI held steady at 52.2 in March, showing continued growth despite slightly slower hiring. New orders and output rose, but worries about US demand dampened optimism. Manufacturers raised prices due to higher input costs. (PMI)
• In March, the Russia Manufacturing PMI rose to 55.7, indicating the sector's strongest growth since August 2006. Output and new orders saw significant increases, with foreign demand rising for the first time in five months. This led to higher employment rates and increased input buying to replenish stocks.

Currencies

• The dollar rose close to a two-month high after data suggested manufacturing growth and inflation are on the rise. Investors are looking ahead to economic reports and Fed comments this week for clues on future interest rate cuts. The dollar gained against major currencies like the Euro.
• The Turkish lira dropped to a new low of 32.4 per USD following Erdogan's AKP party's defeat in local elections. Concerns arose over potential shifts in economic policies, but Erdogan vowed to address inflation. Turkey's inflation hit 67.07% in February 2024, prompting citizens to invest in gold and USD-linked assets. The central bank raised interest rates by a significant 4,150 bps over the past year amid economic challenges.

Commodities

• Oil prices stabilized around $83 per barrel, hitting a 5-month high, with anticipation for OPEC+'s meeting to extend production cuts. Investors are monitoring Ukrainian drone strikes on Russian refineries, peace efforts in Gaza, and Chinese manufacturing growth.

On Tuesday, stocks dropped sharply as strong economic data (job openings, factory orders) dimmed hopes of a Fed rate cut in June. Tesla slumped due to lower-than-expected deliveries. On world markets, silver is up on growing geopolitical threats. Eurozone production activity remains subdued, the Euro weakened on ECB rate cut expectations, and the Indian rupee depreciated as regulators aim to compete with China. BTC and ETH continued their vertical downfall alongside stock indexes, dropping another 7% each. Some other major coins, including Uniswap and Avalanche, shrank by more than 8%.

Details

• Job openings rose to 8.76 million in February, exceeding expectations. Gains were seen in finance, government, and some service sectors. Openings fell in information technology and federal government. Job growth varied regionally, with the West showing the strongest increase. (BLS)

Crypto

• Singapore tightened crypto rules (PS Act) to protect users and ensure financial stability. All crypto businesses, even those indirectly involved, must comply. Regulations apply to cross-border transfers. The Monetary Authority of Singapore (MAS) oversees these measures to combat money laundering and terrorism financing. (source)

World Markets

• Eurozone factory activity (PMI) remained in decline for March, but the rate softened. This revision to 46.1 reflects improving supply chains and a slower drop in output. New orders and exports also fell less sharply. Despite some optimism, job cuts continued due to weak growth expectations. (SP)
• German inflation eased to 2.2% in March, the lowest in nearly 3 years, meeting market expectations. This brings it closer to the ECB's target of 2%. Both overall and EU-harmonized rates declined. Food and energy price drops led the slowdown, while services inflation rose slightly. Core inflation also dipped to its lowest level since mid-2022. (DE)
• French manufacturing PMI dipped in March, extending a 14-month decline. However, the drop slowed, with some restocking and backlog clearing. New orders contracted further, leading to job losses. Despite this, manufacturers remain optimistic about future demand due to expected economic improvement. (SP)

Currencies

• The euro weakened to a near two-month low below $1.08. Investors expect the ECB to cut rates more than the Fed this year as German inflation slows to a 20-month low of 2.2%. While French inflation dipped, rates in Italy and Spain rose slightly.
• The Indian rupee weakened past 83.4 to the dollar, near a record low. This is due to expectations of less central bank support (RBI) and potential weakening of the Chinese yuan (PBoC). A weaker rupee could help Indian exports compete with China's. High energy prices also pressured the rupee as India imports oil and coal.

Commodities

• Silver surged past $25.50 per ounce, a year-high, on Middle East tensions and safe-haven demand. Industrial use, like solar panels backed by IKEA's EV grant, also boosted prices. However, strong US economic data dampened hopes of an immediate Fed rate cut, sending those bets below 60%. Investors now focus on jobs data and Fed speeches for clues on future rate changes.

On Wednesday, stocks edged higher after mixed economic data. The services sector slowed, but job growth remained strong. Tech stocks rose except for Microsoft and Intel, which dropped due to the earthquake in Taiwan. Globally, Eurozone inflation is down to a 2-year low, while gold and oil continued to over-perform amid tense geopolitical disputes. The crypto market's slide paused, with BTC and ETH hovering above major resistance levels at 66K and 3.3K respectively. Meanwhile, some major coins continued to slump, with Bitcoin Cash and Litecoin down more than 8%.

Details

• Service sector growth slowed (ISM PMI to 51.4). New orders, inventories, and employment weakened. Prices eased but remain a concern. (ISM)
• Private businesses added 184K jobs in March, the most in 8 months. Service sectors like leisure/hospitality led gains. Goods production added jobs in construction and mining, but manufacturing saw little growth. (ADP)

World Markets

• Eurozone inflation dipped to a 28-month low of 2.4% in March, missing expectations. Both headline and core inflation rates fell. Energy prices led the decline, while food and goods price growth slowed. Service inflation remained steady. Monthly inflation stayed positive at 0.8%. (Eurostat)
• Eurozone unemployment held at a record low 6.5% in February, despite a slight rise in jobless numbers. Youth unemployment remained flat at 14.6%. Spain has the highest rate (11.5%), while Germany enjoys the lowest (3.2%). This is an improvement from 6.6% unemployment a year ago.
• Turkey's inflation surged to a 16-month high of 68.5% in March, exceeding forecasts slightly. Transportation and housing costs rose the fastest, while food inflation eased. Core inflation climbed to 75.2%. Despite a slower monthly increase, high prices remain a major concern. (Tuik)

Currencies

• The dollar weakened after a surprising slowdown in service sector growth (ISM PMI). This data clashed with other strong economic indicators this week like job growth and factory orders. Investors now await Fed Chair Powell's comments as hopes for a June rate cut hover around 59%.

Commodities

• Oil prices hit a 5-month high above $86 per barrel after OPEC+ extended production cuts. Supply concerns due to attacks on Russian facilities, Middle East tensions, and a focus on output reduction by key members like Iraq pushed prices higher.
• Gold surged to record highs above $2,280 per ounce. Rising tensions in the Middle East and Ukraine fueled demand for safe havens. Mixed signals on Fed policy exist, with some expecting 3 rate cuts this year. Investors await Friday's US jobs report and Fed comments for clues on interest rates.

On Thursday, stocks rose as hopes for Fed rate cuts grew again after jobs data and Powell switched to dovish comments once more. All sectors gained, with tech (Meta +3%) and real estate leading. Alphabet fell on news of potential AI search fees. On world markets, ECB bureaucrats reiterated their pro-growth stance, weakening the Euro as service PMI grew, while copper prices jumped on China's economic recovery hopes. The crypto market improved on technical volatility, with BTC reaching 68K and ETH - 3.4K. Bitcoin Cash (+7%) and Binance (+5%) were among the best daily performers.

Details

• Jobless claims unexpectedly surged to 221Th, the highest in two months. This contradicts recent strong labor data, suggesting higher interest rates might be slowing the job market. (DOL)
• Job cuts jumped to 90,309 in March, the highest in 15 months. Tech (14,224) and government (36,044) led the losses. This brings Q1 job cuts to 257,254, exceeding Q4 2023 but down from Q1 2023. Cost-cutting is the main driver, with tech still leading job cuts overall. (Challenger)
• Imports surged to a 16-month high of $331.9B in February, driven by a $7.1B increase in goods. Consumer goods (phones, household items) led the rise, followed by food, beverages, and auto parts. Service imports also climbed, with travel and transportation sectors showing the biggest gains. (Census)

Crypto

• Memecoins dominated the crypto market in Q1 2024 (RWA being the second), surging over 1300% on average. Solana (SOL) was a major driver. This outpaced other sectors by a wide margin, with Brett (over 7700% gains) leading the pack. The sector now boasts 6 major cryptocurrencies by market cap. This impressive performance has caused mixed reactions within the crypto market. (source)

World Markets

• Eurozone services sector PMI (51.5 in March) grew modestly after 6 months of decline. Sales improved, but mainly domestically. Businesses added staff, though slower than before. Price pressures eased to multi-month lows. Service providers remain optimistic about future activity. (SP)

Currencies

• Dollar weakens for a third day (104) as expectations of Fed rate cuts grow. Jobless claims and March job cuts rose, and service sector growth slowed. Investors await Friday's jobs report for clues. Fed Chair Powell signaled rate cuts likely in 2024, but data dependence remains. The Euro and other currencies gained against the dollar.

Commodities

• Copper prices soared to a 14-month high (over $4.20/lb) due to a weaker dollar and supply concerns. Lower US interest rates (expected due to weak service sector data) boosted demand from global manufacturers and key importers like China (despite some demand worries there). Mine disruptions in Africa added to supply risks, prompting Chinese smelters to cut output.

On Friday, stocks increased in a technical recovery after Thursday's sharp downturn, despite strong jobs data. The unexpected drop in unemployment and continued wage growth suggest a robust labor market, potentially delaying Fed rate cuts. Despite Friday's gains, the market is on track for a weekly decline. Globally, gold hit a new ATH, silver surged above $27, and Zimbabwe is launching a new currency. The crypto market was mostly in the red, despite BTC recovering slightly above $68K. Solana (-5%) and Algorand (-3%) led the decline.

Details

• Unemployment unexpectedly dipped to 3.8% in March, defying expectations. Job gains were strong (498th) and the labor force participation rate increased. Despite Fed rate hikes, the job market remains tight. (BLS)

Crypto

• Grayscale reshuffled its crypto funds based on index rebalancing. Cardano and Cosmos were removed from some funds and proceeds reinvested in existing holdings. The Large Cap Fund now holds mostly Bitcoin and Ethereum as well as 4.52% of Solana, and ~3% in XRP and Avalanche, while the Smart Contract Platform Ex-Ethereum Fund focuses on Solana and Cardano (plus, 12.25% - Avalanche, 8.53% - Polkadot and 6.25% Polygon). The DeFi Fund remains unchanged (8% - Uniswap, 20.41% - MakerDAO, and 13.17% - Lido). (source)
• BlackRock added big names like Goldman Sachs and Citigroup as authorized participants for its Bitcoin ETF. This move suggests major financial institutions are increasingly interested in being part of the cryptocurrency market. (source)
• Crypto VC funding surged 38% and funding reached projects not seen since late 2021. This might signal a new wave, similar to pre-bull run periods. Crypto-focused VCs like Andreessen Horowitz are leading the charge. (source)

World Markets

• Hong Kong's Hang Seng index ended flat (16,723.92) despite initial morning losses. Positive retail sales and business activity data lifted investor sentiment. Upcoming US jobs data and China inflation figures are on watch. Financials gained, while tech, property, and consumer stocks fell. The index is down 1.1% for the week due to Fed rate hike concerns and geopolitical tensions. The index reached its 1997 level whenHong Kong was officially handed back to China by the United Kingdom on July 1. Overall, the Index halved (ATH ~32.7K) since the "Umbrella Movement" hit Hong Kong in 2014. It was a political movement that emerged in response to proposed reforms to the electoral system by the Chinese government, which were viewed by many in Hong Kong as restrictive.

Currencies

• The Mexican peso surged to a near 7-year high (over 16.49 per USD) due to low volatility, high interest rates, and economic strength. Even with a recent rate cut, Mexico's high real rates make the peso attractive (carry trade). Some central bank officials worry about inflation but support the peso's stability.
• Zimbabwe is launching a new currency to replace its failing dollar. Backed by foreign currencies, gold, and other valuables, it aims to tackle inflation and a weak economy. This is the first move by the new central bank governor to address Africa's weakest currency. The new currency launches at a set rate on April 8th with lower interest rates (20% vs 130%).

Commodities

• Silver prices surged above $27 after strong jobs data reduced expectations of Fed rate cuts. The data showed unexpected job gains and steady wage growth. This aligns with comments from Fed officials suggesting slower rate cuts. Silver is up 6.5% for the week due to Middle East tensions and hopes for future easing.
• Food prices edged up in March, ending a three-month decline. Vegetable oils surged 8% to a year-high, while dairy prices reached an 11-month peak. Meat prices also rose slightly. However, cereal and sugar prices fell, with cereals reaching a 40-month low. This is due to strong competition among wheat exporters and a production increase in India for sugar. (FAO)

On Week 15, investors eye key data: US inflation, FOMC minutes, consumer confidence, and trade figures. Global focus includes interest rate decisions, inflation announcements, and China's economic data.

SVET Markets Weekly Update (March 25 - 29, 2024)

On Week 13, the economy continued to show signs of slowing down, with major regional manufacturing indexes indicating weakness. Prices decelerated across main sectors, while FOMC members sent mixed signals about potential rate cuts, leading to mixed stock results. The S&P and DJ hit record highs, while Nasdaq underperformed and the dollar index rose.

Globally, gold reached a new ATH as major world banks softened their hawkish anti-inflationary rhetoric. Inflationary dynamics eased worldwide, although the yen stumbled as the Japanese economy showed some inflationary signs. The Chinese economy's performance was still under question, despite upbeat government economic reports and promises to support the economy from CPC officials. Meanwhile, cocoa prices surged on pure speculative rush.

Crypto markets relented, with a double top pattern forming on BTC and ETH daily charts, leading many analysts to worry about a potential market reversal on a sell-the-news event after the upcoming BTC halving.

On Monday, new home sales decreased, Texas manufacturing slowed down while Chicago's picked up, stocks paused after last week's record highs. DJ fell, S&P dipped, Nasdaq remained flat. Consumer staples and industrials led declines, while energy outperformed. Intel and Microsoft dropped on China news (Intel processors ousted from government PCs). Chipmakers surged. Internationally, Yuan rose on government's support while cocoa continued to rally. BTC and ETH led the crypto market, gaining over 6%, driven by technical factors and forming a 'double top' pattern.

Details

• New home sales dipped slightly in February (662Th annualized rate) compared to January, missing expectations. This aligns with rising mortgage rates. Sales dropped in some regions but rose in others. The median home price was $400,500. There's currently an 8.4-month supply of new homes available. (Census)
• Chicago Fed's economic growth index rose slightly to 0.05 in February, indicating a modest pick-up in economic activity. Improvement was seen in production, sales, and inventories compared to last month. (ChicagoFed)
• Texas manufacturing slowed down in March according to a Dallas Fed survey. Production, new orders, and shipments all fell. Business outlooks also weakened, with increased uncertainty. This suggests slower growth for Texas manufacturing. (DallasFed)
• 10-year Treasury yield rose as investors wait for clues on Fed rate cuts. Atlanta Fed Bostic expects a single cut instead of the two while Powell hinted on three cuts. Key inflation data and Fed official comments are eyed. Bets on a June rate cut are rising.

Crypto and Local Banks

• Iceland ditches Bitcoin mining for "real" farms. Worried about food security and energy use, the country prioritizes agriculture and self-sufficiency, aiming to feed its people and lessen reliance on imports. Renewable energy will focus on homes and essential industries, not digital currencies. (source)
• Hundreds of small banks are struggling after last year's troubles. Sources analyzed about 4th institutions and found 282 with high levels of commercial real estate exposure and unrealized losses from the rate surge. Mergers have stalled. Behind doors, fearing publicity regulators are quietly pressuring banks to improve their finances. (CNBC)

World Markets

• Ghana's central bank held interest rates at 29% to fight inflation. Inflation eased slightly to 23.2% but remains high. Economic growth in 2023 (+2.9%) exceeded targets (+2.3%), but the trade surplus narrowed due to lower exports.

Currencies

• China's Yuan strengthened to 7.25 after state banks intervened and signaled support. This follows recent weakness on economic growth worries.

Commodities

• Rice futures prices fell to a 4-month low of $17.8 per hundredweight as the USDA forecast larger global rice supplies and slightly lower demand (Pakistan's high stocks, India's growing production).
• Cocoa prices continued its unprecedented rise, hitting a record high of $9.4K a ton (+45% in March). This explained by supply concerns in top growers Ivory Coast and Ghana. Poor harvests hurt by El Niño rains and heat. Ghana cut its production forecast. Prices may rise further as the smaller mid-crop season approaches.

On Tuesday, stocks were in the red as investors awaited inflation data and Fed clues. Durable goods orders surprised on the upside, but consumer confidence missed, and regional manufacturing activity continued to slow down. The financial and consumer discretionary sectors led, while utilities and energy lagged. Tesla and Reddit rose on news. In the world's markets, the yen weakened despite Japanese government support, the Brazilian real is cheaper due to export concerns, and the Swiss franc fell against the USD due to its central bank's rate easing move. BTC and ETH stumbled, meeting resistance at 70K and 3.6K, respectively, increasing the chances of forming medium-term side-channels on their price charts.

Details

• Home prices rose faster than expected in January (6.6% YoY), with San Diego and Los Angeles leading the gains. However, prices dipped slightly month-over-month due to rising mortgage rates. Only Southern California and Washington D.C. saw price increases in January. (SP)
• Factory orders for durable goods rose 1.4% in February, exceeding expectations. This follows a January decline. Orders for transportation equipment (cars, machinery) bounced back significantly. Business spending plans also showed a modest increase. (Census)
• Richmond manufacturing index fell to -11 in March, signaling a slowdown. New orders and backlogs dropped sharply. Despite this, employment remained stable and wage growth continued. Businesses are still somewhat optimistic, but less so than last month.(RichFed)
• A Texas service sector business survey showed a decline in March(index -5.5). Companies' outlooks remained flat, but uncertainty rose. Revenue growth slowed, and employment was steady. Price pressures eased, but future activity expectations stayed positive. (DallasFed)

Crypto

• The London Stock Exchange will start trading Bitcoin and Ethereum ETNs in late May, pending regulatory approval. This move aims to bring cryptocurrencies to the traditional stock market. (source)

World Markets

• German consumer confidence rose insignificantly to -27.4 in April, the highest level of 2024. Income and economic outlook improved modestly. However, willingness to buy remains very low, and saving is still high. Experts say a sustained economic recovery hinges on lower inflation and clearer government plans. (GFK)
• Spain's economic growth slowed in 2023. The final quarter came in at 2.0%, following a similar increase in the previous quarter. This brings the full year growth to 2.5%, down significantly from 2022's 5.8% expansion. (INE)

Currencies

• The weak yen prompted warnings from Japanese officials. Finance Minister Suzuki didn't rule out intervention, and currency diplomat Kanda called the decline "speculative." This follows the Bank of Japan's recent rate hike, which had little impact on the currency.
• The Swiss Franc weakened to a 5-month low. The Swiss central bank cut rates rate by 25bps to 1.5% and lowered inflation forecasts (also to 1.5%), while the US Fed held rates due to high inflation. This policy contrast caused the Franc to depreciate.
• The Brazilian real weakened (to 4.98) due to lower inflation and a weak export outlook. Lower inflation data increased expectations of a dovish stance by the central bank, potentially slowing future rate cuts. Concerns about slowing demand for iron ore and soybeans in China, key Brazilian exports, also weighed on the real.

On Wednesday, stocks rebounded after a two-day slump. The Dow surged on strong performances from Apple and Intel, while the S&P hit a record high. Tech stocks lagged, with Nvidia dropping. Investors await Fed comments and inflation data for clues on rate cuts. Utilities, real estate, and industrials led gains. In the world's markets, Chinese industrial profits surged, while EU consumer sentiments improved only marginally. BTC and ETH continued to slide down by several percentage points, forming a side-channel on daily graphs. The crypto market followed suit, with Algorand, Polygon, and Solana dropping by 3% and more.

Details

• 30-year mortgage rates dipped barely noticeable to 6.93% (previous: 6.97%) in late March. This could increase housing inventory, but experts say it will likely be slow as rates are expected to fall further this year. (MBA)

Crypto

• Republican lawmakers urged the SEC to clarify rules for digital assets like Ethereum, particularly regarding custody services. They argue Ethereum isn't a security and current uncertainty harms the market. This impacts offerings like Ethereum ETFs and the broader digital asset landscape. (source).
• Fidelity applied to launch a spot ETF. This filing offers the possibility of some holdings being staked to earn rewards. (source)

World Markets

• Chinese industrial profits surged 10.2% in early 2024, reversing a 2023 decline. This points to an economic recovery fueled by government support. Private sector profits grew much faster than state-owned ones. Gains were strong in tech, autos, and energy, while profits fell in mining and agriculture. (CN)
• Eurozone economic confidence rose to a 3-month high (96.3) in March, beating expectations. Both manufacturers and consumers were more optimistic, with sentiment also improving in services and retail. Inflation expectations eased slightly, while manufacturers expect to raise prices. Confidence rose in France, Italy, and Germany, but fell in Netherlands and Spain. (EU)
• French consumer confidence rose in March to a near two-year high (91), but stayed below the long-term average. People felt better about finances, standard of living, and future inflation. They were also more optimistic about buying big items and job prospects. (Insee)
• Spain's inflation rose to 3.2% in March, after a dip in February. This is in line with expectations. Energy prices drove the increase, but food price growth slowed. Core inflation, excluding volatile items, dipped to its lowest level in over two years - 3.3%. (Ine)
• Russia's industrial output surged to a 2-year high of 8.5% in February, up from 4.6% growth in January. Manufacturing, utilities, and mining all saw strong gains. The overall Russian economy also grew at a solid pace of 4.6% year-on-year in January. (RU)

Currencies

• The Euro held steady around $1.08, likely ending the quarter down vs. the USD. This follows the ECB signaling future rate cuts due to falling inflation. Investors expect a cut in June, with some anticipating more by year-end. The dollar strengthened as US rate cut expectations eased.
• The yen weakened to a 32-year low (152), sparking talk of intervention by Japanese officials. Finance Minister Suzuki warned they might take action. This follows the Bank of Japan's recent rate hike, which had little impact on the currency's decline.
• The British pound held steady (1.26) but is on track for a quarterly decline versus the dollar. This follows dovish signals from the Bank of England, which kept rates unchanged despite inflation. Some policymakers shifted toward holding rates, leading markets to believe the UK could cut rates before the US, but one official downplayed that expectation.
• South Africa's rand gained slightly (18.9) after the central bank kept rates high to fight inflation. Inflation is near the target range, but policymakers expect it to take longer to cool down. This means interest rates will likely stay high for a while. (77 words)
• Mexican peso strengthened to an 8-year high (16.6) due to lower unemployment and bets on continued tight monetary policy to fight inflation. The central bank cut rates slightly but signaled a wait-and-see approach.

On Thursday, stocks barely budged at the close of Q1, with investors awaiting inflation data and Powell's comments. This caution persists despite a strong quarter for stocks, with the S&P up 10% (its best performance since 2019). Internationally, gold reached a new ATH on expectations of global rate cuts, oil rose due to geopolitical tensions, and the dollar index is up following hawkish comments from FOMC members. In the crypto market, BTC surpassed 70K and ETH reached 3.5K once again. Bitcoin Cash continued its surge, adding 7% and surpassing 575.

Details

• The economy grew at a solid 3.4% annual rate in Q4 of 2023, slightly better than first thought. This was driven by stronger consumer spending on services and increased business investment in areas like technology and structures. Housing investment grew modestly, while government spending rose more than expected. Trade played a smaller role as both exports and imports grew slower than initial estimates. A bigger-than-expected reduction in business inventories also weighed slightly on the final growth figure. (BEA)
• Jobless claims unexpectedly fell to 210K in late March, better than expected. This continues a trend of low claims, but a separate measure of ongoing unemployment ticked up slightly. The data suggests a tight labor market, potentially allowing the Fed to wait before cutting rates. (DOL)
• Chicago PMI showed a deepening contraction in March (index 41.4). This is the 4th straight month of decline and the worst in 10 months. New orders and production fell, while employment surprisingly rose. Prices paid by businesses also dipped. (ISM) Also, the Kansas City Fed's manufacturing index plunged to -9 in March, indicating a steep decline in production. (KFed)
• At the same time, consumer confidence (Michigan Consumer Sentiment Index) rose to a 29-month high of 79.4 in March after a revision. Both expectations and current conditions improved, while inflation expectations dipped slightly. (SCA)

Crypto

• A new report by Statista predicts a surge in global cryptocurrency use. Here's a quick breakdown:
1. Russia: Projected to have the world's second-highest number of crypto users (38.5 million) by 2027, boasting the fastest growth rate (15% annually).
2. USA: Currently leads with 52.8 million users, expected to nearly double by 2027 (102.2 million).
3. Europe: Combined user base to reach 191.6 million by 2027 from 101.5 million in 2022 (14% annual growth).
4. Rest of the World: Expected to experience explosive growth, jumping from 291.7 million users in 2022 to 729.3 million by 2027 (20% annual growth).

World Markets

• German retail sales dropped 2.7% YoY in February. This follows a record low in March 2023 and indicates continued weakness in the retail sector. (DES)Germany's unemployment rate stuck at a 15-month high of 5.9% in March. Disparities remain, with Bremen and Berlin worst hit, while Bayern and Baden-Württemberg fare best. (Stat)
• South Africa's producer price inflation (PPI) dipped to 4.5% in February (below expectations), after a higher reading in January. The pace of price increases slowed down for various goods. Monthly inflation was also lower than forecast. (SA)
• Brazil's unemployment edged up to 7.8% in early 2024, but remains low compared to levels (up to 15%) since 2015. The number of unemployed people increased, but wages also grew slightly. (IBGE)

Currencies

• The dollar rose to near a six-week high around 104.4 after a Fed official hinted at delaying rate cuts. This comes as inflation data remains strong. Investors await the key PCE inflation report for clues. The dollar gained ground against most currencies but could weaken versus the yen if Japan intervenes to support it.

Commodities

• Gold prices surged to a new ATH, on track for its biggest monthly gain (+8.5%) in over a year. This rally is fueled by hopes of Fed rate cuts despite stubborn inflation. Investors see gold as attractive due to lower yields and ongoing geopolitical tensions. The key inflation data on Friday will be closely watched for clues on the Fed's future moves.
• Oil prices climbed above $82 per barrel for a third month in a row. This is despite a surprise inventory build and ongoing geopolitical tensions. The rise is fueled by expectations of OPEC+ maintaining production cuts at their upcoming meeting, along with higher refinery activity.

On Friday, the stock market is closed for the Easter break. Powell delivered his remarks at the San Francisco Fed, indicating he's not in a hurry to cut rates, contrary to majority expectations. This may reflect negatively on Monday's market opening. Globally, gold continues to outperform, hitting a new ATH at $2,230 while steel prices fall to 4 years low on weakening Chinese economy. BTC and ETH remained within narrow ranges of $72K-$68K and $3.6K-$3.4K on hourly charts, forming a double top pattern on daily ones. Meanwhile, Bitcoin Cash keeps rallying, rising approximately four times YoY and outperforming all major alts except Solana, which surged approximately eight times YoY.

Details

• Core inflation (PCE), excluding food and energy, remained steady in February at 0.3% monthly and 2.8% annually. Personal income grew, but at a slower pace than January. Spending surged in February, driven by services like finance and transportation, along with car purchases. This suggests inflation might be plateauing, while consumer confidence is rising. (BEA)

Crypto

• Bitcoin Cash (BCH) saw a dramatic reversal in mid-February, skyrocketing 55% in a week. This surge comes ahead of a key event: the halving on April 3rd, which cuts new coin creation in half. This, along with the launch of BCH futures contracts on Coinbase and a rising network hash rate, has fueled a return of investor interest and speculation about BCH's future. Even BCH co-founder Roger Ver is reigniting the debate about BCH's role as the "true" Bitcoin. (source)
• A UK government task force published a report exploring how blockchain technology can be used in investment funds. This builds on their earlier work and looks at using tokens as collateral and streamlining the investment process. The government welcomes this progress, highlighting the UK's position as a leader in financial innovation. (source).
• Crypto analysts argue that cryptocurrencies, particularly meme coins and NFTs, are better suited for the modern attention economy than Web2 platforms, which struggle to accurately measure and compensate user attention. (source)

World Markets

• Ukraine's current account deficit shrank significantly to $111 million in February 2024, compared to $705 million a year earlier. This is due to a sharp drop in both service and good imports. Smaller surpluses from other areas partially offset this improvement. (UA)
• Vietnam attracted $4.6 billion in foreign investment in the first quarter of 2024, up 7.1% YoY. Pledges for future investment also rose, indicating continued growth. Manufacturing received the most investment, with Singapore and Hong Kong as the top sources. (MPI)

Commodities

• Gold prices remained near record highs above $2,230 despite thin trading. This is due to expectations of central banks cutting rates, including the Fed's possible move in June. Geopolitical tensions also boosted demand for safe-haven gold.
• Steel prices plunged to a 4-year low due to weak demand in China. Steel mills are taking in iron ore, but production is down as construction slows. This reflects a gloomy outlook on China's property market despite government attempts to boost it.

On Week 14, locally focus is on jobs data and economic activity indicators. Globally, inflation reports and manufacturing health are key. Trade data and interest rate decisions will also be watched closely.

Comment: On falling PMI in major States.

So, we still have burgeoning stocks coupled with a weakening economy, along with Powell's constantly dwindling influence. He continues to play political games in an election year, giving the market hints on impending cuts, only to retract them, trying to navigate between pressure from both Democrats and Republicans. Meanwhile, economic data from the week confirmed the economic slowdown.

Democrats are worried about their falling popularity among key, low-income electorate due to high rates, affecting mortgages and slowing the economy. Plus, accumulated inflation pressure is unbearable. At the same time, Republicans enjoy rates, which undermine Democrats' position. Let's see how things develop.

In Kansas, the main manufacturing industries heavily impacting regional PMIs include transportation equipment manufacturing (35%), machinery manufacturing (25%), and food manufacturing (20%).

Corporations such as Spirit AeroSystems Holdings Inc., Textron Aviation, and Cargill are major players in transportation equipment manufacturing, machinery manufacturing, and food manufacturing respectively, significantly influencing regional PMIs.

In Chicago, the dominant manufacturing sectors influencing regional PMIs are machinery manufacturing (30%), fabricated metal product manufacturing (25%), and food manufacturing (20%).

Prominent corporations like Caterpillar Inc., John Deere & Company, and Archer-Daniels-Midland Company are key contributors to machinery manufacturing, fabricated metal product manufacturing, and food manufacturing respectively, impacting regional PMIs.

In Michigan, key manufacturing industries significantly affecting regional PMIs are transportation equipment manufacturing (40%), machinery manufacturing (25%), and fabricated metal product manufacturing (20%).

Companies like General Motors, Ford Motor Company, and Fiat Chrysler Automobiles are dominant players in transportation equipment manufacturing, significantly affecting regional PMIs.

So, falling regional PMIs indicate a rapidly worsening situation in key industries such as transportation, food, and machinery across the country. The Fed must pay attention to that.

SVET Markets Weekly Update (March 18 - 22, 2024)

On Week 12, the Fed kept its rate unchanged while hinting at a hawkish policy reversal. Stock markets reacted with new ATHs, while BTC and ETH still lingered after the massive 10% correction following the quarterly options expiration. In world markets, stock indexes rallied when major central banks, including those in China and Brazil, began pivoting their policies from anti-inflationary to pro-growth. The ECB also signaled a softening of its rate hike rhetoric.

On Monday, stocks rebounded as investors focused on AI advancements ahead of the Fed meeting, overshadowing interest rate hike concerns underpinned by homebuilders' rising confidence. Apple and Alphabet benefited from news of AI integration. On the world's markets, Chinese manufacturing sector added 7% unexpectedly, while oil prices continued to grow on worsening geopolitics and lower supplies. The crypto market was in the red, experiencing a continuing correction with BTC hovering slightly above 67K and ETH dipping below 3.5K. Among major alts, only Avalanche (+7%) continued to rise.

Details

• Homebuilder confidence jumps to 8-month high (51) in March as low existing inventory pushes buyers to new construction. Mortgage rate dip below fall's peak further fuels demand. (NAHB)

Crypto

• Digital assets see record inflows for two straight weeks, reaching $2.9 billion last week. This pushes the yearly total to $13.2 billion, surpassing 2021's bull run. BTC dominates with nearly all inflows (99.9%), while overall trading volume remains steady at $43B - 47% of overall global BTC volumes. (source)
• Despite China's strict crypto regulations, Chinese investors made $1.15B, contributing to the global total of nearly $38B. The US remains the leader with $9.4 billion in crypto earnings, followed by the UK at $1.4B. Hong Kong, a part of China, also saw significant crypto activity with $250M in gains. (source)
• BlackRock's BTC trust sees high trading activity with an average daily trade size of $13K, suggesting retail investor interest (~250K trades in a day, a trade size is ~326 shares, or ~$13K). (source)
• El Salvador accumulated over $65 million in unrealized BTC profit. According to a survey conducted by the Central American University, only 12% of the local population have used BTC at least once to pay for goods and services in 2023. (source)

World Markets

• China's manufacturing output roared back in Jan-Feb, growing 7% YoY, exceeding expectations (5%) by far. This is the fastest pace in nearly two years, driven by strong manufacturing and utilities. (CN)

Currencies

• Brazilian real tumbles to a 4-month low (over 5 per USD) as investors weigh potential interest rate cuts in Brazil vs. expected hikes by the Fed.

Commodities

• Oil prices jump 2% to hit a high of $82.72 per barrel (highest since October) due to several factors: lower exports from Iraq and Saudi Arabia, signs of rising demand in China and the US, and ongoing geopolitical tensions impacting supply.
• Copper prices surge to a new high since April 2023 (above $4.1 per pound) on strong Chinese economic data (factory output +7%, retail sales +5.5% yoy). Smelter production cuts due to low concentrate prices also contribute to the rise. However, a 9% decline in property investment remains a concern.

On Tuesday, stocks are flat ahead of the Fed meeting, ignoring the sudden surge in building permits. No rate hike is expected. Internationally, Japan increased its key interest rates to 0.1% for the first time in eight years. The crypto market was hit by a second wave of correction, with Bitcoin reaching 62.4K and Ethereum down to 3.2K. Some altcoins, including Solana, Polkadot, and Cardano, slid more than 7%.

Details

• Building permits jump 1.9% to a 1.52M annual rate in February, exceeding expectations and hitting a post-August high. Gains in Midwest and Northeast offset declines in other regions. (CNS)

Crypto

• Former Treasury Secretary says a forgotten method (Arthur Okun’s pre-1983 system) shows inflation is much worse (18% vs official 4.1%) as it considers housing costs and interest rates. "Price indexes do not include borrowing costs. Thus, when interest rates jumped last year, official inflation did not fully capture the effects it would have on consumer well-being". (source)
• Over $122 million poured into 27 projects in a week on the Solana, driven by memecoin craze and booming DEX activity. (source)
• Grayscale Bitcoin Trust sees biggest outflow ever ($640 million) as Bitcoin dips and investor sentiment sours. (source)

World Markets

• Breaking with 8 years of negative rates, Japan hikes rates to 0.1% to combat inflation and support rising wages. They're also scaling back asset purchases with some flexibility to adjust. (BoJ)
• Eurozone economic sentiment surges to a 14-month high (33.5) in March, with analysts mostly expecting stable activity. However, inflation expectations remain deeply negative (-64.3) and the current economic situation is still seen as weak (-54.8).
• Russia's borrowing costs soar (13.4% yield on 10-year bond) due to high inflation (is on 7.7%, with the 4% target), weak consumer response to rate hikes, and government spending concerns (budget deficit is RUB 1.474B in Jan-Feb). (source)

Currencies

• Euro weakens near $1.08 as dovish ECB signals (possible rate cuts) counter slowing wage growth. 5 out of 26 members of the central bank governors (Spain, the Netherlands, Ireland, Greece, Slovakia) have publicly supported rate cut in June.
• British pound tumbles to 2-week low ($1.27) as investors eye key inflation data and central bank decisions this week. BoE likely to hold rates, but mull August cuts unlike ECB and Fed's expected June moves.

On Wednesday, stocks soar to new ATHs after Fed maintains rate cut plans. Tech leads rally, with mega-caps like Meta and Apple up over 1%. In world markets, gold set a new record at $2222. The crypto market surged back with BTC and ETH gaining about 7%.

Details

• Fed holds rates at a 23-year high of 5.25%-5.5% but promises three cuts later in 2024, with projections for stronger economic growth but slightly higher inflation. They see unemployment falling to 4% this year. (FED)

Crypto

• With BTC ETFs approved, the pressure is on for ETH ETFs. Several companies are vying for a green light from the SEC, with deadlines approaching. Despite regulatory hurdles and DeFi challenges, analysts remain optimistic about Ethereum's strength and growing DeFi ecosystem. DeFi protocols surged 80.3% YoY to $51B, with a 21.6% increase in wallet addresses. (source)

World Markets

• Brazil cuts rates 50bps to 10.75% as inflation eases but remains above target. They aim to boost the economy cautiously while keeping inflation in check. (BCB)

Commodities

• Gold rises to $2222, setting a new record, after mixed central bank signals. Fed to hold rates, but hints at cuts later in 2024. BoE eyed for future rate cut clues.

On Thursday, manufacturing activity is down, service sectors cools a bit, home sales grows unexpectedly, stocks soar on continuing tech lead rally with Micron up 16% on strong earnings. Reddit debuts on NYSE, but Apple tumbles on DOJ lawsuit. Internationally, EU manufacturing sector continue to soften, as Swiss Bank cut its key rate while Bank of England kept its rate unchanged but showed signs of softening its anti-inflationary stance. Despite that, crypto market turned red correcting after yesterday's surge on Fed turning dovish enthusiasm. BTC's trading slightly above 65K, ETH - 3.4K. Among few coins which are still in a green are XRP (+7%) and LTC (+1%).

Details

• Service sector growth cools down in March, with PMI dipping to 51.7 (3-month low). New business slows, but employment rises. Businesses see higher inflation and are boosting marketing plans despite these mixed signals. (SP)
• Philly Fed Index dips to 3.2 but beats forecasts (expected -2.3). Shipments and new orders improve, suggesting some expansion. Prices remain low, but future activity expectations rise.(PhilFed)
• Existing home sales surged 9.5% to a 1-year high (4.38 million) in February, defying forecasts. More houses on the market are meeting buyer demand, with gains in all regions except the Northeast. (NAR)

Crypto

• Massive real-world asset tokenization (such as $326 trillion in real estate or the gold market, valued at $12.39 trillion) could fuel the crypto market by boosting liquidity. That trend is confirmed by main-stream opinion's leaders - the Boston Consulting Group and the BlackRock. (source).
• India cracks down on foreign crypto exchanges like Binance and OKX, blocking their websites and prompting an exodus to local exchanges. Local exchanges see massive user inflows with the government's unclear regulations and high taxes making things difficult for foreign players. (source)

World Markets

• Bank of England holds rates at record 5.25% despite inflation dipping to 3.4% (lowest in nearly 30 months). One member voted for a cut, but policymakers wait for clearer signs inflation is under control before easing. (BoE)
• German manufacturing PMI sinks to 41.6 (worst in 5 months) despite a slower decline in output. Backlogs and employment continue to fall, but sentiment improves. (SP)
• French manufacturing PMI tumbles to 14-month low (45.8) as output and sales plummet. Despite some supply chain improvement, job cuts held steady.(SP)
• EU car sales surge 10.1% in February (+12.1% previous), with strong growth in France and Italy. Battery electric cars hold 12% market share (up from 9%), boosted by Belgium, France, and Netherlands despite a German dip. (Acea)

Currencies

• Mexican peso weakens after central bank cut rates (25bps to 11%). Inflation dips but remains above target (4.4%). Investors weigh the Bank of Mexico's move against the Fed's planned rate cuts later in 2024.

Commodities

• Gold continued to increase, fueled by expectations of central bank easing. The Fed signaled rate cuts, and now the Bank of England holds steady, with one vote for a cut. Switzerland became the first major economy to cut rates, further boosting investor confidence in looser monetary policy.

On Friday, stocks cool off after record highs. Dow retreats, but weekly gains expected. Consumer discretionary stocks lag, while utilities and communication services rise. On worlds markets, Euro, Chinese Yuan and Indian Rupee weaken on rate cuts expectations, EU gas prices increased due to supplies concerns, cocoa market is in panic with prices quadrupling in past two months. The crypto market entered into a correction mode forming a sideway channel with major coins sliding down for more than 4%. BTC got under 64K and ETH dropped below 3.4K.

Crypto

• BlackRock clients have much more interest in BTC than ETH. (source)
• Minnesota UBI bill that would give up $300 to $1.2K every month for two years to low-income residents has already advanced through a House committee. The program would be funded with $200 million over two years. (source)

World Markets

• El Salvador's economy rebounds. Q4 growth hits 4.5%, the highest in 2 years. Trade and investment surge, but consumer spending slows. This marks a significant improvement from the previous quarter's decline. (BCR)
• Vietnamese stocks climb to 18-month highs, boosted by Wall Street's record and hopes of US rate cuts this year. Local gains led by finance and construction sectors after Hanoi appoints new acting head of state.

Currencies

• Dollar strengthens for a second week, hitting 3-week highs (104.2). Bets on earlier rate cuts by other central banks lift the dollar. Swiss National Bank cut rates, Bank of England paused, and Bank of Japan shifted policy, but remains dovish. The Fed held steady on rates and its plan for 3 cuts, but awaits signs of inflation easing.
• China's offshore yuan weakens to a 4-month low (7.25 per dollar) on expectations of more easing. The central bank hints at looser policies, and a strong dollar adds pressure. Investors await data to assess China's economic health.
• Euro falls to near $1.08, its lowest level in over 5 months, on hopes of ECB rate cuts. A hawkish ECB official signaled potential cuts before summer, aligning with market expectations of multiple reductions this year. The ECB remains data-driven, though, and future moves depend on inflation.
• Indian rupee weakens to record low (83.5) after China's currency move sparked Asian selloff. Despite the drop, strong economic growth (8.4% GDP) and high PMI (over 60) kept the rupee somewhat stable.

Commodities

• European natural gas prices stay high near €29/MWh due to supply worries. Concerns include outages in Norway, repairs at a US terminal, and competition for gas from Asia. However, analysts expect prices to fall as winter ends, with more solar power and stable gas storage levels in Europe.
• Cocoa prices keep surging, hitting a record high above $8,600 per pound (was ~2K at the start of the year). Fears of a global cocoa shortage intensify as reports emerge of processing slowdowns in West Africa and lower-than-expected harvests in Ivory Coast. Analysts predict a wider global cocoa deficit due to these supply concerns.

On Week 12, local investors will expect inflation data, Fed speeches, GDP. In EU they will watch for inflation and rates. Japan, Canada will see key data releases.

Comment: Fed's Created Inflation Is Confirmed.

I was always arguing for that the Fed's old bureaucrats have created non-core inflation (excluding food and energy) by themselves, through their stupid-high interest rates.

Now, the fact that governments are significantly altering their inflation statistics by not including in it the effect of rising rates is confirmed by non other than the former Treasure Secretary Mr. Summers himself.

Note that Japanese bankers kept their rates at a negative level (!) throughout that time, achieving better results in "suppressing inflation" by doing absolutely nothing (in fact, even printing more money). In Japan, inflation is about 2% now.

All main-stream economists' counter-arguments suggesting that the Japanese economy is "structurally different" are inconsistent with the concept of "global financial markets" and the fact that Japan imports almost all of its energy from abroad, thus facing inflationary prices like everyone else.

Bottom line, almost all non-core inflation stemmed from producers and service providers simply factoring the Fed's rates into product prices and salaries.

SVET Markets Weekly Update (March 11 - 15, 2024)

On Week 11 BTC turned red for the first time in two weeks, while main stock indices, except the Nasdaq, managed to close in green. This comes despite inflation rising unexpectedly to 3.2% and traders being jittery about the outcome of the FOMC's meeting next week. On the world's markets, oil, gold, and silver prices rose despite the dollar index edging above 103.

Overall, traders behaved more rationally this week compared to the previous two weeks, when major stocks and crypto markets continually reached new all-time highs (ATHs). Investors factored in the slow but sure deterioration of economies worldwide as energy and food prices began to appreciate again. Additionally, despite the ongoing rally in "big name" tech stocks, smaller and mid-sized stocks underperformed, leading many analysts to question the validity of the recent bull market.

A similar trend is occurring in the crypto markets, where major coins outperform and reach ATHs, while the vast majority of coins and tokens remain in bear market territory. This situation characterizes the 2024 market as a "golden bull run" driven by hyper-rich institutional and private investors aiming to make the most profitable assets across all markets out of reach for the average investor.

On Monday, stock market sees mixed performance. The Dow ticks up slightly, while the S&P 500 and Nasdaq dip. Tech sell-off hits Nvidia, AMD, and other tech stocks. However, materials, energy, and consumer stocks rose. Investors anticipate key inflation data before the Fed meeting on March 20. Internationally, Japan managed to avoid entering a recession, and steel prices reached a 9-month low. BTC reached a new ATH at $72.4K, leading the rest of the market, with ETH closing above $4K again. Many altcoins, including XRP (+20%), Litecoin (+17%), Avalanche (+15%), and Algorand (+14%), significantly outperformed two leading coins.

Details

• Consumers inflation expectations stay put at 3% for next year, matching a 3-year low. Gas prices expected to rise slightly, while some sectors like medical care, education, and rent see inflation dip. Long-term inflation outlooks inch up slightly. (BoNY)

Crypto

• Bitcoin price skyrockets to a new high above $72K, jumping over 70% this year with its total market cap above $.14 trillion. This surge pushed BCT total value above silver's $1.382 trillion for the first time. (source)

World Markets

• Japan barely avoided a recession. GDP grew slightly (0.1%) in Q4, revising previous estimates. Capital spending surged, exports rose, and net trade helped offset weak consumer spending and government cutbacks.
• Japanese big manufacturers turn gloomy. Business sentiment tumbles (survey index -6.7%) despite economic growth. Concerns over global issues and potential rate hikes weigh on sentiment. (Esri)
• Germany's inflation dips to 2.5% (lowest in 2 years), beating expectations. Food and energy slow down, core inflation steady. Monthly price increase falls short of forecast. (Des)

Currencies

• China's currency strengthens (past 7.2 yuan/dollar) on inflation data. Consumer prices unexpectedly rose in February, sparking mixed signals for future stimulus. Producer prices remain low, suggesting economic recovery may be fragile.

Commodities

• Steel prices in China drop to a 9-month low (CNY 3.5K/tonne) on worries about weak demand. Imports fall 8.1% year-on-year, while steelmakers ramp up iron ore purchases. Investors wait for China's loan data to gauge future demand.

On Tuesday, major stock indices rose despite an unexpected inflation increase and a decline in business activity. Internationally, manufacturing output decreased in Brazil and India, while Mexico registered an increase. BTC, ETH, and most of the crypto market corrected, while XRP surged by 20%. MicroStrategy bought 12th BTC.

Details

• The inflation rose unexpectedly to 3.2% YoY in February (above predictions). Energy slowdown weaker than expected. Food, used cars, and apparel price increases eased compared to January. Transportation costs continued to surge. Monthly inflation ticked up slightly (0.4%). (BLS)
• Core inflation dipped slightly to 3.8% YoY in February (near 3-year low), but remained above expectations. Shelter costs, a major contributor, slowed down. Prices for recreation and personal care eased, while medical care and auto insurance kept rising. Monthly core inflation stayed flat at 0.4%. (BLS)
• Small business confidence dips to a 9-month low (89.4) in February. Inflation replaces labor quality (down to lowest since early 2020) as the top concern for owners. (NFIB)

Crypto

• MicroStrategy buys more Bitcoin (12th) as its price hits a new high. Their total holdings now stand at 205th BTC, worth over $14.8 billion. BlackRock's new Bitcoin ETF (iShares Bitcoin Trust) also holds a significant amount (197,943.2 BTC) (source)

World Markets

• Brazil's inflation slows down for the 5th month straight, reaching 4.5% in February (lowest in 7 months). Food and transportation costs rose, but housing, clothing, and healthcare saw some relief. Monthly prices ticked up (0.83%, highest in a year) due to school year expenses and fuel tax increase. (IBGE)
• India's industrial output grew 3.8% year-on-year in January 2024, lower than expected (4.1%). Manufacturing, making up most (78%) of production, slowed to 3.2% growth compared to December's 4.5%. However, mining and electricity sectors saw faster expansion (5.9% and 5.6%, respectively). This follows an upward revision for December's growth (4.2%). (MOSPI)
• Mexico's industrial output jumped 2.9% in Jan (exceeding expectations). Construction boomed (17.9%), while manufacturing recovered (0.1%). Mining dipped further, and utilities grew slower. Monthly production also rose slightly (0.4%). (INEGI)

Currencies

• Brazilian real weakens (4.98 per USD) on inflation concerns. Higher than expected inflation in Brazil (4.5%) and potential Fed rate cut delay weigh on the real. China's economic slowdown further weakens foreign demand for Brazilian exports.

Commodities

• Oil prices jump past $78/barrel on OPEC's upbeat demand forecast. They predict 2.25 million bpd growth in 2024 and raised 2023 economic outlook (+2.8%). Despite production increase (led by Nigeria, Libya), OPEC cuts and Middle East tensions support prices.

On Wednesday, stock markets dip after record highs. The S&P 500 and Nasdaq fell slightly, while the Dow Jones gained. Nvidia, Tesla, and Intel dropped, while Amazon rose. On world markets, silver, soybean, and copper prices surged due to a combined effect of a lower dollar, bad weather, and monopolistic manipulation of pricing. BTC shot above 73K, stimulating the rest of the crypto market with BNB (+10%) and MATIC (+8%) leading the way.

Crypto and AI

• MicroStrategy raises $500 million through convertible notes to buy more Bitcoin. These notes mature in 2031 and pay interest twice a year. (source)
• The EU passed a law regulating AI. It bans harmful applications like facial recognition databases used for mass surveillance and social scoring. "Deepfakes" must be clearly labeled. High-risk AI in areas like law enforcement and education requires strict oversight, transparency, and human involvement. Citizens have the right to challenge AI-based decisions. (source)

World Markets

• Russia's inflation surges to 7.7% in Feb, exceeding forecasts (7.4%) and central bank's target (4%). Food and services prices contribute most. Monthly inflation slows slightly. (ROS)

Currencies

• Mexican peso strengthens (near 16.66/USD) on hawkish central bank signals. Policymakers prioritize inflation control and advocate for gradual interest rate adjustments. Strong industrial production growth (2.9%) and lower-than-expected inflation (4.4%) support their stance.

Commodities

• Silver surges to $24.7/oz (highest since Dec 2023), mirroring gains in other metals. Expectation of central banks easing rates (Fed, ECB in June, BoE in Aug) fuels the rise. However, Bank of Japan is predicted to tighten policy soon.
• Soybean prices climb near 3-week highs (~$11.8/bushel) due to lower supply concerns. Brazil revised production estimates downward due to bad weather in key regions like Argentina. However, prices remain down over 9% for the year due to a 2023 surplus.
• Copper prices soar above $4/pound (7-month high). Chinese smelters cut production due to low concentrate prices affecting profitability. Specific limits not set, but adjustments planned. Exploring alternatives like using more copper blister to reduce reliance on concentrate.

On Thursday, stocks fall after inflation data raises concerns. Higher yields and mixed economic data (strong producer prices, weak retail sales) cause investor jitters. The energy sector rises with strong oil prices. Internationally, the South African manufacturing sector is experiencing slow growth due to rising energy prices. BTC corrected sharply following stocks, bringing down the rest of the crypto market, while some coins such as Polygon and Stellar dropped more than 5%.

Details

• Producer prices (PPI) jump 0.6% in Feb, highest since Aug 2023. Exceeds expectations (0.3%). Goods surge 1.2% (energy +4.4%, food +1.0%). Services rise 0.3% (transportation +0.9%, trade -0.3%). Core inflation slows to 0.3% (Jan: 0.5%) but tops estimates (0.2%). Yearly inflation hits 1.6% (Jan: 0.9%), exceeding forecasts. (BLS)
• Jobless claims drop below expectations: 209th in the week ending March 8th (vs. expected 218th). (DOL)

Crypto

• Major banks are creating digital tokens (crypto) for real-world assets like bonds and deposits ($108 trillion+). This tokenization is being explored cautiously. Regulators in the US and Hong Kong are involved, with the Fed allowing some exploration by member banks. Banks are primarily using private, permissioned blockchains endorsed by regulators, not fully public ones. (source)
• Blockchain gaming surges: daily active wallets jump 20% in February. Play-to-airdrop campaigns and rising crypto game token prices are seen as key drivers. This trend suggests growing interest in this sector. (source)

World Markets

• South Africa's manufacturing sector surges 2.6% YoY in January, exceeding expectations. This marks the fourth month of consecutive growth, driven by chemicals, wood products, textiles, and others. (STATSA)

Currencies

• Stronger dollar (above 103) reflects persistent inflation. Higher producer prices, lower jobless claims, and weaker retail sales data raise concerns. Reduced hope for Fed rate cuts in 2024 (56.7% chance for June cut, down from 58.2%).

Commodities

• Oil prices surge to highest since November ($81.26/barrel) due to several factors: IEA predicts higher global oil demand in 2024; oil inventories unexpectedly declined last week; attacks on Russian refineries and ongoing conflicts add uncertainty; OPEC+ decision to limit supply strengthens prices.

On Friday, stocks fell on the triple witching expiration due to a tech sell-off and concerns over a Fed rate hike. Amazon and Microsoft led the decline. Despite the daily drop, the market saw small weekly gains. On the world's markets, the central bank of China kept its key rate unchanged at 2.5%. The crypto market was in the deep red as BTC plunged below 70K on traders' following stocks. Among major alts, only Solana (+5%), Avalanche (+5%), and Binance (+1%) showed a positive dynamic.

Details

• Manufacturing activity in New York State plunged in March, with the Empire State Index reaching a much worse than expected -20.9 (down from -2.4 in February). This reflects a significant decline in demand, new orders, shipments, and unfilled orders. Employment and working hours also weakened. Despite some hope for future improvement, overall sentiment among firms is cautious. (NYFed)
• Consumer confidence dips slightly to 76.5 in March, a 3-month low. Mixed signals: modest decline in business condition expectations, flat current conditions. Inflation expectations remain unchanged. Consumers cautious about long-term outlook due to upcoming elections. (UM)

Crypto

• The Dubai International Financial Centre (DIFC) recently passed a new Digital Assets Law, aiming to: clearly define regulations for those using and investing in digital assets; modernize the DIFC to attract international investment; establish the DIFC as a hub for innovation in digital assets and blockchain technology. However, it's unlikely that any of bureaucrats 'regulatory initiatives' will really improve anything except for bureaucrats themselves. However, you can read this law yourself and make your own conclusions. (Dubai's Digital Assets Law also other Digital laws are accessible here)
• Bank of America reports record investments: the groundbreaking inflow in stocks of $56.1 billion, the highest ever for a single week; significant milestone with $3.4 billion in crypto-investments. (source)

World Markets

China's central bank kept interest rates steady at 2.5%. This aimed to stabilize the yuan (down 1.3% vs. USD this year). (BoC)

• India's trade gap widens to $18.7 billion despite strong export growth (11.9% YoY). Imports surged even faster (12.2% YoY) due to robust domestic demand and higher oil prices. Officials remain optimistic about exports holding steady. (IC)
• French inflation dipped slightly to 3% annually in February (down from 3.1%). This is the lowest level since early 2022, driven by slower price increases in food, manufactured goods, and services. However, energy costs, particularly electricity and fuel, are rising faster, causing a 0.8% jump in monthly consumer prices. While a slight improvement is seen, rising energy prices remain a concern. (INSEE)

Currencies

• Japanese yen weakens against the dollar (below 148.5) as traders anticipate the Bank of Japan's policy decision. Rumors suggest the bank might end negative rates due to wage growth, but the market seems to expect this already. Governor Ueda acknowledges a moderate economic recovery with some data showing weakness.

On Week 12 it gets busy: Fed meeting on 20th of March: Economic forecasts, interest rate projections in focus Macro data: Manufacturing, services activity, housing market on watch. Global focus: Interest rate decisions in several countries (Japan, UK, etc.). Inflation: Data releases from Canada, UK, South Africa, Japan. Purchasing Managers' Indexes (PMIs): Flash updates from various regions. China: Key economic indicators like industrial production, retail sales, and investment monitored.

Comment: Why High Fed Rates Do Not Bother Them?

We have a lot of self-congratulatory comments coming from mainstream media on how "brilliantly" the Boomer-led Fed managed to keep rates at an astronomically high level without hurting economic growth. Let's look at this.

They claim that unemployment is low. It's wrong. It's low among low-paid employees in government, transportation, manufacturing, and healthcare. This is supported at an unsustainable level by corporations, which have pushed SMBs – incapable of financing their businesses with such overpriced loans – out of the markets. Unemployment is high and rising among the most valuable and productive parts of the workforce in technology, finance, and high-value-added services. This is especially true for new, fledgling, and the most innovative businesses.

They claim that stock market highs increase the wealth of consumers, who then spend it in retail shops. It's not true, too. In the USA, institutional investors, which include both active and passive funds, own ~80% of all stocks. So, private investors only hold USD ~$8 trillion of the ~$40 trillion worth of the local stock market.

Moreover, for an "average" asset holder, real estate makes up ~50% of holdings (including primary residence) and stocks & investments only ~25%. The rest is cash & savings (15%) and other (10%, including vehicles, retirement accounts, and valuables). With that, only 40% of homes in the USA are mortgage-free, according to various sources.

You might not be a genius to see that a positive impact on private asset holdings from rising stock prices (~30% YoY, or +5% (15%*0.3) to individuals' wealth) can't beat the combined effect of almost doubled prices on food, shelter, or -7% (15%*0.5) and cosmically high mortgage rates (~10%), or -3% (50%*0.1*0.6).

So, we have a combined effect of -5% yearly decrease in private wealth or -8.2% if you count the +3.2% inflation. Only brain-empty Boomer politicians can't see this obvious fact and continue to preach the great "success of economic policies".

That's not all. If the present political trends of establishing a "strong government" with high taxes, high rates, and increasing regulatory burden continue, the economy might enter a Japanese-style stagnation. Here's how it plays out.

The decades-long economic stagnation in Japan can be attributed to various factors, including a surplus in corporate savings (check), policy mismanagement (check), structural impediments (check), and the close ties between economic bureaucracies and corporations (double check).

Policy mistakes, such as the consumption tax hike in 1997 (check) and slow disposal of nonperforming loans (check), exacerbated the economic challenges. The complex structure of Japan's political economy, characterized by symbiotic relationships between economic bureaucracies and corporations (check), also played a role in impeding progress.

The link between Japan's economic stagnation, high asset prices (check), and low levels of innovation and entrepreneurship is multifaceted. The prolonged economic slowdown has hindered innovation and entrepreneurial activities due to risk aversion (rapidly growing with Millennial and Gen Z generations) and limited opportunities for growth (almost check).

The aging population (check, if immigration channels are closed) impacted the labor force and innovation landscape. Moreover, the dominance of large corporations and conglomerates in Japan's economy (check) has created barriers for small businesses and startups to thrive (check), contributing to a lack of dynamism in the entrepreneurial ecosystem.

So, as you can see, we are on a straight road into the classical economic dystopia, where the current abyss between the haves and have-nots will widen for the next 20-30 years before the current system collapses and the new free-market, supplemented by UBI and politically decentralized system is built.

SVET Markets Weekly Update (March 4 - 8, 2024)

On Week 10, BTC reached 70K and ETH reached 4K. The Dow, S&P, and Nasdaq all hit new ATHs. Faced with unexpectedly high unemployment and easing inflation, gold rose to a record high of 2.2K, while the dollar fell by 1.4%.

On Monday, stocks indices closed lower as investors awaited economic data releases and Powell's congressional testimony for insights. Meanwhile, on world markets, gold hit a record high, while Japanese manufacturing continued to expand and Chinese production slowed down slightly. Bitcoin almost reached an ATH but retreated due to spontaneous profit-taking. The rest of the crypto market also performed well, with some major coins such as Dogecoin (+12%) seeing double-digit percentage increases.

Crypto

• The second milestone for the Ethereum ETF application passed the Sunday. Analyst predicts 70% chance of approval by May. BlackRock filed for an Ethereum ETF. Futures-based products exist but lack attention. (source)

World Markets

• South Korea's GDP grew 2.2% in Q4 2023, up from 1.4% in Q3, with an average annual growth of 6.95% from 1961-2023, peaking at 20.8% in 1969 and hitting a low of -7.3% in 1998.(BOK)
• The au Jibun Bank Japan Services PMI rose to 52.9 in February 2024, marking 18 months of sector growth, driven by a significant increase in new business from tourism and product launches. Employment surged, but growth was mainly domestic as foreign demand stagnated. Input cost inflation eased, while output cost inflation grew. Business sentiment dipped but stayed optimistic about future investment and expansion.(SP)
• The Caixin China General Service PMI fell to 52.5 in February 2024, marking the slowest expansion since November. Despite increased export orders, overall new work and employment dropped. Higher input prices led to increasing output prices, and business sentiment hit a four-month low. (SP)
• Turkey's 10-year bond yield reached 26% amid rising inflation and upcoming elections. Annual inflation hit 67% in February, with expectations of it surpassing 70% in May. Concerns persist about potential lira depreciation and looser fiscal policies post-elections.

Currencies

• Euro surges to 1.085, highest since February, as investors anticipate ECB meeting for clues on future interest rates. Inflation eases but core rate remains high, suggesting cautious approach from ECB.

Commodities

• Gold hit a record $2,115 per ounce as investors predicted FED interest rate cuts. This follows data showing a 16-month contraction in US manufacturing and weak consumer morale.

On Tuesday, Dow, S&P, and Nasdaq dropped more than 1%. Tesla, Microsoft, and Meta led the decline due to concerns over China and the tech sector's health. Gold reached a new all-time high on weak PMI and expectations of rate cuts. BTC crashed spectacularly to $59K after touching an ATH at $69K as a result of a massive Wall Street bear attack, taking down the rest of the crypto market with it. Some major coins, such as Bitcoin Cash (-14%), Cardano (-11%), Polygon (-11%), and Algorand (-10%), depreciated by ten percent or more within a few hours.

Details

• Services sector growth slowed in February (to 52.6 from 53.4), despite rising business activity and new orders. Employment and supplier deliveries contracted, while inflation pressures eased. Concerns remain regarding inflation, employment, and geopolitical conflicts. (ISM)

Crypto

• Solana DEXs smash weekly trading volume record, exceeding $11 billion (154% increase) and surpassing previous high of $9.88 billion. Orca and Raydium (DEXs) on the Solana network saw $4.5B and $3.52B in trade. (source)

World Markets

• The Eurozone Composite PMI rose to 49.2 in February, indicating near-stabilization of the economy. Growth in service sector activity and contractions in manufacturing output continued. France and Germany experienced modest growth, while Ireland and Spain observed solid expansions. (SP)
• Industrial producer prices in the Eurozone decreased in January, marking a moderation from the previous month. (EUS)

Commodities

• Gold hits a new record high ($2,130) on weak PMI and factory orders, fueling expectations of rate cuts (55% chance priced in for June). Geopolitical tensions and recession fears add support. Investors eyeing jobs report and Powell's speech for further clues.

On Wednesday, stocks rebound after Powell's comments and data. Fed not rushing to cut rates, labor market strong, Nvidia, Meta, Broadcom up and Apple falls for 6th day. On world's markets, gold surged to the new ATH on Powell's comments and weak job reports, while wheat dropped on oversupply and oil continue to rise. Crypto market was in deep green as all major coins recovered from Monday's crash to their 2 years height. BTC kept above 65K.

Details

• Private businesses added 140K jobs in February, below expectations of 150K. Most new jobs were in service sectors, especially leisure and hospitality. Most jobs shed were in mining (-4K) and information (-2K). (ADP)
• Job openings fell to 8.86 million in January, the lowest in 3 months and below expectations. The decline was broad-based across most sectors except nondurable goods manufacturing. Job openings also decreased in most regions except the Northeast. (BLS)

Crypto

• El Salvador's BTC holdings surpass $150 million, reflecting a $50M profit since adopting it as legal tender in 2022. President Bukele's daily 1 BTC buying strategy has grown their stash to 2,380 BTC, currently valued at $164.7 million. (source)

World Markets

• In February 2024, the HCOB Eurozone Construction PM increased slightly to 42.9, indicating a continued but softer decline in activity, with housing remaining weak. New orders fell sharply, affecting purchasing, while employment declines slowed, and future outlook slightly improved. Input costs rose at a slower rate. (SP)
• Euro area retail sales fall further in Jan 2024, down 1.0% YoY (1.3% expected) after -0.5% decline in Dec. This marks the 16th consecutive month of contraction. (ES)
• Brazil's industrial output surges 3.6% YoY in Jan 2024, exceeding expectations (2.8%) and marking the 6th straight month of growth. (IBGE)
• Egyptian stocks surge to record high (32150) on surprise central bank move: 600bps rate hike, currency floatation. Loan rates hit record highs (28.25%), pound weakens towards 50/$1.
• Hong Kong's Hang Seng rebounds 1.7% to 16,438 after a drop, driven by hopes of China's stimulus measures (5% GDP target, support by during the annual National People’s Congress) and rising US futures. Tencent, JD.com, and other tech giants lead gains.

Commodities

• Wheat prices plummet 5% to 3.5-year low on falling global prices, abundant supply from major exporters like Russia and Ukraine, and slightly increased global wheat production.
• US oil prices jump over 2.5% to near 4-month high as lower-than-expected inventory rise, Fed's wait-and-see stance, and OPEC+ cuts support demand. Geopolitical tensions add further pressure.

On Thursday, major indices climbed, with the S&P 500 and Nasdaq hitting new highs. Powell hinted at the Fed cutting rates this year, while jobless claims edged up slightly, and labor costs were revised lower. In the world markets, the ECB held the rate at the record high of 4.5%. BTC hovered under 68K, while the rest of the crypto market continued to outperform, with Solana (+14%), Binance (+10%), and Algorand (+8%) leading the surge.

Details

• Employers announced most Feb job cuts (84,638) in 11 months, led by tech (12,412) and transportation (13,573). YTD cuts down 7.6% YoY, with tech leading industry cuts (28,218). (CHAL)

Crypto

• Tether partners with Uzbekistan to make it a blockchain hub. This aims to boost the country's economy and innovation through crypto and stablecoins. (source)

World Markets

• ECB holds interest rates at record highs (4.5%) to fight inflation (projected at 2.3% in 2024), despite revising down growth forecast to 0.6% for 2024. They anticipate a rebound in growth (1.5% in 2025, 1.6% in 2026). (ECB)

Currencies

• Dollar falls to 1-month low on rate cut bets. Fed sees inflation nearing 2% target, jobless claims rise, layoffs highest since 2009. Euro surges despite lower ECB forecasts.

Commodities

• Sugar futures near 2.5-month low (21 cents/lb) on weak demand, Thailand output optimism. Potential cane planting decline in India and lower production expected in Brazil's center-south (40.8 million tons).

On Friday, Nasdaq, S&P and Dow hit new ATH but then stocks retreat after chip sellof. The unemployment went up unexpectedly. Fed rate cut bets in June stay. On world's markets, Euro zone GDP flat. BTC reached 70K and then retreated to 66K in a second wave of profiteering. ETH reached over 4K. The rest of the crypto market wend down after BTC with most coins correcting 1-3%.

Details

• Feb unemployment at 3.9%, highest since Jan 2022 (up from 3.7% expected). Unemployed rose by 334k to 6.5 million. (BLS)

Crypto

• Retail crypto interest is rising (website traffic, Google searches) but not at peak levels (compared to 2022). Bitcoin searches up, "how to buy" less so. Ethereum searches stronger. Crypto app usage climbs (Coinbase) but isn't near peak. Retail seems hesitant for full commitment. (source)

World Markets

• Eurozone GDP flat (0.1% yoy) in Q4 2023, matching Q3. France, Italy, Spain grew, Germany shrank. (ES)

Currencies

• Dollar tumbles to mid-January low (102.5) on cooling US jobs data. Strong Feb payroll hides revisions down, unemployment up, wage growth slows. 57% chance of Fed rate cut in June. Greenback falls most vs. yen, pound, and Aussie dollar. Weekly: -1.4%.

Commodities

• Gold hits record high at $2,200 on rate cut bets. Feb jobs strong, revisions lower, unemployment up. Wage growth slows. 60% chance of Fed rate cut in June expected.

On Week 11: markets analysts will focus on: inflation, retail sales, and consumer sentiment. UK watches jobs, GDP, and trade. China's loans, car sales, and housing market in focus. Brazil, India, and Russia's inflation rates key. Eurozone and India's production along with Australia's business confidence round out the global economic data picture.

Comment: Where are we going?

So, the story of this week (and of many previous one) is a paradoxical one. While assets like BTC, domestic and international stocks, and gold are all rallying, the underlying state of the world seems to be deteriorating rapidly. Economies are struggling, with unemployment rising and GDP falling. Many ridicule Powell and his political friends for celebrating a non-existent victory over inflation. Despite Powell's attempt to appear confident during his Congressional testimony, it contrasted sharply with polls showing growing consumer unease.

The question remains: where are we headed? Everyone seems to be expecting rate cuts in June, hence the current stock and BTC rally. But what if the Fed doesn't cut rates, or if FOMC members make more hawkish comments, leading to a sudden shift in investor sentiment and renewed focus on the troubled economy?

SVET Markets Weekly Update (February 26 - March 1, 2024)

On Week 9, BTC almost reached its ATH, and the crypto markets rallied as stocks continued to outperform worldwide. This was driven by easing inflation and slowing economies, with traders betting on central banks implementing rate easing policies sooner this year.

On Monday, the Dow, S&P 500, and Nasdaq closed slightly down, with utilities, communication services, and real estate leading the decline. Amazon joined the Dow, replacing Walgreens Boots Alliance. On the world's arena, Xi supported dwindling Chinese markets by encouraging consumers' goods producers. Oil rebounded on Lebanon's supply cuts. The dollar was steady as traders waited for new macroeconomic data. Crypto markets were in deep green as BTC rose over 54K, entering its Oct 2021-Jan 2022 range, and ETH shot above 3.1K. The market was led by Monero (+6%), Solana (+5%), Polygon (+5%), and Cosmos (+5%).

Details

• Building permits in January fell by 0.3% to 1.489 million. Approvals for buildings with five or more units decreased, while single-family authorizations increased. Declines in the South, increases in the West, Midwest, and Northeast regions. (CB)
• The Federal Reserve Bank of Dallas manufacturing index improved to -11.3 in February 2024, from -27.4 in the previous month. Production, new orders, capacity utilization, and shipments increased, while employment and future indices also improved. Wage and input costs rose, while selling prices were unchanged.(DF)

Crypto

• Japan's cabinet, led by PM Kishida, approved a bill to allow more flexibility for venture capital firms and investment funds in dealing with cryptocurrencies. This aligns with Kishida's focus on supporting Web3 firms and marks a shift from strict regulations, reflecting Japan's aim to stay competitive in the digital landscape.(source)

World Markets

• The Hang Seng fell 0.54% on Monday, led by financials, consumers, and tech, as uncertainties persisted both at home and abroad. Chinese President Xi Jinping's remarks on boosting consumer product sales capped the decline.
• Japan's January inflation rate fell to 2.2% from 2.6% YoY, the lowest since March 2022, mainly due to slower food price increases. Core inflation dropped to 2.0%, exceeding expectations but remaining within the Bank of Japan's 2% target. Prices fell for fuel and certain services, while transport and education costs rose. On a monthly basis, prices remained stable. Despite this, Japan's economy entered a technical recession in Q4, losing its third-largest global ranking to Germany.(StatJap)
• European stocks were lower, with the STOXX 50 and STOXX 600 declining after reaching record highs. Traders await key economic indicators and Fed policymaker appearances, while the energy sector underperformed and basic materials outperformed.
• Russian stocks surged 2% on Monday as sanctions on Russian companies and individuals were less severe than expected, with key commodity exporters escaping penalties.

Currencies

• The dollar index held steady near 104 as investors await key inflation data, including the personal consumption expenditures price index, which could guide Fed monetary policy.

Commodities

• WTI crude futures rebounded to $77/barrel after a 2.5% drop, driven by strengthening US markets, Libyan exports disruptions, and high refinery margins. Foreign buyers are turning to American crude due to shipping issues in the Red Sea.

On Tuesday, stock indexes were flat to lower, as traders await key economic data and Fed comments. Durable goods orders contracted by 6.1%, while the home price index is up. In global markets, the Nigerian central bank hiked its rate to a record 22%. Cotton prices are up on a speculative buying. The crypto market continued to grow, with BTC shooting above 57K (+10%) and reaching Nov 2021 levels, now aiming at ATH. ETH closed over 3.2K, and major coins such as BCH (+7%), Uniswap (+3%), and Cosmos (+2%) followed suit.

Details

• In January, orders for manufactured durable goods fell by 6.1%, surpassing market predictions of a 4.5% drop. This was the largest monthly decline since April 2020, mainly due to a 16.2% decrease in transportation equipment orders. Excluding transportation, new orders decreased by 0.3%. Orders for non-defense capital goods excluding aircraft, a key indicator of business spending plans, increased by 0.1%.(CB)
• The S&P CoreLogic Case-Shiller 20-city home price index in increased 6.1% year-on-year in December 2023, the greatest rise since November 2022. San Diego, Los Angeles, and Detroit saw the highest gains. Despite increased financing costs leading to price declines in 15 markets in Q4, 2023 exceeded average annual home price gains over the past 35 years.(SP)

Crypto

• Ethereum's Dencun upgrade is live on testnets, leading to mainnet activation on March 13, 2024. Features "protodanksharding" with EIP-4844 to reduce Layer 2 transaction costs. Builds upon Shapella upgrade with new features.(source).

World Markets

• In January 2024, lending to companies in the Euro Area increased by 0.2% to EUR 5.136 trillion, following a 0.5% increase in December. Bank lending to households rose by 0.3% to EUR 6.870 trillion, below market expectations, indicating a slowdown in the Eurozone economy. Overall private sector credit growth remained unchanged at 0.4%.(ECB)
• The Central Bank of Nigeria raised its benchmark interest rate to a record high of 22.75% to combat inflation, which reached a near 28-year high of 29.9%. The naira has plunged 70% against the dollar in 2024, and the central bank has taken measures to support it and boost local dollar liquidity, including relaxing the foreign exchange regime.(CBN)
• Russian CB kept key policy rate at 16% in February, pausing hiking campaign after 850bps increase since July 2023. Inflation pressures eased compared to late 2023, but upside risks remain. GDP grew 3.6% in 2023, surpassing estimates amid capacity and labor challenges due to sanctions and mobilization.(CBR)

Currencies

• The Brazilian real strengthened towards 4.98/USD, becoming an attractive option in emerging markets due to low volatility and high-interest rates (currently at 11.25%). However, the mid-month CPI for February at 4.49% tempered the upward momentum, as inflation is expected to ease to 3.9% by year-end.

Commodities

• Cotton futures reached a high of 95 cents per pound, driven by speculative buying and sustained demand. USDA reported exports of 276,100 running bales, up 11% from the previous week. China, Vietnam, and Pakistan were the primary destinations. World consumption for 2023/24 is expected to remain unchanged, while production is projected to decrease by 355,000 bales.

On Wednesday, major stocks indices decreased as investors awaited the PCE inflation report and digested contradictory comments from Fed officials. The US economy showed 3.2% annualized growth in Q4 2023. In the world's markets, economic sentiments lowered in the Euro Area, and sugar prices rose due to dry weather conditions. The crypto market heated up, with BTC reaching 64K, then suddenly crashed due to massive profit-taking, with BTC hitting 59K. BTC ETFs have surpassed the 50% of gold ETFs' market.

Details

• The economy grew at an annualized rate of 3.2% in Q4 2023, slightly below the initial estimate of 3.3%, due to a downward revision in private inventories. Consumer spending was revised higher, led by services, while government spending and exports also increased more than anticipated. Non-residential investment was revised higher, except for investment in equipment, while residential investment continued to grow. For the full year 2023, the US economy grew 2.5%, up from 1.9% in 2022.(BEA)
• The core personal consumption expenditure (PCE) price index in the US rose by 2.1% in the Q4 2023, up from 2% in the third quarter and exceeding initial estimates of 2%. (BEA)
• The average mortgage rate decreased to 7.04% in February 2024. Mortgage loan application volume, decreased 5.6% from the previous week. The Refinance Index decreased 7% and was 1% lower than the same week one year ago. (MBA)

Crypto

The total assets under management (AUM) of US-listed Bitcoin ETFs have surpassed 51.5% of the size of gold ETFs, with Bitcoin's price surging past $63K. There is currently $92.1 billion invested across 19 US-listed gold ETFs. In comparison, US Bitcoin ETFs now hold a cumulative 746,600 BTC, with a value of over $47.5B. This milestone follows the SEC's approval of Bitcoin ETFs in the US seven weeks ago, marking a significant recognition of Bitcoin as an investable commodity.(source)

• BTC has reached new all-time highs in 14 countries facing economic and financial challenges: Japan, Argentina, Laos, Congo, Ghana, Turkey, Burundi, Sudan, Lebanon, Malawi, Egypt, Pakistan, Sierra Leone, and Nigeria leading the way. (source)
• BlackRock recommended 28% allocation of one’s portfolio to Bitcoin. (source)

World Markets

• The economic sentiment indicator in the Euro Area slightly decreased to 95.4 in February, missing expectations and driven by declining confidence among businesses and consumers.(EU)

Commodities

• US natural gas prices have recovered to above $1.8/MMBtu after falling to a low of $1.54 on February 19, the lowest level since June 2020. This rebound is despite a mild winter that has left stockpiles well above normal levels (+22.3%), and record-high production levels, which have contributed to an oversupply in the market. To address this issue, some producers have reduced their production plans.
• Raw sugar futures reached a one-month high as dry weather affected key producers, threatening global supply and raising concerns over low sugar production in India and Thailand.

Comment: The KISS Generation.

They had it all. Easy access to education, booming job markets, and a seemingly endless supply of opportunity. The Baby Boomer generation, basked in a golden age, accumulating wealth and privilege. However, their story has a dark side, and it's one that threatens the very future of our planet.

The "Keep It Simple, Stupid" Trap:

My years as an economist, entrepreneurs and investors have revealed a disturbing pattern: the Baby Boomer generation's penchant for oversimplification. This "KISS" (Keep It Simple, Stupid) mentality has permeated every aspect of life, from economics to art.

Take economics, for example. The "Washington Consensus," a one-size-fits-all economic policy championed by many Boomers, ignored the crucial role of economic geography. This ignorance left billions in developing nations struggling, while a select few amassed obscene wealth.

This simplification virus infects other areas as well. Businesses prioritize short-term profits over long-term sustainability. Science gets reduced to soundbites, ignoring the complexity of the natural world. Art becomes commodified and devoid of depth. Even food is stripped of its nuance, replaced by a bland, mass-produced experience.

The Burden of "Accurate" Decentralization:

The consequences of the "KISS" generation's reign are now laid bare. We, Gen X and Millennials, inherit a world in desperate need of "accurate" decentralization. This entails handing over the reins of power, not to a chaotic mob, but to a diverse and engaged citizenry. It's a monumental task, one made even more challenging by the stubborn resistance of aging leaders clinging to their outdated "adequacy."

A Call to Action:

The "KISS" generation's time is up. Their oversimplified solutions have failed us. We, the inheritors of their legacy, must embrace complexity, nuance, and long-term thinking. It's time to move beyond the "KISS" mentality and embrace the messy, intricate beauty of the real world. Only then can we build a future that is truly sustainable and equitable for all.

On Thursday, stock indicators closed higher as traders disregarded the PCI increase. On the world's markets, German and French inflation fell as a result of lower food and energy prices. Uranium fell below 100 due to weaker sanctions. The crypto market was in the green again, after BTC's (61K) sharp correction, with traders turning their attention to major alts, leading to a rally in Litecoin (+8%), Solana (+8%), and Cardano (+5%). In February, stocks showed positivity with the Nasdaq gaining +6%, the S&P increasing by +4%, and the Dow rising by +1%. BTC added +45% at the same time period.

Details

• Core PCE prices increased by 0.4% MoM in January, the most significant increase since February 2023 but in line with market expectations. It follows a downwardly revised 0.1% increase in December. Core PCE prices rose by 2.8% YoY, indicating the least growth since March 2021 and slowing from 2.9% in December.(BEA)

Crypto

• FATF has downgraded Russia's compliance rating due to inadequate regulation of virtual assets and cryptocurrencies. At the same time, the Russian Central Bank, which pushes digital ruble project, wants to ban crypto altogether. However, many Russian firms use crypto as a cross-border payment tool. "According to Rosfinmonitoring, the number of transactions conducted in Russia using crypto tripled from the beginning of last year to November 2023". (source)

World Markets

• Germany's consumer inflation fell to 2.5% in February 2024, the lowest since June 2021, driven by slowing food and declining energy prices. The annual rate edged closer to the ECB's 2% target, while services and core inflation held steady. Monthly prices rose 0.4%, below expectations. (DST)
• Germany's unemployment remained unchanged at 5.9% in February 2024, the highest since May 2021, with jobless rising for the 14th straight month by 11,000 to 2.713 million and up 190,000 year-over-year. Regional disparities persist with highest rates in Bremen and Berlin and lowest in Bayern and Baden-Württemberg. (STB)
• Spain's consumer price inflation fell to a 6-month low of 2.8% in February 2024, largely due to decreased electricity prices and stable food costs, with the core inflation rate dropping to 3.4%.(INE)

Currencies

• The dollar index rose above 104, recovering from a recent low amid mixed economic signals. Core PCE prices increased significantly, hinting at persistent inflation and affecting expectations of a Federal Reserve rate cut. Meanwhile, rising unemployment claims suggest a softening labor market.

Commodities

• Uranium prices dropped below $100 per pound for the first time in seven weeks after the government didn't ban Russian nuclear fuel imports. Despite this, uranium prices remain high year-to-date due to supply risks and robust demand, with global nuclear power set to triple by 2050.

Comment: Business As Usual No More.

For a very long time, since the fall of the Berlin Wall in 1989, business has been the matter of first priority both in the private and public sectors. Stock markets boomed. All governments' pipe dreams were to lure as many wealthy investors into their countries as possible. The only goal was to buy cheap and sell dear. Business and financial moguls were given the status of new saints. As a result, Gen X and Millennial generations' skill sets were tailored to fit that reality. The dream was to be first in the classroom, then university, get an MBA, land a cushy corporate job or start your own company, start more companies, cash out and become an angel investor or VC - that was the dream life story for billions for more than three decades in a row.

That epoch has ended. The Boomers grew old and tired of making money, having had more than enough. Now they want real power, the kind that eclipses that of pharaohs of the past. Moreover, a few very powerful Boomers at the very top, with their fingers on the nuclear button, suddenly became zealots. That's when things got very messy very quickly. Suddenly, business is no longer the priority. Suddenly, we all have to choose sides whether we want to or not. Taking sides is extremely bad for business. So the Boomers decided business must be sacrificed. From now on, "Les grands bataillons ont toujours raison".

Now Gen Z and Millennials have to learn a new skill set - how to survive under increasing state pressure, which will require more and more taxes and life resources to feed the Boomers' war machines. What about the economy? There will still be an economy, but an entirely new type - the Permanent War Economy. No one really knows what that is. This is an unprecedented episode in human history with two superpowers, economically interdependent yet both with the power to destroy the Earth, facing each other in an uncompromising war for absolute global dominance led by chronically deranged septuagenarian and even nonagenarian Boomers.

We are not quite there yet, but we will be sooner or later, just wait. No wonder our markets are crazy. What do we have to lose at this point?

On Friday, the main indices hit new record highs as tech stocks rallied. Factory activity contracted more than expected, and inflation data eased concerns. The S&P 500 and Nasdaq had positive weeks, while the Dow lagged. In the world markets, Euro stocks reached all-time highs due to low inflation, a slowing economy, and increased employment. Gold reached ATH, while oil rose again due to geopolitics and OPEC cuts. The crypto market is on the rise, with Cardano (+7%), Algorand (+6%), and Bitcoin Cash (+5%) leading the way. ETH edged above 3.4K, while BTC is slowly recovering from a profit-taking event, reaching 62.5K.

Details

• The US ISM Manufacturing PMI fell to 47.8 in February, below expectations, indicating 16 consecutive months of declining manufacturing activity. New orders and production levels also contracted, while prices rose at a slower pace. Employment levels declined for the fifth straight month. (PMI)
• In February, the Global Manufacturing PMI rose to 52.2, marking the fastest sector expansion since July 2022. Output and new orders surged, export orders grew for the first time in three months, and job creation hit a five-month peak. However, business confidence dipped from a 21-month high. (SP) Comment: such a mess in data :)
• UBI News: Tacoma, Washington, launches GRIT 2.0, a guaranteed income project offering 175 families $500 monthly for a year. Eligible families must earn between 100% and 200% of the Federal Poverty Line.(source)
• The University of Michigan Consumer sentiment was revised lower in February, with expectations and current conditions subindexes both dropping. Inflation expectations for the year ahead increased slightly, while the five-year outlook remained the same. (UM)

Crypto

• Nigeria fined Binance $10B, accusing it of causing a 70% depreciation of the Naira through speculative exchange rate manipulations, reports BBC. (source)

World Markets

• European equities ended the week positively, with the Stoxx 50 reaching a 23-year high and the Stoxx 600 hitting a record high. Disinflation in the Eurozone and lower Treasury yields supported the market, with gains seen in tech shares and banks. Daimler Truck exceeded earnings expectations.
• In February, the HCOB Eurozone Manufacturing PMI was revised to 46.5, indicating a slight improvement but still showing a contraction in the sector. Germany's decline was notable, while Spain grew and Greece and Ireland saw significant expansions. Employment fell, and prices dropped, but business confidence remained stable. (SP)
• In February, Euro Area inflation decreased to 2.6% YoY, slightly above expectations and above the ECB's 2% target. Energy prices fell less sharply, and while the pace of increase in other categories slowed, the core inflation rate also declined (to 3.1%) but remained above forecasts. Monthly, consumer prices rose by 0.6%. (EuroStat)
• In January, the Euro Area unemployment rate dropped to a record low of 6.4%, with the number of unemployed decreasing to 11.009 million. Youth unemployment remained steady at 14.5%. Spain had the highest unemployment rate at 11.6%, while Germany boasted the lowest at 3.1%. (EuroStat)

Currencies

• The dollar index fell below 104 as poor economic data and central bank officials' remarks weighed on sentiment. Fed officials had differing views on rate cuts and inflation concerns.

Commodities

• Gold reached a record high of over $2,080 per ounce, driven by a weak dollar and lower Treasury yields, as US economic data showed a decline in manufacturing and weak consumer surveys. US inflation for January was the lowest in three years. New York Fed President expects an interest rate cut later this year.
• WTI crude futures reached $80 per barrel, the highest in four months, due to speculation of extended supply cuts by OPEC+ and tensions in the Middle East. Uncertainty around ceasefire talks and increased US crude stocks influenced prices. Weekly oil prices are up over 5%.

On Week 10 investors will monitor the labor report, speeches by Fed officials, and key indicators like the ISM Services PMI. Internationally, the focus will be on central bank decisions, inflation rates, GDP growth rates, trade data, and services PMIs in various countries.

Comment: We Are Diverging.

The news today, in one corner, we have Nigerian bureaucrats pointing fingers at cryptocurrency for their blunders. Blaming the Binance for their own economic mess.

Meanwhile, a city in Texas is taking a bold step towards Universal Basic Income (UBI), something crypto enthusiasts have been advocating for years. This is a small step forward towards a decentralized governance system, just like many of us have been preaching.

This news perfectly highlights the divide in our world. It is an unending battle between generations. The older folks just can't seem to let go of the reins and are desperate to control us, even if it means crippling progress.

So, crypto brothers and sisters, hold onto your coins tight. In this uncertain world, they might just be your lifeline to freedom.

SVET Markets Weekly Update (February 19 - 23, 2024)

On Week 8, Wall Street rallied on hopes for AI, with major world indexes following. Chinese markets were re-energized after the Lunar New Year break. Cocoa continued its unprecedented price rally. The crypto market was mostly flat, with BTC and ETH holding their two-year high levels.

On Monday, as markets remained closed for the national holiday, EU stocks were steady due to an absence of directional signals for investors. Chinese traders returned from Lunar New Year break energized by strong tourism activity data (+47.3% YoY), leading to a strengthened yuan. Still, aluminum prices fell on expected weaker China demand for commodities. The crypto market was mostly in the green. ETH led the charge with a +3% increase, preparing to test the crucial 3K resistance level. BTC fluctuated around 52K, allowing traders to re-focus on major alts, leading to larger growth in Algorand (+3%), Stellar (+2%) and Cardano (+1%).

Crypto

• Bitcoin ETFs had a strong week, with net inflows exceeding £2.2 billion from February 12-16. BlackRock's iShares Bitcoin Trust led with £1.6 billion, accounting for 50% of BlackRock's ETF flows this year. Fidelity's Wise Origin Bitcoin Fund and the Ark 21Shares Bitcoin ETF also saw notable inflows, while the Grayscale Bitcoin Trust experienced outflows. (source)

World Markets

• Equity markets in Europe were steady with the STOXX 50 index closing at a 23-year high. Investors are looking ahead to a busy week of economic data and central bank minutes. Positive tourism data from China also buoyed global investors. Temenos stock rebounded after falling Friday on a critical report.
• The IBC-Br Index of Economic Activity in Brazil increased by 0.82% in December 2023, exceeding market expectations and signaling the strongest growth since April. This news suggests that the central bank may not need to cut interest rates as urgently, and that industrial production, services output, and retail sales are all performing well, except for a slight contraction in retail sales.(BCB)
• Israel's economy contracted 19.4% annually in Q4 2023, the steepest fall since Q2 2020 and the 2nd lowest in this century., as the conflict with Hamas severely disrupted business activity (displacement of citizens, military mobilization and restrictions on the entry of Palestinian workers), consumption (-26.9%), investment (-67.8%), and trade (export -18.3% / import -42%). Government spending surged on war expenses (+88.1%). For full year 2023, GDP grew 2% versus 6.5% in 2022.

Currencies

• The offshore yuan strengthened past 7.20 per dollar as traders returned from Lunar New Year break. The currency was buoyed by a weaker dollar and positive Chinese tourism data during the holiday (+ 47.3% YoY). The PBOC left its policy rate unchanged at 2.5%. Markets now await the monthly loan prime rate fixing on Tuesday.

Commodities

• Aluminum prices fell to a one-month low near $2.2K per tonne in February amid weak demand outlook. Weak data from top consumer China and uncertainty over EU sanctions on Russian aluminum weighed on prices. The UAE helped restore Guinea's bauxite exports after an explosion disrupted logistics. Broader EU bans on Russian aluminum are called for as current restrictions only impact a small portion of imports.

On Tuesday, the CB economic index dropped, and stock followed suit with large tech companies leading the decline due to concerns over high valuations. Major retailers reported mixed earnings. In foreign markets, the CAC in France hit ATH, cocoa prices continued their rally reaching ATH due to poor weather conditions, while steel futures dropped on China's economic slowdown. With Bitcoin still oscillating around 52K and Ethereum lingering just under 3K, the larger crypto market entered a short-term correction mode with Polkadot (-5%), Cosmos (-4%), and Solana (-4%) leading the retreat. In other news, 10 Autoglyphs were sold for 5K ETH.

Details

• The Conference Board Leading Economic Index (LEI) decreased by 0.4% in January 2024, following a 0.2% decline in December 2023. Despite the decline, only four out of ten components were negative contributors over the previous six months, and the index does not currently signal a recession. However, real GDP growth is expected to slow to near zero percent in Q2 and Q3 of 2024.(CB)

Crypto

• Coinbase International Exchange (launched in May 2023) hit a record $1 billion in daily trading volume for the first time, with the bulk of trades in Ethereum and Bitcoin. However, this figure is separate from the company's main US exchange, which reported $3.2 billion in spot trading volume on the same day. (source)
• A complete set of 10 Autoglyphs has sold for 5,000 ETH, or about $14.6 million, marking the highest NFT sale in two years and the fifth-largest on-chain purchase. Autoglyphs have gained acclaim, being exhibited at prestigious venues and even donated to Europe's largest modern art museum, Centre Pompidou.(source)

World Markets

• The CAC 40 hit ATH, rising 0.34% due to positive corporate news. Air Liquide and Veolia saw significant gains, while losses from Renault and ArcelorMittal moderated the increase.
• South Africa's unemployment rate rose to 32.1% in Q4 2023, with job losses in community & social services, construction, agriculture, trade, and manufacturing. Employment fell, but finance, transport, and mining added jobs. The youth unemployment was 59.4%. (StatsSA)
• Mozambique's economy grew by 5.36% YoY in Q4 2023, due to positive contributions from sectors like accommodation & food services, construction, transport & storage, information & communications, finance, agriculture, and fisheries. Despite a slowdown in the extractive industry and poor manufacturing performance, 2023 saw the strongest GDP growth since 2015, reaching 5%.

Currencies

• The euro has strengthened (above the $1.08) due to a weaker dollar and data indicating slower wage growth in the Eurozone. Despite decelerating wage growth, it remains above a level consistent with 2% inflation. ECB officials have expressed caution about rate cuts, suggesting they are likely this year but without giving a specific timeline.
• The Mexican peso reached a one-month high around 17 per USD in February, benefiting from a weaker US dollar and the Bank of Mexico maintaining its record high interest rate. Banxico revised its inflation expectations upwards for most of 2024.

Commodities

• Steel rebar futures dropped to CNY 3,750 per tonne in February due to low demand for ferrous metals. New home sales fell by 34% in major Chinese cities, leading to a surge in steel rebar stocks and a 4% increase in iron ore inventories. The PBoC's loan prime rate cut did little to improve demand optimism.
• Cocoa prices have reached a record high of over $6,030 per tonne due to concerns over crop conditions in West Africa, the leading cocoa-producing region. Fears of a fourth consecutive global deficit are growing as unfavorable weather conditions potentially reduce crop yields.

On Wednesday, investors disregarded cautious Fed minutes hinting at a possible delay in interest rate cuts, leading to flat stock markets. Gold and oil prices increased due to geopolitical factors. The crypto market experienced a correction, with major altcoins such as Algorand (-4%), Solana (-2%), and Polygon (-2%) in the red, as BTC fell to $51.4K and ETH to $2.9K.

Details

• 30-year fixed mortgage rates increased to 7.06% in the week ending February 16th, hitting the highest level since early December, driven by rising Treasury yields and higher inflation. This marked a total increase of 28 bps over the previous three weeks. MBA's chief economist Mike Fratantoni noted that potential homebuyers are sensitive to these rate changes as affordability remains strained due to limited supply and increased home values.(MBA)

Crypto

• VanEck's HODL Bitcoin ETF witnessed a massive surge in trading volumes, surpassing its daily average by over 2,200%, as individual traders drove the activity. This comes on the eve of a fee reduction from 0.25% to 0.20%, positioning HODL as the third-largest Bitcoin ETF in the U.S. The surge reflects growing investor interest in Bitcoin and cryptocurrency markets, coinciding with Galaxy Digital receiving a buy rating and a 30% upside potential price target from an analyst.(source)

World Markets

• Nikkei 225 gained 1.1% and Topix Index rose 0.7%, approaching 34-year highs, as technology stocks surged following Nvidia's positive earnings report. However, Japan's private sector activity slowed in February, with services growth easing and manufacturing activity contracting further. Tokyo Electron, Advantest, SoftBank Group, Screen Holdings, and Disco Corp led the technology sector's advance with significant gains.
• In December 2023, Mexico's retail sales declined 0.2% YoY, underperforming expectations, due to lower sales in auto vehicles (-9.9%), hardware & glass (-7.8%), and health items (-5.4%). However, e-commerce (+31.2%), self-service and department stores (+7.4%), and household goods (+5.7%) saw improvements. Month-on-month, retail sales fell by 0.9%, missing the consensus of a 0.2% rise.(Inegio)

Commodities

• Gold prices rose to $2,024, marking the fifth straight session of gains, after the FOMC minutes indicated policymakers' caution in easing policy. The Fed is expected to maintain rates in March and May but may cut borrowing costs by 25 basis points in June. Safe-haven demand for gold increased due to geopolitical tensions in the Middle East, as Houthi militants targeted US ships in the Gulf of Aden, disrupting shipping routes.

On Thursday, the Wall Street rallies on Nvidia's strong earnings. The S&P 500 hits a new high, and the Nasdaq records its biggest gain since 2023. The Dow Jones breaches 39K for the first time. Nvidia's stock soars 16.4%, and its market cap surpasses $1.9 trillion.

World markets are also fueled by AI optimism, with German DAX hitting ATH and China's stock markets rising on a weekly basis after almost a year of continuous downfall. Nickel prices surged due to geopolitics.

The crypto market was mixed, with BTC and ETH slightly in the red but still holding their record 2-year levels. Some major altcoins, like Polygon, added more than 5%, while others, like Polkadot or Avalanche, closed flat.

Details

• The number of people claiming unemployment benefits has decreased, with a low claim count of 201K, below market expectations but with sharp declines in California (-8,584), Kentucky (-3,655), and Michigan (-1,907). Overall, this suggests a strong labor market with low unemployment, giving the Federal Reserve leeway to hold interest rates higher if inflation remains high. (DOL)
• The Chicago Fed National Activity Index decreased in January, indicating contraction. Three of four broad categories of indicators decreased, with production-related indicators contributing the most to the decline.(CFed)
• DAX 40 hits record high at 17,370, boosted by tech rally post Nvidia forecasts. Mercedes-Benz raises dividend despite sales decline, lower earnings outlook. Delivery Hero drops 6% after terminating Foodpanda sale talks. Germany's private sector contracts in February, led by manufacturing output decline.

Crypto

• BlackRock rapidly acquired 122,600 BTC, worth $6.31 billion in six weeks, becoming the 11th largest holder. This strategic move demonstrates broader acceptance of Bitcoin as an asset class. (source)

World Markets

• Shanghai Composite flat around 2,988, set for over 4% weekly gain. China's policy measures and monetary easing boost investor confidence. Beijing implements market stabilization measures, PBOC cuts bank reserves and mortgage rates. Chinese tech stocks benefit from AI excitement. Gains from COL Group, Chengdu Hi-Tech, ChongQing Changan. Losses from Wuxi Apptec, PetroChina, Luxshare Precision.
• February 2024 HCOB Eurozone Composite PMI increased to 48.9, signaling a slower decline in output. New orders fell as inflation rates rose but employment increased and business confidence improved on expectations of lower living costs and interest rates.(SP)
• Euro Area inflation rate stable at 2.8%; core rate at 3.3%. Inflation slowed for food and goods, while energy prices declined less. Monthly CPI dropped 0.4%.(EuroStat)
• February's HCOB Flash Germany Manufacturing PMI fell to 42.3, the lowest in four months, showing lower output and new orders. Job losses were high, input prices down, and business sentiment turned pessimistic.(SP)

Currencies

• Russian ruble steady near 2-month low (92 r/usd) as EU sanctions and US energy trade restrictions weigh. Tankers pause loading, Ukrainian attacks on refineries impact fuel production. Central Bank slashes current account forecast, key interest rate at 16%. Possible pause in rate hikes due to easing inflation risks.

Commodities

• Nickel futures surged above $16,500 per tonne due to sanctions on Russia, boosting supply concerns. However, oversupply projections for 2024 and weak EV adoption dampened the bullish sentiment. Australia introduced stimulus measures to support local nickel producers amid mining plant shutdowns.

On Friday, stock indexes closed near record highs, with the S&P 500 and the Dow Jones rising. Nvidia surpassed a $2 trillion valuation. Internationally, Chinese direct investments dropped. Gold was stable while Cocoa continued to skyrocket. The crypto market was mixed with BTC and ETH edging down about one percent while some major altcoins such as Bitcoin Cash, Polkadot, Cosmos and Cardano showed a positive dynamic. Uniswap rocketed up by more than 53% and closed above $11 at its two-year highs.

Crypto

• Uniswap's $UNI token price surged by 50% due to a governance proposal rewarding token holders for staking. Uniswap's Protocol emphasized efficiency in token swapping with minimal governance.(source)

World Markets

• Foreign investments into China decreased by 11.7% YoY in January 2024 but rose by 20.4% from the previous month. According to CPC 4,588 new foreign-invested enterprises were established, showing a 74.4% increase from the previous year.(CMC)
• The FGV-IBRE Consumer Confidence Index in Brazil dropped to 89.7 in Feb, the lowest level since May 2023, driven by declining future expectations due to high interest rates and private debt. While lower-income households experienced a sharper decline, current conditions slightly improved.(source)
• Argentina's Leading Economic Index fell by 6.79% in December 2023 compared to the same time the year before. The average index from 1993-2023 was 0.19%, with a peak of 14.39% in May 2020 and a low of -9.98% in March 2020.(Utdt)

Commodities

• Gold above $2,020/ounce, supported by weaker dollar and safe-haven demand. Uncertainty on Fed rate cuts. Waller suggests delay, citing inflation concerns. Geopolitical tensions in Middle East also increase gold demand.

Week 9 focus: PCE price indexes, income & spending data, Fed speeches, ISM Manufacturing PMI, GDP, durable goods orders, consumer sentiment, home sales. International: inflation rates, GDP growth rates, manufacturing PMIs, interest rate decision from New Zealand, and unemployment rates for key countries.

Comment: Freedom or Not?

Lately, I have seen some of my young readers playing with a number of pro-state ideologies, thinking it would be cool to limit some of our freedoms in exchange for more 'stability' and 'fairness' in their lives. This reflects a more general world trend towards limiting freedom of self-expression, including the freedoms to travel and to engage in entrepreneurship.

It is obvious to many that the governance mechanisms of the current world — and those of most countries — must be altered to reflect advancements in technology from 21st century, primarily by making those mechanisms much more decentralized. However, decentralization brings with it the choice of which governance system to follow.

It seems to me that some young people may be seduced by the glamor and beautiful, yet empty, symbols of past epochs and their leading states. I am very familiar with life in one of those bygone era's leaders—the USSR—and I would like to offer some practical observations based on personal experience. These insights are intended for the young, nomadic crypto-entrepreneurs who, for ideological reasons, might wish to return to those 'glorious' times and 'become' citizens of the Soviet Union.

You can. Why not? However, as a business owner and a crypto enthusiast, you might be considered a criminal Soviet citizen.

In the USSR, it was a criminal offense to own a business and to hold any type of currency other than the ruble. Additionally, your frequent travels, especially to the EU and USA, might make you a suspect as a CIA agent for the KGB.

Besides, it was not allowed to leave the territory of the USSR without State authorization, and you would have had to be a member of the KPSS. To travel even within the countries of the Warsaw Pact, you would need written approval from your Soviet factory boss, your Communist Party chief, and pass an interview with local KGB operatives.

Furthermore, any earnings from outside the USSR would belong to the State. Even if you had a personal contract with a foreign employer, all proceeds would go to a local affiliate of Vneshtorg. You would then receive Vneshtorg Bank 'checks' that you could only exchange at 'Berezka' shops in the USSR.

There are some other minor requirements for USSR Citizen, like you can't own a printer or to read certain books, or to move from city to city without a local militcia (police) chief authorization / registration, also as a KPSS member you would need to visit regularly (1-2 times a months) local party cell's meetings etc.

Yes, there was a brief period of time—roughly between the enactment of the Law on Cooperation in May 1988 and the official dissolution of the Soviet Union in December 1991—when those restrictions, although still 'official,' were not observed and were largely ignored by the old and confused enforcement apparatus of the USSR.

However, it was only after the new Russian Constitution was adopted under Boris Yeltsin in December 1993 that all those restrictions officially became void.

So, if your startup's team has just developed an MVP of the Time Machine, do not rush to set your test dials to the USSR somewhere between 1917 and 1991 without first carefully considering other available options.

SVET Markets Weekly Update (February 12 - 16, 2024)

On Week 7, monthly inflation rose higher than expected, but the economy continued to show signs of slowing down, confusing traders and leading to a sideways move on stock markets. The Euro Area economy stagnated, while Japan entered a recession. Oil prices increased due to geopolitical tensions and the OPEC+ response. In the crypto markets, BTC hovered around 52K, and traders' attention switched to ETH after Templeton filed for a spot Ethereum ETF.

On Monday, stocks were mostly flat near record highs ahead of the CPI release, as earnings season continued. The S&P 500 and Nasdaq 100 hit ATH again and then slightly declined. Investors awaited remarks from Fed officials for signs of potential interest rate cuts. On global markets, EU stocks reached record highs, following N. American indexes, while oil and gold prices held steady, awaiting Fed comments and inflation data. The cryptocurrency market saw significant gains, with Bitcoin adding 4% and surpassing $50K for the first time since December 2021. Major altcoins followed suit, with Polygon and Ethereum leading the charge, each increasing by about 5%.

Details

• The budget deficit decreased to $22 billion in January 2024, compared to $39 billion the previous year, due to record-high receipts and lower tax refunds. Outlays grew by 3% to $499 billion, while receipts increased by 7% to $477 billion. The deficit for the first four months of the fiscal year rose by 16% to $532 billion.(BFS)

Crypto

• Franklin Templeton files for spot Ethereum ETF, joining other asset managers seeking SEC approval. The ETF will reflect the price of ether, with Coinbase and Bank of New York Mellon as custodians.(source)
• ERC-404 token market cap experiences high volatility, plunging 30% before partially recovering. The ERC-404 standard combines ERC-20 (fungible) and ERC-721 (non-fungible) token standards, linking tokens to NFTs. (source)
• Torrevieja, a coastal city in Spain, has initiated a plan to become Europe's first "crypto-friendly" city. The Association of Small and Medium-sized Merchants of Torrevieja (APYMECO) and the Torrevieja City Council aim to transform the city into a blockchain hub through a three-phased plan, focusing on cryptocurrency trade, sustainability, and job creation.(source)

World Markets

• European stocks closed higher on Monday as markets evaluated new corporate earnings and anticipated macroeconomic data. The Eurozone's Stoxx 50 and Stoxx 600 reached record highs. Financial companies led the gains, with Axa and UniCredit advancing close to 2%. Consumer goods also advanced, with strong performances by LVMH and L'Oreal. Saab jumped nearly 6%, while Siemens Energy advanced 5.7%.
• India's industrial production grew by 3.8% in December 2023, exceeding expectations, with manufacturing output increasing by 3.9%. Mining and electricity output slowed compared to the previous month. From April to December, industrial production rose by 6.1%. Manufacturing production averaged 5.82% growth from 2006 to 2023. (MOSPI)
• The Philippines saw a 27.8% year-on-year increase in net foreign direct investment (FDI) to a near two-year high of USD 1.05 billion in November 2023, driven by an expansion of net inflows for net debt instruments. Inflows dropped for equity capital (-52.5% to USD 0.09B). Equity capital mainly came from Japan and the United States, channeled to manufacturing, real estate, and construction industries.
• Russia's trade surplus in 2023 plunged by 2.4 times to USD 140 billion, with exports down 28.3% to USD 425.1 billion and the share of mineral products declining to 61.2%. Destinations shifted, with decreases to European (-68%) and South/North American (-40.4%) countries, but increases to Asian (5.6%) and African countries (42.9%). Imports rose by 11.7% to USD 285.1 billion. Among imports, machinery, equipment, and vehicles increased by 5.1 percentage points to 51.1%, and chemical products by 2.8 percentage points to 19.5%.

Currencies

• The dollar index (DXY) rose slightly above 104 as investors awaited consumer inflation data, which may indicate interest rate trends. January's headline inflation is expected to fall to 3%, while the core rate may reach 3.8%.

Commodities

• WTI crude at $76.92/bbl, supported by Middle East tensions, but global supply and demand concerns limit further gains.
• Gold prices were subdued around $2,020 an ounce on Monday as many Asian markets were closed for holidays. Investors are awaiting key US inflation data that could impact interest rate expectations. Despite a smaller than expected increase in December CPI, gold did not gain ground. Markets still expect a possible Fed rate cut in May.

On Tuesday, yearly inflation continued to decrease (3.1%), but monthly core inflation rose higher than expected, coupled with technical indicators showing over-bought levels, causing markets to overreact, leading to all major stock indexes dropping sharply. Economic sentiments in the EU improved but the Euro hit a 3-month low due to lower chances of early rate cuts by the Fed. The crypto market was also in red, with BTC correcting more than 1% and ETH remaining flat. Litecoin (-6%), BCH (-4%), and Chainlink (-3%) declined more than the rest of the altcoin market. Additionally, the CoinBase reported that 8.2 million residents (27% of all adults) in CA own crypto.

Details

• Core consumer prices rose by 0.4% in January 2024, the highest increase since April 2023, driven by higher costs in shelter and transportation services. This challenges disinflation trends and supports FOMC hawks. The acceleration in costs of shelter and transportation services drove the increase, offsetting slowing inflation for goods such as used cars and trucks, apparel, and medical care commodities. (BLS)
• The annual inflation rate in the US decreased to 3.1% in January 2024 from 3.4% in December, although it was higher than market forecasts of 2.9%. Energy costs notably dropped, with gasoline declining by 6.4%, utility (piped) gas service falling by 11.8%, and fuel oil sinking by 14.2%. However, prices increased at a softer pace for food, shelter, new vehicles, apparel, medical care commodities, and transportation services, while the decline for used cars and trucks continued.(BLS)
• The NFIB Small Business Optimism Index dropped to 89.9 in January 2024, the lowest in eight months, due to labor quality and inflation concerns. Twenty percent of owners cited inflation as their top problem, while 39% reported unfilled job openings. Plans to create new jobs also softened, with a net 14% planning to hire in the next three months.(NFIB)

Crypto

• The Blockchain Association (BA) opposes Senator Elizabeth Warren's proposed Digital Asset Anti-Money Laundering Act (DAAMLA). A letter from 80 individuals, including former U.S. government and military officials, argues that digital assets are vital for the nation's strategic advantage. The letter suggests DAAMLA would be ineffectual against foreign illicit actors and could hinder innovation and economic growth in the digital asset industry. Additionally, it refutes Senator Warren's claim that former defense, national security, and law enforcement officials were attempting to obstruct digital asset regulation.(source)
• Spot Bitcoin exchange-traded funds (ETFs) have experienced daily net inflows of approximately $125M during their first month. Grayscale's Bitcoin Trust (GBTC) has seen significant outflows, but it remains a prominent player in the new product offerings.(source)
• According to a 2023 research 8.2M residents in California, accounting for 27% of the state's adult population, own digital assets. Nearly 80% of these digital asset holders would be more likely to support pro-crypto political candidates. 40% of California crypto owners were aged between 18 and 34. Nationally, a majority (51%) of Millennials and Gen Z adults say they are likely to support crypto-friendly candidates in 2024. (source)
• Coinbase reported a 12% decline in its third quarter transaction revenue, amounting to $289 million. Despite this decrease, the company's adjusted EBITDA, which represents earnings before interest, taxes, depreciation, and amortization, remained positive for the third consecutive quarter, totaling $181M. Some analysts predicted a 16% increase in Coinbase's quarterly revenue, projecting it to rise from $674M to $784M YoY. (source)

World Markets

• The ZEW Indicator of Economic Sentiment for the Euro Area rose to 25 in February 2024, exceeding expectations. Analysts were split on economic activity forecasts, while the current economic situation improved. Inflation expectations decreased.()

Currencies

• The euro weakened to $1.07, its lowest since November 13th, as investors opted for the strong dollar after hotter-than-expected US inflation data reduced expectations of early Federal Reserve interest rate cuts.

Commodities

• Mining production in South Africa increased by 0.6% YoY in December 2023, with growth in PGMs, coal, chromium, nickel, and non-metallic minerals. However, output declined for iron ore, metallic minerals, manganese ore, and gold. Monthly production decreased by 4.2% in December. (StatsSA)
• Tin futures rose to around $25,500 per tonne due to supply risks. Delays in mine approvals in Indonesia and uncertain production in Myanmar led to reduced exports. Partial mining activities in Wa State may resume after the Chinese New Year, impacting the world's 3rd largest tin producer.

On Wednesday, PPI came in lower than expected, and stocks rebounded with the Nasdaq climbing more than 1%. Semiconductors and crypto-related stocks, like Nvidia (+2.5%) and Coinbase (+14%), led gains. In the world's markets, the Euro Area reported stagnation, as palladium prices rebounded from a low base. Crypto continued to surge as BTC increased by +4%, surpassing 52K and the $1T market cap mark. On the altcoins side, Avalanche (6%), Cardano (+6%), ETH (+5%), and Polygon (+5%) are leading the pack. In other news, the BlackRock ETF received an additional $0.5B in just one day.

Details

• Producer prices (PPI) decreased 0.2% monthly in December 2023, more than initially estimated, while core PPI dropped 0.1%. Excluding food, energy, and trade, producer prices rose 0.2%. The BLS adjusts its seasonal factor annually to account for price movements. November and October figures were unrevised.(source)
• Job openings rates fluctuated in several states in December, with some increasing and others decreasing. Nationally, the job market remained relatively stable with little change in job openings, hires, and separations rates.(BLS)

Crypto

• Bitcoin ETFs are seeing strong demand, with BlackRock's iShares Bitcoin Trust receiving $493 million in inflows on a single day - this Tuesday - and now managing $5.1 billion in assets. This suggests strong investor interest in gaining exposure to Bitcoin through traditional investment vehicles. (source)

World Markets

• Luis de Guindos (ECB VP) speech summary: Economic activity stagnated in Q4 2023, with inflation driven by energy effects. Underlying inflation indicators are declining, reflecting a disinflationary trend. Financial stability concerns arise, especially for highly indebted corporates and real estate sectors. Euro area banking system remains resilient, but vigilance is needed. (ECB)
• In Q4 2023, the Euro Area economy stagnated due to high inflation, borrowing costs, and weak demand. Germany contracted by 0.3%, while France's GDP stalled. Spain and Italy saw growth, and the Dutch economy ended its three-quarter contraction. The Eurozone economy advanced by 0.1% year-over-year, and full-year GDP growth in 2023 was 0.5%, a significant decline from previous years.(EuroStat)
• Industrial production in the Euro Area rose 2.6% monthly in December 2023, exceeding expectations and marking the largest gain since August 2022. Durable consumer and capital goods output rebounded, but energy, non-durable consumer, and intermediate goods production decreased. Annual industrial activity increased 1.2%, the first yearly rise in ten months.

Commodities

• Palladium prices rose above $900/ounce due to bargain buying amid recent price declines. Support also came from Eurozone avoiding recession and industrial production rebounding. Despite a surplus expected this year, major producers - South Africa (80th metric tons), Russia (74th mt.), Canada (17th mt.) and the US (14th mt.) - are maintaining output levels. Declining demand for catalytic converters due to EVs has impacted the market on the downside.

On Thursday, stocks rose, with 10 out of 11 S&P sectors finishing higher, led by energy, real estate, and materials. Silver prices also rose. Treasury yields declined, and traders assessed weak retail sales data. The crypto market is mostly flat, with BTC at $52K and ETH at $2.8K, both slightly in the green.

Details

• Retail sales fell 0.8% in January 2024, the largest drop since March, surpassing forecasted declines. Several sectors, including building materials and gasoline stations, saw significant decreases, while furniture stores and food services saw increases. (CB)
• The NY Empire State Manufacturing Index improved to -2.4 in February 2024 but remained in contraction territory. New orders and unfilled orders declined, while shipments rose. Employment was steady, and input price increases accelerated. Businesses were cautiously optimistic about the next six months.(NY Fed)
• The Philadelphia Fed Manufacturing Index rose to 5.2 in February 2024, surpassing forecasts. New orders remained negative, while shipments turned positive. Employment fell to its lowest since May 2020. Price increases were reported but remained below long-term averages. Indicators suggest optimism for growth in the next six months.(Phil Fed)

Crypto

• Chainalysis reported 29.5% drop drop in crypto sent to launder-friendly services from $31.5 billion in 2022 to $22.2 billion. The decline in laundering outpaced the overall transaction decrease, indicating a potentially cleaner crypto landscape. (source)
• Gibran Rakabuming Raka, son of Indonesia's president, won the local elections with 60% of the vote, indicating the public's growing embrace of digital technologies. His campaign promoted blockchain, crypto, AI, and cybersecurity, aligning with Indonesia's goals to become a digital leader and bridge the divide.(source)

World Markets

• Peru's GDP contracted by 0.74% in December 2023, against expectations. Declines were seen in fishing, financial & insurance, and manufacturing. Growth slowed in agriculture and mining, while utilities and accommodation & restaurants grew faster. The GDP for 2023 decreased by 0.55%.
• Tunisia's economy contracted for a second straight quarter entering a technical recession, with declines in oil refining, manufacturing and agriculture offset slightly by growth in services like hotels, restaurants and finance; quarterly GDP rose slightly but annual growth was just 0.4% in 2023.(INS)

Commodities

• Silver prices rose to $23/ounce due to Fed rate cut possibility. Retail sales fell, while jobless claims dropped. Chicago Fed Goolsbee expressed caution about waiting too long before cutting rates, citing inflation data and 2% target.

On Friday, PPI unexpectedly increased, and major stock indexes fell on concerns about delayed Fed rate cuts. The real estate, tech, and consumer discretionary sectors underperformed. The Japanese economy entered a technical recession, while oil prices increased on OPEC+ decision. Soybean prices hit a 2-month low after an increased stocks forecast. The crypto market continued its sideways movement, with BTC (+52K) and ETH (+2.8K) wavering at their 2-year highs. At the same time, altcoins' bulls used that pause to push major coins higher, with BNB, Algorand, and Polygon continuing their 2-day surge by adding another +2.5%.

Details

• Producer prices (PPI) rose 0.3% in January, the largest monthly increase in five months, driven by a 0.6% surge in service costs. Goods prices fell 0.2%, with gasoline dropping 3.6%. Year-on-year, PPI increased 0.9%, while core PPI rose 0.5% monthly and 2% annually, both above estimates.(BLS)
• Housing starts dropped 14.8% in January 2024 to 1.331 million, the lowest since August, missing forecasts. Single-family starts fell 4.7%, and multi-unit starts plunged 35.8%. All regions experienced declines.(CB)
• The University of Michigan consumer sentiment rose to 79.6 in February, a fresh high since July 2021 but below forecasts. Expectations improved, while current conditions dipped slightly. Inflation expectations for the year ahead increased to 3% and remained at 2.9% for the five-year outlook.(UM)

World Markets

• European stocks closed higher, with the Eurozone’s Stoxx 50 reaching a 23-year high and the broader Stoxx 600 jumping to ATH. Tech shares, led by ASML, and industrial companies, including Safran, BASF, and Air Liquide, fueled the gains. Additionally, ECB member de Galhau emphasized the rationale for an initial interest rate cut, while NatWest surged over 7% following strong results and a new CEO appointment.
• Japan's Q4 2023 GDP unexpectedly shrank by 0.1%, missing forecasts and leading to a recession. Private consumption declined for the third consecutive quarter, capital expenditures were muted, and public investment decreased. However, net trade contributed positively due to stronger export growth.(Esri)
• The CBR kept its key rate at 16% in February, halting a series of hikes. Inflation has eased to 6.6% annually, and the CBR predicts it will fall below 4.5% by year-end, nearing the 4% target. Despite this, inflation risks remain, and the economy, impacted by sanctions and labor shortages due to mobilization, grew by 3.6%, above expectations.(CBR)

Commodities

• WTI crude futures hit a 3-months high at $79.19, supported by Middle East tensions, OPEC+ supply cuts, and a weaker dollar. However, the IEA warned of slowing global oil demand, revising its 2024 forecast downward, and anticipating a larger supply increase.
• Soybean futures are bearish at $11.7 per bushel, near the lowest levels since December 2020, due to increased US grain stocks forecast. Weakened Chinese demand, strong South American competition, and favorable rainfall in Argentina and Brazil contribute to the negative outlook.

On Week 8, investors will focus on FOMC minutes and global flash PMIs, including the US, Eurozone, Germany, France, UK, Japan, and India. Germany's Ifo Business Climate, Turkey's interest rate decision, and Canada's inflation rate will also be closely watched.

SVET Markets Weekly Update (February 5 - 9, 2024)

On Week 6, major stock indexes reached ATH with the S&P 500 marking 14 consecutive weeks of gains, a 50-year unprecedented record. Commodities, including oil, gold, and coffee, were on the rise due to the developing Middle East situation. Crypto markets rebounded with major alts leading the charge, and BTC shot over $47K, again.

On Monday, stock indexes closed lower as upbeat PMI data and Fed comments dampened hopes of a March rate cut. Meta declined on profit taking, Boeing dropped due to weaker outlooks after reworking 50 737 Max jets, Nvidia hit ATH while Tesla dropped to a 10-month low. On the global scene, Eurozone PMI rose while PPI dropped 10% YoY. Cocoa continues to reach record highs on lower crops. The crypto market is mostly in red, with BTC declining 1% and ETH remaining flat. Only ChainLink continued to gain, adding another 5%, and Polkadot followed with a 1% increase. Additionally, data showed that the Web3 industry funding rebounded in 2023, with a total of $9 billion.

Details

• The January Composite PMI was confirmed at 52.0, up from 50.9 in December, signaling the fastest expansion since July 2023. Growth was driven by services as manufacturing contracted again. New orders increased at the fastest pace in 7 months despite falling export orders. Input price inflation eased to the lowest level since May 2020, while business confidence hit a 20-month high.(SP)
• Vehicle sales declined by 6.9% to 15.00 million annualized units in January, down from December's revised figure of 16.12 million. This follows an average of 14.79 million units from 1976 to 2024, with a record high of 21.71 million in October 2001 and a low of 8.48 million in April 2020. (NADA)

Crypto

• The Web3 industry rebounded strongly in 2023. Total funding reached $9.043 billion, with enterprise infrastructure and wallets favored. Ethereum's developer numbers grew by 66%, and compliance and social sectors gained importance. HashKey Capital led investments in infrastructure, DeFi, and other sectors in the Asia-Pacific region.(source)

World Markets

• The Eurozone Composite PMI rose in January to a 6-month high but still below 50, indicating a slower decline in business activity. Still, France's and Germany's PMI are below 50 and degrading. New orders fell at the slowest rate in 7 months, helping stabilize employment in the eurozone. Both input costs and output prices increased at their fastest pace in 8 months while future growth expectations improved to their strongest in 9 months.(SP)

Euro Area industrial producer prices fell by 10.6% in December 2023, exceeding expectations. Energy prices led the drop with a 27.5% decrease, while intermediate goods and durables also saw price reductions. Excluding energy, producer prices decreased by 0.4%. Month-over-month, producer prices fell by 0.8%, the biggest drop since May.(EuroStat)

• Brazil's Composite PMI rose to 53.2 in January 2024, marking the fastest expansion in 15 months. Both services and manufacturing activity accelerated, leading to a sharp increase in sales. Job creation also picked up pace, with manufacturing companies hiring more than service providers. Input cost pressures eased while charge inflation quickened, with services seeing higher inflation rates.(SP)

Commodities

• Cocoa futures hit record highs above $5,100 per tonne amid worries that harsh Harmattan winds are severely damaging crops in top producer Ivory Coast, potentially reducing yields for the April mid-crop. Ivory Coast has halted 2024/25 forward sales as shipments so far this season are down 36%. Poor crops in Ivory Coast and Ghana expected to lead to a large 2023/24 global cocoa deficit.

On Tuesday, NY Fed data showed that consumer debt hit a record, stocks were mixed, with the S&P 500 flat, the Nasdaq down, and the Dow Jones up. Investors adjusted their expectations following Powell's remarks. Earnings season continued, with Palantir surging 30% on profit outlook. Internationally, Euro Area retail sales decreased by -1.1%, and Argentina's industrial production slumped to a 2-year low. The crypto market is mostly on the rise, with BTC showing a small gain, while ETH added 3%. Polygon increased by +2%, and Uniswap jumped +4.5%. Monero crashed by -35% after Binance announced that it delists XMR. Also, the Nigerian Naira corrected sharply (-10%) to both BTC and ETH after devaluing almost 40% relative to those currencies during a month, due to general weakness of the Naira (NGN/USD is up 30% YoY).

Details

• Consumer debt hit a record high of $17.50 trillion in Q4 2023, increasing by $212 billion (1.2%) from the previous quarter. Mortgage balances rose to $12.25 trillion, while credit card debt surged by 4.6% to $1.13 trillion. Auto loan balances increased to $1.61 trillion, and other balances (including retail cards) grew by $25 billion. Student loan balances were effectively flat at $1.6 trillion. Non-housing balances grew by $89 billion. Delinquency rates and the transition into troubled status both increased amid the debt surge.(NY Fed)

Crypto

• Solana, after almost a year of uptime, suffered a major outage halting transactions. This prompted criticism on its scalability. Developers released a patch and requested validator operators to update, but the network restart was still ongoing.(source)

World Markets

• In December 2023, Euro Area retail sales decreased by 1.1% MoM, surpassing market expectations of a 1% fall. High inflation and borrowing costs negatively impacted demand, causing sales of food, drinks, and tobacco, as well as non-food products, to decline. Online trade also experienced its largest decrease since July 2021. Yearly, retail sales contracted for the 15th consecutive month with a 0.8% decline.EuroStat
• Argentina's industrial production fell 12.8% YoY in December 2023, the biggest decline since May 2020, with seven straight months of decline. Key sectors like basic metals, machinery, and food & beverages saw significant drops. Monthly, it decreased 5.4%, extending November's 0.6% fall.(Indec)
• In January 2024, total sales of new cars and light commercial vehicles in Russia reached 65,200 units (83,000 including alternative supply channels). Sales growth compared to January 2023 was 64%. Market dynamics were influenced by factors such as market saturation in the crossover segment and the impact of a significant increase in the key rate, disposal fee, and other factors, including seasonal ones, leading to customers postponing new car purchases.(AEB)
• The Central Bank of Kenya raised its benchmark rate to 13% to anchor inflation expectations and address exchange rate pressures. Inflation climbed to 6.9% in January 2024, nearing the upper end of the target range, while the economy is expected to remain strong in 2024.(CBK)

Commodities

• Gold remained near $2,020 an ounce as economic data and the Fed's hawkish stance reduced expectations of interest rate cuts. Stronger-than-expected US services sector growth and job additions, along with Jerome Powell's reaffirmation of no March rate cut, have lowered odds for rate cuts this year, impacting gold's price.

On Wednesday, mortgage applications increased, indicating an improving economy and higher Fed rates for longer, but stocks climbed on strong corporate reports, with the S&P 500 hitting ATH and Nvidia, Microsoft, and Meta showing significant gains. Internationally, China's vehicle sales slowed while Japan's leading economic index rose. The crypto market was in a mildly positive mood with Algorand increasing 3% and BTC showing less than a 1% rise. Monero recovered 30% of yesterday's dump, to 133.

Details

• Mortgage applications increased 3.7% in the week ending February 2nd, the fourth rise this year, despite a minor 2bps rise in average rates to 6.80%. Refinance applications jumped 12.6%, while home purchase applications fell 0.6%, following a weekly decline.(MBA)

Crypto

• MicroStrategy has consistently bought Bitcoin since 2020, becoming the global leader in corporate Bitcoin holdings. In 2023 and 2024, they added more to their stash, purchasing 850 bitcoins for $37.5 million in January, bringing their total to 190,000 BTC, worth $8.41 billion. Galaxy Digital Holdings holds 17,518 bitcoins in comparison, valued at $775 million.(source)
• A study found crypto investors earned $887 on average in 2023, up greatly from 2022 when the market fell and investors lost over $7,000 on average amid crypto firm failures and a bear market.(source)

World Markets

• China's vehicle sales increased 47.9% YoY to 2.44 million units in Jan '24, with NEV sales making up 29.9% and growing 78.8% YoY. However, both total and NEV sales decreased from Dec '23. Passenger vehicle sales dropped 37.9% YoY and 40.4% MoM, the worst since the early 2000s, due to a housing slump and market downturn.(CN)
• Japan's leading economic index rose to 110.0 in Dec '23, above forecasts, due to falling unemployment and improved consumer morale. This is the highest reading since Oct '22, rebounding from a 7-month low of 108.1 in Nov '23. Consumer confidence also reached a 1-year high in Dec '23.(ESRI)
• France's trade deficit expanded to €6.83 billion in Dec '23, surpassing expectations of €6 billion. Exports increased 1% to €50.2 billion while imports rose 2.5% to €57 billion. The deficit in investment and intermediate goods rose, but the energy shortfall narrowed. The deficit for 2023 decreased by €63.1 billion due to lower imports and higher exports of energy and manufactured goods.(FR)
• The Reserve Bank of Australia left its cash rate at 4.35% in its 2024 meeting, following a 425bps rate hike to curb inflation. Inflation remains high, but cost pressure is easing. Future tightening depends on data and risks, with a focus on returning inflation to the 2-3% target range by 2025. The board will monitor global and domestic trends, maintaining the Exchange Settlement rate at 4.25%.(RBA)

On Thursday, unemployment claims dropped, but major indices closed higher from the previous session with the S&P 500 reaching a new ATH at 5,002. Traders seem to be focusing on strong earnings, discounting the higher-for-longer narrative. On world's markets, in South Africa, manufacturing production rose, and cocoa continued to soar due to poor harvest expectations. Cryptocurrency-wise, Cardano saw a 5% gain, while BTC remained barely in the green, with ETH hovering near 2,4K in red, following a mini-rally at the start of this week.

Details

• Unemployment claims fell slightly to 218K (-9K) after a revise-up, close to expectations, yet still above the past two-month average. Continuing claims dropped by 23K to 1.87m. Despite this, the labor market slowdown is evident with the four-week average up 3,750. States like Oregon, Ohio, and California saw decreases, but Missouri and Texas had increases.(DOL)

World Markets

• South Africa's manufacturing production rose 0.7% YoY in December 2023, the slowest growth in three months. Major declines from vehicle parts, chemicals, and textiles were offset by increases in beverages, petroleum, and paper. Monthly output decreased by 1.7%, with a 0.4% rise for the full year.(ZA)

Commodities

• Cocoa futures rose for 7% in 24 hrs hitting a record $5,500/ton as supply concerns grow due to low stocks in top producers Ivory Coast and Ghana. Poor weather and crop diseases in the region have led to a 39% drop in shipments from Ivory Coast and a 35% decrease in Ghana's arrivals, causing prices to soar.

On Friday, stocks closed mixed, with the S&P 500 and Nasdaq reaching ATH once again, driven by gains in megacap companies. The Dow, however, fell due to declines in the energy and industrial sectors. The revised December Consumer Price Index (CPI) showed minimal change, supporting the ongoing disinflation. Earnings results showed significant shifts, with megacap companies like NVIDIA up and PepsiCo, Pinterest, and Expedia down due to disappointing reports. In global markets, European stocks closed near record highs, and oil prices rose due to the worsening situation in the Middle East. The crypto market also saw gains, with Avalanche (+6%) and Bitcoin (+4%) leading the charge. Uniswap and Cosmos increased by 3%, while Ethereum and Cardano added 2%. Monero continued to retreat, decreasing by 5%, after correcting by 30% post-crash. Among major currency pairs, BTC-to-Turkish Lira and BTC-to-Brazilian Real outperformed the rest of the market with a 3% increase.

Details

• Core consumer prices, excluding food and energy, remained steady with a 0.3% increase in December 2023, matching November's figure and market forecasts. Service prices excluding energy services slowed, while shelter and medical care costs rose more. Goods prices saw a rebound in apparel, new vehicles, and alcoholic beverages, but used cars, medical care commodities, and tobacco dropped.(BLS)

World Markets

• European stocks closed near record highs, with the Stoxx 50 hitting a 23-year high and Hermes performing well post strong sales results, but L'Oréal fell after below-forecast sales. Germany's inflation hit a two-year low of 2.9% in January.
• Italian industrial production rose 1.1% MoM in December 2023, beating expectations and recovering from a revised 1.3% fall in November. Output increased for consumer, capital, and intermediate goods, while energy output fell less sharply. Yearly output fell 2.1%, the smallest decline in four quarters, and 2023 saw a 2.5% drop compared to a 0.4% rise in 2022.(Istat)

Currencies

• The Russian ruble traded near 90 per US dollar, its lowest level in a month, pressured by weakening seasonal tax factors and the central bank head signaling interest rate cuts in 2024 while disagreements between the bank and government on capital controls added uncertainty.

Commodities

• Wheat futures dropped to $5.9, near three-week lows, due to higher global supply projections and lower US consumption. The USDA's WASDE report showed increased global wheat production, particularly in Middle East, reducing imports for the top importer. Russia's record-high wheat production, near 91 million tons, and near-record exports signal a supply surge. US demand fell due to reduced food demand.
• WTI crude futures closed at $76.84, up 6% and 3% from previous days, due to Middle East geopolitical tensions, Israel's ongoing operations in Gaza, and US drone strike in Baghdad, affecting oil demand. US gasoline inventories dropped dramatically, while crude stocks rose, contrasting market expectations.

On Week 7, investors will track inflation, retail sales, Fed speeches, and earnings from Coca-Cola, Airbnb, among others. Meanwhile, UK, Japan, and others report Q4 GDP, inflation, and unemployment. International highlights include UK and India's inflation, Switzerland's unemployment, and Germany's ZEW sentiment.

Comment: on Governments

I try to avoid discussing political topics unless they directly impact the price levels of key asset groups such as stocks, commodities, and currencies, including cryptocurrencies, which I monitor daily. However, I sometimes can't resist sharing my thoughts. Today is one of those days.

During the past week, three Boomers (two of whom happen to be in charge of thermonuclear weapons) and the head of a large resource-producing country delivered key speeches. I won't name them to avoid hurting anyone's feelings. Use your imagination, pls.

One of these Boomers, who previously demonstrated a strong presence of mind and character, is now showing obvious signs of physical decay, putting everyone, even their most loyal supporters, in a difficult position trying to justify their continued presence in power.

At the same time, separating this relic of the past era (as well as his supporting cohort) from the instruments of power they love to wield is an insurmountable task. This night be raising a fundamental observation in most minds: the current, hyper-centralized governance system is no longer adequate for our technological civilization. Instead, it has fueled a strong desire to replace one relic with another.

The second Boomer's public speech, addressed to a group of journalists, demonstrated a remarkable resolve in following a path that, although substantiated by reasonable assumptions, has already led to unimaginable suffering of countless innocent people, and surprisingly, no one can do anything about it. I am sure that the majority would argue with me that the overly centralized governance system is not one of the major causes of this.

The third Boomer, by chance does not possess a suitcase with a red button to press, but he is in charge of the economy, which has been in decline for almost two decades, despite this individual holding power all that time. However, his speech delivered in front of a large body of people's representatives contained nothing but new empty promises to improve people's lives.

It all raises the question: why still maintain such drastic centralization of power when its possessors cannot do much good for any of us during decades but can do almost unlimited harm to everyone within a few minutes?

Evidently (not to majority, of course), those systems were created to keep us under the control, like animals in a zoo, of few megalomaniacs. Sure, so-called "social scientists" would give you thousands of reason why the centralized system of governance is our "natural state". Otherwise, without that control, we all get crazy and start exterminating each other. It's a "human nature" they say.

That what we have heard from them for the past 200 years or so, yet it were governments which started to exterminate us in hundreds of millions using the latest advances in technologies - peoples by themselves are much less ambitiously bloodthirsty than governing us bureaucrats.

Not even the largest crowd of flesh-eating monsters, are able to do so much harm as one indistinguishable bureaucrat with a right button to push. After 20th centuries global wars it has become the indisputable fact. Still, peoples watch thrillers and vote to place new rulers on top to protect them from imaginary treats and to expose them to the very real and momentary extermination.

Obviously, not to the majority, of course, those systems were created to keep us under the control of a few megalomaniacs like animals in a zoo. Sure, so-called 'hardliners' and a bench of 'social scientists' would give you thousands of reasons why the centralized system of governance is our 'natural state.' Otherwise, without that control, we all get crazy and start exterminating each other. It's 'human nature' they say.

That's what we have heard from them for the past 200 years or so, yet it was governments that started to exterminate us in hundreds of millions using the latest advances in technology. People by themselves are much less ambitiously bloodthirsty than governing bureaucrats.

Not even the largest crowd of flesh-eating monsters is able to do so much harm as one indistinguishable bureaucrat with the right button to push. After the 20th century's global wars, it has become an indisputable fact. Still, people watch thrillers and vote to place new rulers on top to protect themselves from imaginary threats and expose themselves to very real and momentary extermination.

Until when?

SVET Markets Weekly Update (Jan 29 - February 2, 2024)

On Week 5, the Fed kept the rate unchanged at 5.5%, but hinted at no cuts in March. This didn't stop the stock market from reaching ATH on all major indexes, with Meta showing a record 20% growth during one day on Friday. At the same time, manufacturing activity continues to slow down, and job cuts are increasing in the private sector at a record pace. However, government data shows job increases and unemployment remaining stable at 3.7%.

On the world stage, China's stocks continued to deteriorate due to traders' pessimism towards the local economy and CPC stimuli. Gold, silver, and coffee rose due to geopolitical tensions in the Middle East. The Euro Area registered a slight uptick in GDP year-over-year (YoY), despite the German economy entering a technical recession.

At the same time, BTC and ETH slowed down significantly as traders' attention shifted to other major cryptocurrencies, leading to a sharp rise of Chainlink, Avalanche, and Polkadot.

On Monday, the Dallas Fed Index hit an eight-month low, and traders reacted by pushing stocks higher, with the S&P 500 and Nasdaq reaching new heights. Tech and consumer staples gained, while energy lagged. Meta hit an all-time high. However, most traders caution anticipating the Fed decision and 19% of the S&P 500 reporting this week. On a world's stage, China's industrial profits declined due to a weakening economy. Oil, gold, and silver are on the rise following Houthi rebels' missile attacks. The crypto market is in deep green, with Cardano outperforming the rest of the major tokens, adding more than 7%. Solana and Polkadot increased more than 5%, while Chainlink, Avalanche, and Polygon made +3%. BTC and ETH lagged the overall market with under 3% growth.

Details

• The Dallas Fed's manufacturing index dropped to -27.4 in January 2024, indicating a deeper contraction. The production index hit its lowest since mid-2020, while new orders and shipments also declined. Employment fell to its lowest since mid-2020. Despite this, wage and input costs continued to rise while selling prices remained flat. However, future production index increased to 21.7, suggesting optimism for future growth. Most other forward-looking indexes also improved. (Dallas Fed)

Crypto

• Crypto-focused funds globally experience a significant $500 million in net weekly outflows, primarily linked to Grayscale's bitcoin ETF transition. Grayscale's GBTC sees a $2.2 billion net outflow, overshadowing $1.8 billion inflows into new U.S. bitcoin ETFs. The United States, Switzerland, and Germany, with outflows totaling USD 409M, 60M, and 32M respectively, lead the global outflows. Bitcoin, Ethereum, Polkadot, and Chainlink witness notable outflows, raising concerns across the crypto investment landscape. (source).
• Binance's survey in France, Italy, Spain, and Sweden shows strong bullish sentiment among European investors in the face of recent crypto volatility. 73% express optimism about crypto's future, with 55% exclusively engaging in digital assets. High returns (20%), decentralization (18%), and innovation (17%) are cited as key adoption drivers. Additionally, 55% use cryptocurrencies for daily transactions.(source)

World Markets

• Shanghai Composite drops 0.92% to 2,883, and Shenzhen Component falls 2.06% to 8,582 as healthcare and tech stocks decline. US bill proposing a ban on Chinese biotech firms collaborating with the US government raises concerns, impacting sectors like semiconductors and AI. WuXi Apptec, Zhongji Innolight, and TCL Zhonghuan lead losses. Chinese regulators suspend lock-up share lending for short selling to stabilize equity markets.
• China's industrial profits decline 2.3% YoY to CNY 7,685.83 billion in 2023, marking a second consecutive annual fall amid economic challenges. State-owned firms see a softer profit shrinkage (-3.4%), while the private sector experiences growth (2.0%). Specific sectors, including chemical manufacturing, face notable declines, while others, such as ferrous metal smelting, show substantial profit increases. In December, industrial profits rise by 16.8% YoY, marking the fifth consecutive monthly increase.
• Ibovespa fell 0.5% below 128,400 due to caution before monetary decisions by Brazil's central bank and the US Fed. Vale's shares dropped 1.8% amid management concerns and Evergrande's impact, affecting the mining sector. Gol faced the day's worst performance, impacted by US judicial issues and a credit downgrade. Meanwhile, Magazine Luiza rose 2.8% following a R$1.25 billion private capital increase.
• Pakistan's central bank maintains a 22% key interest rate for the fifth time, citing improved external accounts and increased reserves. Inflation, expected to decline faster from March, is projected at 23%-25%, with a medium-term target of 5%-7% now set for September 2025. The GDP growth target remains 2%-3%.
• Zimbabwe's annual inflation rises to a ten-month high of 34.8% in January 2024, up from 26.5% in December. Food, services, and currency depreciation contribute, with the local unit losing over a third of its value against the dollar this year. Monthly consumer prices surge by 6.6%, the highest in seven months.

Currencies

• The dollar index rose to 103.7, approaching mid-December levels, as traders anticipated the Fed's policy decision. Focus is on potential hints about the timing and pace of interest rate cuts. Betting odds for a 25bps rate cut in March and May are approximately 49% and 50%, respectively. Increased buying against the Euro is driven by expectations of ECB rate cuts in April. The dollar also strengthened against the British pound ahead of the Bank of England's decision.
• The Indian rupee hovers around 83.1 per USD, slightly weaker than a mid-January high. Traders await the federal budget for potential reforms, with the Finance Ministry optimistic about 7%+ growth, backed by structural reforms. The central bank intervenes to prevent the rupee from falling below its record low of 83.4.

Commodities

• Gold rises to nearly $2,030/ounce amid Middle East tensions. Houthi rebels' missile attack on an oil tanker and drone attack on US forces drive safe-haven demand. Cautious investor sentiment prevails ahead of the US Federal Reserve's policy decision, with expectations of a steady interest rate. Strong US economic data and hawkish Fed comments reduce the likelihood of a March rate cut to 48%, down from 86% in December.
• Silver prices steady near $23/oz as investors await Fed meeting and US economic data, including jobs report. Traders hope for signs of a cooling labor market and softer Fed tone. Silver remains supported by geopolitical risks in Middle East, including attacks on US service members and commercial shipments.

On Tuesday, job openings increased, while the Dallas Fed reported a drop in service sector activity and home prices continued to rise, dampening hopes for a 25bps rate cut by the Fed. As a result, stocks were mixed: the S&P 500 and Nasdaq declined, while the Dow Jones edged slightly higher. Corporate earnings were also mixed, with UPS sinking and GM soaring. Microsoft, Nvidia, and Meta hit all-time highs.

On world markets, the German economy entered a technical recession, while the EU zone still showed barely perceptible growth. The Mexican economy slowed. The crypto market was mostly in green, with Chainlink surging above 4%, followed by Solana at +3.5%. Ethereum showed a +3% increase, while Bitcoin's gain was less than 1%.

Details

• The number of job openings in December 2023 surged to 9.026 million, up 101K from the previous month and above consensus. Professional and business services saw a gain, but wholesale trade experienced a decrease. Job openings increased in the South (+115K) and Northeast (+12K) but decreased in the Midwest (-22K) and West (-4K).(BLS)
• The Dallas Fed's service sector index for Texas fell to -9.3 in January, suggesting worsening business conditions. The outlook and revenue indexes also declined, while labor market measures showed continued employment growth with shorter work weeks. Input and selling price pressures eased, while wage growth remained unchanged.(Dallas Fed)
• Home prices rose 5.4% year-on-year in November, but fell 0.2% month-on-month, with Detroit and San Diego reporting the highest gains and Portland the only city with declining prices. Seattle (-1.4%) and San Francisco (-1.3%) had the largest declines MoM. (SP)

Crypto

• Blockchain analysts report that Grayscale has slowed BTC transfers to Coinbase, amid a rising price for the asset. The current BTC value from the recent transfer is below $200 million, representing less than half of last week's average daily volume. (source)

World Markets

• The Euro Area had a small gain in Q4 2023 while the overall trend has been down since January 2022. France (0.7%) and Italy (0.5%) leading the expansion and Spain (2%) and Portugal (2.2%) experiencing strong growth. Germany's economy shrank while Ireland (-4.8%) recorded a steep decline.(EUROSTAT)
• Germany's economy shrunk by 0.2% in Q4 2023, in line with expectations, and entered a technical recession due to rising prices and borrowing costs. (Federal Statistical Office)
• Mexico's GDP expanded by 2.4% in Q4 2023, slower than expected and lower than the previous quarter. Primary, secondary, and service sectors saw slower growth, with 2023 growth at 3.1% compared to 3.9% in 2022. (INEGI)

Commodities

• Nickel futures continued its downward movement even after China's stimulus announcement and Nornickel's production forecast. The overall trend remains bearish due to excess supply from world's top exporters, Indonesia, Philippines and China. As the International Nickel Study Group forecasts, in 2023 metal's excess supply was 223K metric tons and is expected to widen to 239K in 2024.

On Wednesday, the Fed kept the rate unchanged at 5.5% but hinted at no cuts in March; as a result, stocks tumbled, with the Dow, S&P 500, and Nasdaq showing deep losses in the communication services, tech, and energy sectors. In the world markets, China's manufacturing is unexpectedly stable, while Brazil's Central Bank cut its rate to 11.25%, and South Korean exports surged due to a more than 50% increase in chip sales. The crypto market is in the red, following Wall Street, with Solana and Polygon dropping 3% and 2%, respectively. Both BTC and ETH are down 1%.

Details

• Fed maintained the funds rate at 5.25%-5.5% in January 2024, as expected. Policymakers indicated rates would not be reduced until inflation moves sustainably towards 2%. Powell suggested rate cuts may begin this year, but not in March. The Fed removed reference to further rate hikes and noted inflation has eased, but remains elevated.(FOMC Minutes)
• Mortgage applications in the US decreased by 7.2% in the week ending January 26, 2023. Applications to buy a home dropped by 11.4%, while those to refinance a home loan increased by 1.6%. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 6.78%. Low existing housing supply is limiting options for prospective buyers and keeping home-price growth elevated, which is constraining home purchase activity.(MBA)
• Private businesses added 107K jobs in January 2024, below expectations. Leisure and hospitality led the growth with 28K jobs followed by trade, transportation and utilities (23K), construction (22K), education/health services (17K) and financial activities (7K). Pay growth slowed, with job-stayers seeing a 5.2% increase and job changers a 7.2% gain.(ADP)
• The Chicago PMI fell to 46 points in January 2024, down from 47.20 points in December 2023. This was below the historical average of 54.66 points, indicating a contraction in manufacturing activity. The index had reached a record high of 81.00 points in November 1973 and a record low of 20.70 points in June 1980. (ISM)

Crypto

• Coinbase and Ripple are major donors to the Fairshake super PAC, which supports pro-crypto politicians. Coinbase has contributed $24.5 million, with CEO Brian Armstrong donating an additional $1 million. Ripple has donated $20 million, while Andreessen Horowitz and Electric Capital have donated $20 million and $500,000 respectively, according to Bloomberg.(source)
• Bitcoin miners transferred over 4,000 BTC (~$173 million) to cryptocurrency exchanges, marking the largest single-day selling since May 16, 2023. However, the selling pressure did not impact mining portfolio reserves, which have remained stable since January, according to on-chain analytics firm CryptoQuant.(source)
• Binance has regained its position as the world's most dominant crypto exchange, capturing nearly 50% of the global market share. The resurgence can be attributed to a spike in trading volume fueled by Binance's zero-fee promotion in December 2023 and the hype surrounding the United States Securities and Exchange Commission (SEC) approving several spot Bitcoin exchange-traded funds (ETFs) (source).

World Markets

• China's Caixin Manufacturing PMI remained unchanged at 50.8 in January 2024, beating market expectations of 50.6. This marked the third consecutive month of growth in factory activity. The reading indicates that manufacturing activity in China is expanding, as a PMI above 50 indicates growth, while a reading below 50 indicates contraction.(SP)
• Brazil's central bank cut the Selic rate by 50 bps to 11.25% in January 2024, as expected. The committee noted economic activity indicators align with an anticipated slowdown and consumer headline inflation continues to decrease. Committee members anticipate a similar reduction in upcoming meetings to sustain the necessary contractionary monetary policy for disinflation. The total easing cycle's magnitude will depend on factors such as inflation dynamics and long-term expectations.(BCB)
• Japan's 10-year government bond yield rose above 0.7%, hitting its strongest level in six weeks, as BOJ Governor Kazuo Ueda's comments revived speculation about a possible shift in monetary policy. Ueda suggested that the BOJ will reexamine its massive stimulus program if wage rises continue to increase the likelihood of achieving the 2% inflation target. However, the BOJ maintained its ultra-loose monetary policy at its first meeting this year, keeping its key short-term interest rate at -0.1% and retaining the 1% upper limit on the 10-year Japanese government bond yield. Japan's unemployment rate fell to 2.4% in December, while domestic industrial production and retail sales grew less than expected.
• In December 2023, Spain's retail trade grew by 3.1% YoY, marking the 13th straight month of growth, driven by non-food sales, particularly personal equipment and other goods. Annual retail sales increased by 6%. However, on a monthly basis, retail trade decreased by 0.7% - the 5th month of a slowing growth rate.(INE)
• Italy's unemployment rate fell to 7.2% in December 2023, the lowest in 16 years, beating market forecasts of 7.6%. Youth unemployment also declined to 20.1%, the lowest since July 2007, pointing to a resilient labor market.(ISTAT)
• Brazil's Q4 2023 unemployment rate fell to 7.4%, below the expected 7.6%, marking the lowest rate since February 2015. The number of employed individuals reached a record high of 100.985 million, with the employment rate rising to 57.6%.(IBGE)
• South Korean exports in January 2024 rose 18% YoY, beating expectations, due to a surge in semiconductor exports. Sales of chips, cars, display products, and home appliances increased. Exports to the US and China grew, reversing a decline in 2023 caused by falls in chip sales and global economic uncertainties.(MOTIES)

Currencies

• The Russian ruble weakened past 89 per USD, near its lowest level in three weeks, due to uncertainty caused by conflicting views between the Central Bank and the government on currency controls. While the government proposed extending capital controls until the end of the year, the CBR officials declined the idea. The ruble remained supported by the central bank's FX interventions and reduced demand for yuan and greenback due to seasonal factors.

On Thursday, recent data showed rising jobless claims accompanied by drastically increased cuts in the private sector and slowing labor cost growth. Stocks reacted with a moderate rise. Financials underperformed while communication services outperformed. On the world's markets, the Euro area's inflation declined to 2.8% while unemployment held at 6.8% with Spain recording 11%. Also, the BoE kept its rate at 5.25% and the Nigerian Naira plummeted on the central bank's factual devaluation. On the crypto market, traders followed WS buying in the dip and brought most popular tokens into the green with Chainlink leading the charge with a 9% increase. BTC and ETH growth is much less pronounced (around +1%).

Details

• US employers announced 82,307 job cuts in January 2024 - a 136% increase from the 34,817 cuts announced in Dec 2023, the most in ten months and the highest January total since 2009. The financial (23238) and technology (15806) sectors experienced the most job cuts. Layoffs were driven by economic trends, anticipated policy changes, and increased automation and AI adoption.(Challenger)
• Unemployment benefit claims rose for a second week to 224K, the highest since November, with California, NY, and Oregon experiencing the most significant increases. Continuing claims also rose, reaching a nine-week high, indicating a soft slowdown in the labor market.DOL
• The ISM Manufacturing PMI improved to 49.1 in January 2024, the highest since October 2022, indicating a less severe contraction in the manufacturing sector. Demand and output stabilized, while inventories fell at(ISM)

Crypto

• Ethereum has seen a price and activity resurgence, with data showing 101K new ETH addresses created daily alongside 484K interacting, 28% faster than three months ago. This growth signals a thriving ecosystem for the second-largest cryptocurrency.(crypto)
• Polygon Labs laid off 60 employees, about 19% of its workforce. Departing staff received severance packages while remaining employees will get at least a 15% raise starting in 2024, reflecting continued web3 job market demand.(source)

World Markets

• The Euro Area inflation rate declined to 2.8% YoY in January 2024, meeting expectations. The core inflation rate eased to 3.3%, still reaching the lowest level since March 2022. On a monthly basis, consumer prices fell 0.4% after rising 0.2% in December. (Eurostat). FYI: Euro Area (Zone) is a monetary union, which accept EURO as their currency. Euro Area excludes: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden.
• The Euro Area unemployment rate held steady at a historically low 6.4% in December 2023, as expected, with youth unemployment dipping to 14.4%. The number of unemployed fell by 17 thousand on the month to 10.909 million. Spain had the highest jobless rate at 11.7%, while Germany had the lowest at 3.1%.(Eurostat)
• Bank of England kept the Bank Rate unchanged at 5.25% for the fourth consecutive time, in line with expectations. Two policymakers preferred a 25bps increase, while one preferred a decrease. The central bank acknowledged more balanced inflation risks and expected GDP growth to gradually pick up. CPI inflation is projected to temporarily hit the 2% target in Q2 2024 before increasing again in Q3 and Q4.(BoE)

Currencies

• The Nigerian naira hit a record low of 1,250.5 per USD, nearing the parallel market rate, after the central bank revised its exchange rate methodology, marking the currency's second devaluation in seven months. This steep drop defies efforts by the central bank and government to boost forex liquidity despite a backlog of $7 billion in matured forwards. The bank warned banks against underreporting transactions amid risks of misinformation and manipulation. About $2.5 billion of the backlog has been paid across key sectors, though dollar shortages persist for Africa's largest economy.

On Friday, the latest data shows that unemployment remains steady at 3.7%, and the economy continues to add jobs at an increasing rate. Despite this, stocks have reached record highs again, boosted by strong results from tech giants. Meta surged a record +20%, Amazon gained ~8%, and Nvidia rose ~5%. On the world's markets, Chinese stock indexes continue to decrease due to trader pessimism regarding the effectiveness of government stimulus and the ongoing Evergrande turmoil. Cryptocurrencies were in the green again with Chainlink leading the market with a +7% increase, followed by Avalanche (+6%). However, BTC (-1%) and ETH (-1%) paused as investors reallocated into other major cryptocurrencies.

Details

• Total nonfarm payroll employment rose by 353K (projected 180K) and the unemployment rate remained steady at 3.7% in January 2024, below the forecasted 3.8%. The activity rate was the same at 62.5%, the lowest since February 2023. The number of unemployed decreased by 144 thousand to 6.12 million, while employed individuals dropped by 31 thousand to 161.15 million. (BLS)

Comment: On that single example, you might really appreciate how bureaucrats are distorting the real economic picture using "hard, factual, trustworthy statistical data" to match their corrupt, political narrative. According to government's issued data both (!) employment and unemployment are now decreasing at the same time :)

• And the answer is that the U-6 unemployment rate, accounting for all forms of unemployment, rose to 7.2% in January 2024 from 7.1% the prior month.(BLS)
• Consumer sentiment (according to the University of Michigan) rose to a 2.5-year high in January as expectations improved (mostly because of a sharp rise in consumers expectations), though assessments of current conditions weakened somewhat. Longer-term inflation expectations edged up but remained relatively subdued.(UoM)

Crypto

• Tether Holdings reported a record-breaking Q4 2023 net profit of $2.85 billion (beating JP Morgan), contributing to a $6.2 billion annual net profit. The company removed secured loans from token reserves, achieving 90% cash backing, and invested $1.45 billion in sustainable energy, Bitcoin mining, data infrastructure, AI, and P2P telecommunications technology.(Tether)
• DeFi's Daily Unique Active Wallets hit a record 5.3 million with a 262% surge in social dapps. The DeFi sector's Total Value Locked reached $110 billion. NFT trading volume was at $1.5 billion, with Blur leading but focusing on high-value NFTs. $41 million in crypto assets were lost to hackers.(DappRadar)
• Polkadot experienced exceptional growth in Q4 2023, with a 93% increase in active parachain addresses and a 150% surge in Cross-Consensus Mechanism Format transfers. This highlights the growing adoption of Polkadot's specialized blockchains and enhanced interoperability.(source)

World Markets

• The Shanghai Composite and Shenzhen Component fell 1.46% and 2.24% respectively, hitting a four-year low due to economic uncertainties and negative investor sentiment. Despite stimulus measures, concerns over Evergrande's liquidation and potential US bans led to significant losses in growth stocks.
• In December 2023, Brazil's Industrial Production rose 1% YoY, surpassing 0.1% forecasts and November's 1.3%. Historically, the average annual growth rate is 1.68%, reaching 37.20% in 1991 and -27.70% in 1990.(IBGE)

Comment: About the Secretary of Labor interview on the Reuters' channel.

Watching all markets across the world at once and trying to gauge how it reflects on crypto every day for more than one year has put me in a non-enviable position.

This is especially true when I have also constantly listened to political commentaries coming from top-positioned bureaucrats, notably those responsible for economic conditions in the country. One of those emanated from the Secretary of Labor today.

That person came full throttle, congratulating the government for the amazing results they achieved with keeping employment so low, inflation high, and GDP growing. Then, the journalist asked, 'Why then do people can't feel that which reflects in upcoming elections' polls?'

(Like, yes, what about the sky-high mortgage rates, unbelievable costs of food and housing, evaporated bank accounts, mounting lay-offs, and complete destruction of whole sectors of the economy like SME banks, start-ups and innovations, SME finance, and crypto to name just a few?

And, yes, "thanks" to the Boomers' outstanding smear campaign against crypto, we still have 95% of the population absolutely oblivious to the decentralized governance and income-earning alternatives we have created for them during the past 15 years.)

It was absolutely dumb striking to see how the Secretary started to mumble something like, 'We work so hard, but people just too stupid to not recognize that.' That speaks volumes about the soundness of the current political system, which acts now like a dystopian movie about gigantic moving cities which fight each other on the face of dilapidated Earth led by straightforward delusional and mentally deficient megalomaniacs and their small cliques.

These "elected officials" completely ignore reality outside of their high-raised, bulletproof cockpits, driving with eyes wide shut, without front-windows, relying on their medieval dials board. All those "legitimated gangsters" do now is keep cheering the crowd with only goal in mind -- to prolong their stay in power for as long as they could, whatever the cost for the rest of us.

And by the way, all alternatives on the so-called elections (and I am talking worldwide, where more than 50% of the world's population will come into voting cabins this year) are not a tiny-tiny better. So, investors, buckle your seatbelts. So much fun ahead.

On Week 5, trader focus on major corporate earnings and FED's insights. Globally, attention turns to interest rates, inflation, trade data, and economic indicators from countries like Australia, India, China, and Germany.

SVET Markets Weekly Update (Jan 22 - 26, 2024)

On Week 4, the economy expanded by 3.3%, and core PCE prices rose by 2.9% year-on-year - the lowest in three years - while WS's major indices hit record highs. On the global stage, European stocks rose to a five-week high on strong earnings, but the ECB's decision to keep interest rates at record highs created some confusion among traders. At the same time, Chinese stocks saw overall gains after Beijing's fresh policy support. In the commodities market, oil and coffee prices continued to rise due to geopolitical tensions. Meanwhile, BTC and ETH experienced sharp declines, only to bounce back on Friday as bulls counterattacked, attempting to liquidate bears' short positions.

On commodities side, Silver prices fell

On Monday, Wall Street's major indices, including the S&P 500, Dow Jones, and Nasdaq 100, hit record highs. Notable performances came from Apple and Nvidia. However, technical graphs show that stock indexes are starting to show weakness. Investors await key economic data on Q4 GDP growth, PCE, and S&P Global PMIs. Meanwhile, BTC has broken through an important resistance level at 40K, suggesting that short-sellers are trying to crash it further following the BTC ETF approval.

Crypto

• Major banks, including Morgan Stanley, face an uncertain future as the dollar's dominance in global reserves is questioned. Diversification by nations like the EU and China, coupled with the rise of cryptocurrencies and stablecoins, rises Morgan Stanley's and other big banks' feign concern over their future, portraying it as a "threat to the global financial system." In reality, the challenge lies in the shifting dynamics favoring decentralized currencies and stablecoins, unsettling traditional banking establishments (source).

World Markets

• South Korea's Producer Price Inflation rose (Bank of Korea) to 0.10% in December 2023, up from -0.40% in November. The monthly average from 1965 to 2023 is 0.46%, with a peak of 14.50% in February 1974 and a low of -2.30% in November 2008.

Commodities

• Silver prices fell to $22.5/ounce as the dollar strengthened, and investors scaled back expectations of prompt Fed easing. Robust US retail sales in December reduced chances of a March rate cut. Governor Waller's stance against rapid rate cuts influenced sentiment, prompting anticipation of additional Fed remarks for clarity. China's lower-than-expected Q4 GDP growth has negatively impacted the industrial outlook for metals.

On Tuesday, the Richmond Manufacturing Index unexpectedly fell, while retail sales were reported to be rising, leading some traders to play technicals and start shorting indexes. Consequently, US stocks, including the S&P 500 and Nasdaq 100, were mixed but remained near record levels, still buoyed by strong corporate results. United Airlines, Verizon, Procter & Gamble, and Alibaba saw significant gains, although the Dow Jones was weighed down by 3M's disappointing guidance.

Meanwhile, Bitcoin and Ether are experiencing sharp declines on Wall Street's active shorting, with Ether down almost 5%. They led a downturn among major cryptocurrencies, with others such as Polygon, Avalanche, Polkadot, Algorand, and Solana declining by more than 3%.

Details

• The composite manufacturing index in the US Fifth District area dropped to -15 in January, indicating sluggish manufacturing activity. New orders and employment declined, while shipments and backlogs also fell. Firms remained pessimistic about local business conditions and expect prices to moderate. (Richmond Fed)
• The US Redbook Index rose by 5.2% in the week ending January 20, 2024, compared to the same week the previous year. Historically, it averaged 3.59% from 2005 to 2024, with a peak of 21.9% in 2021 and a low of -12.6% in 2020. The index tracks weekly retail sales, excluding autos and parts. (Redbook Research)

Crypto

• FINRA, overseen by the SEC, reported that 70% of member firms' communications about crypto may have breached rules by making unfair or misleading claims, likening crypto to cash or regulated assets. A sweep reviewing 500 retail communications found widespread non-compliance, with a few firms responsible for most potential violations. (source)
• In the past 30 days, Cardano (ADA) surpassed Polkadot (DOT) and Kusama (KSM) to claim the highest blockchain development activity. Santiment's list of top crypto coins by GitHub commits includes Cardano, Polkadot, Kusama, Optimism (OP), Ethstatus (SNT), Hedera (HBAR), Cosmos (ATOM), Dfinity (ICP), Chainlink (LINK), and Ethereum (ETH). The shift in rankings implies varying levels of developers' commitment to these networks. (source)

World Markets

• The Bank of Japan maintained its interest rate at -0.1%, lowered its 2024 CPI forecast to 2.4%, and expects 1.8% core inflation in 2025. The 2023 GDP growth projection was reduced to 1.8%, while the 2024 outlook was raised to 1.2%. Governor Ueda indicated any rate hike would aim to support the economy with minimal disruption. (BoJ)
• European stocks, including the STOXX 50 and STOXX 600, slightly declined by 0.3% as investors awaited central bank meetings. Construction stocks dropped, while mining stocks rebounded. Logitech faced a sales decline, leading to a 9% decrease in shares. Volkswagen, on the other hand, saw a 5% increase in shares after positive analyst calls.
• In November 2023, Argentina's monthly GDP YoY decreased to -0.90%, down from 0.60% in October. The average monthly GDP YoY from 2005 to 2023 was 2.31%, with a high of 30% in April 2021 and a low of -24.40% in April 2020. (Instituto de Estadística)
• The Shanghai Containerized Freight Index hit a high since September 2022 at 2,239 points due to over 2,300 ships rerouting to avoid potential Houthi attacks in the Red Sea, increasing voyage costs and raising concerns of trade disruptions and inflation. It added additional 10 days and $1 million in fuel costs for each voyage between Asia and Europe.

Commodities

• Raw sugar futures reached a one-and-a-half month high of over 23 cents per pound due to expectations of lower demand. Hot weather in Southeast Asia affected crops, and investors were concerned about a possible export ban from India. Brazil's sugar supply was also being monitored, with dryer weather causing issues, although recent data showed increased sugar output and record-high exports.
• Aluminum futures rose to $2,230 per tonne from a one-month low after reports of a potential EU ban on Russian aluminum imports. The EU previously banned certain aluminum products, and a broader ban is now considered, while China's possible rescue package for its equity market boosts base metal demand.

Currencies

• The dollar index reached a six-week high above 103.7 due to stronger-than-expected US economic data and hawkish signals from Federal Reserve officials. Retail sales for December and consumer sentiment were also positive. The probability of a March rate cut decreased to 40% from 63% a week ago.
• The British pound remains strong at $1.27 and hits a four-month high against the euro, with BoE rate cuts expected later than Euro Area and US. UK's smaller December budget deficit could allow March tax cuts, despite recession risks and inflation concerns, with markets pricing a 50% chance of a May BoE rate cut.

Comment: on FINRA's BS

In the aftermath of the eradication of crypto freedom, a disturbing revelation unfolds as corporate shackles tighten their grip, orchestrated by malfeasant politicians using SEC and its smaller counterparts as a weapon in their internal scrabbles.

The so-called guardians of financial integrity, like FINRA, claim to uphold fair and balanced communication with the public. However, their own report lacks a definition of "fair and balanced" and how it relates to how many "exaggerated, promissory, unwarranted or misleading" communications are issued outside of crypto. This raises serious questions about the regulatory body's effectiveness in curbing misinformation and maintaining transparency.

The thematic patterns identified by FINRA includes misleading comparisons of crypto to traditional assets like stocks, further underscore a systemic issue. The misrepresentation of federal securities laws or FINRA rules in the context of crypto adds another layer of concern, revealing a regulatory framework struggling to adapt to the evolving landscape of digital assets.

It is noteworthy that FINRA, overseen by the Securities and Exchange Commission (SEC), initiated this sweeping review in November, ostensibly to ensure compliance. Yet, the report paints a picture of a flawed system where a handful of firms exhibit a multitude of potential violations, questioning the efficacy of such oversight.

In scrutinizing 500 retail communications, FINRA's attempt to ensure fairness and balance appears feeble at best. The revelation that some firms were the primary culprits in these potential violations only amplifies the skepticism surrounding the regulatory process.

In conclusion, the regulatory crackdown on crypto communications, as reflected in FINRA's findings, not only exposes a deficiency in oversight but also raises concerns about the broader implications for the future of financial freedom and autonomy in the digital age.

On Wednesday, macroeconomic data showed that January business activity increased, and the S&P 500 and Nasdaq 100 hit fresh records, driven by strong corporate results. Netflix shares soared 10% after beating revenue forecasts and increasing subscribers. Chipmakers gained, with Nvidia, Microsoft, and Meta shares reaching all-time highs (ATH). Microsoft crossed the $3 trillion valuation mark due to continuing AI excitement.

Meanwhile, European stocks hit a 5-week high on strong earnings. Oil and coffee prices continued to rise due to geopolitical tensions.

On the crypto side, BTC and ETH were slightly up on technical recovery from Tuesday's crash, as the rest of the crypto market also showed minor growth. Algorand, Solana, and Bitcoin Cash recovered up to 3%.

Details

• The S&P Global US Composite PMI rose to 52.3 in January 2024, signaling the fastest growth in business activity since June 2023. Service sector activity expanded, while manufacturing output fell slightly. New business increased sharply, but new export orders declined. Job creation slowed, while input cost inflation and average prices charged eased. Business confidence was at its highest level since May 2022, due to hopes of improving demand conditions and investment in new machinery and service lines. (SP Global)

Crypto

• In 2023, the crypto universe saw a decrease in stolen funds to $1.7 billion, from $3.7 billion in 2022, despite an increase in cyber incursions from 219 to 231. The decline in DeFi platform breaches, down 63.7%, suggests improved security measures. However, major heists, such as Euler Finance and Curve Finance, losing $197 million and $73.5 million respectively, highlight ongoing challenges. (source)

World Markets

• Shanghai and Shenzhen stocks rose on news of Beijing's potential 2 trillion yuan rescue fund and measures to boost market confidence, with strong gains from major firms and positive sentiment from Jack Ma's Alibaba share purchase.
• European stocks closed sharply higher, driven by strong earnings from major companies in the Eurozone. The Stoxx 50 and pan-European Stoxx 600 rose by 2% and 1.1%, respectively, with several companies beating forecasts and raising hopes for future growth.
• The Eurozone Composite PMI slightly increased to 47.9 in January 2024, indicating a slower rate of business activity decline. Manufacturing production contraction eased, while services activity declined. New orders and exports decreased at a slower pace. Employment slightly increased, and both input costs and selling prices rose. Business optimism improved due to hopes of reduced cost of living pressures and lower interest rates. (SP Global)
• South Africa's annual inflation rate fell to 5.1% in December 2023, below market predictions. Lower food and transportation costs drove the decrease, while housing, utilities, and other expenses rose. Core inflation remained steady at 4.5%. Monthly consumer prices were unchanged, compared to a 0.1% drop in November.( Statistics South Africa)
• Nigerian stocks hit a record high above 100,000 points, driven by consumer goods and oil & gas sectors amid strategic pre-earnings buys to mitigate effects of rising inflation and currency woes.
• Mexico's economic growth slowed to 2.3% in November, below expectations, due to the Bank of Mexico's tightening efforts and amid industrial slowdown and agricultural contraction, despite two years of expansion and quicker services sector growth; monthly activity dipped by 0.5%.
• Russia's producer price inflation decreased to -3.10% in December 2023, down from -0.10% in November. The average producer price inflation from 1994 to 2023 was 1.62%, with a record high of 21.00% in January 1995 and a record low of -8.40% in November 2008. (Rosstat)

Commodities

• WTI crude futures rose to $75/barrel on falling US stockpiles, China's economic stimulus, and geopolitical tensions. China's central bank reduced bank reserve requirements, and US stockpiles saw a large withdrawal of 9.2 million barrels.
• Natural gas prices rose to $2.6/MMBtu after a month-low of $2.31 as production recovery was slow following the Arctic freeze. Output decreased to 102.8 bcfd in January, and exports to Mexico increased to 5.7 bcfd. Despite this, heating demand is expected to remain subdued due to above-average temperatures.
• Arabica coffee futures rose towards $1.90/pound due to geopolitical tensions in the Red Sea affecting shipping costs, causing delays and increased freight rates. Despite this, the International Coffee Organization (ICO) projects a 5.8% increase in global coffee production for 2023/2024 and a 2.2% rise in consumption, resulting in a 1 million bag surplus.
• Cocoa futures reached a 46-year high of $4,700/tonne due to supply constraints in West Africa, with production expected to only increase slightly in the upcoming season. Supply chain disruptions and aging tree stocks are affecting crops in top producing countries, while soaring prices may reduce demand.
• Germany Electricity price surged 382.20% YoY in Jan 2024, reaching an all-time high of 699.44 in Aug 2022.

Currencies

• The British pound strengthened on robust PMI data, suggesting the Bank of England may slow down on cutting rates. Private sector growth hit a seven-month peak, with potential for March tax cuts, despite poor retail sales and rising inflation.

Comment: On crypto hacking decrease.

The objective data highlights the stupidity of government regulations in the crypto market, and how free market forces are more effective in driving innovation and technological progress. The fact that there's the decrease in the total value stolen, demonstrates that regulatory measures has nothing to do in preventing hacking incidents as DeFi remains largely untouched by bureaucrats.

The 63.7% decrease in the total value stolen on DeFi platforms suggests that these platforms are becoming more secure due to the forces of competition and innovation, rather than government regulations. This highlights the importance of allowing free market forces to drive innovation and technological progress, rather than relying on government intervention, which can only hinder progress and increase costs for consumers.

Hard facts prove again and again that free market forces are more effective than governments in driving innovation and technological progress in the markets. At the same time, politicians remain immune to facts - personal ambition and systemic corruption that the only forces which really drive them.

On Thursday, the economy expanded 3.3% due to rising exports, surpassing the 2% forecast, while PPI growth slowed. Unemployment claims increased, and the Kansas Fed Composite Index fell, indicating worsening economic conditions and leading to mixed stock performances: the S&P and Dow rose, but the Nasdaq remained flat as investor confusion persisted. Tesla's stock dropped over 12% due to lower earnings, whereas IBM's surged 9% thanks to an AI-driven revenue increase. On a macroeconomic side, oil prices surged on strong GDP data and ECB kept its key rate unchanged on 4.5%. In the cryptocurrency market, BTC and ETH are slightly up, but Chainlink, Avalanche, and Cardano experienced more than a 2% decline due to technical factors. Monero surged almost 3% to $157.

Details

• The economy expanded 3.3% in Q4 2023, exceeding forecasts of a 2% rise, with consumer spending slowing and private inventories contributing less to growth. Exports accelerated and non-residential investment increased, led by equipment and intellectual property products. Full-year 2023 growth was 2.5%, compared to 1.9% in 2022.(BEA)
• The new orders for manufactured durable goods were unchanged in Dec 2023, missing expectations of a 1.1% increase. Excluding transportation, orders rose 0.6%, and excluding defense, they increased 0.5%. Primary metals contributed to the increase.(Census Bureau)
• Unemployment claims rose by 25K to 214K in the week ending January 20th, with continuing claims also increasing, suggesting that unemployed individuals are taking longer to find jobs. The data contrasts with recent hot labor figures and challenges the view that the labor market will remain historically strong. (DoL)
• Durable goods orders excluding defense rose 0.5% in Dec 2023 after a 6.9% increase in Nov. The series has an average of 0.34% from 1992 to 2023, with a high of 28% in July 2014 and a low of -20.9% in Aug 2014.(Census Bureau)
• Personal consumption expenditure price index grew 1.7% in Q4 2023, slowing from 2.6% in Q3 and marking the weakest growth since Q2 2020.(BEA)
• The Kansas Fed Composite Index fell to -9 points in January 2024 from -1 points in December 2023, with an average of 5.49 points from 2001 to 2024. The index reached a high of 32 points in March 2022 and a low of -30 points in April 2020. (Kansas Fed)

Crypto

• UK Govt proceeding cautiously on CBDC, no launch decision yet. Exploring feasibility, design, & developing criteria for a UK digital pound. No immediate plans for a UK central bank digital currency. UK governments are traditionally influenced by City moguls, so it's no wonder they have cold feet about CNBC, which will disintermediate all those banks. (source)
• Tesla's Q4 2023 report reveals a consistent crypto strategy, maintaining its 9,720 BTC holdings valued at $386 million. The company's stock declined in after-hours trading, despite exceeding delivery predictions for Q4 with 484,507 vehicles sold. However, Tesla fell short of analyst estimates with adjusted earnings per share at $0.71 and revenue at $25.17 billion, missing expectations of $0.73 and $25.87 billion, respectively. (source)
• In 2023, 62.1M users joined crypto, with Ethereum leading with 15.4M acquired users, followed by Polygon with 15.2M and Bitcoin with 10.7M. Solana, which saw a resurgence, acquired over 45% of its new users in May and December. (source).
• Chinese investors continue to invest in Bitcoin despite the government's ban since 2021, as China's global ranking in terms of peer-to-peer trade volume jumped from 144th to 13th in 2023. The Chinese crypto market recorded an estimated $86.4 billion in transaction volume between July 2022 and June 2023, surpassing Hong Kong's $64 billion in crypto trading. The proportion of large retail transactions in China nearly doubled the global average of 3.6%. (source)

World Markets

• The European Central Bank maintained interest rates at record highs in its first 2024 meeting, pledging to keep them restrictive until inflation reaches 2% despite concerns of a recession. The main refinancing operations rate stays at 4.5% for the third time, and the deposit facility rate remains at 4%. President Lagarde said officials agreed it's too early to discuss rate cuts. The ECB ended its rapid rate-hiking cycle in September but remains hawkish due to underlying price pressures and geopolitical uncertainties.(ECB)
• The number of initial jobless claims in France decreased by 6.6 thousand in December 2023 from the previous month, with an average of -0.85 thousand claims from 1996 to 2023. Highs and lows were 818.6 thousand in April 2020 and -203.9 thousand in June 2020, respectively. (Dares)

Commodities

• Brent crude futures rose over 3% to above $82 per barrel due to increased demand expectations, falling inventories, and positive market sentiment. US economic growth exceeded forecasts at 3.3% in Q4, and China's decision to reduce banks' reserve ratios contributed to the increase. Supply disruptions were also a concern, with US and UK forces striking against Houthi fighters in Yemen.

Comment: On the Fed's Ineffectiveness

In recent economic reports, concerning trends have emerged, calling into question the effectiveness of the Fed's current policies. The data suggests that urgent action is needed, advocating for a shift towards free market forces to rejuvenate the economy. The Fed must promptly lower interest rates before irreversible damage occurs.

The rise in unemployment claims by 25K to 214K and the decline in the Kansas Fed Composite Index to -9 points in January 2024 from -1 points concurrently paint a concerning picture. Such negative indicators necessitate a reevaluation of the Federal Reserve's approach. The central planning and bureaucratic interventions often lead to unintended consequences, hindering economic prosperity rather than facilitating it.

Durable goods orders excluding defense, which rose by 0.5% in December 2023 following a significant 6.9% increase in November, underscores the volatility of the current economic landscape. This volatility, when coupled with the Fed's apparent hesitancy to adapt swiftly, demands a rethinking of the prevailing monetary policy. Allowing the invisible hand to guide economic activities leads to a more efficient allocation of resources, fostering sustainable growth.

The Personal Consumption Expenditure Price Index growing at 1.7% in Q4 2023, a decline from the 2.6% in Q3, adds another layer to the argument for immediate rate cuts. Bureaucratic interventions often distort market signals, leading to artificial price fluctuations. A return to free market principles is a remedy to such distortions, allowing for a more natural and responsive economic equilibrium.

In the era of technological progress and AI, Fed's role is becoming obsolete. The dynamism of modern economies requires adaptive and agile measures, characteristics often associated with free market mechanisms. The Fed's interventions, far from being a panacea, might contribute to economic stagnation, particularly in times of rapid technological advancement.

In conclusion, the recent economic data signals a pressing need for the Fed to reconsider its current stance and promptly lower interest rates. Central planning and bureaucratic ambitions can inadvertently undermine economic stability.

On Friday, core PCE prices rose 2.9% YoY - lowest since Feb 2021 - hinting at potential Fed cuts and pending home sales jumped. However, stocks fluctuated, with the S&P 500, Nasdaq and the Dow traded near flat hindered by technicals and slower-than-expected core PCE inflation rate already priced in. Also investors prepare for FED's rate decision the next week. At the same time, Crypto was on a rise with Avalanch leading the pack with ~9% increase, followed by Solana (~+7%) and BTC (~+6%).

Details

• The Core PCE prices (excluding food and energy) rose by 0.2% in December 2023, slightly exceeding November's increase. Year-on-year, core PCE prices rose by 2.9%, lower than the expected 3%, marking the lowest reading since February 2021. The data indicates a drop in inflation, hinting at potential rate cuts this year. Overall PCE prices, including food and energy, increased by 2.6% from the previous year, meeting expectations. (BEA)
• The pending home sales jumped 8.3% in December 2023, surpassing expectations and posting the largest gain since June 2020. This uptick, seen in the Midwest, South, and West, signals a positive start for the housing market, attributed to lower mortgage rates and stable prices, with forecasts suggesting significant sales growth in the coming years. (NAR)

Crypto

• BlackRock's spot Bitcoin ETF, iShares Bitcoin Trust, has exceeded $2 billion in assets, as Bitcoin's value surged to $42,000. Fidelity's spot Bitcoin product follows closely with over $1.7 billion in assets. However, a cooling trend in inflows and trading volume for these ETFs has been observed in recent days. (source)
• AI-powered trading bots are expected to have a $145 million market value by 2029, growing at a 37% CAGR from an estimated $22 million in 2022. The growth is driven by the complexity and fast-paced nature of cryptocurrency markets, but experts warn of regulatory uncertainties, risks, and the high cost and technical expertise required for these bots. (source)
• In 2024, Bitcoin will likely play a leading role due to spot ETF approvals and the impending halving, with price predictions ranging from $80,000 to $1 million. Tokenization of real-world assets, including real estate, will become a defining trend, with 72% of finance leaders planning to adopt it within three years. Additionally, GameFi is expected to overcome current challenges and gain widespread adoption, with triple-A blockchain games potentially reaching 1 million users. (source)
• Ether options trading volume reached an all-time high of $17.9 billion in January, with a put-call ratio of 0.31 indicating bullish sentiment in the market. (source)
• Polish researchers expanded their simulation of early life origins by using the Golem network, a peer-to-peer computing platform, to run 11 billion reactions. This cost-effective method required only $38K worth of GLM tokens, compared to a projected $80K with traditional cloud services, showcasing a novel application of distributed computing in scientific research. (source).

World Markets

• European stocks hit multi-year highs, with the Stoxx 50 reaching a 23-year peak, driven by luxury sector gains after LVMH reported strong sales. Despite weak German consumer confidence and tech stocks' slight decline, luxury counterparts Hermes and Kering surged, underscoring resilience amid economic slowdown concerns.
• Mexico's trade surplus soared to $4.242 billion in December 2023, greatly exceeding expectations. This was despite a slight drop in exports, as imports fell sharply, driven by a significant decrease in oil imports. The annual trade deficit also narrowed by 79.7%. (INEGI)

Currencies

• The euro fell towards $1.08, the lowest since mid-December, amid a strong dollar bolstered by solid US GDP data and the ECB's decision to maintain interest rates, with President Lagarde indicating it's too early for rate cuts. Concerns about Germany's economy deepen as consumer and business morale decline.

Comment: on Golem's use in scientific researches.

The actions of SEC's Gensler and Senate's Warren are not only detrimental to the growth and success of SMEs, but they are also hindering the progress of non-corporate science. By imposing strict regulations and limitations on the use of cryptocurrency and blockchain technology, these individuals are stifling innovation and preventing groundbreaking research from being conducted.

The Polish scientists' successful use of the Golem network to simulate the origins of life on Earth is just one example of the potential that decentralized networks have in advancing scientific research. It is important for policymakers to recognize the benefits of this technology and create an environment that fosters its growth, rather than hindering it.

On Week 5 focus will be on the FED's interest rate decision, employment data, manufacturing and service sector activity, consumer sentiment, and factory orders, alongside earnings from major companies. Internationally, attention will turn to the Bank of England's monetary policy, GDP figures from several countries, global inflation data, manufacturing PMIs, and various jobless rates.

SVET Markets Weekly Update (Jan 15 - 19, 2024)

On Week 3, the major stock indexes rallied, most reaching all-time highs, driven by the continued outperformance of the technology sector. Traders maintained optimism despite increasingly bearish comments from FOMC members, anticipating the expected Fed rate hikes. In contrast, EU markets slowed down due to hawkish remarks from ECB chiefs, while uranium and oil saw a sharp increase amid worsening geopolitics. Meanwhile, BTC dipped as some traders actively shorted their positions following the approval of a BTC ETF. The rest of the cypto market followed BTC into the red.

On Monday, Martin Luther King Jr. Day saw BTC and ETH trading flat at $42.7K and $2.5K, respectively, as markets remained closed. In the EU, stocks were marginally in the red as regional industrial production fell. In commodities, natural gas prices corrected slightly after a sudden +20% surge due to weather reports showing the Arctic front engulfing North America.

Details

Crypto

• Morgan Stanley's analysis (source) highlights the significance of CBDCs and stablecoins in global finance. The interaction of traditional fiat currencies, Bitcoin, e-money, and stablecoins will shape international trade and finance. CBDC-enabled smart contracts offer innovative solutions, signaling a transformative shift in global finance.
• Solana-based memecoins continue to attract over-hyped investors (source). Myra - another Solana-based dog coin surged almost 69,000% within 24 hours of trading, aiming to join Solana's top memecoins such as Bonk and dogwifhat. Dubbed as "the woman behind MYRO," the meme cryptocurrency has seen over $4.5M in trading volume.
• Digital asset investment products saw US$1.18bn inflows last week, with trading volumes at a record high of US$17.5bn (source). The US had US$1.24bn of inflows, while minor outflows were seen in Europe. This inflow did not break the record set at the launch of the futures-based Bitcoin ETFs.

World Markets

• Euro Area industrial production fell by 6.8% in November 2023, Eurostat surpassing market forecasts and marking the ninth straight month of decline. The average from 1991 to 2023 was 0.99%, with a high of 41.70% in April 2021 and a low of -28.30% in April 2020.
• In November 2023, the Euro Area trade surplus was EUR 20.3 billion (Eurostat), with imports falling by 16.7% and exports decreasing by 4.7%. The European Union also had a trade surplus of EUR 25.5 billion, with imports declining by 16.1% and exports remaining stable. Notably, trade deficit narrowed with Russia and China.
• The CAC 40 index dropped 0.72% to close at 7,411 amid cautious sentiment in Europe. Investors are monitoring global economic and monetary policy outlook, with attention on the World Economic Forum in Davos. Hopes for accommodative borrowing conditions were dampened by suggestions that the ECB might refrain from cutting interest rates this year.

Commodities

• US natural gas futures fell 5% to $3.15/MMBtu on Monday, after a 14.5% increase last week. Traders are closely monitoring weather and demand forecasts due to a bitter Arctic cold front engulfing North America , with record-breaking low temperatures expected. However, gas in storage currently exceeds the seasonal average by 11.6%, and meteorologists forecast warmer temperatures for Jan. 22-26 in the US.

Comment: World Economic Forum 2024 - Analyzing Key Themes and Unaddressed Realities.

The World Economic Forum 2024 is set to tackle four major themes: the Fractured World, Jobs, AI, and Climate.

The first theme delves into geopolitical tensions, with a spotlight on conflicts in Ukraine and the Middle East. The US election's potential impact adds a layer of uncertainty.

The second theme explores concerns about job displacement due to automation, rising inequality, and issues of inclusion. A notable session on crypto, titled "Clear-Eyed about Crypto," hints at anticipated calls for more stringent regulations.

The third theme, AI, encompasses various tech-related topics (the Tokenization Economy, TradeTech's Trillion-Dollar Promise, Quantum's Black Swan, The Battle for Chips, Biology as Consumer Technology, etc), raising questions about the role of technology in shaping our future.

The fourth theme, Climate Change is addressed with usual topics like Brazil's Sustainable Transformation and Working in Harmony with Nature.

However, amidst these discussions, a critical question emerges: How can meaningful change occur within the current centralized economic regime controlled by misanthropic megalomaniacs?

One glaring omission in the forum's agenda is a lack of self-reflection and acknowledgment of responsibility for the issues they aim to address. The Forum appears hesitant to confront the systemic problems that may contribute to global challenges. Moreover, the absence of discourse on altering governance mechanisms, particularly the concentration of presidential authorities, raises concerns.

The oversight of the World Economic Forum is not addressing the root causes of the challenges discussed. There's the reluctance to consider alternatives to the current governance structures, which are central to the chaotic state of affairs worldwide. Obviously, things may worsen before improving.

On Tuesday, major stock indexes are mostly lower, with the S&P 500 and Dow Jones down, while Nasdaq remains flat. Comments from Fed's Waller about a gradual decrease in inflation suggest no rush for rate cuts, leading to a rise in the dollar and Treasuries. Hawkish remarks from ECB policymakers also emerged. Apple's stock falls after the company offered iPhone discounts in China, and financials are down due to a warning of lower margins. In the crypto sector, Bitcoin's price fell below $43,000 after ETF approval, yet institutions like BlackRock capitalized on the opportunity, purchasing 11.5k BTC amid the dip. Ethereum maintains a bullish pattern, holding steady at $2.5K.

Details

• The NY Empire State Manufacturing Index hit a record low of -43.7 in Jan '24, signaling a steep decline in manufacturing activity (source) New orders and shipments also plunged. Employment and workweek decreased modestly. Unfilled orders and delivery times shrank significantly. Price increases picked up slightly. Optimism rose slightly, with firms expecting improvement in the next six months. Capital spending increased, indicating improved investment plans.

Crypto

• Bitcoin's price fell after ETF approval, but institutional investors like BlackRock (bought 11.5k BTC) (source) saw this as an opportunity to accumulate. Will this stockpiling have a positive impact on Bitcoin's price?

World Markets

• European stocks dipped after ECB officials at Davos suggested it's too early for rate cuts, citing persistent inflation and regional conflicts. Ocado Group saw Q4 revenue growth, while Hugo Boss missed Q4 EBIT forecasts.
• In January, Germany's ZEW Economic Sentiment rose to +15.2, (source) higher than expected, indicating increased optimism and anticipation of ECB rate cuts. US rate cut expectations are even stronger, while the current German economic assessment is stable but low.

Commodities

• Platinum below 950 USD/t.oz, near weakest in a month, due to US dollar strength and rate cut bets. However, supply deficit projected, with market anticipated to have a shortfall of 0.54 million ounces in 2024, as demand to outpace supply. Risks include electricity shortages in South Africa and sanctions on Russia.
• Palladium nears 5.5-year low, pressured by stronger dollar and potential market surplus of 300,000 ounces in 2024 due to faltering automotive demand. The demand for catalytic converters declining as EVs share grows and manufacturers use cheaper materials.

Currencies

• The dollar index hit a nearly monthly high of 103.3 on Tuesday, as investors scaled back bets on interest rate cuts. Fed's Waller sees no reason to move quickly on rate cuts. The euro and pound fell due to hawkish ECB remarks and weak data, increasing likelihood of interest rate cuts.

On Wednesday, mortgage rates continue to fall, retail sales jumped thanks to auto and industrial production rose, resulting in 20-Y Bonds increasing to 4.423%. As a result, stocks traded lower as traders tempered their expectations of March Fed rate cuts, with the S&P 500 down ~1%, Nasdaq off ~1%, megacaps like Alphabet, Amazon and Nvidia down over 1%, and Apple losing 0.7% on a ban of certain watch sales in Germany. On the macroeconomic side, China's economy grew but China's population continued to decrease. EU inflation ticked up leading among other things to increasing 10-Y UK Treasuries (Gilts) prices. Gold prices dropped as the dollar index rose. BTC and ETH are experiencing around 3% declines both on technical indicators showing volatility.

Details

• The average contract interest rate for 30-year fixed-rate mortgages fell to 6.75% as mortgages applications grew to 10.4% (MBA) in the second week of 2024, the lowest rate in three weeks, following Treasury yields lower. As a result, housing market sentiment improved in January 2024 NAHB, driven by expectations of a rate cut by the Fed.
• Retail sales jumped 0.6% in December, exceeding forecasts, driven by auto sales (Census Bureau). Core retail sales, excluding autos, gas, building materials, and food services, saw a robust 0.8% increase.
• Industrial production unexpectedly rose 0.1% in December (Fed), driven by manufacturing and mining gains. Capacity utilization remained unchanged at 78.6%. For Q4, industrial production fell 3.1% and manufacturing output decreased 2.2% at an annualized rate.

Crypto

• FYI: MiCA, which is set to come into effect on December 30, 2024, will establish a prohibitive regulatory framework for cryptocurrencies across the EU (source). It will mandate that crypto service providers—including crypto exchanges, payment processors, miners, custodians, brokers, crypto ATM operators, and token issuers—in all 27 member countries obtain national licenses and adhere to over-stringent financial compliance standards. These standards include increased share capital requirements, which will wipe off smaller and medium-sized enterprises from the market. Essentially, this will result in major financial corporations dominating the cryptocurrency industry within the EU, relegating small and medium-sized crypto enterprises to gray areas or outside of EU. It will lead to the flourishing of DeFi and the emergence of groundbreaking innovations that could subvert what they refer to as 'regulations' - Draconian restrictions that, once again, may only favor a select few at the top, to the detriment of the Humanity.
• Binance Labs invested in over 25 Web3 projects (source) in 2023, including Optimism, LayerZero, Celestia, Aptos, Mysten Labs, Trust Wallet, Neutron, Helio, Radiant, Pendle and Arkham.

World Markets

• China's economy grew a seasonally adjusted 1.0% in Q4 2023 (5.2% YoY in Q4 of 2023, faster than a 4.9% YoY growth in Q3 but less than market forecasts of 5.3%), matching expectations but slowing from an upwardly revised 1.5% in Q3, the 6th straight quarterly expansion though still dragged by property sector weakness, while government stimulus is limited by debt concerns though some infrastructure spending and PBoC liquidity injections continue; the China statistics bureau said effective policies are needed to vitalize the economy and consolidation recovery momentum.
• China's population declined by 2.08 million in 2023 to 1.409 billion, the second straight annual drop since 1961, with births at 9.02 million the lowest since 1949, as the pandemic and economy impacted the birth rate; the working-age population was 61.3% of the total and those over 60 were 21.1%, the male population totaled 720.32 million and the female population 689.35 million. (China's Statistics Bureau)
• In December 2023, the Euro Area's inflation rate rose to 2.9% from November's 2.4% (Eurostat), driven by energy-related effects. Czechia led the race with 7.6 percent. The core rate fell to 3.4%, its lowest since March 2022, while consumer prices increased by 0.2%. At the same time, in December 2023, the core inflation rate, excluding food and energy, dropped to 3.4%, the lowest since March 2022. It averaged 1.89% from 1991-2023, peaking at 5.70% in March 2023.
• European stocks fell 1-1.2% to multi-week lows as hawkish ECB comments tempered expectations for near-term rate cuts, with rate-sensitive real estate companies hit hard, while investors also reduced hopes for early Fed cuts following strong US retail sales data and Britain's inflation rose to 4% in December.

Commodities

• Gold prices dropped to around $2,020 as a hawkish US Fed official's remarks bolstered the dollar and yields, reducing the likelihood of a March rate cut.
• WTI crude fell below $72 as a stronger dollar, due to reduced expectations of a March Fed rate cut, outweighed Middle East tensions affecting oil shipments.

Currencies

• The dollar index rose for a third day to 103.5 Wednesday as better-than-expected retail sales reinforced expectations the Fed may not cut rates as early as thought, with March cut bets now at 56% versus 77% earlier, while Fed officials like Waller say no need to cut rapidly with inflation falling gradually; dollar saw biggest gains versus the yen, franc and Aussie.
The Indian rupee depreciated past 83.1 per USD after hitting a 4-month high of 82.2 on January 15th as expectations of a Fed rate cut delay strengthened the dollar and emerging market currencies, though. The Indian rupee depreciated past 83.1 per USD record high Sensex, and persistent RBI intervention to prevent the rupee from sinking past its record low of 83.4 limited the downturn.

On Thursday, Stock indexes rose on volatility, with the Nasdaq-100 hitting ATH of 16,969, led by tech companies, amid ongoing market analysis of economic data and despite negative Fed commentary. Apple shares performed particularly well. Hawkish Fed signals and strong labor market data influenced Treasury yields and rate cut expectations. EU markets are up as overseas traders took cues from Wall Street. At the same time, the dollar, oil, and uranium are on the rise, "helped" by geopolitical risks.

Meanwhile, BTC surpassed silver in the ETF market. However, BTC and ETH are in a decline of over 2%, with Bitcoin preparing to test its important support zone at 41-40K, fueling speculation that it might repeat its plunge from January 2018 after the approval of the first BTC futures trades, which prompted many Wall Street players to start aggressively shorting Bitcoin.

Details

• Jobless claims fell 16K to 187K (DOL), lowest since Sept'22 & below 207K forecast. Continuing claims fell 26K to 1.806M, lowest since Oct'23. Data shows tight labor market, allowing Fed to stay hawkish. Non-seasonally adjusted claims plunged 29,543 to 289,228, largely due to big NY drop (-17,176) in transportation, warehousing, construction & information.
• Building permits rose 1.9% to 1.495M in Dec (Census Bureau), beating 1.48M forecast. Multi-unit rose 2.2% to 501K; single-family up 1.7% to 994K, highest since May'22. Permits rose in South (8.4% to 860K), Midwest (4.7% to 199K) & Northeast but dropped in West (-16.3% to 335K).
• Philly Fed Business Conditions fell to -4 in Jan, lowest since May'23 & down from upwardly revised 12.6 (PhilFed). Average is 34.5 since 1968, with high of 91 in Sept'75 & low of -39.7 in Dec'73. At the same time, the Philadelphia Fed Manufacturing Index improved slightly in January 2024 to -10.6 from 12.8 in Dec 23 but remained negative for the 18th time in the past 20 months.

Crypto

• BTC surpasses silver in the ETF market (source). BTC ETFs, gaining approval, outpaced silver ETFs, ranking second only to gold-focused ETFs. Grayscale Bitcoin Trust's conversion led to nearly USD 30B in BTC ETF assets, exceeding silver ETFs' USD 11B. Gold remains the top commodity with around USD 95B.
• Tokenized US treasuries experience a remarkable 657% annual growth (source), reaching $863.6 million in market cap as of Jan. 18.

World Markets

• Construction output in Euro Area fell 2.2% y/y EuroStat in Nov, sharpest since Feb'21 & worse than Oct's 0.7% drop. Shows impact of ECB tightening as appetite for big buys/projects fell. Building fell 2.4% vs Oct's 0.7% & civil engineering fell 1% vs Oct's 0.2%. Output fell 1% m/m.
• Building plans approved in major South African cities fell 26.6% y/y in Nov (SA Statistics), the 5th straight drop. Non-residential & residential plans fell 41.6% & 28.1% respectively. Permits for additions/alterations fell 10%.

Commodities

• Uranium prices hit $106 per pound, highest since 2007, due to supply setbacks and rising demand. Kazakhstan's production issues, Cameco's outlook downgrade, and Western shunning of Russian uranium contributed to the surge. Ambitious decarbonization goals, particularly in China and Japan, boosted demand.
• Brent crude rose above $78 amid Middle East tensions and US strikes in Yemen. North Dakota oil output fell due to extreme cold. OPEC and IEA revised up global oil demand forecasts for 2025 and 2024, respectively.
• Wheat futures dropped below $5.9 per bushel in January due to ample global supply. Favorable winter crop conditions in the US, upward revisions to global supply estimates, and strong harvests in major exporting countries contributed to the decline. Despite higher consumption estimates, expectations of large exports from Ukraine and Russia weighed on prices.

Currencies

• Dollar index rose to 103.6 due to stronger economic data, signaling a less dovish Fed. Lower jobless claims and better-than-expected housing data boosted the dollar. Market expectations for a March rate cut decreased. Dollar gained the most against the Swiss franc and the Euro.

On Friday, the Michigan consumer sentiment index reached 2021 highs, and inflation expectations fell. Stocks rallied on strong earnings and economic data, with the technology sector leading the gains. Nvidia, Advanced Micro Devices, and Texas Instruments surged. The S&P 500 reached an all-time high, while the Nasdaq and Dow also gained.

EU stocks were down on ECB remarks. Asian stock markets continued to be dragged down by the Chinese economy, with the exception of Japanese stocks propelled by the independently efficient BoJ's policy. In Africa, markets are in the red, while in South America, it's in equilibrium.

In commodities, uranium and oil continue to rally on geopolitics, while natural gas is in deep red due to oversupply.

In currencies, the Russian ruble and the Pakistani Rupee continue to depreciate against USD.

On the crypto side, BTC and ETH are slightly in the green but continue to fluctuate close to their critical support levels. Most of the crypto market trades in the red, with MATIC, Avalanche, and Polkadot down by more than 3 percent. Meanwhile, Chainlink and Litecoin both surged by more than 5%.

Details

• According to the University of Michigan, consumer sentiment (78.8) soared to highest level since July 2021 in January 2024, driven by optimism about inflation and income. Inflation expectations fell to lowest level since December 2020. All five index components rose, pointing to a strong start to the year. (University of Michigan)
• Existing-home sales fell 1.0% in December 2023 to lowest level since August 2010, missing expectations. Sales down in Midwest and South, but up in the West. Annual decline of 6.2%. NAR Chief Economist sees potential upturn due to lower mortgage rates and expected inventory increase. (NAR)

Crypto

• The Bitcoin network's achieved a hash rate of 500 exahashes per second, processing 5 billion computations per second for every star in the Milky Way galaxy. It would take approximately 2000 years for the entire global population to match the network's current hash rate. (source)
• 99% of crypto is legal. According to Chainalysis' crypto crime report, the total value of cryptocurrency sent to illicit addresses dropped in 2023 to $24.2 billion from $39.6 billion in 2022. The 2022 figure was inflated by $8.7 billion in FTX creditor claims. In 2023, illicit cryptocurrency transactions accounted for just 0.34% of all cryptocurrency volume, down from 0.42% in 2022 and a significant decrease from 1.3% in 2019. (source)
• Spot Bitcoin ETFs led by Fidelity and BlackRock saw nearly $1.2 billion influx within the first five days of trading, but a net outflow of $131.6 million due to Grayscale's converted fund. Bitcoin's price has been affected, with potential further pressure from profit-taking by GBTC investors.(source)

World Markets

• Foreign direct investment in China decreased 8% to CNY 1.13 trillion or $157.1 billion in 2023. It fell in manufacturing and services but rose in high-tech industries, construction, and R&D. Investment increased from several countries, including France, the UK, and the Netherlands. (China's Ministry of Commerce)
• EU stock markets are mostly in red, led by Greece market (down by almost 2%). EU Central Bank published its "Account of the ECB meeting held on 13-14 Dec 2023" (ECB). It shows that ECB maintained high interest rates and signaled an end to bond purchases to combat inflation. Inflation projected to remain elevated in coming years. No rate cuts discussed, future decisions data-dependent. The ECB's projected inflation: 5.4% (2023), 2.7% (2024), 2.1% (2025), 1.9% (2026). The core rate: 5.0% (2023), 2.7% (2024), 2.3% (2025) and 2.1% (2026).
• South American markets are in an equilibrium with Argentinian Merval surging almost 4% but Brazil's Ibovespa falling 0.3% to a one-month low below 126,900 due to uncertainty over payroll tax exemption and rising interest rates. Fiscal challenges and an impasse on tax reform plans intensified the decline, impacting consumer discretionary stocks like Casas Bahia and Magazine Luiza. Vale and Petrobras also retreated despite recovering commodity prices, leading to a weekly decline of over 3.4%.
• Asian markets are mostly down led by China related stocks (f.e. HK50 is 3% in red) with exception of Japanese stocks, with the Nikkei 225 up 1.4% at 35,963 and Topix gaining 0.72% at 2,510. Easing inflation in Japan reinforced a dovish outlook on monetary policy. Strong corporate earnings in the US boosted technology stocks, driving gains in Tokyo Electron, Advantest, Disco Corp, Renesas Electronics, and SoftBank Group. The Nikkei and Topix finished the week 1.08% and 0.63% higher, respectively.
• In Africa markets are in a negative territory mostly except the Zimbabwe Stock Index (ZSI Industrials) which rose by 56.97%, gaining 386,194 points since the start of 2024, propelled by high inflationary expectations.

Commodities

• Uranium prices continue to rally, adding another 14% and hitting $106 per pound, the highest since 2007, driven by supply issues in Kazakhstan, setbacks in key mines, and geopolitical tensions affecting Russian imports.
• Urals Oil rose 5.59% to $3.34 per barrel since the start of 2024, tracked through a contract for difference (CFD).
• US natural gas futures hit a two-week low at $2.5/MMBtu, with over 20% weekly losses, driven by smaller storage draw, reduced demand, increased output, and low LNG export flows.

Currencies

• The Russian ruble weakened to around 89 per USD, influenced by profit-taking after a recent rally on positive oil dynamics. The finance ministry's forex sales aim to prevent further depreciation.
• Among other daily records is the Pakistan Rupee, which continues to depreciate against USD with a historical high of 307.75 in September 2023.

Busy Week 4 ahead: US GDP, PCE, income/spending data, durable goods, PMIs, home sales, and earnings. Rate decisions in Euro Area, Japan, Canada, and others. Manufacturing and Services PMIs in several countries. Germany Ifo and GFK indices, Australia NAB Business Confidence.

SVET Markets Weekly Update (Jan 8 - 12, 2024)

On Week 2, the SEC approved 11 Bitcoin spot ETFs, which was followed by BTC sell-off within the next two days and by ETH soaring to $2.7K on traders' expectations of an SEC-approved spot Ethereum ETF.

On the macroeconomic side, the inflation rate rose to 3.4% YoY, but the Producer Price Index (PPI) unexpectedly fell 0.1% in December, confusing traders and leading to higher volatility in the markets. Meanwhile, consumer credit saw a significant increase, mortgage applications jumped, and jobless claims dropped, pointing to a strong economy despite the high Fed rates.

On Monday, Nasdaq and other stocks rose sharply led by tech shares and chip makers. Dow gained despite Boeing's 8% drop on 737 MAX 9 Jets issue. Oil giants fell as oil prices sank on Saudi output rise and price cuts. Investors await CPI data and big bank earnings reports. BTC rose more than 6% leading cryptocurrency gains, with ETH following with +4%.

Details

• In November 2023,consumer credit saw a significant increase of $23.7 billion, surpassing expectations of $9 billion and marking a significant growth from the previous month's $5.7 billion increase. This growth was driven by a $19.1 billion jump in revolving credit, such as credit card debt, which rose by 17.7% year-on-year. Non-revolving credit, including auto and student loans, also increased by $4.6 billion, or 1.5% compared to the previous month.

On Tuesday, the Nasdaq and other major stocks were mixed, following a tech-driven rally. Worst performers included real estate, materials, industrials, and utilities. Small business sentiment improved in December but remained pessimistic. Apple, Amazon, Alphabet, Netflix, and NVIDIA shares rose after initially trading lower, while Tesla dropped. BTC corrected slightly after reaching to 47K in the previous session. ETH's in red at 2.2K still lagging behind Bitcoin.

Details

• In December, the NFIB Small Business Optimism Index rose to 91.9, the highest in five months. Inflation was the top concern for 23% of owners, replacing labor quality. Expectations for better business conditions and raised compensation increased, while selling prices and real sales outlook remained stable. However, small business owners remain pessimistic about the economy.
• The RealClearMarkets/TIPP Economic Optimism Index improved to 44.7 in January 2024, highest in eight months, beating expectations but still negative. Economic Outlook and Personal Financial Outlook increased, with investor optimism up 20% and non-investors up 5%.

On Wednesday, Nasdaq, Dow and SP indexes edged up as traders remained cautious ahead of key inflation data and the start of earnings season. Consumer discretionary and tech led gains while energy lagged. NVIDIA, Microsoft, and Meta rose to multi-week highs, while Exxon and Chevron dropped to 4-week lows. On a crypto side, SEC approved the spot BTC ETF. ETH is surging ahead with a +5% gain, breaking 2.5K resistance, leading the charge in the cryptocurrency market. Following behind is BTC, which has posted a more modest increase, reaching to 46.6K.

Details

• Wholesale inventories fell 0.2% in November, the second straight monthly decrease, led by a 0.5% drop in nondurables such as chemicals, apparel, and groceries. Durable goods inventories were flat for the second month, with increases in some categories offset by declines in others. Wholesale inventories were down 3% year-over-year.
• Mortgage applications jumped 9.9% in the first week of 2023, the most in a year, rebounding after a 10.7% previous slump as expectations grow of a Fed rate cut in Q1, pushing mortgage rates down from October highs and spurring demand especially for refinances, up 19%, while purchase applications rose 6%.

World Markets

• Chinese stocks fell to over 3-year lows as lack of aggressive stimulus weighed, with the Shanghai Composite down 0.54% and Shenzhen Component off 0.55%; investors await economic data amid bets authorities will have to ease policy further to combat deflation and spur recovery. Wantai, Changan, Muyuan Foods, Ganfeng Lithium and Shenzhen Silver saw notable declines.
• European shares closed moderately lower as ECB comments highlighted weak growth outlook but need for further evidence of declining inflation before rate cuts, weighing on equities. Financial companies were among the worst hit, with Santander, Allianz, BNP Paribas, AXA and Flutter Entertainment posting notable declines.
• The Baltic Exchange's main sea freight index fell for the third straight day to a over 2-month low at 1,664 points on Wednesday, with the capesize, panamax and supramax indices all declining due to seasonally weak demand around the Lunar New Year holiday. The capesize index saw its biggest daily drop since December 7th.
• Ukraine's annual inflation rate stayed at 5.1% in December 2023, the lowest since 2020, with a slowdown in most sectors except for a rise in food & non-alcoholic beverage prices; monthly consumer prices increased by 0.7%.
• Belarus's annual inflation rate rose to 5.8% in December 2023, the highest since March, as consumer prices increased most for services (8.1%) and food (6.8%), while non-food goods rose just 2.9%. On a monthly basis, consumer prices were up 0.9%.
• Ghana's annual inflation rate eased for the fifth consecutive month to 23.2% in December, the lowest since March 2022, on slowing food and non-food price growth. However, inflation remains well above the central bank's 6-10% target range. On a monthly basis, consumer prices rose 1.2% in December after increasing 1.5% in November.
• The Philippines saw a 29.6% annual drop in foreign direct investment (FDI) to USD 0.66 billion in October, with declines across all major components like debt instruments, equity capital and reinvestment of earnings. For the first 10 months of the year, FDI net inflows fell 17.5% year-on-year.

Commodities

• Natural gas futures fell over 6% from an 8-week high to below $3/MMBtu on Wednesday despite forecasts for extremely cold weather next week driving record demand. Traders expect lower gas usage on the January 15 holiday to limit demand. Additionally, a projected storage surplus and forecast return to warmer temperatures on January 23-24 weighed on prices, after a jump to colder than normal from January 13-22.

Comment: On Ghana's High Inflation.

The high inflation rate in Ghana in December 2023 can be attributed to several factors. Prices rose significantly in the categories of housing, water, electricity, gas, and other fuels, up 82.34% year-on-year, as well as furnishings and household equipment, and transport. Food and non-alcoholic beverages inflation was also high at 59.71% year-on-year

The country's worst economic crisis in a generation, the slumping cedi currency, government spending cuts, and central bank interest rate hikes have all contributed to the high inflation. Additionally, the gradual deceleration in overall inflation is primarily attributed to base effects compared to the previous year. These factors, along with aggressive monetary policy tightening, have influenced the high inflation rate in Ghana compared to other African countries and even to the war-affected Ukraine.

Comment: On the Philippine's FDI decline.

The Philippines' foreign direct investment (FDI) inflows have lagged behind its regional peers in the Association of Southeast Asian Nations (ASEAN) since 2010. In 2022, the FDI inflows shrank to USD 9.2 billion, down 23% from the previous year. (re: 1, 2)

Compared to Indonesia and Malaysia, the Philippines has faced challenges that have made it less attractive to foreign investors. Some of these challenges include closed sectors of the economy to 100% foreign ownership, poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, a complex judicial system, and barriers to doing business such as traffic congestion.

Time and time again, we can see that, independent of geography, the further government bureaucrats stay out of the economy, the better it performs.

On Thursday, The Nasdaq, S&P 500, and the Dow Jones turned negative as investors processed a CPI report showing higher headline inflation but a lower core rate. Bets for a rate cut decreased, with utilities as the worst-performing sector. Apple and Tesla fell, while Microsoft's gain made it the most valuable US company, overtaking Apple. JPMorgan, Bank of America, Wells Fargo, and Citigroup were in the red.

In the crypto market, Bitcoin briefly surged above $49K before dropping below $47K on the first trading day after the SEC approved the first spot bitcoin ETFs, ranging from BlackRock to Ark Invest. Concurrently, Ethereum soared to $2.7K on traders' expectations of an SEC-approved spot Ethereum ETF, despite repeated government denials.

Details

• The inflation rate rose to 3.4% YoY in December, driven by slower decreases in energy prices and a rise in food pricing as well as a softening in the pace of price increases for various goods and services. Core inflation eased, while consumer prices (CPI) overall increased by 0.3% compared to the previous month.
• The core inflation rate, excluding food and energy, declined to 3.9% in December, the lowest in over two years. The shelter index, a significant component, slowed to 6.2%, and other indexes showed modest increases. Core consumer prices increased by 0.3% monthly, aligning with market expectations.
• According to DLS, US jobless claims dropped to 202,000, below expectations, and continuing claims fell to 1,834,000, indicating a tight labor market that could support the Fed's continued hawkish approach to combat inflation. Seasonal factors caused unadjusted claims to rise.

Crypto

• The SEC approved 11 Bitcoin spot ETFs, with BlackRock's iShares Bitcoin Trust (IBIT) gaining attention due to the firm's stature and recent Bitcoin investments. IBIT opened at $28.05 but fell over 4%. (source) Its price saw a 24-hour volatility above 11% . While the ETFs mirror Bitcoin's spot market moves, with BTC hitting $48,965 before pulling back, investors watch closely after anticipating institutional capital post-approval. The market response to these ETFs remains a point of global interest.

World Markets

• China's vehicle sales rose 23.5% in December 2023 (source China Association of Automobile Manufacturers), with annual sales exceeding 30 million for the first time; NEV sales surged 46.4% for the month, contributing 31.6% to the year's total.
• European equity markets closed lower due to higher-than-expected US inflation, raising doubts about a potential interest rate cut. Banks and luxury sector stocks were among the biggest losers. Grifols also experienced a significant decline after addressing a short-seller report.
• Mexico's industrial production growth slowed (according to INEGI) to 2.8% in November 2023, below expectations and the weakest since April, with declines in mining and manufacturing and slower growth in utilities and construction. Monthly output fell by 1%.

Commodities

• According to the latest spot benchmarks from sellers to buyers priced in megawatts per hour (MWh), the price of electricity in Italy has increased to 113.26 by 2.20 EUR/MWh or 1.98% since the start of 2024. It is worth noting that the Italy Electricity Price reached its highest point ever recorded at 815.57 in September 2022.

On Friday, major indexes were volatile as traders digested mixed earnings reports and easing PPI. The S&P 500 and Nasdaq shifted into the negative zone, while the Dow Jones dropped nearly 300 points. Bank of America, and Wells Fargo saw declines, while Delta Airlines sank on earnings news and Tesla lost value due to production delays caused by conflicts in the Red Sea and associated shifts in transport routes.

BTC were in deep red, as prices got down to 43K, after the first spot Bitcoin ETFs began trading and investors started to sell the news following yesterday's frenzy, causing an increasing amount of long liquidations.

Details

• Producer prices (PPI) unexpectedly fell 0.1% in December 2023, (source BLS) matching November's decline. Goods costs dropped due to lower diesel fuel prices. Services prices were unchanged. Core PPI was flat, below expectations. Year-on-year, headline PPI rose to 1%, below forecasts, while core PPI fell to 1.8%.

Crypto

• Spot Bitcoin BTC/USD saw a 5.55% drop, with trading volumes reaching $4.5 billion, with a 700K individual transactions recorded on its first day of trading, largely driven by the Grayscale Bitcoin Trust and BlackRock's iShares Bitcoin Trust ETFs. While the day's trading volumes were significant, the true measure of organic inflows into these ETFs remains unclear, according to market observers.

World Markets

• In December 2023, Chinese banks issued CNY 1.17 trillion in new loans, below expectations (source PBC). M2 money supply and outstanding yuan loans also missed forecasts. The central bank may increase liquidity and cut interest rates to support the economy, which saw a record CNY 22.75 trillion in new lending in 2023.
• European stocks rose on expectations of loose monetary policy, closing the week in a green, driven by soft US inflation and ECB dovish rhetoric. The Eurozone's Stoxx 50 and pan-European Stoxx 600 gained 0.7% and 0.8% respectively, with industrial giants leading the gains. However, luxury giants in Paris closed in the red due to Burberry's profit warning.
• India's industrial production growth slowed to 2.4% in November 2023, (source Indian Ministry of Statistics) below expectations and the lowest since March 2022. Manufacturing, mining, and electricity output all decelerated. Industrial production for April-November 2023 increased by 6.4%. Also, India's inflation rate rose to 5.69% in December 2023 due to higher food prices, (source's the same) particularly for vegetables, pulses, spices, and fruits. El Niño caused a five-year low in monsoon rainfall, impacting agricultural production.
• Russia's annual inflation rate fell to 7.4% in December 2023, (source: the Russian Statistical Service) below expectations and supporting earlier interest rate cuts. Consumer prices rose at a slower pace for services but faster for food and non-food goods. Monthly consumer prices increased by 0.7%, down from 1.1% in the previous period.

Commodities

• Wheat futures fell to below $5.95 per bushel (lowest in a month) in January due to strong global supply expectations. The USDA revised up its global wheat supply forecasts for the current marketing year. Revised counts showed higher wheat stocks in Ukraine and production in Russia, lifting export expectations. Strong harvests in Canada and Australia also lifted export forecasts, while increased feed and residual use in India and the EU revised global consumption higher.
• Soybean futures fell below $12.1 per bushel (lowest in 24 months) due to a USDA report showing larger-than-expected US corn and wheat stocks. Soybean stocks also exceeded expectations. The market faces pressure from excess old-crop soybeans and favorable weather conditions in Brazil, the largest soybean exporter. Recent rains in Brazil have boosted crop yields and led to projections of a significant rise in soybean exports in January compared to the previous year.

Comment: On the Bitcoin ETF.

Spot Bitcoin ETFs represent a new investment model in the crypto industry that aligns investors' interests with the current market price of the cryptocurrency, rather than futures contracts. This shift to physical BTC holdings provides a more transparent and direct investment strategy, decreasing complexities and increasing demand for "physical" BTC. Mainstream institutions have now had a high bandwidth compliant channel to invest in this asset class with the approval of spot Bitcoin ETFs, which is expected to drive a demand shock, followed by a supply shock in April due to the Bitcoin halving.

On Week 3, key data includes retail sales, Michigan consumer confidence, export/import prices, housing indicators, and earnings reports from major companies. Fed officials will also give speeches. China will release Q4 GDP growth, retail sales, industrial production, unemployment rates, and house price index data. The global economic picture will be painted by UK and Canada inflation rates and retail sales, as well as Germany's ZEW Economic Sentiment index and Japan's inflation figures. In the Euro Area, investors will monitor ECB President Lagarde's speeches and balance of trade and industrial production data.

SVET Markets Weekly Update (Jan 02 - 05, 2024)

On Week 1, the Nasdaq and S&P closed 1.8% and 3.8% lower, respectively, while the Dow Jones was down 0.7%. Meanwhile, BTC initially rose sharply, breaking the 45K barrier, but later stumbled due to massive profit-taking, leading to a downturn in the entire crypto market, with some coins falling by more than 10%.

On the macroeconomic front, the unemployment rate remained at 3.7%, with manufacturing and service sectors contracting both domestically and globally. In the global market, oil prices spiked due to geopolitical tensions, whereas food prices decreased worldwide.

On Tuesday, Nasdaq and other stock indexes started 2024 in red after a strong 2023 as traders continue to fix their gains. Investors are assessing economic and monetary policy ahead of releases this week. Tech stocks, particularly Apple, performed poorly due to rising Treasury yields and a downgrade by Barclays. Tesla was flat despite beating delivery estimates.

Also, the majority of World's main stocks indexes (including, Shanghai Composite, JP225, FTSE 100, CAC 40, Ibovespa and JSE All) were in red with exception of German's DAX 40 and Italian IT40 which went flat.

At the same time, BTC rose sharply, breaking the 45K barrier, with ETH and other alts still lingering below their key resistance levels.

Details

The S&P Global US Manufacturing PMI for December was revised down to 47.9, indicating a worsening in manufacturing conditions. Output, new orders, and employment decreased while input buying, inflation, and selling prices increased. Despite this, business confidence improved slightly.

Currencies

The dollar index held above 102, supported by a rebound in Treasury yields, selloff on Wall Street, and heightened geopolitical tensions in the Middle East. Investors scaled back bets on the scale of interest rate cuts from major central banks this year. The dollar strengthened across the board, with the most pronounced buying activity seen against the kiwi and the euro, ahead of key US jobs data and the latest Federal Reserve policy meeting minutes.

World Economy

• China: the Shanghai Composite rose slightly while the Shenzhen Component fell as mainland stocks struggled for direction amid weak global sentiment. A private survey showed that China's manufacturing sector growth unexpectedly accelerated in December, contrasting with official data indicating contraction.
• Germany: the DAX 40 pared back early gains to trade near the flat line at 16,760 points as bond yields rose and investors awaited key data. The index had earlier risen to an all-time high amid hopes of interest rate cuts. Siemens and Allianz reached all-time and over two-decade highs, respectively. Sartorius, Fresenius, and Commerzbank were the top performers.
• Britain: the FTSE 100 closed 0.2% lower at 7,721 as markets assessed the validity of looser monetary policy for the year. Insurers, including Prudential, were among the sharpest losers. Food inflation slowed in December, strengthening hopes of disinflation and looser financial conditions. Shares for key grocery chains, including Marks & Spencer and B & M, booked gains.
• France: the CAC 40 index closed 0.16% lower at 7,531 due to a global bond yield rally and caution ahead of key Euro Area inflation data and the US jobs report. Rising oil prices and inflationary fears weighed down tech and luxury shares, including Dassault Systèmes and Pernod Ricard. Losses were partially offset by a 3.1% rise in TotalEnergies.
• Brazil: the Ibovespa fell 0.7% to below 133,100 as future interest rates rose, reducing risk appetite. Stubborn inflation and steady GDP growth reduced urgency for Selic rate cuts, causing the consumer discretionary sector to drag the index down. Gol and Atacadao performed the worst. Commodity-linked giants Petrobras and Vale limited the decline due to rising oil benchmarks and iron ore prices.
• South Africa: the JSE All Share index fell 1.5% to 75,709 due to rising oil prices and mixed Chinese data, negatively impacting heavyweight resource-linked shares. Impala Platinum, Gold Fields, and Exxaro Resources were the biggest laggards. RMB Holdings was the only winner, rising 4.6%.

On Wednesday, Nasdaq and other major stock indexes fell for the 4th straight day as investors digested FOMC minutes, finding little insight on future rate cuts. Tech stocks led declines, with Tesla, Broadcom, and Nvidia down. Energy shares rose, with Chevron and Exxon Mobil gaining due to rising oil prices. ISM Manufacturing PMI showed contraction in the manufacturing sector.

Meanwhile, crypto whales used this as an opportunity to fixate their profits, sending both BTC and ETH below their month-old support levels of 41K and 2.1K, respectively. After a fast recovery, BTC and ETH now stand at 43K and 2.2K.

Additionally, major European market indexes are predominantly down, and Asian markets closed mixed after the Shanghai Composite finished in the green due to online gaming stocks rising following Beijing's removal of a bureaucrat overseeing the gaming sector.

Details

According to the recently issued FOMC Minutes: the members expect real GDP growth to slow in 2024, with the labor market rebalancing and some increase in unemployment. Inflation projections for 2023 and beyond were revised down due to better-than-expected data, leading to a view of more balanced risks for inflation and employment. However, participants remained cautious about inflation risks.

Participants revised down the following key macroeconomic projections for 2023:

• GDP growth: 2.6% (revised) - 2.1% (September projection);
• PCE inflation: 2.8% - 3.3%;
• core PCE inflation: 3.2% - 3.7%;
• Year-end unemployment: 3.8% - 3.8% (unchanged).

and for 2024:

• GDP growth: 1.4% - 1.5%;
• PCE inflation: 2.4% - 2.5%;
• core PCE inflation: 2.4% - 2.6%;
• Year-end unemployment: 4.1% - 4.1% (unchanged)
• Year-end federal funds rate: 4.6% - 5.1%.

Overall, the FOMC minutes showed that FOMC participants' positions have softened suddenly during the inter-meeting period, but the possibility of a new rate hike still remains elevated due to the FOMC members' ideological rigidity in setting 2% as a 'normalized' inflation target and their anticipation that it might suddenly return.

Allegedly, this sudden shift in FOMC members' opinion happened due to political, not economic, reasons. Most indications of rapidly softening inflation were obvious to the great majority of non-affiliated market observers at least six months before the FOMC's December meeting.

Also, the US ISM Manufacturing PMI rose slightly to 47.4 in Dec 2023, but still indicated a 14th month of factory activity contraction. Production rebounded, but new orders, employment, and inventories shrank. Price pressures decreased, and supplier delivery times increased slightly.

Crypto

Based on CoinTelegraph citing Messari data, the total VC deal volume saw a remarkable 81% increase in the final quarter of 2023, reaching $3.83 billion. Some seed investment rounds in the past three months included USD 8M for Bitcoin and cash back rewards startup, $1.2M for the sequencer on Avalanche Subnet and $8M for Web3 technology for digital assets education.

Commodities

• WTI crude oil futures rose to $73 per barrel due to supply concerns from Libya's oilfield shutdown and Iran's warship deployment in the Red Sea. Prices had dropped almost 2% the previous day due to reduced expectations of significant interest rate cuts by major central banks. Geopolitical tensions and rising global supplies weighed on the market.
• Uranium prices hit 16-year highs in early Jan 2023 due to strong demand and supply risks. 21 countries, led by China, plan to triple nuclear power by 2050. Supply threats include Western utilities shunning Russian uranium and potential US import ban, Niger coup, and Canadian mine issues.
• Steel rebar futures fell in early Jan to CNY 3,920/tonne, a two-week low, due to ample supply despite expectations of robust demand. Chinese steel mills plan to maintain high output, but concerns over China's property market and reduced dependence on construction limit the steel demand outlook.

World Economy

• Brazil: Ibovespa rose 0.2% to 132,250 on Wednesday, led by oil giant Petrobras and Petro Rio due to supply concerns in Libya. Retail sector fell, with Lojas Renner, Magazine Luiza, and Casas Bahia down. Vale lost 0.4% despite rising iron ore prices. Traders digested FOMC minutes.
• India: India's equities dropped 0.5% to 71,513.5, with tech stocks leading the decline. Nifty IT fell 2.2%, while metal and auto stocks also dropped. Traders took profit booking amid slowing factory activity growth and ahead of key US economic data.

On Thursday, the Dow Jones rose, while the S&P 500 and Nasdaq fell, with the Nasdaq experiencing its longest red-candles streak since October. Investors await labor data amidst speculation of interest rate cuts and rising treasury yields. The financial sector rose, but energy and consumer stocks dropped. Early gains were halted as ADP's strong jobs data and unemployment claims increased uncertainty about Fed rate cuts.

Meanwhile, BTC and ETH were in high demand, quickly recovering from yesterday's slump and reaching USD 44.7K and USD 2.3K, respectively.

Additionally, global PMI data indicated that manufacturing and service sector activities continued to contract across most of the world's leading economies, with the notable exceptions of China and Brazil.

Details

According to the Challenger Report in December, employers announced the least number of job cuts in five months, totaling 34,817. However, the annual job cuts in 2023 increased by 98% to 721,677, the highest annual total since 2020. Technology and retail industries experienced the most job cuts, with technology rising by 73% and retail by 274%. Health care/products manufacturers and financial firms also saw significant increases. Job cuts in 2023 were mainly due to market/economic conditions. Employers are expected to remain cautious and cost-cutting in Q1 2024, slowing the hiring process for job seekers.

The S&P Global US Composite PMI edged up to 50.9 in December 2023, indicating a marginal uptick in business activity, the fastest expansion since July. The service sector drove growth, while manufacturing production declined. Service providers experienced a surge in new sales, whereas goods producers faced a faster decline. Employment levels modestly increased, and input costs rose more rapidly, while selling price inflation slowed down.

World Economy

Europe:

• On the day the PMI indexes were announced for major EU economies, the data showed that overall manufacturing and service sector activities continued to contract across most countries, though the rate of contraction slowed in some cases.
• The exception was Spain, where the composite PMI index rose above the 50 no-change mark to 50.4 in December, up from 49.8 in November, signaling a return to growth. Also in the UK, the composite PMI increased to 52.1, pointing to a second consecutive monthly expansion.
• In Italy, the composite PMI rose but remained in contraction territory at 48.6, up from 48.1 previously.
• In France, the composite PMI was revised upwards to 44.8, surpassing initial estimates and rising slightly from November, though still indicating ongoing contraction for the seventh straight month in the eurozone's second largest economy.
• Germany's composite PMI was also revised up but remained below 50 at 47.4, pointing to a sixth consecutive month of private sector contraction as demand for goods and services continued to decline.
• Across the eurozone as a whole, both manufacturing and service sector output declined further in December, with contraction rates consistent with the prior month. Demand weakened while employment fell for only the second time in nearly three years. However, business sentiment and expectations for future growth showed some improvement.

Latin America

• In the largest LA economy - Brazil - services PMI fell slightly to 50.5 in December but remained above 50, signaling a third straight month of expansion. New orders and output grew but at a slower pace with employment also up marginally. Input costs rose at the slowest rate in over 3 years while selling prices continued to increase sharply. Firms maintained a positive outlook for growth.
• The annual inflation rate in Uruguay picked up to 5.11% in December of 2023 from 4.96% in the previous month. Producer Prices in Colombia decreased 5.79 percent in December of 2023 over the same month in the previous year. Producer Prices Change in Colombia averaged 5.52 percent from 2000 until 2023, reaching an all time high of 35.65 percent in April of 2022 and a record low of -6.55 percent in July of 2023.

Africa

• Nigerian stocks hit a record high, with financials, telecoms, and consumer goods leading gains. The market closed 2023 up 46%, buoyed by President Bola Tinubu's market friendly reforms (including the removal of energy subsidies), strong corporate earnings, and new listings.
• South Africa's PMI dropped to 49 in December, with the sharpest output decline since May and falling new orders. Supply delays and load shedding impacted sales. Purchase costs rose slowly, hinting at easing inflation. Future output expectations dipped but remained positive.
• Egypt's PMI marginally improved to 48.5, still showing contraction. New orders saw the sharpest decrease since May due to currency weakness and inflation. Output fell slightly faster, but employment rose. Input and output cost inflation eased. Business outlook brightened significantly.
• Kenya's PMI improved to 48.8, signaling the slowest contraction in four months due to marginally better demand. Manufacturing and construction still struggle with costs and weak demand. Input costs eased, but output charges increased, leading to reduced business optimism.

Asia

• China's Caixin Services PMI rose to 52.9 in December, marking the fastest growth since July, driven by a surge in new business and export orders. Employment grew, inflation of input prices increased, while output cost inflation eased. Business confidence improved. At the same time, China's Caixin Composite PMI reached 52.6 in December, the highest since May, with manufacturing and services expanding robustly. New orders surged to a seven-month peak, while new export declines slowed. Employment shrank as input costs rose amid competitive pricing.
• Japan's Manufacturing PMI revised to 47.9 in December, indicating the sharpest contraction in factory activity since February. New orders and output declined, with foreign sales dropping significantly. Purchasing was curtailed sharply, while employment remained flat. Input costs rose, optimism improved slightly.
• Indian rupee nears record low at 83.4 amid foreign inflows, lenient monetary policy, and costly energy imports due to global disruptions. RBI interventions prevent further decline after foreign investors sell off government bonds.

On Friday, the Nasdaq and other major stock indexes ended flat after a volatile session, halting a nine-week winning streak. Nvidia and AMD shares rose, airlines rebounded, and healthcare shares underperformed. The economy added 216K payrolls in December, exceeding estimates, with wages accelerating. The service sector contracted, signaling a slowing economy under Fed pressure. Meanwhile, BTC and ETH entered correction mode but maintained a bullish pattern.

On the macroeconomic front, oil prices jumped due to geopolitical tensions, while food prices continued to subside worldwide. Additionally, the German car market slumped under high ECB rates and rising energy costs, whereas the Italian construction sector expanded, buoyed by subsidies.

Details

The employment situation is unchanged: The unemployment rate held steady at 3.7% in December, slightly below the market consensus of 3.8%, influenced by a slowdown in new entries into the labor force. The activity rate declined, and the number of unemployed individuals increased while the count of employed individuals dropped.

The government continues to expand with a record speed: government payrolls rose by 52K in December 2023, with gains in local (+37K) and state (+8K) government. Across 2023, the government added an average of 50K jobs monthly, more than doubling the 2022 average monthly gain.

The service sector contracted succumbing to Fed's rate pressure: In December, the ISM Services PMI unexpectedly fell to 50.6, the lowest reading in seven months, with new orders slowing sharply and both employment and inventories contracting. Production growth accelerated and price pressures eased. Respondents expressed concerns related to economic uncertainty, geopolitical events, and labor constraints.

Crypto

• Crypto attracted more than USD 2B into CeFi products in 2023: Cryptocurrency investment products saw inflows of around $2.2 billion over the last year, with Bitcoin-focused products attracting $1.93 billion from institutional investors. Solana ($SOL) was a leading altcoin with inflows of $167 million, surpassing those for Ethereum ($ETH). XRP and Cardano ETPs also saw significant inflows.
• Crypto on a rise: Celestia (TIA), Lido Daq (LDO), Maker (MKR)

World Economy

Germany's car sector is under the pressure of rising energy costs: Germany's new car registrations plummeted 23% to 241,883 units in December 2023, worsening from a 5.7% drop previously. Historically, the rate has averaged 3.51% since 1959, with a peak in April 2021 and a low in April 2020.
• Italy construction sector expanded with an unprecedented during past 10 years speed on government's subsidies: Italy's Construction PMI climbed to 55.2 in December, marking the highest level since April 2022 and showing strong sector recovery, supported by government incentives. Output and new orders surged, boosting employment and purchasing, despite high input costs. Builder confidence improved.
• Italy is on a brink of deflation as ECB has over-tighten its policy in the past 2 years: Italy's annual inflation rate dipped to 0.6% in December 2023, below the 0.7% expected, reflecting ECB's tight monetary policy. Net inflation slowed to 3.1%. Energy prices continued to fall, while costs for processed food and services also eased.
• Brazil's industrial production keeps expanding: Brazil's industrial production grew by 1.3% year-on-year in November 2023, marking the fourth consecutive month of growth and the strongest in six months, surpassing market estimates of a 0.7% increase.

Commodities

• Oil rises on growing geopolitical tensions: WTI crude futures rose over 2% to $73 amid Middle East tensions ahead of Blinken's visit. The increase comes despite Thursday's decline after a record US gasoline inventory surge and significant distillate stockpile growth. Libyan protests and a deadly incident in Iran also influenced the market.
• Food: The FAO Food Price Index hit its lowest since February 2021, falling to 118.5 in December. Vegetable oil and sugar prices significantly dropped, while meat prices also decreased. Conversely, cereal and dairy costs rose slightly. The 2023 annual drop was the largest since 2015.

On Week 2, traders are likely to push prices up and down waiting inflation data on Thursday, while foreign trade, producer prices, and Fed speeches will take center stage prior to that. On the world's stage, CPI figures are due from Mexico, Brazil and India. China's agenda includes inflation, trade data, and new yuan loans. Germany will report factory orders and trade, the UK will present GDP and industrial output, and unemployment rates are awaited from the Euro Area.

2023: Every Day On Markets.

SVET Markets Weekly Update (December 26 - 29, 2023)

On Week 52, the world's markets corrected slightly on profit taking. However, on a yearly basis, almost all major indexes locally and globally recorded record gains, except in China, where the Shanghai Composite and Shenzhen Component declined by 3.7% and 13.5% YoY. The S&P 500 added 24.7%, the Dow gained 13.7%, and the Nasdaq jumped by 44.5%. In Japan, the Nikkei and Topix indexes gained 28% and 25%. In Germany, Frankfurt's DAX 40 surged 20% yearly. The UK's FTSE 100 had only a 3.8% yearly gain, while the French stock market was up nearly 17% since January, Italian stocks gained above 28%, and the Spanish index soared 22.8%. In other parts of the world, Indian stocks added 19% YoY, but South African gains were null, decreasing by 0.18%. Notably, Russian stocks grew by nearly 44%. Additionally, all crypto-related stocks are in the green, with Coinbase stocks' price skyrocketing by more than 400%. At the same time, BTC and ETH gained over 150% and nearly 100% YoY, respectively.

On Tuesday, the Nasdaq and other major stock indexes closed higher, extending an eighth straight week of gains, driven by reduced price pressures and expectations of interest rate cuts in 2024. Intel's shares rose by 5.2%, while Apple faced a setback following a sales ban on its smartwatches. Home prices continued to rise due to tight supply and increased competition among buyers. Meanwhile, the price of BTC decreased by more than 3% due to after-Christmas profit-taking, and ETH followed with a 3% drop.

Details

Texas manufacturing sentiment improved in December, with the Federal Reserve Bank of Dallas general business activity index rising to -9.3 from -19.9. Production and new orders showed signs of recovery, while prices paid for raw materials increased, leading to higher output charges.

Home prices, as measured by the S&P CoreLogic Case-Shiller 20-city index, rose 4.9% YoY in Oct 2023, the most since Nov 2022, due to low housing supply. Eased mortgage rates and a more dovish Fed may further boost home prices, with Detroit, San Diego, and New York leading gains.

Commodities

Wheat futures are expected to close the year nearly 15% lower due to ample supplies from key producers and supply risks from the war in Ukraine. A good harvest in Russia is set to lift available wheat for export to a record high of 50 million tonnes, while robust crops in South America further contribute to global supply. However, damaged infrastructure in Ukraine limits exports from Europe's bread basket and restricts the decline in prices.

Lithium carbonate prices hit a low of below CNY 97,500 per tonne due to oversupply and reduced demand from electric vehicle manufacturers in China. Forecasts now suggest a lithium deficit may not return until 2028, with global supply expected to increase by 40% in 2024, exacerbating the surplus.

On Wednesday, the manufacturing activity continued to decelerate, while the Nasdaq index rose, contributing to a 45% growth this year. This surge is primarily attributed to the resurgence of the seven largest technology companies and the hysteria surrounding artificial intelligence. Shares of Bit Digital, a prominent BTC miner, experienced an 18.5% increase as the company plans to double its mining fleet by 2024. In the crypto market, both BTC and ETH exhibited growth, with ETH taking the lead with an increase of more than 5%.

Details

In December, Richmond's Manufacturing Index dropped to -11, a 10-month low. Shipments, orders, and employment declined, while backlogs reduced. Vendor lead time improved, and prices and expected price changes increased, maintaining overall pessimism in future local business conditions.

Commodities

Uranium prices nearly doubled to $91/lb in 2023 due to increasing demand and risks to supply, as 22 countries, led by China, announced plans to triple their nuclear power generation by 2050. The surge in prices was driven by volatile fossil fuel prices and decarbonization goals, but faced threats from the invasion of Ukraine, a potential US ban on Russian uranium imports, and supply disruptions in Niger and Canada.

Carbon permit prices rise to €80/tonne, rebounding from a 14-month low. Eurozone manufacturing declines, but firms show optimism for the year ahead. European natural gas market becomes more volatile due to weather, Red Sea disruptions, and ship rerouting.

Canola futures near CAD 640/lb amid low crude oil prices and increased rival oilseed availability. Weak crude oil and strong corn production in the US lowered demand for Canadian rapeseed in biofuel feedstock. Canola exports decreased 23% due to improved weather in rival seed-oil regions.

On Thursday, the Nasdaq 100, Dow Jones, and S&P 500 all gained, with the Nasdaq Composite up 44% YTD, the most since 2003, due to mega-cap tech stocks and the AI trend. Unemployment claims increased to 218K, above the predicted 210K. Meanwhile, BTC and ETH are still trading within their month-old ranges, unable to break out above 45K and 2.5K, respectively. This situation raises the question of whether there might be massive profit-taking in January as a 'sell-the-news' event.

Details

Unemployment claims rose unexpectedly in late December, with 218,000 people filing for benefits, higher than the predicted 210,000. Continuing claims also increased to a one-month high of 1,875,000. This may indicate a slight weakening in the labor market and could suggest that the Federal Reserve may start cutting interest rates in early 2024.

The 10-year Treasury note yield hovered near 3.8% on new economic data indicating a likely Fed's rate cut in early 2024. Fed funds futures suggest a 90% chance of a rate cut by Q1 2024. Bond indices have rallied since Nov, best performances since 1990.

Crypto

Binance's user base grew 30% in 2023, despite regulatory settlements and the departure of its founder. The exchange saw increased activity on its platform, including growth in its Pay and Earn products, and interest from institutional investors.

Comment: SEC is, basically, useless.

The reported 30% spike in Binance's user base is just another slap in the face for useless bureaucrats, especially the SEC. Their attempts to "regulate" contemporary markets are nothing more than a joke. These old folks claim they're safeguarding customers, but in reality, users are rightfully ignoring their irrelevant attempts.

The only goal of these bureaucratic agents is to gain unfair political advantages and boost their net worth. They do so at the expense of the youngest and most vulnerable private capital holders globally. Their so-called regulations only serve to cut off access to the most profitable investment opportunities.

It's a blatant disregard for the potential and intelligence of private investors. People are smart enough to navigate the markets without being hampered by outdated regulations imposed by self-serving bureaucrats. The reported growth in Binance's user base is a testament to users refusing to be dictated by these bureaucratic impositions.

Commodities

Aluminum futures reached an 8-month high of $2,400/tonne in Dec, ending the year up due to supply concerns and a late-year recovery. Prices fell earlier due to macroeconomic issues in major manufacturing countries. Norsk Hydro and Alcoa reported falling sales and losses, but Chinese stimulus and a Guinean explosion led to a late rally.

World's Economy

European stocks were stable with the STOXX 50 at a 23-year high and STOXX 600 near a 23-month high, due to expected rate cuts from US and European central banks in 2024. Global shipping activity increased and UK retail footfall rose 4% post-holidays. STOXX 50 and 600 may gain nearly 19% and 13% in 2023, respectively.

FYI: The STOXX 50, also known as the EURO STOXX 50, is a stock market index that represents the performance of the 50 largest and most liquid stocks from 11 Eurozone countries.

Palestine's Q3 2023 (prior the war) GDP grew 3% YoY, maintaining Q2's rate. Agriculture, wholesale & retail trade, public administration, and services slowed. Mining, manufacturing, construction, and information & communication increased. Quarterly GDP rose 1%, driven by mining, manufacturing, and electricity.

On Friday, the Nasdaq and other major stock indexes ended lower at the close of the 2023 trading session, after nearing record highs earlier in the week. Investors sold off profits, and assessed the Fed's future path. Despite this, the S&P and Dow posted their ninth straight winning weeks, and the Nasdaq surged by 44.5%, driven by an AI-backed rally in tech companies. For the year, the S&P 500 added 24.7%, the Dow gained 13.7%, and the Nasdaq jumped by 44.5%. Nvidia soared 245%, and Meta added 183%. Meanwhile, crypto-related stocks are declining as investors sell off, causing significant drops in crypto asset prices. However, on a yearly basis, all major crypto-related stocks are in the green, with Coinbase stocks' price skyrocketing by more than 400%. At the same time, BTC and ETH gained over 150% and nearly 100% YoY, respectively.

Details

The Chicago PMI dropped to 46.9 in December, lower than expected (51), indicating a return to contraction after November's growth, which was the first in 15 months.

World Economy

• Shanghai Composite and Shenzhen Component rose on Dec 30, due to expectations of policy easing and attractive valuations in China. However, they had a decline of 3.7% and 13.5%, respectively, for the year due to the country's fragile economic recovery and lack of policy support.
• Nikkei and Topix (Japan) indexes gained 28% and 25%, respectively, in 2023 due to solid earnings, tech stock rallies, BOJ stimulus, and expectations of US Fed rate cuts, making them Asia's top-performing markets.
• Frankfurt's DAX 40 (Germany) index closed at 16,751 points, recording a 20% yearly surge, driven by gains in tech stocks and retailers. Europe's unexpected deceleration in Spain's inflation rate for December suggests that the European Central Bank might also consider rate cuts in the coming year.
• FTSE 100 (UK) gained 0.6% in the final week of 2023, marking fifth straight week of gains. Personal goods and energy shares rose, while real estate declined. British house prices fell, but the FTSE 100 had a 3.8% yearly gain, led by aerospace and defense, and oil and gas sectors.
• The CAC 40 index (France) rose by 0.3% to 7,560, with almost all constituents in the green, amid hopes of a softer monetary policy. The French stock market gained nearly 17% since January, with Stellantis being the top boost.
• The FTSE MIB (Italy) was up 0.4% towards 30,500, setting it up for yearly gains above 28%. Optimism about accommodative monetary policy drove the gains.
• The BSE Sensex (India) closed at 72,240, down 0.23% due to weakness in financial and energy shares. In 2023, the Sensex gained 19%, marking the second-best year since 2017, driven by domestic macroeconomic factors, corporate profits, expected rate reductions, and foreign investments.
• The IBEX 35 in Spain closed slightly higher at 10,102, supported by economic data suggesting potential rate cuts by the ECB. The Spanish index soared 22.8% in 2023, driven by a strong financial sector.
• The JSE All Share Index (South Africa) started higher, up 0.34%, with expectations of rate cuts. The index is expected to gain 1.8% for the week but end the year with a slight decrease of 0.18%.
• The Hang Seng closed at 17,047.39 with little change, as the Chinese central bank committed to a prudent monetary policy. Financials rose, but tech, property, and consumer sectors were subdued. The index was flat for the month and saw a 14.0% yearly decline due to economic uncertainties in China and global economic risks.
• The MOEX Russia index dropped slightly to 3097 on the last trading day of 2023, with little movement over the week. The December S&P Global Russia Manufacturing PMI increased to 54.6, the highest in seven years. Transport, electric utilities, and metals & mining recorded losses, while IT and consumer goods advanced. The index grew by nearly 44% over the year, helped by renewed dividends payments, disclosure of companies' financial results, and bypassing of Western sanctions.

The first week of 2024 will feature important data releases including labor market reports, FOMC minutes, and key indicators such as ISM Manufacturing and Services PMI. Global attention will also be on inflation rates, manufacturing PMI figures, and unemployment rates in various countries.

Comment: The New Year Prognosis. What could possibly go wrong?

I'll make it short and simple for you.

In case you ever wonder what's wrong with the world in one picture, have a second look at a global map of the distribution of World's USD 100 Trillion GDP. This map, under the contemporary centralized elders-clans-based governance model, basically represents the distribution of decision-making power.

According to that map, there are only seven countries whose opinions matter: the US (GDP = USD 23 Trillion), Japan (5T), Germany (4T), the UK (3T), France (3T), Italy (2T) on one side, and China (17T) on the other. These countries, with a combined GDP reaching 60% of the global economy, have the capability to finance, deploy, and maintain large military forces in the long term. Consequently, they are able to enforce compliance from other countries, for lack of a better word. More often than not, they exercise this power.

Sure, there are smaller GDP countries like Russia, Saudi Arabia, or Israel that punch above their weight, but it would be difficult for them to withstand the economic pressure of a prolonged war without some form of alliance.

At the same time, the great majority of the world's population has almost zero influence on what's going on in politics, economy, and military globally, and very often locally. Naturally, people worldwide are extremely upset with this nonsensical redistribution of wealth and power. What could possibly go wrong?

Of course, we have all become more "civilized" (or rather, lazy and relaxed) over the past hundred years or so. This means we are less inclined towards direct kinetic confrontations to resolve our differences, unlike our predecessors. Additionally, the existence of thermonuclear weapons gives us pause. However, the world is still ruled by brutal force, just as it was ten thousand years ago, and it will continue to do so until we fundamentally change our global governance model. We need to shift from a "muscles-based" approach to a "brains-based" approach. This implies that we must decentralize or face extinction.

"Why is decentralization the best solution?" you ask. It's because we have already tried everything else. Decentralization will, at the very least, give a portion of our global humanity a chance to embark on some unconventional social experiments. For instance, we could explore giving decisive political power to algorithms and crowds, connected through intelligent networks. Perhaps this approach will make a difference. If not, then we must prepare ourselves to become just another species out-competed and wiped out from the face of the Earth.

Happy New Year!

SVET Markets Weekly Update (December 18 - 22, 2023)

On Week 51, the Nasdaq, along with other major stock indexes, extended its rally into an eighth consecutive week of remarkable growth, driven by traders' expectations of multiple interest rate cuts by the Federal Reserve in 2024. Macroeconomic data revealed that the economy expanded by 4.9% annually in the third quarter, which was marginally below projections. Concurrently, the annual PCE inflation rate decreased to 2.6%.

In the cryptocurrency market, BTC and ETH have been oscillating between $41K to $44K and $2.1K to $2.3K, respectively, as they await a catalyst that could spur further growth. Despite showing mixed technical indicators, the prevailing sentiment in the crypto market leans towards optimism.

On Monday, stocks extended their winning streak to 7 weeks, led by energy sector gains. Nasdaq rose, Apple shares dipped on patent issues. Investors expect lower rates, despite mixed views from policymakers. BTC and ETH declined on a pre-market but then surged back during a day remaining in a rising pattern.

Details

In December, the NAHB/Wells Fargo HMI improved to 37 from 34 (lowest in a year), beating predictions. First rise in 5 months due to declining mortgage rates, raising buyer interest and sales expectations. Sub-indexes for sales and buyers also grew.

Crypto

On-chain data: Digital asset investment products saw minor outflows of $16m, ending an 11-week streak of inflows. Trading activity remained high at $3.6bn, suggesting profit-taking rather than a shift in sentiment. Altcoins saw $21m of inflows, with Solana, Cardano, XRP, and Chainlink being the main beneficiaries.

Commodities

Gasoline futures surged above $2.18/gallon, rising with oil amid supply threats and higher crude prices. Red Sea attacks and longer export routes contributed to the increase. Anticipated multiple rate cuts by the Fed and softer dollar amplified the price rise, while gasoline stocks rose unexpectedly.

World Markets

Shanghai Composite and Shenzhen Component dropped to their lowest levels in over a year, driven by economic uncertainties in China. Mixed economic data and lackluster policy plans from top officials dampened market sentiment. Investors now look to the People’s Bank of China’s loan prime rate decisions.

On Tuesday, housing starts rose unexpectedly but stocks edged up with the Nasdaq 100 reaching an all-time high record of 16,766. Top sectors were materials, communications, consumer discretionary and real estate. Meanwhile, BTC and ETH continue to fluctuate up and down on technicals as traders await catalysts and assess Fed policy. The double top formation is now more prominent on some altcoins' daily graphs.

Details

Building permits decreased by 2.5% to a rate of 1.460 million in Nov '23, below expectations. Permits for large buildings dropped 9.6% while single-family permits rose 0.7%. There were regional declines in the Northeast and South, but increases in the Midwest and West.

Crypto

Bitcoin digital art sales hit $449M in 30 days, topping Ethereum NFTs. Bitcoin now struggles with network congestion and higher fees from the popularity of Bitcoin-based digital collectibles.

Comment: Ordinals - the Future of BTC?

FYI: Bitcoin ordinals, also known as ordinal NFTs, are a protocol that allows individual satoshis (the smallest unit of Bitcoin) in the Bitcoin blockchain to be assigned a unique identifier. This unique identifier is called an "ordinal" and is based on the order in which the satoshi was mined. Ordinals enable the attachment of data such as images, videos, and more to an individual satoshi on the base Bitcoin blockchain.

The rise of Bitcoin-based digital collectibles known as Ordinals has sparked a debate in the Bitcoin community. Most of the first generation Bitcoiners criticize Ordinals as inefficient, arguing Bitcoin should focus on its original purpose of enabling peer-to-peer payments.

They have a point. While Ethereum was built for NFTs, Bitcoin wasn't. Over the past year, average Bitcoin transaction fees have surged over 25 times. The network is facing record congestion in its mempool, where unconfirmed transactions are stored.

But Ordinals supporters counter that the digital art is good for Bitcoin. Transaction fees fund miners and secure the network as less and less BTCs are mined. BTC must demonstrate its usefulness to the larger crowd to justify these costs.

I believe Ordinals represent the future. They will bring a new generation of users oriented around NFTs to Bitcoin, though not necessarily technologically savvy. Ordinals can introduce Bitcoin to mainstream audiences in an accessible way and drive adoption of cryptocurrency.

World Economics

The Bank of Japan (BoJ) kept rates unchanged and policy loosened. It pledged patience amid uncertainties. Policymakers will respond to achieve 2% inflation and wage rises. The BoJ won't hesitate to ease more. The governor, Kazuo Ueda, said inflation may not sustain without wage increases, which have lagged price rises.

Commodities

Crude oil held at $73/barrel on supply fears. Yemen's Houthis attacked ships, diverting tankers. BP, Frontline avoided the Red Sea. Iran's oil minister blamed Israel for hacking gas stations. The US will push disclosures on Russian oil to enforce sanctions.

On Wednesday, major stock indexes rebounded to trade slightly higher, with the Nasdaq 100 reaching a new record high of 16,830. Gains were driven by expectations of Fed rate cuts and better-than-expected economic data on home sales and consumer confidence. Alphabet stock rose on news it plans to reorganize its ad sales unit. BTC and ETH prices jumped but stayed under their yearly highs, shifting technicals to the bullish side, again.

Details

Sales of previously owned homes rose 0.8% month-over-month in November 2023 to 3.82 million units, the first increase in five months. Prices and inventory also increased from last year, with the median home price at $387,600.

30-year fixed mortgage rates fell to 6.83% for the week ending December 15th, the lowest level since June, due to positive inflation news and Fed projections of future rate cuts. Rates have declined since early November as Treasury yields fell on expectations the Fed's tightening campaign is over.

World Economics

The People's Bank of China (PBoC) kept its one-year LPR at 3.45% and the five-year rate at 4.2%, continuing record lows, despite injecting a record CNY 800 billion to aid a sluggish property sector.

Russian MOEX index rose on Wednesday, extending gains for the fourth session, as investors bet on the end of monetary tightening. Electric utilities, metals & mining, and consumer goods sectors led the rally. Gazprom projected its 2023 EBITDA to reach 2.2 trillion rubles, improving its debt-to-EBITDA ratio.

On Thursday, the Nasdaq and other stock indexes rallied, as weaker-than-expected US GDP growth reinforced expectations of future Fed interest rate cuts. Tesla stock rose nearly 3% on reports of potential US tariffs on Chinese electric vehicle makers. Meta shares added 1% and are headed for their best year on record. BTC and ETH, although trading in the green zone, were still lacking a decisive bullish impulse to get them over two-week old resistance levels.

Details

The economy grew 4.9% annually in Q3, slightly below estimate of 5.2%. Consumer spending and trade rose less than expected, but business investment and government spending increased more than anticipated. Still the strongest growth since late 2021.

Comment: Why did such a spike in GDP happen while all main-stream analysts predicted the recession?

The unexpected spike in the US's Q4 real GDP, driven by a substantial increase in retail sales and sustained consumer expenditure, provides a compelling testament to the resilience of the public amidst a backdrop of negative rhetoric from aging government officials and politicians. Despite the prevailing doom and gloom portrayed by centralized government elites, this economic surge suggests that the traditional model of "representative democracy" might be losing its grip on shaping public sentiment.

The continued rise in consumer spending, seemingly unaffected by the narratives propagated by the political establishment, underscores a growing disconnection between official channels and the public's lived experiences. It hints at a shift where citizens are increasingly relying on decentralized information sources and forming opinions outside the influence of government-led manipulation.

This economic endurance, defying pessimistic projections, aligns with the principles of decentralized systems, challenging the efficacy of centralized control in shaping public opinion and economic behavior. The Q4 GDP performance serves as a stellar confirmation that the public is carving its own path, guided less by traditional political narratives and more by decentralized and diverse sources of information.

World Economic

Japan's annual inflation rate fell to 2.8% in November from 3.3% in October, the lowest since July 2022. Price growth moderated across most categories, especially food and fuel, while core inflation also declined to 2.5%. Deflationary monthly price changes indicate easing inflationary pressures in Japan.

Comment: Do you need more proof that Fed is useless?

The news about Japan's inflation tanking while the Bank of Japan keeps rates in the basement, and the Fed cranks them up to the stratosphere, is a stark slap in the face to the supposed gospel of central banking. Despite Japan leaning on Chinese and EU markets and being heavily into oil imports, they keep their inflation numbers down just by waiting it out and recognizing that it has nothing to do with their central bank (BoJ) actions or non-actions.

All BoJ has been caring about all those post-enclosure years is to stimulate employers to raise (!) the wages of their employees in order to help them to keep up with the non-core inflation. Meanwhile, the U.S., which isn't as entangled in those oil/food messes, sees the Fed hiking rates like there's no tomorrow but still unable to combat the inflation as effectively as BoJ with its non-action approach.

The fact that Japan's inflation is doing a nose-dive, despite the BoJ keeping rate below zero, seriously questions our necessity in these Fed aging "wizards". The Fed's policy doesn't seem to have much grounding in reality. If anything, this stark contrast between Japan and the U.S. exposes the Fed's scam. Maybe it's time to ask if we're all just caught up in a central banking slavery for no reason at all.

On Friday, the Nasdaq and other major indexes rose due to lower-than-expected PCE inflation, plummeting home sales and rising consumer sentiment index, which reinforce potential Fed rate cuts expectations. Energy, real estate, and utilities led gains; consumer discretionary fell. BTC, ETH hover around $44K and $2.3K, with mixed technical signals.

Details

World Economics

Comment: Why don't current disruptions in the Red Sea influence on the upside The Baltic Exchange's Freight Index ?

The Baltic Exchange's main sea freight index does not respond solely to specific regional events such as the disruptions in the Red Sea; instead, it reflects a composite of various shipping routes and vessel types globally. Factors influencing the index include:

In essence, while disruptions like rebel attacks in the Red Sea can influence costs for affected routes, the Baltic Index's aggregate nature means it represents a broader picture of global shipping that dilutes the impact of any single event.

Crypto

Argentina's Foreign Minister confirmed gov't under Javier Milei will allow contracts in BTC and other cryptos, boosting crypto community's confidence. Milei's election victory sparked enthusiasm in the crypto industry, with contracts in crypto now permitted.

Comments:How consequential might be that decision of Javier Milei for BTC in Argentina?

The announcement by Argentina's Foreign Minister regarding the government's intention to allow contracts in Bitcoin and other cryptocurrencies has certainly generated excitement in the crypto community and has the potential to drive wider adoption of cryptocurrencies in the country, particularly for business-to-business transactions.

However, it is important to note that this announcement is a political statement that could be subject to change as government policies shift. Javier Milei, who will take office as president, has expressed support for cryptocurrencies, but his administration's stance could change, especially if he seeks to maintain good relations with financial authorities in the US and international organizations like the World Bank, which have expressed skepticism towards Bitcoin.

Furthermore, while the announcement refers to "species" in general, which could include cryptocurrencies like Bitcoin and Ethereum, it could also include other assets like sugar or livestock. This means that there will be competition among different assets, which is not necessarily a bad thing, but it could limit the adoption of cryptocurrencies in the country.

RE: "Art 766. – Obligation of the debtor. The debtor must deliver the corresponding amount of the designated currency, whether the currency is legal tender in the Republic or if he does not have it."

In summary, while the announcement by Argentina's Foreign Minister is a positive development for the crypto community, it is essential to maintain a realistic perspective and recognize that there are still significant challenges to overcome before cryptocurrencies become widely adopted in the country.

During Week 52, limited macroeconomic activity is anticipated, with traders having priced in potential declines reflected in regional Fed indexes, including the Chicago Fed National Activity Index (Tue), Richmond Fed Manufacturing Index (Wed), Dallas Fed Services Index (Wed), along with data on Pending Home Sales (Thur), Trade Balance (Thur), and Chicago PMI (Fr). Market attention may shift to geopolitical events and unforeseen trading strategies around Christmas. Globally, investors will focus on Japan's Unemployment Rate (Mon), China's Industrial Profits (Tue), and NBS Manufacturing PMI (Sat).

SVET Markets Weekly Update (December 11 - 15, 2023)

On Week 50, the FOMC kept interest rates at 5.5% and projected slower rate hikes, boosting the Nasdaq and other major stock indexes to new highs. However, Global PMIs revealed a strong services sector and weaker manufacturing. Meanwhile, BTC and ETH investors exhibited hesitancy, as prices formed either bearish double tops or bullish flag on daily graphs.

On Monday, the Nasdaq rose, continuing its sixth straight weekly gain, as investors turned their attention to the upcoming Fed meeting and inflation data. While optimism remains, higher inflation could impact expectations for rate reductions. In the meantime, BTC and ETH experienced a significant correction, sliding up to 7% due to aggressive profit-taking by traders.

Details

According to NY Fed, consumer inflation expectations for the coming year dropped to 3.4% in November, the lowest since April 2021, continuing a trend of lower inflation. Fuel and rent price growth expectations also eased. Inflation expectations for the next three and five years remained stable at 3% and 2.7% respectively.

Crypto

Government removes two AML provisions related to cryptocurrency regulation. First, US Secretary of the Treasury must collaborate with regulators to establish a risk-focused examination system for crypto in financial institutions. Second, a comprehensive report detailing crypto transactions linked to sanctioned entities is required. Senators Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall championed those stupid provisions.

Comment

The recent regulatory developments signaling a potential shift in the anti-crypto tide are noteworthy. The removal of two critical provisions related to cryptocurrency anti-money laundering (AML) regulations reflects a dynamic landscape shaped by various factors.

Firstly, as the political season gains momentum, the rift between the GOP and DEM becomes more apparent. The collaboration mandated by the first provision, requiring the US Secretary of the Treasury to work with banking and government regulators to establish a risk-focused examination system for cryptocurrencies within financial institutions, may indicate a recognition of the difficulties of finding common ground in this space.

Secondly, amidst the looming recession, policymakers may be motivated to decrease pressure on private businesses, including those in the crypto sector. Regulatory adjustments could be a strategic move to foster innovation and alleviate burdens on an industry that has shown resilience in the face of economic challenges.

Third, the perception that enough has been done to suppress crypto, particularly through crackdowns on major players like Binance and Ripple, might be influencing a more nuanced approach. The harsh anti-crypto regulations' push, led by a group of senators with ridiculously uninformed stance on crypto, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall, might be running off steam.

On Tuesday, investors weigh a surprising CPI report and anticipate the Fed's policy decision. The Nasdaq and other key stocks seesaw amid an unexpected 0.1% rise in consumer prices. Energy is the worst-performing sector due to a drop in oil prices. Tesla and Oracle shares fall due to disappointing earnings and legal challenges, respectively, while Alphabet dips after an antitrust ruling. BTC and ETH continued to adjust as traders take profits.

Details

The annual inflation slowed to 3.1% in November, as energy costs fell (gasoline -8.9%, utilities gas -10.4%, fuel oil -24.8%). Prices for food, shelter, cars, apparel rose slower, but medical care commodities and transportation services rose faster.

The core inflation (excluding food & energy) rose by 0.3% from the previous month, aligning with expectations and slightly up from 0.2%. Highest rises are in shelter - up 0.4%, medical care - 0.6%, and transportation services - 1.1%.

This indicates that, although, Fed's tightening is affecting the bottoms' of economy, e.g. consumer credit and mortgage rates which negatively affect the most underprivileged and financially vulnerable members of the society, service prices excluding energy continue to rise, prolonging corporates and elitists inherited privileges.

Crypto

Comment: AI and Web3?

Web3 is the next generation of Internet technologies, and generative AI involves machines creating content intelligently. The challenge is that these technologies have different requirements and integrating them is not straightforward.

Generalization: AI can be used to analyze data and optimize supply chains, while blockchain technology can ensure transparency and security in the supply chain. In the financial services industry, AI and blockchain are being utilized to create more efficient and secure payment systems, detect fraudulent activities, and ensure the security and integrity of transactions. Also, AI models can be embedded in smart contracts executed on a blockchain to automate tasks, resolve disputes, and enhance decision-making processes.

Mismatch between Generative AI and Web3: Generative AI, which usually runs on powerful GPUs, faces a challenge when integrated with Web3, which operates on limited data and computation capabilities. This creates a hurdle in adapting Web3 runtimes to handle the demands of generative AI workloads.

Need for Integration: Despite the challenges, there is a need for Web3 to incorporate generative AI to keep up with Web2 alternatives. The key question is how to achieve this integration effectively.

Solutions:

1. Text Tools: Generative AI is being leveraged to empower Web3 through applications such as NFTs, blockchain gaming and the metaverse. For example, by implementing Generative AI text tools, it is possible to streamline and innovate dynamic game elements like dialogues and avatars;
2. NFTs: image and video generation for NFTs;
3. Autonomous agents: this latest trend in generative AI. These agents are intelligent models capable of reasoning through tasks, formulating plans, and executing them. They have gained attention due to their semi-autonomous nature.

On Wednesday, the Fed held interest rates steady at 5.5% and projected slower rate hikes through 2024-2025, buoying the Nasdaq and other major stock indexes to new highs, including the Dow Jones reaching a record of 37,090. Meanwhile, BTC and ETH also experienced growth, but started to form a bearish double top, raising speculation about "selling the news" among traders.

Details

The Fed maintained the fed funds rate at 5.25%-5.5% for a third meeting in a row. The central bank indicated 75bps cuts in 2024 due to slowing economic growth and job gains. GDP growth is projected at 2.6% for 2023 and 1.4% for 2024, while PCE and core PCE inflation are revised lower for both years. Unemployment is expected to remain at 3.8% for 2023 and 4.1% for 2024. The dot plot shows a drop in the median year-end 2024 federal funds rate projection to 4.6% from 5.1% in September.

In November, producer prices remained stable, as defined by BLS's PPI, after decreasing 0.4% in the previous month, contrary to predictions of a 0.1% increase. Prices for goods and services stayed the same, with gasoline prices dropping the most (-4.1%). Food prices rose, particularly chicken eggs (58.8%). Within services, traveler accommodation and utility natural gas increased, while automobile retailing margins decreased.

Comments

It becomes evident that the Federal Reserve’s policies, designed ostensibly to balance the negative effects of the free market system, are, in reality, a Placido-pill that sustains aging individuals' unwarranted powers within the regulated-market system. This sustenance perpetuates a status quo where a select few wield tremendous influence without contributing positively to the overall economy.

a) Regulated-Markets as a Sustaining Pill for Elites: The regulated-markets system, underpinned by the Federal Reserve’s policies, acts as a life-extending elixir for entrenched elites. Instead of fostering a fair and competitive environment, the system provides a cloak for the preservation of power, shielding aging individuals and their families from the natural evolution that should occur in a dynamic society.

b) Ineffectiveness in Influencing Key Economic Indicators: Despite its purported role, the Federal Reserve demonstrates a stark inability to influence critical economic indicators. Stock markets, inflated asset prices, and the costs of major resources and energy remain largely immune to the Fed’s interventions. This lack of influence exposes the institution as an ineffective regulator that fails to curb the excesses of the privileged few.

c) Artificial Suppression of Salary Rises: The Federal Reserve’s policies, rather than promoting economic well-being, artificially suppress salary rises (and, as a result, slow down the service-based economy) a vital factor in improving the livelihoods of the majority. This deliberate suppression hampers the ability of individuals to experience real growth in their standard of living, perpetuating economic inequality and social unrest.

d) Destruction of SME Lending Market: The adverse effects extend to the small and medium enterprises (SMEs), which are the lifeblood of innovation and economic dynamism. The Federal Reserve’s policies contribute to the destruction of the lending market for SMEs, stifling their growth potential and hindering the very source of innovation and job creation that should be driving the economy forward.

e) Selective Impact on Inflation: Remarkably, the major sources of inflation — governments and large corporations — are largely untouched by the Federal Reserve’s interventions. This selective impact raises questions about the institution’s true purpose and its alignment with the interests of the broader society.

f) The Federal Reserve as a Dangerous Economic Weapon: In light of these observations, the Federal Reserve emerges as a dangerous economic weapon wielded by the elite to suppress any rising, technologically driven opposition from the grassroots of society. Its policies serve as a tool for maintaining control indefinitely, irrespective of the risks posed to the stability and progress of our civilization.

The conclusion drawn from this analysis is the urgent and comprehensive reforms are necessary to dismantle this distorted system. Relying on the Federal Reserve as the guardian of economic stability has proven detrimental to the majority and advantageous only to a select few. A paradigm shift towards decentralization, transparency, accountability, and a ultimately, to an equable and fair distribution of economic power is imperative for the prosperity and sustainability of our society.

World Economy

Comment

The global economic landscape is experiencing a significant transformation, characterized by a series of interconnected developments. China, a long-standing economic powerhouse, is facing challenges that have the potential to reverberate across the global economy. Stagnant productivity and declining domestic sales have led to concerns about deflation and sluggish growth in the world's second-largest economy. As a result, China's manufacturing sector is likely to export deflation, impacting global trade and economic dynamics.

Concurrently, there is evidence of a contrasting trend in other regions. The United Kingdom, Japan, and other advanced economies are witnessing a surge in manufacturing exports to Asia, particularly to rapidly expanding economies such as India. This shift is indicative of a broader realignment in global trade patterns, with smaller-economy, relatively peripheral countries emerging as potential beneficiaries.

Furthermore, 3rd world countries such as Brazil, Russia, and Nigeria are experiencing growing stock markets and expanding economies. This trend, coupled with rising commodity prices, particularly for resources like uranium, underscores the potential for smaller economies to capitalize on the changing global economic dynamics. The higher prices of locally produced commodities and the relatively lower prices of imported goods from developed economies, because of the competition among them, have the potential to bolster the internal markets of these countries.

The confluence of these developments reflects a broader narrative of decentralization in the global economy. As traditional economic powerhouses face challenges, smaller economies are presented with opportunities to leverage their comparative advantages. The intensifying competition for global market share is reshaping trade dynamics, with implications for both developed and emerging economies.

On Thursday, major stocks indexes rose, with Nasdaq hovering above the flatline at 2-years highs. Apple increased to ATH of 198.26. Despite the unexpected rise in retail sales and a decline in weekly jobless claims, expectations of a rate cut in March 2024 remain high. Also, the dollar index (DXY) dipped to a post-August low. BTC and ETH rose, still staying within a double top formation on daily graphs.

Details

Retail sales rose unexpectedly by 0.3% in November 2023, outperforming market predictions of a 0.1% fall. This suggests a promising start to the holiday season, with significant increases in various sectors, including, food services and drinking places (1.6%), nonstore retailers (1%), health and personal care (0.9%) and furniture stores (0.9%). However, sales dipped at gas stations and some retail stores.

Unemployment claims dropped to 202K, the lowest in two months and below the expected 220K, with notable declines in New York (-6,581) and Pennsylvania (-4,362). This reflects a tighter labor market, providing the Fed more interest rate flexibility. Continuing claims increased slightly but stayed below expectations.

On Friday, Fed Williams mentioned that rate cuts are not being discussed currently, as the NY Manufacturing Index declined, and the Global PMIs showed a strong services sector and weaker manufacturing. As a result, major stock indexes were directionless, with the Nasdaq fluctuating, slightly in the red. BTC and ETH traders were indecisive, as prices continued to form either bearish double tops or bullish flag on daily graphs.

Details

New York Fed President Williams pushed back against market bets of multiple rate cuts by the central bank next year, driving oil benchmarks to give back gains that were fueled by a dovish Fed outlook. The comments also lifted the greenback, pressuring foreign demand for dollar-denominated commodities.

In December, NY Empire State Manufacturing Index dropped to -14.5, a four-month low, indicating declining business activity in NY. New orders and shipments fell, unfilled orders decreased, and delivery times shortened. Inventories reduced, employment declined moderately, and the average workweek shortened. Input price increases slowed, while selling price increases remained steady. Firms had a slightly more positive outlook but remained subdued. In the country, overall, the industrial production decreased 0.4% YoY with utilities declined 1%, manufacturing - 0.8%, offsetting a 2.3% rise in mining.

In December, the S&P Global Services PMI rose to 51.3 from 50.8, surpassing expectations. The services sector expanded for the 11th consecutive period at the fastest pace since July. New orders increased due to advertising spending, upselling, and looser financial conditions. Employment growth hit a 6-month high, and input costs rose, but output charge inflation cooled.

Comment: Why manufacturing has been more affected by Fed's high rates than services sector in 2022-2023?

The impact of rising interest rates on manufacturing is evident in the slowdown of factory demand, reduced global demand, and adverse sales developments.

The manufacturing sector is particularly sensitive to interest rate changes as they can lead to reduced investment, increased borrowing costs, and decreased consumer spending on big-ticket items such as cars and homes. Additionally, rising interest rates can make exports more expensive abroad, leading to a slowdown in exports and a stronger dollar, which can further impact the competitiveness of manufacturers in the global market.

On the other hand, the services sector, which includes industries such as finance, insurance, real estate, and transportation, is less affected by interest rate changes as it generally requires lower investment relative to manufacturing and is more focused on domestic demand, which has been more resilient in the face of rising interest rates.

At the same time, manufacturing accounts for only 11% of the U.S. GDP and 8% of direct employment, so the slowdown in it is less impactful compared to the service sector.

On Week 51, traders focuses locally on personal income, PCE price index, Q3 GDP growth, consumer confidence, and durable goods orders, while the UK reports on inflation and retail sales. Japan highlights BOJ interest rate decisions, inflation rates, and foreign trade data. Germany looks at the Ifo Business Climate Index, GFK consumer confidence, and producer inflation figures.

SVET Markets Weekly Update (December 4 - 8, 2023)

On Week 49 the Nasdaq and other major stock indexes gained on weak economic statistics, including a cooling labor market and a slowing manufacturing sector, reinforcing expected Fed easing. However, on Friday, the new BLS data reporting a 3.7% unemployment rate came as a surprise, leading to a mixed close. Meanwhile, BTC and ETH continued their rise, reaching $44K and $2.4K, respectively. They were joined by major alts, some of which outperformed these two leading coins.

On Monday, the Nasdaq closed barely in the green as investors paused to assess the interest rate outlook after the previous week's strong gains. Microsoft, Nvidia, Amazon, Alphabet, and Meta all declined by over 1%. However, crypto-exposed stocks like Coinbase surged as Bitcoin reached a 20-month high.

Details

In October, factory orders fell 3.6% month-over-month, the largest decrease since April 2020. This decline signals the industrial sector's struggle with high interest rates. Transportation equipment orders, particularly nondefense aircraft and parts, dropped significantly. Orders also decreased for electrical equipment, machinery, and primary metals. In contrast, orders rose for fabricated metal products and computers and electronic products. Excluding transportation, factory orders were down 1.2%, and excluding defense, orders fell 4.2%.

On Tuesday, the Nasdaq rose as traders weighed new economic data showing job openings dropped below forecasts to the lowest since March 2021, signaling a cooling labor market. This was despite the PMI topping estimates, pointing to resilience in the services sector. Apple, Amazon, Nvidia, and Tesla grew 1-2%. Meanwhile, the crypto rally in major coins continued with BTC reaching over 44K and aiming at the 2-years-high as ETH came over 2.3K - the first time since May 2021.

Details

The ISM Services PMI rose to 52.7 in November from 51.8 in October, exceeding forecasts of 52. This indicates faster growth in the services sector, with quicker expansions in business activity, production, and employment. New orders stayed robust while inventories rebounded. Although price pressures eased slightly, there are ongoing concerns about inflation, interest rates, and geopolitical events.

The number of job openings dropped by 617K month-over-month to 8.7M in October, the lowest since March 2021 and below forecasts of 9.3M. Openings fell in healthcare, finance, insurance, real estate and leasing but rose in information. By region, openings declined in the South, Midwest, West and Northeast. The data indicates a cooling labor market compared to recent months, with fewer available jobs across most industries and regions in October.

World Economy

Germany

The DAX 40 closed at a record high above 16,530 after dovish ECB comments and signs of US labor market weakness suggested potential earlier rate cuts by the ECB and Fed. ECB officials indicated further hikes are "rather unlikely" given November's inflation slowdown.

Spain

The IBEX 35 reached 5-year highs at 10,249, driven by ECB policymakers softer stance on rate hikes and US economic data. Rate-sensitive property sector gains were led by Merlin Propeties and Inmobiliaria, while Banco Santander and Cellnex Tel advanced by around 1.9% each.

FYI: The IBEX 35, or Índice Bursátil Español, is the benchmark stock market index for Spain. It tracks the performance of the 35 most liquid Spanish stocks traded on the Continuous Market of the Bolsa de Madrid. The index is capitalization-weighted, meaning that the companies with the largest market capitalizations have a greater impact on the index's performance.

China

Moody's affirmed China's A1 rating but cut the outlook to negative over lower medium-term growth and property sector risks, plus increased government aid to strained local governments and state firms that threatens fiscal health, economic stability, and institutional robustness; 4% GDP growth forecast for 2024-2025.

Brazil

Brazil's economy grew 0.1% in Q3, defying a predicted 0.2% contraction. The industrial and services sectors expanded, while agriculture output decreased. Household and government spending rose, supported by income transfer programs and a better job market. Exports remained strong, imports declined, and gross fixed capital formation fell amid high interest rates.

India

The BSE Sensex closed at a record 69,296, driven by energy and financial stocks. Investors reacted positively to India's ruling party's state election victory and strong PMI data. Top gainers included Power Grid Corporation of India and NTPC, as oil prices declined.

FYI: The S&P BSE SENSEX, also known as the BSE SENSEX or simply SENSEX, is a stock market index that tracks the performance of 30 of the largest and most liquid publicly traded companies listed on the Bombay Stock Exchange (BSE) in India.

Comment

The recent surge in combined market indexes in the USA, Spain, Germany, and India, alongside the growth of the Brazilian GDP, has been largely attributed to traders' expectations of imminent rate cuts by world central banks in response to a decelerating inflationary trend. However, this buoyant market performance appears to be somewhat detached from a broader improvement in other key macroeconomic indicators.

Despite the optimistic market sentiment, concerns loom over the sluggish manufacturing activity, which continues to decelerate, and a concurrent rise in unemployment. Also the deteriorating economic situation in China - second largest world's economy - is a reason for continues concern. The majority of banks have opted for over-hikes, with the noteworthy exception of Japan. This discrepancy in monetary policies raises questions about the sustainability of the current growth trajectory.

Furthermore, the geopolitical landscape remains relatively unchanged, with only superficial demonstrations of political goodwill, such as the non-binding meeting between Xi and Biden in San Francisco. While there may be symbolic gestures, the substantial improvement in geopolitical tensions is yet to materialize.

In light of these factors, it appears that the ongoing market rally is susceptible to a correction. The economic reality, with its inherent complexities and challenges, is likely to catch up sooner or later. Traders and investors should exercise caution and remain vigilant watching for the evolving economic landscape.

On Wednesday, the Nasdaq and other major stock indexes turned negative due to energy and megacap declines, despite earlier gains on cooling job data reinforcing expected Fed easing. Meanwhile, BTC went sideways just under 44K, and ETH retreated below 22.2K.

Details

103K workers were hired in Nov, below expectations of 130K. Services added 117K led by trade/transport/utilities, education/health, financial activities, while losses in leisure/hospitality, professional services. Goods shed 14K due to manufacturing, construction losses. Pay growth slowed - job-stayers saw 5.6% increase, smallest since Sept 2021. Job-changers saw 8.3% pay gains, least since June 2021.

World Markets (Africa)

Nigeria: The NSE index hit a record high at 71866, gaining for a second day on consumer stocks like FBN, Coronation Insurance, Access Bank and UBA. The Nigerian market has risen since President Tinubu took over May 29 on reforms, despite inflation, rate hike and forex fears.

South Africa: The JSE rose 0.3% despite fears of 2023 recession on poor Q3 GDP and power cuts. Top gainers were Amplats, Redefine, Implats and MTN, up over 3% each. British American Tobacco fell over 10% on a $31.5bn impairment from US brand pressure.

Ghana: The Ghana PMI rose to 51.6 in Nov from 50.5, indicating a tenth straight month of private sector growth and the highest since Aug. Output and new orders rose at a 3-month high. Job creation has lasted 12 months. Selling prices inflation accelerated but was below the average and 2022. Firms remain optimistic.

Uganda: The Bank of Uganda held rates at 9.5% as inflation eased to 2.6% in Nov from tight policy, good harvests, stable forex, lower global inflation. Core inflation was 2%, below the 5% target. Growth is seen at 6% in FY2023/24, 6-7% medium-term.

Namibia: Namibia's central bank held its key rate at 7.75%, the highest since Apr 2019, for a third straight month to protect the rand peg and support growth. Inflation rose to 6% in Oct, a 5-month high, for a fourth month. Growth slowed in 2023 on weak construction. Risks are global slowdown, tight policy, geopolitics and South Africa's power cuts.

Comment

Africa's economic situation is diverse and complex, reflecting the continent's vast size, varied geography, and differing political and economic systems.

The Mediterranean region, which includes countries like Egypt, has been politically troubled, but it has shown some economic resilience. Egypt, for instance, has one of the largest nominal GDPs in Africa at ~$400 billion. Mediterranean countries have a GDP that is approximately the world average.

Sub-Saharan Africa, which includes many of the continent's poorest countries, is expected to see economic growth slow to 2.5% in 2023. The region's largest economy, Nigeria, has a nominal GDP of $390B. The region faces significant challenges, including conflict, climate shocks, and poverty.

The West Coast of Africa, which includes countries like Ivory Coast, is relatively well-off compared to other parts of the continent. Ivory Coast has a nominal GDP of $79B billion

The Central African region, which includes countries like the Central African Republic, is characterized by conflicts and difficult political regimes. The Central African Republic has a nominal GDP of $2.760B.

South Africa, once the dominant economy in Africa, has been declining but still has a significant economy with a nominal GDP of $380B

The East Coast of Africa, which includes countries like Ethiopia and Kenya, has been friendly to Chinese investment. Ethiopia has a nominal GDP of $155B, and Kenya has a nominal GDP of $112B

Inflation has started to subside across the African continent, which is a positive sign for economic stability. However, the great discrepancy and uncertainty of economic policies country by country make it a fertile ground for cryptocurrencies.

On Thursday, the Nasdaq and other major stock indexes closed higher due to a megacap rally driven by AI optimism. Alphabet's advanced AI model launch led to a 5.3% share increase. Government data revealed initial jobless claims rose less than anticipated, continuing claims fell beyond predictions, and the Challenger report indicated more job cuts in November. Meanwhile, BTC continued to linger at Wednesday's level as ETH surged almost to 2.4K.

Details

According to the latest Challenger Report employers announced plans to cut 45,510 jobs in November, up from 36,836 in October, with retail (6,548), tech (5,049), financial (3,698), transportation (3,515), and healthcare/products (3,329) seeing the most cuts. While lower than November 2022, the 686,860 year-to-date tally was the highest since 2020's lock-down impact and 2009 prior.

On Friday, the Nasdaq rose, but other equities fluctuated as investors assessed the sudden drop in the jobless rate to 3.7% and a surge in consumer sentiment, while inflation expectations dipped. Meanwhile, BTC and ETH continue to hold below $44K and $2.4K, respectively, outperformed by leading altcoins, including ADA, SOL, MATIC, and DOT.

Details

The University of Michigan's consumer confidence soared to 69.4 in December, outperforming expectations due to lower near-term inflation forecasts, reaching the highest point since August and significantly rebounding from June 2022's record low.

In November, the unemployment rate dropped to 3.7% from 3.9%, outperforming market expectations. Unemployed persons decreased by 215K, while employed individuals increased by 757K.

Comment

The latest BLS report, revealing a drop in the unemployment rate from 3.9 to 3.7 percent, is certainly unexpected and raises questions about the dynamics of the current job market. The contrast with previous data from JOLTs, Challenger, and ADP reports prompts a closer examination of the underlying factors.

A detailed analysis of the government data suggests interesting trends among various worker groups. Notably, the unemployment rate for teenagers decreased to 11.4 percent in November. Simultaneously, the jobless rates for adult men, adult women, Whites, Blacks, Asians, and Hispanics remained relatively stable. This nuanced pattern prompts speculation that employers might be adapting to the escalating costs of doing business, potentially induced by FED policies, by favoring the recruitment of younger workers who may command lower wages.

Furthermore, a deeper dive into industrial analysis indicates a noteworthy rise in employment within the health care and government sectors, while other industries, with the exception of hospitality, exhibit mostly flat employment figures. This leads to the hypothesis that increased government spending could be a driving force behind the employment spike. If this holds true, it implies that the government is emerging as a major contributor to inflation at both executive and FED levels.

The reliability of government data has become a topic of scrutiny among a growing number of analysts. As we navigate these nuances, it is crucial to monitor the evolving job market dynamics and their potential implications for broader economic trends.

The week 50 focuses on the Fed's interest rate decision, inflation data, and retail sales. Oversees investors will monitor global monetary policies, Germany's ZEW index, Japan's Tankan index, and flash PMIs, while China highlights retail sales and other economic indicators.

SVET Markets Weekly Update (November 27 - December 1, 2023)

On Week 48, volatility has been prevalent across all markets, including the crypto. Nasdaq fluctuated, ranging between 14.1K and 14.5K. These up-and-downs are influenced by how traders interpret the numerous comments regularly issued by FOMC board members. Concurrently, BTC has got a bullish push, approaching the 40K mark. This surge is attributed to optimism surrounding the SEC's potential approval of a spot BTC ETF and anticipation of the traditional Santa Claus rally.

On Monday, the number of sold houses decreased, the Dallas Fed's index dropped, and Nasdaq, along with other major stock indexes, were trading slightly lower as investors awaited key economic releases, including the Fed's preferred inflation measure, PCE. Nvidia, Microsoft, and Amazon saw positive movement as Cyber Monday sales commenced. However, retailers signaled a weakening in consumer spending despite a 7.5% increase in e-commerce spending on Black Friday compared to the previous year. Meanwhile, BTC and ETH both corrected on technicals, starting to form a double top on daily charts.

Details

The number of new single-family houses sold in the country decreased by 5.6% in October to 679K, below the predicted 723K. The high mortgage rates made it difficult for buyers to afford. Sales were varied, with the Northeast experiencing a 13.2% increase, while the South saw a 2.1% rise. The median price of houses sold was $409.3K, while the average price was $487K, compared to $496.8K and $543.3K a year ago.

The Dallas Fed's index for manufacturing in Texas has been deteriorating for three straight months, reaching its lowest level since July 2023. The production index fell into negative territory, while the new orders index has been negative for 18 months and the capacity utilization index returned to negative territory. The shipments index slipped, and labor market measures suggest slower employment growth and shorter workweeks. Price front, wage growth normalized, while material cost growth remained below average and selling prices fell. Expectations for future activity is mixed.

Macroeconomics

The Russian stock market (MOEX) edged higher, building on slight gains from last week, reaching 3220 (ATH: ~4200) as investors continued weighing the outlook for key Russian exports like oil and metals. Gains in oil companies supported the broader market index as Russia appears to be selling some oil above the $60 price cap through a fleet of tankers.

The Euro hovers on USD 1.09 near its highest point since August 10, surpassing $1.09, as market participants anticipate inflation data to evaluate monetary policy. Despite subsiding inflation pressures in the Eurozone, robust wage growth poses a challenge to the European Central Bank's efforts to tame price surges, according to ECB President Christine Lagarde. She underscores the need for cautiousness, declaring that it's premature to proclaim victory over inflation. Lagarde anticipates further weakening of inflationary pressures but envisions transitory spikes in headline inflation with substantial uncertainty in the medium-term outlook. The forthcoming CPI report is expected to reveal a decline in the Euro Area's annual inflation rate to 2.7%, its lowest since July 2021, with the dipping to 3.9%, its lowest since June 2022.

On Tuesday, the dollar index fell, and Nasdaq was up while traders were considering new data and comments from the Fed. Governor Waller expressed confidence in the current policy, while Governor Goolsbee noted significant progress on inflation, and Governor Bowman's hawkish stance seemed more conditional than before. Consumer confidence improved for the first time in four months, and home prices hit a record high. Meanwhile, BTC surged above 38K, continuing to edge towards 40K under sustained bullish pressure, exploiting rising positive sentiments on stock markets and in an expectation of the traditional Santa Claus rally.

Details

In November, the Dallas Fed's service sector index for Texas improved to -11.6 from a ten-month low of -18.2 in October indicating that services sector continues to degrade but a bit slower. However, employment indicators suggested growth, with the employment index rising and part-time employment increasing. Input price pressures eased while selling price pressures slightly increased.

Currencies

The dollar index reached its lowest point in 15 weeks, falling to almost 102.5 on Tuesday (-3% in November). Recent Fed speeches have led to the belief that the Fed is done with raising interest rates and may start cutting them next year. Board Member Waller expressed confidence in the current policy for slowing the economy and returning inflation to 2%. Governor Bowman anticipates further policy tightening but her statement was less assertive than before.

FYI: Comments on Vitalik's techno-optimism article

Vitalik’s publication of the My techno-optimism article was a response to Marc Andreessen’s manifesto, which, basically, argues “to keep the world roughly the same as today but with less greed and more public healthcare”. The exchange is symbolic of a generational dialogue where each side speaks but fails to truly listen.

Contrary to Vitalik’s and other Millenials / Gen Z public figures' disposition towards politics, Boomers continue to navigate the intricate web of global governance effectively, while tech moguls engage in endless discussions.

A fundamental critique of the Boomers lies in their desire to halt progress, seemingly unable to cope with the rapid changes that threaten their established power structures. Their reluctance to embrace technological advancements and evolving societal norms underscores a resistance to change, contributing to the widening generational gap.

Vitalik, a prominent figure in the tech world, represents the optimism of Millenials. His global influence is undeniable, yet his worldview is simultaneously broad and narrow. While he envisions a unified by a 'defensive technologies' World, his focus on a predominantly Western, high-tech community leaves a significant portion of humanity untouched.

The criticism against Vitalik’s views has several dimensions:

1. Limited Worldview: Vitalik’s optimistic vision fails to acknowledge the profound cultural, social, and economic differences that exist globally. His theories may resonate with a tech-savvy minority but lack relevance for a substantial majority of the global population.
2. Defensive Technologies: The call for defensive technologies, rooted in a fear of violence, neglects the symbiotic relationship between offense and defense. This oversight reflects a failure to recognize the complexities inherent in technological advancements and their potential consequences.
3. Political Involvement: Despite significantly improving as a public speaker and media influencer since 2014, Vitalik remains light-years distant from the realities of global politics.
4. Timing Issue: Vitalik’s defensive technological gradualism requires a lot of time to reverberate through society in all countries and to lead to real improvements on social and economic levels of a broader society. Simultaneously, with Boomers’ increasing stubbornness and their aggressive wrong-decision-making, we are all running out of time very quickly.

In response to the perceived shortcomings of Vitalik’s proposal, we advocate for an 'on-hand' approach to politics. The proposal suggests actively engaging in local politics by not only developing methodologies, platforms, and applications that facilitate the spread of horizontal governance systems beyond the confines of the crypto/blockchain enthusiast community but also by establishing formal political parties to represent the interests of the technological and entrepreneurial community at both the local and federal levels.

On Wednesday, Nasdaq and other stock indexes pared back some of their early gains after a Fed official cautioned against premature rate cut expectations. The comments tempered investor optimism following remarks earlier in the week that had suggested the Fed might soon halt rate hikes. Meanwhile, revised GDP data showed the economy grew faster in Q3 than initially estimated. BTC and ETH traders remained undecided, with prices continuing the up-and-down movements characteristic of the entire month of November.

Details

The economy grew at an annualized rate of 5.2% in the third quarter of 2023, exceeding initial estimates. This marks the fastest expansion since Q4 2021. Upward revisions were seen in nonresidential investment and residential spending. Meanwhile, consumer spending eased slightly from initial readings but remained robust. Government expenditures and trade also made positive contributions to growth. The report suggests the economy maintains momentum despite high inflation and interest rates.

On Thursday, PCE inflation measures slowed, personal spending eased, and continuing jobless claims rose to a two-year high. The Nasdaq pared back early gains to trade lower 14.2K. Meanwhile, BTC and ETH continued to hover below 38K and 2.1K, respectively.

Details

In October, personal income rose 0.2% month-on-month, reaching $57.1 billion. Disposable personal income, which excludes taxes, increased 0.3% month-on-month, totaling $63.4 billion. Personal outlays (PCE - preferred Fed's indicator of inflation), including consumption, interest payments, and transfer payments, rose 0.2% month-on-month, totaling $43.8 billion and increasing by 3.5% from the previous year in October, marking the lowest level since April 2021. Consumer spending increased 0.2% month-on-month, reaching $41.2 billion. Personal savings totaled $768.6 billion, or 3.8% of disposable personal income.

The number of filings for unemployment benefits increased to 218K in the week ending November 25th, but slightly below market expectations. Continuing claims surged by 86K to 1.927M, the highest level since November 2021. The non-seasonally adjusted claim count dropped to 198.8K, driven by declines in California, Texas, Oregon, Florida, and Georgia.

On Friday, the PMI Index indicated that factory activity contracted more than anticipated. However, major stock indexes, including Nasdaq, traded higher as investors interpreted comments from Powell. He suggested that current monetary policy is "sufficiently" tight, implying a potential end to interest rate hikes. Tesla's stock price corrected after a recent price increase on its Cybertruck. Both BTC and ETH pushed higher, with Bitcoin reaching above 39K and Ethereum closing above 2.1K on hourly charts.

Details

According to Powell, the risk of excessively raising interest rates now balances the risk of not increasing them enough to curb inflation. He implied the full effects of rate hikes likely haven't emerged yet. Maintaining the Fed's anti-inflation credibility helped keep public inflation expectations anchored. Powell aligned with other Fed officials that it's premature to declare victory over inflation, since price increases remain above the Fed's 3% target. Core inflation rose 3.5% in October. He reiterated preparedness to tighten policy further if appropriate, though the need to restrain the economy excessively has moderated.

The ISM Manufacturing PMI remained at 46.7 in November, below expectations of 47.6, indicating continued contraction in the manufacturing sector. Production, employment, and supplier deliveries deteriorated, while new orders, inventories, and prices decreased at a slower pace. Prices stabilized due to easing energy markets, but steel market increases offset this. Manufacturing supplier lead times are decreasing, which is positive for future economic activity.

Macroeconomics

The November 2023 S&P Global Mexico Manufacturing PMI rose to 52.5, the highest since July, indicating improving business conditions. Demand significantly increased, driving job creation, more input purchasing, and greater production volumes. New orders saw the joint-strongest upturn in nearly 5 years, although international sales continued falling due to global economic uncertainty.

Comment

Why hasn't re-shoring mitigated the effect of rising interest rates in the manufacturing sector, which continues to shrink?

The state of re-shoring (moving production back to the USA) is experiencing a significant shift due to the continuing disruption of international supply chains caused by factors such as the Ukraine war, China's economic slowdown, and the ongoing impact of the global lock dawn. This trend is reflected in the increasing mentions of "re-shoring" in S&P 500 earnings transcripts, which were up 128% in the first quarter of the year compared to the same period a year ago.

However, despite this trend, the latest Purchasing Managers' Index (PMI) has shown a reduction in manufacturing in the USA, indicating that re-shoring alone may not be sufficient to offset the overall decline in the sector

One possible reason for the limited re-shoring is that some companies find it easier to move production to countries such as Mexico, whose imports to the USA have recently equaled those of China.

In summary, while there is a growing interest in re-shoring manufacturing to the USA, the decision to do so is influenced by a wide range of factors, and the overall reduction in manufacturing in the USA suggests that re-shoring alone may not be enough to reverse the trend.

On Week 49, the labor report, JOLTS, and ISM Services PMI are highly anticipated, along with Michigan consumer confidence, factory orders, and trade data. Monetary policy decisions are expected in several countries, and inflation rates will be watched in China, Turkey, South Korea, the Philippines, Mexico, and Russia.

SVET Markets Weekly Update (November 20 - 24, 2023)

On Week 47, stock markets remained relatively unchanged amidst mixed economic signals. Durable goods orders pointed to an economic slowdown, but the number of unemployment claims dropped sharply, suggesting that the feared labor market slowdown has not yet fully materialized. Meanwhile, BTC and ETH experienced marginal gains following Javier Milei's victory in the Argentinian elections.

On Monday, the major stock indexes gained, with the Nasdaq leading the way, as Microsoft reached an all-time high following news that the company has hired two former OpenAI executives to head a new advanced AI research team. Still, most traders awaited the FOMC's minutes on Tuesday, which could provide clues about the Fed's monetary policy outlook. Meanwhile, BTC and ETH retreated back to their Friday's close after a sudden Sunday's surge on the victory of Javier Milei in Argentina's general election.

Crypto

The pro-bitcoin candidate won Argentina's election. Javier Milei beat his opponent by over 2.7M votes. Though Milei hasn't proposed making bitcoin legal tender, he wants to replace the hyperinflating peso with the USD. The new president takes office Dec. 10.

Comment

Milei's political platform is not expected to incorporate Bitcoin, at least initially, and possibly not at all. Although Milei seldom discusses Bitcoin publicly, he doesn't come across as a fervent supporter; rather, he seems to align with an anti-establishment ethos to resonate with his base. Bitcoin, for him, appears more of a distraction than a practical tool. Furthermore, Milei is cautious not to antagonize the International Monetary Fund (IMF), as the IMF disapproves of Bitcoin, and Argentina, having accepted a $45 billion IMF loan, is obligated to discourage cryptocurrency use.

While Milei may be radical enough to defy the IMF, severing ties with China, another major international lender, would be economically perilous. Despite this, there is optimism that Milei won't impede the growing interest in Bitcoin within Argentina, and restrictions on banks providing crypto services might be eased. Although Bitcoin has thrived amid Argentina's economic challenges, it is unlikely to become the country's standard currency. Milei's stance on Bitcoin differs from that of El Salvador's president, who views Bitcoin as a tool for freedom and is less bound to the IMF.

Despite uncertainties, Bitcoin stands to benefit from Argentina's evolving economic landscape, fostering local interest and potentially contributing to the country's resurgence by providing a model for nations seeking to overcome the pitfalls of socialism.

On Tuesday, sales of existing homes as well as the Chicago National Activity Index decreased, the Nasdaq dropped, and there was a subdued trading day in Wall Street as investors processed unfavorable earnings reports from major retailers Lowe's, Kohl's, and Best Buy. Traders was also looking for insights into the future of monetary policy from the FOMC minutes. Meanwhile, Bitcoin and Ethereum fluctuate close to their year's top.

Details

In October, the Chicago Fed National Activity Index dropped to -0.49, the lowest in seven months, indicating a decline in economic growth. All four categories contributed to this decline, with production-related indicators falling to -0.33 and employment-related indicators dropping to -0.10. Additionally, the personal consumption and housing category decreased to -0.02, while the sales, orders, and inventories category fell to -0.04.

Sales of existing homes fell 4.1% in October to their lowest level since 2010, below forecasts. Tight inventory and high mortgage rates continue to weigh on the market, though starter and mid-priced homes still see multiple offers. Inventory rose slightly from September but remains down from a year ago. The median home price rose 3.4% from a year earlier to $391,800. Sales declined in the Northeast, South, and West but were flat in the Midwest.

Argument

In the journey of human progress and economic growth, the interaction among entrepreneurship, innovation, and regulations has been a continuous focus. Human talent for entrepreneurship flourishes in open spaces. Historical examples like the development of North and South America and Australia show how such spaces fostered innovative economies over 400 years. Yet, in today's world, such spaces are rare, hindering organic entrepreneurship.

Fostering entrepreneurship in modern, orderly countries faces challenges. Strict law and order perspectives, often from traditional views, lead to numerous regulations. These regulations, meant for societal order, unintentionally stifle entrepreneurship by removing necessary elements of anarchy and risk in the innovative process. Governments historically tighten regulations as innovative endeavors grow, hindering progress with excessive bureaucratic control.

In the recent cryptocurrency industry incident, regulators disproportionately affected a sector of 100 million people. This reflects a broader pattern of governments reacting to innovations challenging established norms. The decentralized nature of the crypto industry clashed with traditional regulations, raising questions about the balance between regulation and entrepreneurial growth.

To address challenges in conventional settings, we propose a solution: "Entrepreneurial Cities" with minimized regulations, allowing maximum freedom for capital and innovation. Similar to societies accepting activities like gambling in designated places, establishing cities exclusively for entrepreneurs is a constructive step, better than extreme measures like "private armies" or nuclear weapons.

On Wednesday, Durable goods orders signaled an economic slowdown by declining more than expected, yet jobless claims were lower than forecast. Nasdaq and other major stock indexes closed higher as traders digested this mixed economic data. This increase was driven by gains in tech, communication, and consumer stocks. Microsoft hit a record high, again, while Nvidia fell on poor results. BTC and ETH were, also, on the rise, with Ether leading the charge.

Details

New orders for manufactured durable goods fell sharply by 5.4% in October 2023 compared to the previous month, reversing a 4.0% increase in September and falling well short of market expectations. This was the second-largest monthly drop in durable goods orders since April 2020, driven primarily by significantly reduced demand for transportation equipment, especially civilian aircraft and vehicles. There were also declines in orders for primary metals, electrical equipment, and other capital goods, signaling decreasing business investment.

The number of unemployment claims dropped sharply last week to 209K after hitting a three-month high the previous week, falling well below market forecasts. Meanwhile, ongoing claims also declined from a two-year peak. This suggests the feared labor market slowdown has not fully happened yet, giving the Federal Reserve leeway to sustain high interest rates. When smoothing out weekly volatility, claims are also down over the last month. However, on a non-seasonally adjusted basis, unemployment filings actually rose last week, with significant increases in California, Oregon and Kentucky.

On Friday, the private sector experienced continued marginal growth, and stock markets closed mixed following a shortened Thanksgiving week. The Nasdaq remained relatively flat. Mega-cap tech stocks like Apple, Meta, and Microsoft declined. Nvidia also slipped after reportedly delaying the launch of a new AI chip in China to comply with US export regulations. Meanwhile, BTC and ETH received another bullish impulse on the hourly timeframe, temporarily surpassing 38K and 2.1K, respectively.

Details

The private sector saw continued marginal growth in November according to the preliminary S&P Global Composite PMI. While manufacturing expansion slowed, service sector output grew slightly faster, marking the fastest pace since July. New orders also increased slightly, thanks to service sector new business growth for the first time in four months. However, employment declined for the first time in over three years. Input cost increases were the smallest since October 2020, though selling price hikes accelerated. Business confidence also softened somewhat.

On Week 48 attention will turn to consumer confidence, GDP, home sales, and profits. Globally, policy updates are expected in South Korea and New Zealand. ECB and BoJ officials will speak. October inflation rates are due for Eurozone countries, Poland, and Australia.

SVET Markets Weekly Update (November 13 - 18, 2023)

On Week 46, after a surprising decrease in consumer prices, market sentiments turned upbeat for a day when traders weighed signals that the Fed may not hike rates further. As a result, Nasdaq jumped over 14K on Tuesday and continued to consolidate in that zone for the rest of the week. Meanwhile, BTC and ETH slid back on active profit-taking from some players.

On Monday, the Nasdaq relented as traders took a pause after Friday's price surge, awaiting key economic data releases, including the CPI report. Investors also responded to Moody's negative downgrade of the U.S. credit outlook. Tech stocks like Apple, Microsoft, and Amazon saw declines, while Nvidia and Tesla rose. Meanwhile, BTC continued its sideway drift in the 36K-37K range as ETH climbed above 21K.

Details

In November, the RealClearMarkets/TIPP Economic Optimism Index increased to a seven-month high of 44.5 from 36.3. However, it has been negative for 26 straight months. The Six-Month Economic Outlook improved to 39.1 from 28.7, its lowest since 2001. The Personal Financial Outlook rose to 53 from 46.8, returning to positive. Confidence in Federal Economic Policies also increased to 41.5 from 33.5, its lowest since October 2013.

In October, consumer inflation expectations for the next year dropped slightly to 3.6% from 3.7%. Rent and food inflation expectations stayed at 9.1% and 5.6% respectively. Expectations for price growth in gas, college education, and medical care increased. However, median inflation expectations for a five-year period decreased to 2.7% from 2.8%, while those for a three-year horizon remained steady at 3.0%.

On Tuesday, Nasdaq rallied as inflation slowed, easing concerns about interest rate hikes. Nvidia surged to a record high. Tesla soared amid price hikes. Meta Platforms climbed as Amazon announced it will sell products on its platform. Meanwhile, BTC declined due to a technical correction.

Details

The core annual inflation rate in the US, excluding food and energy, decreased to 4% in October 2023, down from 4.1% the previous month and below market expectations. Price increases slowed for shelter (70% of the total increase, slowed to 6.7% from 7.2%), recreation, personal care, and household items. However, motor vehicle insurance costs rose further. On a monthly basis, core consumer prices increased just 0.2%, below the 0.3% rise in September and forecasts.

On Wednesday, Nasdaq continued to rise as traders weighed signals that the Fed may not hike rates further, though rates will remain elevated for some time. Producer prices fell, indicating easing inflation. Retail sales declined but less than expected. Apple, Microsoft, Amazon, and Nvidia rose. BTC rebounded sharply from Tuesday's deep plunge, reaching above 37.8K.

Details

Producer prices (PPI) unexpectedly fell 0.5% in October 2023 compared to forecasts of a 0.1% rise, the largest monthly decline since April 2020. Goods prices dropped 1.4%, the first decrease since May, primarily due to a 15.3% fall in gasoline prices. Prices also declined for diesel fuel, hay, home heating oil, and light trucks. However, tobacco products prices rose 2.4%. Services prices were unchanged after six straight increases, as rises in transportation/warehousing services and services minus trade/transportation offset a decline in trade services margins. The producer price drop signals easing inflationary pressures.

World Markets

The UK inflation rate fell to 4.6% in October 2023, down from 6.7% in August and September and below market forecasts of 4.8%. This is the lowest rate since October 2021, partly due to the recent reduction in energy prices after Ofgem lowered the household bill cap. Housing and utility costs dropped 3.5% with large declines in gas and electricity prices. Food inflation also eased to 10.1%, the lowest since June 2022. Additionally, price growth slowed for transport, restaurants, furniture, clothing, and other goods and services. The core inflation rate excluding food and energy fell to 5.7%, the lowest since March 2022. On a monthly basis, the CPI was unchanged. This sharp prices decease in UK confirms a world-wide trend on slowing inflation as economies continue to adjust to the World's new geopolitical situation.

China's industrial production grew 4.6% year-over-year in October 2023, slightly exceeding market forecasts of 4.4% growth. It was the fastest expansion since April, led by mining and manufacturing. However, utilities output slowed. By industry, production accelerated for non-ferrous metals, computers, and textiles. But growth decelerated for electrical machinery and chemicals, while output declined for non-metal minerals and general equipment. For the first ten months of 2023, industrial production was up 4.1% versus the same period last year, showing ongoing recovery despite headwinds. The October data indicates China's industrial sector continues to see modest growth momentum.

On Thursday, the Nasdaq hesitated near its one-year highs as traders digested recent economic data. Weekly jobless claims rose to a three-month high, indicating a cooling jobs market. Import and export prices also declined sharply in recent months. With no rate hike expected in December, markets see a higher chance of a rate cut next year. Meanwhile, BTC and ETH corrected on profit-taking, reaching 36.2K and 1.98K, respectively.

The Philadelphia manufacturing index rose in November but stayed negative, indicating slowing growth. New orders and shipments fell, while employment was flat. Costs increased at a slower rate. Expectations for future growth remained weak, according to the survey. Overall, the index showed the manufacturing sector continued to struggle despite some improvement.

The housing market index from NAHB/Wells Fargo fell 6 points to 34 in November, well below expectations of 40. This was the fourth straight monthly decline, taking the index to its lowest since December 2022, as high mortgage rates have significantly hurt builder optimism and consumer demand. In particular, the index for current single-family home sales fell 6 points to 40 and the future sales index dropped 5 points to 39.

The number of people applying for unemployment benefits increased to 231K, the highest in almost three months, exceeding market expectations. Continuing claims also rose to 1,865,000, the highest in nearly two years, indicating that jobseekers are struggling to find work. These statistics suggest a weakening US labor market, supporting the Fed's warnings of an economic slowdown and showing that businesses are feeling the impact of higher interest rates.

Import prices fell 0.8% in October, exceeding forecasts of a 0.3% decline. This was the largest monthly drop since March, led by a 6.3% fall in fuel import prices as petroleum and natural gas costs decreased.

Commodities

Gold prices rose above $1,980 an ounce as new economic data strengthened expectations that the Fed would finish raising interest rates soon and could begin monetary easing by mid-2024. Meanwhile, Moody's lowered its US credit rating outlook to negative, citing growing budget deficits and political conflicts in Washington, which supported gold prices.

Comment

Is gold subsiding its role to BTC?

The gold market has experienced several major periods of fluctuation and stability over the years. In the 1970s, there was a sharp rise in gold prices, when gold rose from its low 30 to almost 900 USD per ounce, driven by geopolitical conflicts and a weakening dollar due to the Federal Reserve's low-interest rate policy. This period was followed by a decline and a long stagnation until 2000, characterized by a volatility and a lack of significant increase in gold prices, which ranged from ~200 to ~500.

From 2000 to 2014, there was another significant rise in gold prices (reaching above 1900), attributed to geopolitical tensions, a weakening dollar, and the Federal Reserve's low-interest rate policy. However, a correction occurred until 2017, influenced by a strengthening dollar due to high Fed rates. In 2020, gold experienced a small rise back to all-time highs, but in the past three years (2020-2023), gold has stagnated due to a sharp rise in the dollar, attributed to high Fed rates.

The role of gold has remained significant, particularly during times of uncertainty, geopolitical tension, and economic turmoil. Gold has traditionally served as a hedge against inflation and a safe haven asset.

However, the rise of cryptocurrencies has introduced a new dynamic to the investment landscape. While gold and cryptocurrencies are both considered hedges against monetary inflation, the two assets have distinct characteristics. Gold has a long history of being a hedge against fear and geopolitical instability, while cryptocurrencies are a relatively new asset class that has gained attention for its potential as a store of value and investment only recently.

As economic and geopolitical landscapes continue to shift, the future role of gold and its relationship with cryptocurrencies will undoubtedly evolve. Cryptocurrencies are likely to assume a more prominent position in investment portfolios, particularly among younger investors as a response to the growing global instability.

On Friday, the Census Bureau reported an unexpected increase in new home construction in October, while the Nasdaq moved mostly sideways. Alphabet, Microsoft, Nvidia, Meta, and Apple saw declines, while Amazon and Tesla rose. Simultaneously, BTC and ETH continued to correct technically. Other news: SEC has postponed the decision on Franklin Templeton's Spot Bitcoin ETF.

Details

In October, building permits increased 1.1% from September to an annual rate of 1.487 million, according to preliminary data. The rise in permits continues to be driven by low housing inventory despite higher borrowing costs. Multi-family permits rebounded 2.2% while single-family rose 0.5% to a May 2022 high. Permits increased in the South and Northeast but fell in the West and Midwest.

Crypto

The SEC has postponed the decision on Franklin Templeton's Spot Bitcoin ETF application, as well as Global X's and Hashdex's applications. The new deadline for these applications is January 1, 2024. This delay has raised questions about the impact on Bitcoin's market. The SEC can defer a decision on an ETF application three times before deciding whether to approve or deny it. This process typically takes around 240 days before a final decision is made.

On Week 47, key data releases include FOMC meeting minutes, durable goods orders, S&P Global PMIs, and home sales. Internationally, preliminary manufacturing and services PMIs will be released for several countries, while interest rate decisions are slated for Turkey, Sweden, South Africa, and Indonesia.

SVET Markets Weekly Update (November 6 - 11, 2023)

On Week 45, the Nasdaq, despite a sudden surge on Friday, lingered in the 13.5K-13.8K zone due to a technical correction and bulls' hesitations about the direction of the Fed's policy after Powell's commentaries switched back to a hawkish mood. Meanwhile, BTC entered into an accumulation mode below $38K after closing the previous week above 36K.

On Monday, Nasdaq remained stagnant following a strong week and within its key resistance zone of 13K-13.5K. Bulls believe the Fed's rate hikes are over and await corporate results. Tech and healthcare led the gains, while real estate lagged. Apple, Microsoft, Amazon, and Nvidia rose, while Tesla and Berkshire Hathaway fell. Fed officials' speeches this week will be closely watched for clues about future rate moves. BTC holds near 35K, while some coins, including MATIC, AVAX, and DOGE, showed notable increases as some traders' attention switched to large cap alts.

World Markets

Venezuelan stocks (IBC Index) nearly 6x in value (to 61K from 15K) this year due to soaring inflation and a falling bolivar.

Comment

One unappreciated consequence of inflation is the rapid rise of local stock markets. This happens because investors view investing in equities as a safe haven or a way to protect their wealth against the eroding effects of inflation. This is because, historically, stocks have demonstrated the potential to outpace inflation and provide returns that can help investors maintain or increase their purchasing power.

Argentina (inflation to date: 119%; stocks index rise to date: 321%) and Venezuela (303%; 579%) have experienced significant inflation in recent years but their stock markets valuation grew even faster. However, not everyone in these countries has easy access to the stock market. Stock market participation is restricted to a small minority of investors who have the financial means and access to brokerage services.

As a result, the majority of the population have limited options for protecting their wealth against inflation. As a result, many resort to investing in foreign currencies like the US dollar or, increasingly, in cryptocurrencies as alternatives.

Crypto

Investor Charlie Munger voiced his apprehension over Bitcoin's surge in value, citing Adam Smith's economic principles that stress "the importance of individuals taking better care of their own property than that of others. Also, Munger cautioned against disrupting the established financial system with novel currencies like Bitcoin, comparing it to 'throwing a "stinky marble" at a long-standing recipe that works well for many people'.

Comments

The growing gap between generational understanding of finance and economy and their role in improving our civilization is becoming increasingly apparent.

BabyBoomers, in their 60s and 70s, still adhere to the belief in the transformative power of individual 'self-improvement,' which, after numerous Darwinian iterations, would ultimately lead to the emergence of a group of 'super-homo' who would collectively assume the role of Earth's stewards, guiding humanity towards a brighter future defined by their 'ethical' intuitions.

On the other hand, millennials and the affiliated Gen-Z have, through their interactions with boomers, concluded that these notions are utter nonsense, rooted in medieval theories that would regress us to the most catastrophic periods in human history when such 'inspired' shepherds manipulated the destinies of millions like pawns on a chessboard. In response, they propose technology-based solutions driven by algorithmic and mathematical consensus, ensuring timely and effective decision-making for large populations.

Presently, most boomers and their Gen-X allies in power recognize the threat that technology and mathematics-based governance mechanisms pose to their (and their numerous siblings') personal power. Consequently, we are entering an era of 'glove-off' battles where the most intelligent and technologically adept individuals are labeled threats to 'law and order' and dealt with accordingly.

This situation is exacerbated by a deep divide within the Boomer generation, splitting them into two opposing camps. One camp advocates for perpetual economic and social globalization based on the principles of 'universal humanitarian law,' leading to the gradual erosion of national, ethnic, and social distinctions, the dissolution of country borders, and the establishment of a World Government led by the most 'advanced' nations.

This faction is countered by the elites of the least economically developed nations among the Boomers, who vehemently oppose relinquishing any of their authority over their local, suppressed populations to some form of 'human rights' enthusiasts from other continents. They enjoy widespread support from the local, impoverished, and disillusioned segment of the population.

These two factions within the Boomer generation are now entering the concluding phase of their lives and are determined to make a 'last stand' against their opposing and deeply despised counterparts, regardless of the cost to the rest of us, who are expected to 'shut up, serve, and obey'.

In this unprecedented new environment, we - boxed between those two monstrous enraged dinosaurs - must all carefully consider our personal destinies, particularly our current inability to oppose the boomers' indiscriminate and unsubstantiated application of brutal force to intimidate us into submission.

This is a different Earth, and this is a different Game.

On Tuesday, Nasdaq rose for the seventh consecutive day, its longest winning streak in two years. Amazon, Apple, Meta, and Tesla all rose. Microsoft reached its all-time high. Energy stocks were the biggest underperformers, falling on lower oil prices. Meanwhile, BTC traders attempted to overcome the 36K barrier, which resulted in a 1K price increase on the hourly graph. Technical formations remained bullish, but major resistance zones ahead and low volumes undermined rising momentum.

Details

The logistics industry is exhibiting signs of resurgence, as evidenced by the Logistics Managers Index (LMI) climbing to 56.5, up from 45 in July. This upward trajectory, according to analysts, suggests a gradual yet consistent expansion of the economy over the past three months. The logistics sector is reportedly capitalizing on an ongoing supply boom, which has resulted in lower supply costs and stimulated job creation. However, this LMI surge is primarily attributed to increased inventories, which could be a consequence of seasonal fluctuations and should not be construed as an unequivocal indicator of a broader shift towards robust economic growth.

World Markets

The Helsinki Stock Market Index (HEX) is a major stock market index that tracks the performance of the Finnish stock market. The index is a market value-weighted index, and it consists of all the stocks listed on the Helsinki Stock Exchange. The index began with a base of 100 on December 31, 1985. The major components of the index include companies from various sectors such as oil and gas refining and marketing, industrial machinery, electric utilities, diversified banks, and communications equipment.

The drop in the Finnish market index (HEX, Helsinki) by more than 11% in 2023 can be attributed to a combination of factors, both domestic and international. This analysis provides insights into the key drivers behind this decline:

Energy Crisis: One of the significant factors contributing to the market index drop is the global energy crisis. Energy prices, especially fossil fuels, have surged in 2023, affecting various industries that rely heavily on energy, such as manufacturing and transportation. This has led to increased operational costs, reduced profit margins, and general economic uncertainty.

Sudden Break of Relations with Russia: The abrupt deterioration of relations with Russia has had adverse effects on the Finnish economy. Russia has historically been a significant trading partner for Finland, and any disruptions in this relationship can impact various sectors of the Finnish economy. Trade restrictions, economic sanctions, or geopolitical tensions can hinder business operations and trade, leading to decreased market performance.

Aggressive Policy of the Finnish Central Bank: The aggressive policy of the Finnish Central Bank, characterized by a substantial increase in interest rates to more than 9%, can have a severe impact on the financial markets. Higher interest rates can lead to reduced borrowing, increased borrowing costs for businesses, and decreased consumer spending, ultimately affecting economic growth and corporate profitability.

Sector-Specific Factors:

Expectations for the Future: we expect a reversal in the index's performance in the near future for several reasons:

In conclusion, the Finnish market index's decline in 2023 can be attributed to a combination of domestic and international factors, including the energy crisis, geopolitical tensions with Russia, and aggressive monetary policy. The performance of specific industries and companies within the index was also affected. The expectation for the future is that the index may start to reverse as these factors evolve, offering potential opportunities for recovery and growth in the coming months. However, economic and geopolitical uncertainties may continue to influence the market's performance.

Commodities

Orange juice prices have increased by 89.44% since the beginning of 2023, and there are several reasons for this surge.

Regionally, two of the most important producers of orange juice are Brazil and the United States, which constitute some 85% of the market. In the U.S., the states of California, Florida, and Texas produce the bulk of the country’s oranges. The current crisis in Florida’s orange growing areas has been a key factor in the recent orange juice rally.

Brazilian growers have also been facing some weather-related headwinds. As a result, the 2023/2024 growing season may not be as bountiful as the 2022/2023 growing season, which is likely why orange juice prices continue to rally.

The US orange crop has been ravaged by infestations and extreme weather intensified by global heating, which has led to a decrease in production and a rise in prices. Last year, Florida, which produces more than 90% of the US's orange juice supply, was hit by Hurricane Ian, Hurricane Nicole, and freezing conditions in quick succession, devastating orange producers in the Sunshine State. Producers also battled an incurable citrus greening infestation that is spread by an invasive insect, rendering fruit unusable.

With supplies hurt by storm and insects, the United States is increasingly importing from international markets like Brazil. The US will increasingly have to depend on imports from Brazil, which accounts for around one-third of global output, as well as neighboring Mexico. Indeed, with the US importing more orange juice than it has been producing domestically in recent years, many believe South America’s biggest economy could hold the key to the direction of orange-juice prices in 2023

On Wednesday, Nasdaq flattened out, recording its longest winning streak in two years, as the Dow closed in the red. Real estate and tech outperformed, while utilities and energy lagged behind. eBay's earnings outlook missed estimates, and Lucid Group changed its production forecast. Meanwhile, BTC and ETH remain stalled below 36K and 1.9K, respectively. Also, SOL, MATIC, ADA, XRP, DOGE are rising as traders continue to accumulate select altcoins.

Details

Wholesale inventories increased by 0.2% in September 2023, reversing a six-month trend of declines. Durable goods inventories rose by 0.2%, while nondurable goods inventories increased by 0.1%. This means that businesses are stocking up on goods in anticipation of future demand. However, the impact of this on the future of the economy is uncertain, as it depends on various still fluctuating factors such as inflation, job growth, and business activity.

On Thursday, Nasdaq and the Dow fell as Treasury yields rose and Fed Chair Powell signaled more tightening. Disney soared on strong earnings, while Tesla sank on valuation concerns and a sell rating. Meanwhile, BTC closed a trading day above $36K — the first time since May 2022 — and ETH shot above $2K on rumors about BlackRock's Ethereum ETF application.

Details

New unemployment claims fell slightly (to 217K) on the week ending November 9th, but continuing claims rose to the highest level since April, suggesting that the unemployed are having greater difficulties finding positions within companies. This points out to that the job market is softening, but it remains tight.

On Friday, the Consumer Sentiment Index dropped but Nasdaq gained significantly, along with other major indexes, following hawkish comments from Powell and stabilizing Treasury yields. Major tech stocks saw increases, with Microsoft hitting an all-time high again. Meanwhile, BTC and ETH began to form a double top on the hourly chart just above their key resistance levels.

Details

According to Michigan University the Consumer Sentiment Index fell to 60.40 points in November 2023, down from 63.80 points in October. Historically, from 1952 to 2023, the average has been 85.49 points. The highest recorded level was 111.40 points in January 2000, while the lowest was 50 points in June 2022.

On Week 46 the focus will be on inflation rate data, retail sales, and speeches by Fed officials. Other important data includes producer prices, industrial production, export and import prices, building permits, and housing starts. Playing volatility remains the main theme for traders.

SVET Markets Weekly Update (October 30 - November 3, 2023)

Week 44 was the outlandish one for Nasdaq, which has been actively rising on a technical rebound from the 13K support level, reinforced by some traders' over-optimistic interpretation of Powell's intentions to end rate hiking sooner than expected. Meanwhile, BTC and ETH were stuck below their key resistance levels of 35K and 1.85K, respectively.

On Monday, Texas business activity declined, but the Nasdaq rose on technicals and ahead of the Fed's interest rate decision, as well as Apple's earnings report. Technology, financial, and consumer discretionary stocks led the gains. Large-cap stocks, such as Alphabet, Microsoft, Amazon, and Meta, rose. Tesla and ON Semiconductor shares fell after the companies issued weak outlooks. BTC and ETH continued to consolidate below their key resistance levels at $35K and $1.8K, respectively.

Details

Texas general business activity in manufacturing activity declined for the 18th month in a row, with new orders falling at a faster pace. Output growth slowed, and shipments, wages, and employment growth all slowed as well.

On Tuesday, home prices showed the biggest increase in seven months, while the Nasdaq and other major indexes rose due to technical buying, led by the financial and consumer discretionary sectors. Energy was the biggest laggard. Nvidia fell after reports that it may have to stop chip orders to China. BTC (~34.4K) and ETH (~1.8) were unchanged as bulls consolidate before their next breakout's attempt.

Details

Case Shiller Home Price Index rose 2.2% in August, the biggest increase in seven months. This was above forecasts. Chicago, New York, and Detroit had the biggest increases, while Las Vegas, Phoenix, and San Francisco had the biggest declines. Home prices have increased for seven straight months. S&P DJI said that the strength of the August report is consistent with an optimistic view of future results.

On Wednesday, the Fed kept interest rates at 5.5%, as expected. At the same time, the ISM PMI dropped while jobs increased, highlighting the confusing dichotomy in economic data. Nasdaq rallied on Powell's comments, which some bewildered investors saw as shifting to a "dovish" side, again. Meanwhile, BTC and ETH bulls were still assaulting the 35K and 1.85K resistance zones.

Details

The Fed kept interest rates at their highest level of 5.25%-5.5% in 22 years, reflecting their dual focus on controlling inflation and avoiding a recession. They will continue to raise rates based on the economy and financial markets. Economic activity grew strongly in the third quarter, and the labor market remains strong, but inflation is still high. The Fed warned that tighter financial conditions would hit the economy.

The ISM PMI dropped to 46.7 in October marking the manufacturing sector's contraction for the 11th consecutive month, as new orders and production slowed. This is due to higher borrowing costs from the Fed and lower demand from domestic and foreign markets. As a result, employment contracted and input prices fell.

The job market remains strong, with job openings increasing to 9.55 million in September, the highest level in four months. The growth was led by the accommodation and food services and arts, entertainment, and recreation sectors. However, job openings declined in other services, the federal government, and information. Regionally, job openings rose in the South and Northeast, but declined in the West and Midwest.

On Thursday, Nasdaq closed sharply higher, mostly due to "trading volatility" technicals and as some investors cheered weak signs that the labor market is cooling. Several companies also reported strong earnings, including Eli Lilly, Starbucks, and Roku. Crypto buyers attempted to storm BTC's and ETH's key resistance zones.

Details

The number of people filing for unemployment benefits increased by 5K to 217K in the week ending October 28th, the highest level in nearly two months. This suggests that the labor market is cooling, despite remaining at historically tight levels.

According to the Challenger report job cuts fell to their lowest level in three months in October, but the tech sector continued to lead all industries in layoffs. Employers have announced plans to cut over 640K jobs this year, the highest number since 2020.

On Friday, the Nasdaq rose after the jobs report showed the labor market cooled more than expected, reinforcing bullish bets that the Fed is done raising interest rates. Real estate, financials, and materials were the top performers, while most of the tech sector struggled, led by a fall in Apple shares after its sales declined for a fourth consecutive quarter. Meanwhile, Bitcoin and Ethereum are still trading below 35K and 1.85K, respectively.

Details

The unemployment rate rose to 3.9% in October 2023, the highest since January 2022. The number of unemployed people increased by 146K to 6.51M, while the number of employed people decreased by 348K to 161.2M.

The economy added 150K jobs in October, below expectations, as several strikes weighed on the manufacturing sector. Job gains were concentrated in healthcare, government, and construction. Payrolls remain well above the number needed to keep up with population growth, but the labor market is showing signs of cooling.

On Week 45, the we will see speeches from Fed officials, the release of consumer sentiment and trade data, and earnings reports from Uber and Walt Disney. China will focus on inflation, new loans, and trade data, while Australia's central bank will make an interest rate decision. Inflation rates in Brazil, Mexico, the Philippines, and Russia will also be watched. The UK, Philippines, and Indonesia will release GDP data, and Spain, Italy, Brazil, and Canada will share service PMIs. Germany will provide updates on factory orders and industrial production.

Still, trading volatility remains the name of the game for most investors.

SVET Markets Weekly Update (October 23 - 27, 2023)

On Week 43 the Nasdaq closed in the red, suppressed by expectations of more Fed rate hikes ahead, and faced by a jump in GDP, expanding core PCE, and mixed corporate earnings. Meanwhile, BTC and ETH met strong resistance at $35K and $1.8K, respectively.

On Monday, Chicago Index increased a bit, and Nasdaq rose slightly. This came ahead of a busy week with earnings reports from four big tech companies. Tech and consumer discretionary stocks were the top performers, while energy and materials stocks lagged. Microsoft, Alphabet, Amazon, and Meta all advanced ahead of their earnings reports, while Nvidia jumped after news that Chinese tax authorities are investigating Apple. Meanwhile, BTC continued to rally on expectations of BlackRock's spot BTC ETF nearing approval, reaching 32K—its highest in five months. On the other side, ETH showed much less price performance, still staying in its October range of 1.65–1.75. Other news: FinCEN proposal seeks to expand the PATRIOT Act to cryptocurrencies.

Details

The economy grew a bit in September 2023, according to the Chicago Fed National Activity Index. This was driven by a rebound in manufacturing activity and a slight improvement in employment.

Comment

First, Boomers tell us that a 20-year-long regime of the "zero" rate is an anomaly, supported by a slow economic growth world-wide, so holding the rate at 5% for an indefinite time is perfectly fine, despite all the stupid complaints from "some" business owners about the recession and rising unemployment.

Second, they will start telling us that having several major wars all over the globe killing tens of thousands of people a day is also the "historical habitability" and that it is not caused by their own stupid policies at all - it is just a "return to a world's normal state."

Then we will have to wait just a bit before Boomers will start to preach to us that the nuclear war is absolutely okay because it's just a continuation of their peaceful policies by other means.

I have only one question to all of us: how long will we allow those old idiots to stay on top, and how long will we allow that unbelievably dysfunctional centralized system of governance to exist before it ends our existence?

Crypto

The latest FinCEN proposal seeks to expand the PATRIOT Act to cryptocurrencies, meaning that all cryptocurrency privacy tools would be subject to extensive reporting to FinCEN. This would lead to a central database of all users of privacy tools, making it easier for the government to crack down on them in the future.

Comment

Proposition for Comprehensive Political Reforms

In light of the unprecedented expansion of government powers, often attributed to scapegoating and resulting in unwarranted intrusions into our private lives over recent years, it is imperative that we propose comprehensive political reforms. This high-level outline, though lacking many crucial details, aims to provide a stage-by-stage transformation of our intricate and already tumultuous world.

I. Introduction of a New Political Generation

The first step in our reform agenda is to introduce a fresh, younger generation of political candidates at all levels of governance – municipal, state, and federal. Each candidate should establish a financial "snatch fund" as collateral, contingent on their commitment to uphold the decisions made by People's Decentralized Autonomous Organizations (DAOs), comprised of all voters who elected them.

II. Electoral System Overhaul

To restore public trust in the political process, we propose a complete overhaul of the electoral system. This includes the prohibition of all forms of lobbying and prevents politicians from assuming positions in businesses after leaving office. State pensions will suffice for individuals who pledge to serve the people. Also, limitations on politicians' age and terms in office must be introduced. Additionally, all elections must be direct, instantaneous, electronic, and blockchain-based, ensuring transparency and scrutiny by all citizens.

III. Transition to Direct Democracy

Our third proposal involves the transition from a representative democracy to a direct one. This transformation begins with the abolition of the presidential office, returning power to individual states and, further, devolving authority to cities and municipal communities. Electronic plebiscites on federal-level issues, including matters of war and economic policy, should become standard. Furthermore, the elimination of most federal agencies is suggested, with their essential functions outsourced to private, competing businesses.

IV. Declaration of Individual Sovereignty

A new constitutional amendment should be enacted, affirming absolute individual sovereignty and the primacy of individual rights over the state. Personal privacy and security must be inviolable.

V. Lowering Regulatory Barriers for Private Businesses

In order to foster innovation and adapt to a divided world, we propose a significant reduction in regulatory requirements for all private businesses.

VI. Implementation of Universal Basic Income (UBI)

We advocate the introduction of UBI, distributed algorithmically and unconditionally to every citizen. The funds for UBI will be generated from a single tax on all business activities. All other taxes (except on wars) must be abolished. Most federal state departments, with the exception of a few critical functions (e.g., defense and environmental protection), should be closed, with their responsibilities transferred to competitive private enterprises. Departments are financed from peoples voluntary donations.

VII. Global Governance Transformation

On the international stage, we envision a new governance system based on individual empowerment over state authority and complete global governance decentralization. Passports should be abolished, and individuals should possess only anonymous coded identifiers, confirming their unique identity without revealing personal information. Citizens of states that infringe upon the rights and liberties of their populace should receive preferential treatment. Borders must be transparent, and new regions should be designated to form new countries when existing ones cannot accommodate them. "Government As A Service" principle must be universal in all free states.

This political reform proposition seeks to address the core issues plaguing our current political systems, promoting transparency, individual sovereignty, and greater control for the people over their governance. While the details may require further refinement, this roadmap offers a direction for transforming our complex and crisis-ridden world

On Tuesday, private sector growth accelerated but the Nasdaq rose, ignoring the perspectives of Fed rate's new hikes, led by strong corporate earnings reports and a stabilization in Treasury yields. Top gainers included Spotify, Verizon, and Coinbase, which soared by more than 6% as Bitcoin rose to 35K for the first time since April 2022. BTC and ETH relented on technicals after a week's rally.

Details

Private sector growth accelerated in October 2023, driven by manufacturing and services expansion. Demand for manufactured goods improved, but new service business fell. Job creation was weak, backlogs fell, and expenses and inflation eased. Business confidence picked up.

On Wednesday, new home sales surged, and the Nasdaq hit its lowest levels since June, as investors returned to concerns about interest rate hikes and weighed mixed earnings against rising yields. Alphabet sank 9.5% due to weak cloud revenue, while Microsoft surged 3.1% on strong earnings. Bitcoin remained under USD 35K on lowering volumes, while Ethereum, at under 1.8K, showed a correction pattern on an hourly graph. Other news: A renowned crypto forensics company reported that only USD 21K was raised by Hamas in crypto donations.

Details

New home sales surged in September to their highest level in 20 months, driven by limited existing home supply. Sales increased in all regions and median and average prices rose from a year ago.

Comment

The decoupling of Fed rate hike policies from the market and the broader economic conditions can occur for several reasons. Here's an explanation of how this might happen:

Market Expectations and Forward Guidance: The Federal Reserve often provides forward guidance about its interest rate policies. If the Fed signals that it intends to raise rates gradually and in response to strong economic fundamentals, the market may already price in these changes. So, as long as the rate hikes align with the expected trajectory, the market may continue to perform well.

Alternative Sources of Financing: One important reason for the decoupling, disregarded by most main-stream analysts, could be the increasing diversity of financing sources. In today's financial landscape, there are numerous options beyond traditional banks and large investment institutions. For example, companies can raise capital through private equity, venture capital, crowdfunding, or direct lending. Additionally, the proliferation of FinTech platforms and peer-to-peer lending has created alternative channels for borrowing and investing that are less affected by Fed rate policies.

Global Economic Factors: The decoupling can also be influenced by global economic factors. If other major economies are also performing well and have their own independent monetary policies, it can mitigate the impact of Fed rate hikes on global markets.

Market Psychology and Sentiment: Investor sentiment and psychology play a significant role in market behavior. If investors believe that the Fed's rate hikes are a sign of confidence in the economy and a necessary step to prevent overheating, they may perceive it as a positive signal rather than a negative one.

Investor Adaptation: Market participants may adapt to higher interest rates by shifting their portfolios towards assets that are less sensitive to interest rate changes. For example, they may invest in sectors that tend to perform well during periods of rising rates, such as financials and energy.

Crypto

Crypto forensics company Elliptic has disputed claims about the scale of fundraising by Hamas using digital currencies, stating that while the group solicited bitcoin donations in 2019, it stopped all public-facing crypto fundraising in April due to safety concerns (hilarious!). Elliptic's blog post reveals that only USD 21K in fresh crypto donations have arrived since recent attacks in Israel on October 7, with most of it already frozen. Elliptic asserts that the amounts raised via crypto donations remain small compared to other funding sources, and no public crypto fundraising campaign by a terrorist group has received significant levels of donations relative to other sources.

On Thursday, the economy grew 4.9% in Q3, and the Nasdaq fell to its lowest level since May as investors focused on higher rates for longer as well as disappointing earnings results. BTC and ETH paused on technicals, still hanging inside the 34-35K and 1.85-1.75K ranges, respectively.

Details

The economy grew at a 4.9% annualized rate in Q3 of 2023 (compare with 2.1% in Q2), the most since late 2021. Consumer spending, exports, and private inventories were the main drivers of growth. Government spending also increased faster than in the previous quarter. However, nonresidential investment contracted for the first time in two years.

Comment

There are a few reasons why the US economy grew so much in the third quarter of 2023 despite a record high Fed rate:

In addition to these factors, the US economy may have also benefited from a strong labor market and a rebound in exports.

On Friday, the Nasdaq showed a bearish doji, as corporate earnings reports were mixed and core PCE rose 0.3%, the most since May. Shares of Amazon and Intel jumped after the companies reported strong earnings. Meanwhile, BTC and ETH continued to linger in their previous ranges below 35K and 1.8K, respectively.

Details

Core PCE prices, the Fed's preferred measure of inflation, increased by 0.3% in September, the most in four months. The annual rate eased to 3.7%, the lowest since May 2021, but remained above the Fed's 2% target.

Comment

What is going on in the World in 2020th?

On Week 44, investors will be watching the Fed's interest rate decision, the labor market report, and earnings reports from major companies. Additionally, GDP growth rates and manufacturing PMIs will be monitored for insights into global economic trends.

SVET Markets Weekly Update (October 16 - 20, 2023)

On Week 42 Nasdaq breached its 13K support for the first time in six months on the Middle East conflict and Powell's comments reiterating his "higher for longer" narrative. Meanwhile, BTC unexpectedly rallied, closing the week above 30K and reinforcing the narrative of Bitcoin being a safe haven for savvy investors worldwide in times of geopolitical turmoil.

On Monday, NY Manufacturing Index fell but Nasdaq gained on expectations of a dovish shift in Fed monetary policy linked to growing concerns about the war in the Middle East. Microsoft, Meta, Alphabet, and Tesla shares advanced. On a broader range of stocks, consumer discretionary, utilities, and energy sectors performed best. BTC and ETH rallied following tech stocks. Other news: ~$5 billion or 194,188 BTC reported in government's holdings.

Details

The NY Empire State Manufacturing Index fell slightly in October 2023, but was better than expected. New orders and shipments were little changed, while unfilled orders declined and delivery times shortened. Labor market indicators pointed to a slight increase in both employment and the average workweek. The pace of input price increases was similar to last month, while selling price increases moderated. Firms remained relatively optimistic about the six-month outlook.

Crypto

The US government is one of the largest Bitcoin holders in the world, with a reported $5 billion (194,188 BTC) in holdings. However, this figure only accounts for three documented seizures, suggesting that the government's true Bitcoin holdings could be much larger. This is significant because it shows that the US government is taking Bitcoin seriously and that its holdings could have implications for the future of Bitcoin.

Comment

In recent years, our society has witnessed a concerning trend in which our elders have chosen to prioritize their personal financial interests over fairness, decency, and humanitarian values. This decision has led to an alarming increase in societal chaos and pressure. According to a recent survey, over 80% of younger generations believe that their elders have failed to uphold basic principles of fairness and equality. This sentiment has been reflected in protests and demonstrations demanding accountability and change. However, the elders have resisted these attempts at reform, violently opposing any efforts to replace them and their outdated governance mechanisms. This resistance has perpetuated the current chaos and further alienated younger generations from the political process. It is crucial that our elders recognize the severity of the situation and take steps towards meaningful reform, or risk the long-term stability and prosperity of our society.

On Tuesday, Nasdaq ended flat, as investors adjusted to rising Treasury yields and concerns about higher interest rates. US retail sales data outperformed expectations, reinforcing the belief that the economy is strong and will continue to drive the Fed's interest rate hikes. Nvidia fell after the Commerce Department announced plans to restrict the sale of AI chips to China. BTC and ETH remained almost unmoved after correcting following Monday's run.

Details

Retail sales rose 0.7% in September, beating expectations, despite high prices and borrowing costs. Sales were strongest at miscellaneous store retailers, nonstore retailers, motor vehicles and parts dealers, and gasoline stations. Excluding autos, gas, building materials, and food services, retail sales rose a robust 0.6%.

On Wednesday, the number of building permits decreased, and the Nasdaq fell in line with the other two major stock indexes. The Middle East conflict and earnings season weighed on investor sentiment. Nvidia was among the top underperformers. BTC and ETH were lingering below 28.4K and 1.53K, respectively.

Details

In September, the number of building permits in the US decreased by 4.4% compared to August, reaching a seasonally adjusted annual rate of 1.473 million. The decrease was primarily due to a rise in mortgage rates, which impacted housing demand. However, the ongoing shortage of available homes in the market provided some support. The decrease was seen across various US regions, with the South, West, Midwest, and Northeast experiencing the largest decreases.

On Thursday, jobless claims decreased and Nasdaq as well as the rest of Wall Street stocks fell as investors weighed Fed Chair Powell's comments on that the resilience of the economy suggests that neutral interest rates may have shifted higher. Netflix surged on strong subscriber growth, while Tesla and Blackstone dropped sharply on weak earnings and concerns about high rates. Meanwhile, BTC and ETH continued their sideway drift on low volumes. Other news: California's governor has signed the Digital Financial Assets Law, which is mostly analogous to the infamous New York's "BitLicense".

Details

Jobless claims fell to their lowest level since January 2023, pointing to a strong labor market that is resilient to the Fed's interest rate hikes. Continuing claims, which measure the number of people receiving unemployment benefits, rose slightly, suggesting unemployed individuals are taking longer to find work.

The Philadelphia Fed Manufacturing Index increased to -9 in October 2023, suggesting slow growth in the manufacturing sector. New orders, shipments, employment, prices paid, and prices received were all positive, but most future indicators declined.

Crypto

California's governor has signed the Assembly Bill (AB) 2269 or Digital Financial Assets Law, establishing a cumbersome regulatory framework, mostly analogous to the infamous New York's "BitLicense", for the state's crypto industry. The bill, which will come into effect in 2025, has drawn negative reactions from local industry players.

The following activities require a license under the California Digital Financial Assets Law:

Comment: How Do Wars Influence Crypto Markets?

Several studies have undertaken investigations in this domain, attempting to discern patterns and trends. Most of them posit that the the recent war in Europe may be an explanatory factor behind the recent downward trajectory in cryptocurrency prices. However, it is essential to approach these findings with caution and a degree of skepticism.

As an illustration, examinations of the SP index reveal that although there was initial uncertainty during the first month of the conflict, the market typically began to exhibit positive trends after three months. In 75% of instances, the SP 500 showed positive performance twelve months following the military event. Crypto markets have been highly correlated with stocks during past two years (f.e. the correlation between Bitcoin and the S&P 500 was 0.8 on August 25, 2023), so they might exhibit the mentioned SP's dynamic in a future.

Overall, the higher volatility is the most plausible scenario as traders will be faced by growing geopolitical risks and an economic ambiguity on both crypto and stock markets.

Beyond the realm of trading volume and price dynamics, the war has showcased the multifaceted role that cryptocurrencies play in contemporary geopolitics.

On one hand, cryptocurrencies have been employed for malicious activities, including ransomware attacks and sanctions evasion, underscoring the challenges posed by their pseudo-anonymous nature.

Conversely, cryptocurrencies have also been harnessed for positive purposes amidst the conflict. They have facilitated donations and aid contributions to those affected by the war, highlighting their potential as a means of circumventing traditional financial intermediaries and enabling direct peer-to-peer transactions. Additionally, cryptocurrencies have served as a reliable store of value for individuals and businesses in war-affected regions, offering a degree of financial stability and autonomy amid economic uncertainties.

Moreover, cryptocurrencies have contributed to reducing cross-border transaction costs and fostering financial independence, particularly in emerging markets.

To sum up: Cryptocurrencies have emerged as both a tool and a battleground in the conflict, serving diverse purposes and offering a mixed bag of benefits and challenges for citizens in the warring nations.

On Tuesday, small businesses are reported to be less optimistic, but the Nasdaq and a broader range of stocks gained as Treasury yields fell after dovish comments from Fed officials. Tesla, Bank of America, and Amazon were among the top gainers. Bitcoin went sideways, while Ethereum continued its slump caused by its foundation's sell-offs. Other news: Some "crypto-analytic" firms point to cryptocurrencies as the important source of the Middle East war's financing.

Details

The NFIB Small Business Optimism Index fell for a second month in September to its lowest level in four months, as inflation and labor quality remain top concerns. Owners are pessimistic about future business conditions, and sales growth has slowed.

FYI:

The NFIB Small Business Optimism Index is a composite of 10 survey components that measure the expectations and outlook of small business owners regarding the economy, sales, employment, and other business-related factors. The index is calculated on a scale of 0 to 100, with higher readings indicating greater optimism.

A reading above 100 indicates that a majority of small business owners are optimistic about the future. This is typically seen as a positive sign for the overall economy, as small businesses are a major driver of job growth and economic activity in the United States.

A reading below 100 indicates that a majority of small business owners are pessimistic about the future. This can be a sign that the economy is slowing down or even contracting.

The historical average of the NFIB Small Business Optimism Index is 98. Any reading above 98 is considered to be above average, and any reading below 98 is considered to be below average.

Comments

NFIB Chief Economist Bill Dunkelberg said, "Sales growth among small businesses has slowed, and the bottom line is being squeezed, leaving owners few options beyond raising selling prices for financial relief."

What all world's governments, inundated by 70+ "rulers", stopped to understand is that they are riding people, not numbers. When you squeeze people's families, they will react. First by raising prices—a.k.a. increasing inflation— in their shops and then by something else. We have already seen how fast it might initially lead to throwing stones into someone's shop windows or invading unguarded property and, then, to much much worser acts of barbarism.

That Baby Boomers, still, would not see that as the direct consequence of their inability to fundamentally change the governance system in order to adapt to new realities, most of which have been always driven by implementing new technologies from within the society, and continue to blame all social calamities on "extremists-terrorists" is understood.

Old ruling bureaucrats, incapable of embracing the changes, always blamed the stupidity of their outdated "policies" on someone else—on "nationalists" in America 1861, on "anarchists" in Europe 1914 and then in 1939, on "communists" in Korea 1950, on "religious extremists" in Yugoslavia 1991, on "terrorists with nuclear weapons" in Iraq 2003—et cetera, et cetera. The list goes on and on.

In our day, only complete decentralization and the transfer of major governance mechanisms to the "bottom" of our society to millions of interconnected individuals, forming fluid, rapidly changing independent societies, helped by algorithms, might save our civilization from the chaos to which Baby Boomers are leading us now with their famously rigid brainlessness.

Crypto

Comment

We have come full circle in 10 years, from ETH emerging in 2013 to the current situation when, after the widely acclaimed conversion from PoW to PoS, ETH has started to gradually lose its practically unchallenged stance with investors.

Of course, most of this is due to the current unprecedented combination of deepening economic crises accompanied by a reduction in liquidity—vital for crypto survival—and political and regulatory pressure on the crypto community imposed by three-letter agencies and politicians all around the world.

However, the more decentralized a network is, the better its chances of survival. It looks like ETH taking that leap of faith and going to PoS didn't improve those chances.

On Wednesday, BLS data showed slowing PPI, and the Nasdaq was up slightly. However, investors stayed cautious ahead of Thursday's CPI report. BTC and ETH continue their demise on technicals suggesting weak support at 27K and 1.6K, respectively. Other news: UK Parliament attacks NFTs.

Details

Producer prices (PPI) rose 0.5% in September, the lowest increase in three months. This was higher than economists' expectations but lower than the previous month. The increase was driven by higher goods prices, led by a surge in gasoline costs. Prices for some services also increased, but prices for airline passenger services and other services fell. At the same time, FOMC meeting minutes showed that the Fed intends to keep interest rates at restrictive levels for a prolonged period. Of course, it happened before the Middle East war erupted.

Comment: FYI

What are the advantages of PPI over CPI as an economic trends leading indicator?

The Producer Price Index (PPI) has several advantages over the Consumer Price Index (CPI) as an economic trends leading indicator.

Overall, the PPI is a more timely, sensitive, and reliable leading indicator of economic trends than the CPI, and its current slowing down might be a positive sign for traders, as it strengthens the position of "doves" in the FOMC. Still, Powell pays more attention to the CPI, so it is more watched by analysts.

Crypto

The UK Parliament's Culture, Media and Sport Committee published a report highlighting the challenges and risks of NFTs. The report found that NFTs have revolutionized the art and sports sectors, but they also pose significant copyright infringement, misleading advertising, and fraudulent sales concerns. The committee urged the government to work with NFT marketplaces to protect artists' copyright and to ensure transparent advertising practices. Fan tokens also pose potential financial risks for fans, despite being presented as a fan engagement tool.

Comment

The hypocrisy of Boomers is astonishing. They defend the current centralized, financial system, saying that the Fed stands for the "interests of the Society" by "mediating" the inconveniences of the "free market, which does not exist any way."

The Fed does this by decreasing rates when it's recession and increasing them when there's inflation. Boomers only do not answer the question of who and when might flawlessly defines what "recession" is and for whom this recession is really going on—and for whom it is not.

That is what is happening now. Boomers accumulated 7 Trillion worth of assets during their unusually long lives, and for them, investing in Treasuries for 5% is a dream they don't want to end. For the rest of us we have to work hard and to invest even harder to just make the ends meet.

At the same time, all Fed's officials and top decision makers bureaucrats are Boomers—so, please, don't tell me that it's a "coincidence" that they insist on keeping rates higher even now, when already two wars are raging, inflation is getting to its lowest at 3%, and several sectors of the economy (real estate, tech, and finance) are going to hell.

Of course, all "definitions" are a question of "taste," and that's the point. Either we are following the capitalist system, where market forces and competition on all fronts decide what to produce, what not to produce, and what rates to maintain, or we delegate that to 2-3 old dudes, which is what we're doing now.

In that case, please, stop calling this system "free and democratic." It is the Stalinism in its purest form, expressed by other means, when the financial fate of billions of people is decided based on the personal interests of a narrow group of privileged individuals in their "golden ages" with delusional views on almost everything.

On Thursday, CPI rose and Nasdaq fell due to rising Treasury yields and higher-than-expected inflation. Investors were spooked by the prospect of another interest rate hike later in the year, again. BTC and ETH continued to edge down on bearish technicals. Other news: DappRadar reported a USD 600 million inflow of investments to on-chain gaming.

US core consumer prices rose by 0.3% in September 2023, in line with expectations and matching the increase in August. This is a sign that inflation is still high, but may be starting to plateau. Prices for services unrelated to energy, like housing and medical care, rose at a faster pace, while prices for new vehicles remained steady and prices for used cars and trucks fell. Overall, core consumer prices rose by 4.1% compared to the previous year.

At the same time, unemployment claims remained unchanged at 209,000 for the week ending October 7th, below expectations and near the seven-month low. This data suggests that the labor market remains very tight, even as the Federal Reserve raises interest rates. This could give the Fed more leeway to keep rates higher for longer in an effort to combat inflation.

Comment

Data from the past 3-4 months suggest that the Fed's aggressive tightening policy may lead to stagflation. Inflation is likely to persist because corporations will continue to raise prices as demand shrinks and energy prices will go only higher.

At the same time, the labor market remains tight due to a combination of cumbersome labor laws, political pressure, and employers' reluctance to part with trained employees. Plus the real unemployment is underestimated because of the outdated, low-tech government's data processing system.

Additionally, capital is flowing into the country and into Treasuries and bonds as investors seek refuge from geopolitical risks. This, combined with rising energy prices, is also keeping inflation high. This is also driving up real estate prices to unsustainable levels. At the same time, innovative technology sectors that require extensive venture financing are slowly but surely being wiped out.

It reminds me the Japanese economic stagnation, also known as the "Lost Decades", but with inflation replacing deflation. Key factors of the Japanese economic situation include: the bursting of the Japanese asset price bubble in the early 1990s, a lack of structural reforms to the Japanese economy and an aging population.

The asset price bubble was caused by a combination of factors, including easy credit from banks, government stimulus spending, and speculation. When the bubble burst, it led to a sharp decline in asset prices, such as stocks and real estate. This caused banks to become reluctant to lend money, and businesses to invest less. This led to a recession and a prolonged period of deflation.

The Japanese government implemented a number of policies to try to stimulate the economy, but these policies were largely unsuccessful. The government also failed to implement structural reforms to the Japanese economy, such as deregulating the labor market and reforming the financial system. This made it difficult for Japanese businesses to compete in the global economy.

Finally, Japan's aging population has also contributed to its economic stagnation. As the population ages, there are fewer workers to support the economy. This is also leading to a decline in consumer spending.

The Japanese economic stagnation is a cautionary tale for other countries. It shows that even a highly developed economy can experience a prolonged period of economic stagnation if the right policies are not implemented. Right policies in our situation is abolishing of politician's control over the economy and complete decentralization of all governance systems.

Crypto

Even though the crypto and gaming markets are facing challenges, investors are still putting a lot of money into blockchain gaming startups. According to a report by DappRadar, blockchain games received about $600 million in venture capital investment in the third quarter of 2023.

On Friday, Michigan Consumer Sentiment index is down, but the daily decline of Nasdaq and other stocks might be attributed more to technical factors aligned with rising geopolitical concerns prompted by the escalation in the Middle East conflict. Meanwhile, BTC and ETH are trading sideway below their key support levels (27K and 1.6K) amid rising worries that they might get lower before getting higher. Other news: Bloomberg reports Coinbase trading volumes dropping more than a half in Q3 2023.

Details

The consumer sentiment fell to a five-month low in October, according to the University of Michigan. Consumers are more worried about inflation and the economy than they have been in months. However, they believe the current downturn will be temporary.

Crypto

On Week 42 Investors will be focused on the start of the earnings season in the US, as well as speeches from Fed officials and data on retail sales, building permits, housing starts, existing home sales, and industrial production. Internationally, inflation rates and China's Q3 GDP growth rate will be closely monitored. The UK, Germany, South Korea, and Indonesia will also release key economic data and interest rate decisions.

SVET Markets Weekly Update (October 2 - 6, 2023)

Week 40 proved to be volatile, exactly as predicted. Traders' focus was on unemployment data coming from both government and private sources, which contradicted each other and created a perfect storm for Wall Street players, who capitalized on this on Friday when major tech stocks suddenly shot up, taking bears by surprise. On the crypto front, BTC and ETH attempted to mimic tech stocks but with a much lower amplitude and on very low volumes, signifying a drop in interest in crypto among investors. In other news, House leadership may be taken over by pro-crypto politicians, and EU bureaucrats have been joined by their Taiwanese counterparts in bringing about more cumbersome and unnecessary regulations to crypto.

On MondayTraders cheered the better-than-expected ISM Manufacturing PMI, and the Nasdaq rose slightly on the first day of Q4. However, investors are concerned that high interest rates could persist, putting pressure on stocks in the coming months. Both BTC and ETH saw increases, with BTC surpassing $28.8K, and ETH reaching $1.76K. In other news, the CFTC Chair called for a substantial regulatory framework for cryptocurrencies, including DeFi.

Details

The PMI contracted in September, but at the slowest pace in ten months (rose to 49 from 47.6 in the previous month). New orders fell at a slower pace, production rebounded, employment rebounded, and prices declined at a slower pace. These signs of improvement raise hopes that the US manufacturing sector is turning a corner.

Comment

The Purchasing Managers' Index (PMI) is a leading indicator of economic activity, and a PMI reading below 50 indicates that the manufacturing sector is contracting. The recent rebound in PMI may be temporary, as higher energy prices and the Fed's continued interest rate hikes are likely to weigh on manufacturing activity in the coming months.

Crypto

CFTC Chair Rostin Behnam urged for a substantial regulatory framework for the booming cryptocurrency market, saying it's urgent to update policy frameworks to better regulate the digital asset industry. His comments contrast with those of SEC's Gary Gensler, who has said that current securities laws are enough to regulate the industry.

Comment

We have a "Dumb and Dumber" situation with crypto regulations. On one side, we have "Dirty Garry" arguing that 100-year-old legislation is perfectly fine to regulate 21st-century technology. On the other side, we have a former commodity trader with a Juris Doctor degree from Syracuse University who wants to impose heavy regulation on everything he can reach to satisfy his political ambitions, including DeFi. Is this what we as people deserve because we still refuse to erase the whole centralized governance system to the ground?

On Tuesday, a better-than-expected JOLTS report led to the Nasdaq tanking in a broad sell-off, as investors worried about rising interest rates. The consumer discretionary, financials, real estate, and technology sectors led the decline. Megacap growth stocks were also under pressure, with Microsoft, Amazon, and Tesla losing ground. Airbnb fell 6.5% after a downgrade, while HP gained 1.7% after a double upgrade. BTC (~27.3K) and ETH (~1.64K) closed the day in red. Other news: Crypto supporter McHenry (age: 49) replaced McCarthy (58) in the House of Representatives.

Details

Job openings rose by 690,000 in August 2023, reaching 9.61 million, beating market expectations and showing a strong labor market despite rising interest rates. Openings increased in all sectors and regions, with the biggest gains in professional and business services, finance and insurance, and state and local government education.

Comment

Although, officially, job market looks strong many critics of the government's jobs statistics point out several key areas of concern:

FYI: Here's a breakdown of the naming convention for unemployment measures:

1. U-1: This is the narrowest measure of unemployment, representing the percentage of the labor force unemployed for 15 weeks or longer.
2. U-2: This measures job losers and those who have completed temporary jobs.
3. U-3: This is the official unemployment rate, which represents the percentage of people who are actively seeking employment and are currently without a job.
4. U-4: This includes U-3 and adds discouraged workers, those who have given up looking for work because they believe no jobs are available.
5. U-5: This includes U-4 and adds other "marginally attached" workers who would like to work and have looked for work in the past 12 months but are not currently looking.
6. U-6: This is the broadest measure and includes U-5 plus those who are working part-time for economic reasons, often referred to as "involuntary part-time workers." These are individuals who would prefer full-time employment but are working part-time due to economic conditions or because they can't find full-time work.

While the ADP Employment Indicator does not cover the entire economy (f.e. does not account for the public sector employment) it is much more reliable and comprehensive than a centralized government reporting. It is an excellent example of how entrepreneurs can self-organize and to provide the good quality free-of-charge data without intervention of useless government bureaucrats.

Crypto

The Bank of International Settlements (BIS) is working with central banks in Europe to develop a system to track cryptocurrencies and decentralized finance (DeFi). The system, called Project Atlas, will combine data from both inside and outside of blockchains to create new statistics and vet existing data. The goal of Project Atlas is to better understand the macroeconomic impact of crypto and DeFi.

Comment

Although government 'tracking' always leads to two things—excessive taxation and harmful, useless policing—the fact that EU bureaucrats want to sneak into DeFi means they recognize that DeFi is here to stay. That is positive news.

On Thursday, Nasdaq fell slightly today in reaction to resilient labor market data, which points to more rate hikes. In the broader market, consumer staples, materials, and industrials led the downside. BTC and ETH tumbled on technicals, confirming the bearish trend. Other news: Hong Kong-based CMCC Global raised $100 million in a crypto fund; the Basel Committee requires banks to disclose their crypto asset holdings.

Details

According to a report by Challenger job cuts slowed in September (47K, below 75K in August) but remain elevated, with technology leading the way. Despite the layoffs, employers also announced plans to add jobs. Also, new unemployment claims rose slightly last week, but remained near a seven-month low. Continuing claims unexpectedly fell, suggesting that the labor market remains strong.

Comment

The Challenger, Gray & Christmas job cuts report is a monthly report that tracks the number of job cuts announced by US employers. The report is compiled from press releases and other publicly available information. The Challenger report is one of the most widely followed measures of job cuts in the US, and it is often cited by economists and the media.

The Challenger report has a long history, dating back to 1984. The report is generally considered to be reliable, but it is important to note that it is only a measure of announced job cuts. It does not include job cuts that are not announced publicly, such as layoffs at small businesses or government agencies.

The Challenger report has been used to predict recessions in the past, but it is not a perfect predictor. For example, the Challenger report showed a sharp increase in job cuts in the months leading up to the 2008 recession, but it did not predict the timing of the recession accurately.

The Challenger report is often compared to the Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS) report. The JOLTS report is a monthly report that tracks the number of job openings, hires, and separations in the US. The JOLTS report is considered to be more comprehensive than the Challenger report, but it is also less timely. The JOLTS report is released about 30 days after the end of the month that it covers, while the Challenger report is released about 10 days after the end of the month that it covers.

The JOLTS report is also generally considered to be more reliable than the Challenger report. The JOLTS report is based on a survey of employers, while the Challenger report is based on press releases and other publicly available information.

However, both the Challenger report and the JOLTS report have their limitations. The Challenger report only measures announced job cuts, and the JOLTS report does not include job cuts that are not announced publicly. Additionally, both reports can be revised after they are initially released.

Crypto

Comment

It is a shame that the political games of one person, SEC Gary Gensler, are driving the crypto industry out of the country. This is giving our geopolitical rivals a huge advantage.

Gensler has repeatedly made it clear that he is hostile to the crypto industry. He has proposed new regulations that would stifle innovation and make it difficult for crypto companies to operate. As a result, many crypto companies are moving to other countries, where they are more welcome.

The crypto industry is one of the most innovative and rapidly growing industries in the world. It is creating jobs and attracting investment. By driving the crypto industry out of the country, Gensler is hurting the economy and giving our geopolitical rivals an advantage.

We urge Gensler to reconsider his approach to the crypto industry. He should work with the industry to develop regulations that promote innovation and protect consumers, rather than stifle growth.

On Friday, the Nasdaq rebounded sharply on Wall Street, trying to harvest bears' stop-losses, with megacap stocks leading the way after a mixed jobs report. Microsoft, Nvidia, and Apple were among the top gainers, while Tesla lost ground after cutting prices. Meanwhile, BTC and ETH gains were much less pronounced, with most traders simply mimicking tech stock moves. Other news: Binance's spot and derivatives market share has been declining drastically; Taiwan's bureaucrats have introduced new crypto regulations.

Details

The unemployment rate remained unchanged at 3.8% in September, suggesting a tight labor market. This gives the Fed leeway to keep interest rates high. The number of unemployed people and the labor force participation rate were also unchanged. At the same time, U-6 unemployment rate fell to 7% in September, from 7.1% in August. This includes people who want to work but have given up searching, or are working part-time because they can't find full-time work.

Comment

In a nutshell, what is the relationship between the unemployment rate and the recession?

The relationship between unemployment rate spikes and recessions can be complex and varies from one economic cycle to another.

Historically, spikes in the unemployment rate have often been considered a leading indicator of an impending recession. When businesses start laying off workers due to economic challenges, it can signal a broader downturn in economic activity. For example, the recession of 2007-2009 saw a significant rise in unemployment as the housing market collapsed and financial institutions faced severe turmoil.

However, unemployment rate spikes can also be a lagging indicator. In some cases, the economy may have already entered a recession, and unemployment rates continue to rise as a consequence. There have been instances where unemployment remained low during recessions or depressions due to various factors, such as government intervention, unique industry dynamics, or a strong labor market in specific regions. For example, during World War II, the United States experienced a period of low unemployment despite the global economic turmoil.

Overall, the relationship between unemployment and recessions is not straightforward, which keeps traders confused nowadays.

Crypto

Comment

It is a well-known fact that the most developed countries have an aging bureaucracy, with many officials and politicians who have been in their positions for decades. It means that these individuals are highly resistant to change and new technologies. This is particularly evident in the current debate over the role of blockchain /crypto in finance, where most aging bureaucrats are fighting against its adoption.

On the other hand, younger bureaucrats are more open to the use of new technologies and are more likely to understand their potential benefits. In fact, many younger bureaucrats are embracing technologies such as artificial intelligence and blockchain, which can help to streamline processes, improve efficiency, and increase transparency.

According to data from the U.S. Census Bureau, the median age of members of the 116th Congress (2019-2021) was 59.3 years old. The median age of members of the 117th Congress (2021-present) is 60.5 years old.

In Taiwan, the median age of politicians in the Legislative Yuan, the country's unicameral legislature, is typically in the early to mid-50s. According to data from the Legislative Yuan's website, the median age of members of the 10th Legislative Yuan (2020-2024) was 54.3 years old.

On Week 41, markets might be calmer before Thursday's inflation data release. Also, other economic data like FOMC meeting minutes, Fed speeches, wholesale prices, and consumer confidence will draw attention. Major companies will also start reporting quarterly earnings. Internationally, inflation rates in China, Mexico, India, Brazil and Russia will be watched. China will disclose trade, inflation and lending numbers. The UK will reveal monthly GDP. Australia will provide consumer and business confidence data. Germany will share industrial production details.

SVET Markets Weekly Update (September 25 - 29, 2023)

On Week 39, with the core PCI index showing signs of slowing down, but GDP still on the path of expansion, the Fed received two contrasting signals. On one hand, Chicago Fed Governor expressed the opinion that, with rapidly slowing inflation, the Fed might have already overshot with its interest rate policies. On the other hand, Powell continues to emphasize the necessity of additional rate hikes, postponing any rate cuts for at least a year.

As a result of this divergence in viewpoints, investors, including those in the cryptocurrency market, who had been eager to capitalize on even the slightest opportunity to drive stock prices higher in the past six months, have now become more cautious. Bearish sentiments have taken hold, leading to a decline in stock prices, particularly on the Nasdaq, which fell below key support levels.

On one hand, with macroeconomic and technical indicators pointing towards a bearish outlook in both the stock and cryptocurrency markets, and on the other hand, with an increasing amount of liquidity and a growing number of contrarian traders, including high-net-worth individuals and large institutions, it seems that we are currently poised to enter a highly volatile quarter.

On Monday, Texas' manufacturing activity is down, but the Nasdaq index rose, boosted by Amazon investing USD 4 billion in AI and Netflix settling a labor dispute with screenwriters. BTC and ETH are experiencing mixed performances, with BTC holding above 26.2K and ETH hovering below 1.6K. Other news: Crypto regulation bills could be delayed.

Details

Manufacturing activity in Texas deteriorated in September 2023, according to the Federal Reserve Bank of Dallas. The business activity index fell to -18.1, despite a rebound in the production index to 7.9, its highest reading of the year. New orders also improved, but remained negative at -5.2. Employment growth and workweeks were stronger in September, but uncertainty about the future outlook increased.

Comment

The labor market is still strong, but the economy is deteriorating. The strong labor market is a positive sign, as it suggests that businesses are still hiring and that the economy is not in a recession. However, the rising uncertainty about the future outlook is a concern. Businesses may be hesitant to invest or expand if they are unsure about what the future holds. This could lead to slower economic growth and job losses in the future.

It is important to note that the labor market is a lagging indicator of economic health. This means that it can take some time for the labor market to show signs of a recession, even after the economy has already started to slow down. Therefore, it is important to pay attention to other economic indicators, such as GDP growth, inflation, and consumer spending.

Crypto

Crypto regulation bills could be delayed if US lawmakers don't agree on a government spending bill by September 30.

Comment

It is paradoxical that small and medium-sized businesses would benefit if democratically governments were to stop operating. This is because governments have become too bureaucratic and over-regulated, and their actions often disrupt businesses more than they help them. Only contemporary, illiterate, mostly non-elected, clueless governments can shut down literally all businesses around the world or start wars that are not in the best interests of their citizens. Complete decentralization is the only viable solution left to deal with that.

On Tuesday, the Nasdaq fell almost 2%, breaching the important technical support at 13K, with tech giants such as Tesla, Apple, Amazon, Microsoft, and Alphabet all seeing notable declines. The sell-off came after data showed that consumer confidence and new home sales have fallen in recent months, with prices still rising. Meanwhile, BTC continued to hold above 26K. Other news: The SEC has delayed its decision to approve spot ETH ETFs.

Details

Home prices ticked up 0.1% in July 2023, the first gain in five months, despite forecasts of a 0.3% drop. Chicago, Cleveland, and New York saw the biggest gains, while Las Vegas, Phoenix, and San Francisco saw the biggest declines. At the same time home sales decreased to -8.70 percent. Also consumer confidence dropped to 103.

Comment

Rising home prices with decreasing sales and consumer confidence are signs of an upcoming recession. Economists have observed this pattern historically, as consumers with declining confidence are less likely to make major purchases, such as homes. Additionally, rising home prices can make it more difficult for first-time homebuyers to afford a home, which can further dampen demand.

Fed is also concerned about rising home prices, as they can contribute to inflation. As a result, the Fed is likely to continue hiking interest rates in an effort to cool the housing market and bring inflation under control. However, higher interest rates can also make it more expensive to borrow money, which could further dampen demand for homes.

Overall, the combination of rising home prices, decreasing sales, and consumer confidence are signs of an upcoming recession. The Fed's actions to combat inflation are likely to further exacerbate this trend.

Crypto

SEC has delayed its decision on whether to approve spot Ethereum exchange-traded funds (ETFs) from VanEck and ARK 21Shares. The SEC said it has received no public comments on either proposal and has extended the deadline for a decision to December 25 and December 26, respectively.

Comment

The SEC's handling of the spot crypto ETF proposals reminds me of a science fiction movie with alien body snatchers invading the highest levels of power and forcing them to make disastrous decisions at the last critical moment, even when everything seems to be aligned for a solution that would benefit all of humanity.

How can anyone believe the outrageous claim that the SEC received no public comments on these proposals, despite the unprecedented level of public attention to the issue and the involvement of so many major crypto companies?

How many insectoids from Alpha Centauri do we have in the SEC?

On Wednesday, Manufacturing orders rose above expectations and the Nasdaq closed slightly in the green, with Palantir increasing 6.4% on the news that it got $250M for AI services with the Army. BTC attempted to breach a resistance at 27K but then retreated back to 26.3K. Other news: McHenry threatened to subpoena Gensler; Binance is leaving Russia.

Details

Manufacturing orders unexpectedly rebounded in August, led by machinery, fabricated metal products, computers and electronics, and electrical equipment. Orders for machinery led the increase, followed by fabricated metal products, computers and electronics, and electrical equipment. On the other hand, orders declined for transportation equipment, primary metals, and capital goods. However, orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, went up 0.9%, recovering from a 0.4% fall in July.

Comment

We have already seen in the previous data that manufacturers continue to insist on an upcoming economic recovery and count on the recession being avoided. On the one hand, this underlines an unusual resilience of the economy (compared to previous recessions), boosted by growing government expenditures, including those on the war. On the other hand, we see that negative economic signals continue to accumulate. Overall, this could signify a more prolonged period during which the Fed might hold its high rates.

Crypto

Comment

One branch of the government, the executive branch, is completely disdainful of the regulatory branch. This is a sign of a non-functioning governance system. The only answer is massive deregulation and complete decentralization. The number of bureaucrats overseeing markets must be cut by at least 90% to keep the economy competitive in the dawn of technological breakthroughs, including blockchain and AI, that have occurred in the past decade. These advances allow us to get rid of bureaucrats who are only serving their own interests.

On Thursday, GDP and core price index increases aligned with expectations, creating a neutral backdrop on which megacap stocks such as Meta, Tesla, Alphabet, and Nvidia rallied on technicals, leading to the Nasdaq's up-tick. BTC also started to gain some positive momentum, reaching above 27K, while ETH was boosted by rumors about a potential ETH futures ETF passing SEC scrutiny.

Details

The economy grew at an annualized rate of 2.1% in Q2 (2.2% growth in Q1), driven, mostly, by business investment (+7.4%). Consumer spending, which is the largest component of the economy, grew less than expected (0.8% vs 1.7%), but still remained positive. Government spendings increased 3.3%. The Bureau of Economic Analysis revised down economic growth (to 1.9%) for the full year 2022, due to weaker consumer spending and exports. The Fed expects the economy to grow 2.1% in 2023. At the same time, the core PCE price index rose by 3.7% in Q2 as expected, the lowest rate since Q1 2021.

Comment

The latest data on real GDP growth (GDP deflator increased 1.7% in Q2 2023) showed that businesses are confident in the future economic outlook. Companies continue to invest in new structures, equipment, and technology, which can lead to increased productivity and job creation. However, the trend in GDP growth is negative (2.2% in Q1 2023, 2.7% in Q3 2022, and 2.6% in Q4 2022), and we can expect this trend to continue in Q3 2023.

Crypto

Comment

Although the approval of an Ethereum futures ETF is an important development for ETH, it has little to do with investment into ETH. Spot ETFs, which would track the price of ETH directly, have been consistently rejected by the Securities and Exchange Commission (SEC), which is governed by Gary Gensler. Gensler has been criticized for his close ties to the traditional financial industry, and most of us believe that he is biased against cryptocurrencies.

Macroeconomics

German inflation fell to 4.5% in September, the lowest level since the start of the war. This is down from 6.1% in August and 7.6% in July. This was below market expectations and was driven by a slowdown in both services and goods inflation.

Comment

The easing of inflation in Germany is a positive sign that the global economy, particularly the EU, is adapting to the recent geopolitical shocks caused, first, by the "quarantine" and, then, by the war.

On Friday, Core PCI rose the least since May 2021, and Nasdaq went up at the opening but then backtracked and closed in the red, marking its most bearish month of the year. Nvidia and Tesla saw increases after their ratings were upgraded. BTC moved sideways, reflecting the mood of Wall Street traders. In other news, Eurozone inflation fell, and a new bill requiring the reporting of off-chain transactions was introduced.

Details

The personal consumption expenditure price index (PCI) - one of the key inflation's metrics - slowed to 3.9% in August 2023, the lowest since May 2021 and in line with expectations. Core PCI - the Fed's preferred gauge to measure inflation - which excludes food and energy, rose 0.1%, the least since May 2021, from the previous month and 3.5% from the previous year, both below forecasts.

Comment

Here's a poem about that: We dance with '90s inflation's song, Yet '70s rate, a rhythm strong. Mortgage rates, an '80s serenade, Consumer sentiment, '90s cascade. Technology, a gift from '21's bright star, Governance, an 18th-century memoir. In this curious mix, we now belong, Oh, what could possibly go wrong?"

Crypto

Comment

In this new technological age, any form of bureaucratic government regulation (excluding self-government systems based on communal consent) is likely to become obsolete, susceptible to corruption, and detrimental to entrepreneurs. Nevertheless, the concept of continually improving algorithms, the rules of the game, is unquestionably essential for the advancement of markets.

The notion of achieving transparency for off-chain transactions above a certain threshold is a commendable one, particularly in the context of corporate deals heavily influenced by Wall Street, where certain entities with seemingly unlimited resources accumulate undisclosed assets, thus exerting a disproportionate influence over these transactions. This becomes especially critical in the case of communal coins, such as ETH and BTC.

Macroeconomics

Eurozone inflation fell to 4.3% in September 2023, its lowest level since October 2021. This was below market expectations and was driven by slower price increases for services, non-energy industrial goods, and food, alcohol, and tobacco. Core inflation also cooled. Inflation rates fell in Germany, France, and the Netherlands, but rose in Italy and Spain.

Comment

We initially reported a significant drop in inflation in Germany, but now we see that this trend is supported by more comprehensive data encompassing the entire EU region. It's evident that with inflation decreasing at such a pace, central banks like the Fed are seemingly overreacting with their aggressive interest rate policies. The primary motivation for keeping rates high appears to be political in nature. Additionally, bureaucrats, who often exhibit a disdain for entrepreneurs, may prefer to maintain unreasonably high rates to retain leverage and control over the economy.

Week 40 will be a busy one and, most likely, volatile, for the global economy, with a number of important data releases scheduled. In the US, the jobs report and speeches by Fed officials will be in focus, followed by data on job openings, PMIs, foreign trade, and factory orders. Investors will also be closely monitoring inflation rates in several Asian countries and interest rate decisions in Australia, New Zealand, and India. Elsewhere, fresh PMI data will be released for a number of countries, as well as foreign trade data for several more. Finally, market participants will be keeping a close eye on unemployment rates for Canada and the Euro Area, the Tankan Large Manufacturers Index for Japan, and factory orders for Germany.

SVET Markets Weekly Update (September 18 - 22, 2023)

On week 38, the Fed kept its rate unchanged and its rhetoric hawkish, disappointing traders and leading to the Nasdaq's downfall while BTC barely held above 26K.

On Monday, The NAHB Index fell to its lowest level in five months, and the Nasdaq traded close to its opening as traders hesitated to make stakes before the Federal Reserve's next interest rate decision due on Wednesday (a pause is expected at 5.25% - 5.5%). Tesla declined, while Apple increased on strong demand for iPhone 15 Pro handsets. Bitcoin rose on optimism that the FOMC will pause. Other news: One-third of all cryptocurrency hacks are made in North Korea.

Details

Housing market sentiment declined in September to a five-month low, as builders and consumers became less confident due to high mortgage rates. The NAHB Index fell to 45, and the indexes for current single-family home sales and prospective buyers also decreased.

Comment

This is a clear sign that high mortgage rates are taking a toll on builder confidence and consumer demand. As a result, a growing number of buyers are electing to defer a home purchase until long-term rates move lower.

Getting rid of red tapes, and allowing market forces to work will allow builders to increase the housing supply. This is the best remedy to ease the nation's housing affordability crisis and curb shelter inflation.

When there is more supply of housing there will be more competition among sellers to attract buyers. Of course, there are other factors that contribute to the housing affordability crisis, such as rising incomes and low interest rates. However, increasing the supply of housing is one of the most important things that can be done to make housing more affordable for everyone.

Crypto

Comment

One-third of all crypto-related crimes are associated with repressive regimes that governments cannot influence, despite their best efforts. At the same time, the SEC accuses all of us of being criminals without a hint of proof. This is a beautiful system of governance!

On Tuesday, Housing starts dropped sharply while the Nasdaq went sideways as investors awaited the Fed's rate decision. Amazon fell but Apple gained after positive iPhone outlooks. Bitcoin stalled on rate uncertainty. Other news: Coinbase found that one in five adults in the United States is holding crypto.

Details

Building permits in the US increased by 6.9% in August 2023, the highest in 10 months. This beat market expectations and was driven by a surge in multi-family permits. Permits grew in all regions of the country.

At the same time, Housing starts in August fell 11.3% from July to a seasonally adjusted annual rate of 1.28 million units. This is the lowest level since August 2020. The decline was driven by a 26.3% drop in multifamily starts, while single-family starts fell 4.3%. Despite the monthly decline, single-family starts are still 2.4% higher than a year ago.

Comment

In August, building permits in the United States experienced an increase, while housing starts declined. Why?

The rise in building permits suggests that new construction remained supported by a dearth of homes on the market. However, the decline in housing starts could be attributed to a resurgence in mortgage rates, which weighed on the demand for housing.

So, developers and builders might think in different time frames. Developers may be optimistic about the long-term outlook for the housing market. The housing market has been cooling in recent months, but some developers may still be optimistic about the long-term outlook. They may believe that the current slowdown is temporary and that the housing market will rebound in the future.

Here are some other reasons why building permits increased in August while housing starts declined:

Crypto

Coinbase research:

Comment

52 million cryptocurrency holders in the US represent a growing community. In fact, if these holders were to form their own country, it would be the 28th most populous in the world, ahead of Spain and South Korea.

This is a significant number of people who are interested in and invested in cryptocurrency. It is also a diverse group, with crypto holders coming from all walks of life. This suggests that cryptocurrency is not just a passing fad, but a real and growing movement.

On the other hand, SEC represents a few aging individuals, including Gary Gensler a couple of other "policymakers" (mostly 70-80 years old). The fact that SEC is still winning against us is simply means that the whole system of state governance is inadequate to the new technological age.

OECD Economic Outlook from September:

FYI: The Organisation for Economic Co-operation and Development (OECD) is an international economic organisation with 38 member countries, founded in 1948 to stimulate economic progress and world trade.

Comment

Global economic growth is expected by OECD to slow as the Federal Reserve and other central banks raise interest rates to combat inflation. This tighter monetary policy is already having an impact, with business and consumer confidence declining and the rebound in China fading. The risks to the global economy remain skewed to the downside, with the biggest threats being uncertainty about how quickly and effectively monetary policy will bring down inflation, as well as a sharper-than-expected slowdown in China.

On Wednesday, Fed holds the rate but hinted at keeping it higher for longer. The Nasdaq reacted by correcting sharply as traders' mood changed again from anticipatory to moderately negative. Bitcoin hovered slightly above 27K as bulls lacked positive signals to continue pushing it further. Other news: The SEC updated the 1940s Name Rule, and the GOP keep pushing against CBDCs.

Details

Fed kept the rate unchanged at 5.25%-5.5% (at a 22-year high) as was anticipated by most analysts. Other takes from the FOMC meeting:

Comment

Overall, Fed members' sentiment is clearly shifting towards keeping interest rates higher for longer, despite declining inflation, provided that the economy continues to perform well.

Crypto

Comment

Dirty Garry, after his public humiliation following the XRP ruling, appears to be withdrawing from his front-row seat, where he has actively suppressed innovation in the country. His seat is now taken by his henchmen, who do not hesitate to directly threaten anyone involved in the crypto industry with persecution. Meanwhile, some lawmakers continue their attempt to stop or at least delay the CBDC 1984 madness from happening. Ergo, the system of government must be changed ASAP by drastically reducing the power of executioners and bureaucrats.

Macroeconomics

UK inflation slowed to 6.7% in August from 6.8% in July, beating expectations of 7.0%. This was the lowest rate since February 2022, driven by slower food inflation and lower accommodation costs. Core inflation, which excludes volatile items like energy and food, fell to 6.2%, the lowest since March.

Comment

The UK has one of the highest inflation rates in Europe due to high food and energy costs. The fact that UK inflation is slowing down is significant, as it indicates an overall improving situation with food and energy shortages in the EU. This is likely due to entrepreneurs adapting to the new geopolitical situation by finding new suppliers and developing new technologies. The slowing of inflation in the UK is a good sign for the European economy as a whole, as it suggests that the region is starting to recover from the shocks of the war and the "quarantine".

On Thursday, Unemployment claims declined, suggesting a strong labor market and further rate hikes. Treasuries responded with new highs, and the Nasdaq fell sharply to its lowest level in five weeks, led by rate-sensitive tech shares. Amazon, Broadcom, and Cisco shares decreased on corporate news. BTC plunged below 26.4K as bears used macroeconomic negativity to strengthen their positions. Other news: The WSJ reported that crypto firms are leaving the country en masse.

Details

Unemployment claims fell to 201,000 last week, the lowest level since late January and well below expectations. At the same time, the Philadelphia Fed Manufacturing Index fell to -13.5 in September, down from 12 in August. This is worse than expected and suggests a contraction in manufacturing activity. However, firms are still raising prices and future indexes improved, suggesting some optimism for growth over the next six months. Markets reacted by Treasury rising sharply, with the 10-year yield nearly touching 4.5%, its highest level since 2007 and the 2-year note approaching its highest level (5.2%) since November 2000.

Comment

Employment situation is a lagging indicator and it usually starts to notably worsen when recession is already on the way. In contrast, despite occasional spikes, manufacturing activity in one of the country's largest and most economically active regions continues to deteriorate, which is a clear sign of an upcoming economic downturn. However, most recent unemployment data suggests that the Fed may still have some political ammunition left to argue that its policies are not harming the economy, and it is likely that the FOMC will continue to raise rates further. Traders reacted accordingly and loaded up with Treasuries selling tech sector.

Crypto

Wall Street Journal reported that crypto firms are leaving the US due to SEC crackdowns. Companies are being forced to develop growth plans overseas, and MakerDAO has blocked US-based users. Three companies focusing on overseas growth are Ryze Labs, Zodia Markets, and Ripple Labs.

Comment

We may be standing at the dawn of a new era in cryptocurrency markets, in which a small portion of our community will be in direct confrontation with US and EU regulations due to their perceived unfairness and general stupidity. The rest of the crypto market will be dominated by giant banks, which will cut off the vast majority of users from crypto by introducing expensive, "fully compliant" centralized protocols that mimic DeFi but are insecure and simply represent a continuation of their existing outdated trading systems.

Macroeconomics

The Bank of England paused interest rate hikes at 5.25% on September 21st, citing recent data suggesting that the impact of previous hikes is taking effect and expectations that inflation will decline. Policymakers remain committed to tightening policy further if necessary.

Comments

The BoE rate halt, following the European Central Bank's (ECB) pause, is another confirmation that policymakers are starting to consider a change in their rate-hiking programs due to the continued deterioration of global economies and slowing inflation. However, the Fed's decisions will still have a decisive impact on global financial markets.

On Friday, the Purchasing Managers Index stalled, indicating slowing business activity. The Nasdaq continued its downward trajectory, with bears attempting to test a critical support zone at 13.2K-13.0K. BTC traded sideways slightly above 26.5K, with players closely following macroeconomic data, anticipating more bearish catalysts. Other news: Coinbase's USD 25 billion or more BTC holdings revealed.

Details

Business activity remained largely unchanged in September for the second month in a row, signaling the weakest economic growth since February. The S&P Global Flash US PMI Composite Output Index edged down to 50.1 in September from 50.2 in August. A reading above 50 indicates economic expansion, while a reading below 50 indicates contraction.

Comment

Companies have enough inventory of raw materials and finished goods, and demand remains low, so they are buying less from suppliers. Instead of buying more inputs, companies are using up their existing inventory, which has led to better supplier performance. At the same time, companies need to hold less inventory of finished goods, so they are reducing their post-production inventories at the second-fastest pace since November 2021. Companies are hiring more people, but the pace of hiring is accelerating. The cost of inputs is increasing rapidly, especially fuel costs, but the price of output is increasing only slightly.

In other words, the economy is slowing down, and companies are adjusting their operations accordingly. They are buying less from suppliers, using up their existing inventory, and reducing their inventories of finished goods. They are also hiring more people, but the pace of hiring is slowing down. The cost of inputs is increasing rapidly, but the price of output is increasing only slightly.

Crypto

Cryptocurrency intelligence firm Arkham Intel has discovered that Coinbase, the leading US-based cryptocurrency exchange, holds $25 billion worth of Bitcoin, or nearly 5% of the total supply. This makes Coinbase one of the largest holders of Bitcoin in the world.

Comment

Despite the mantra of decentralization that we all preach, the tendency is clear: over time, any type of asset—decentralized or not—becomes overconcentrated in the hands of a few. This is likely to continue for many years to come, at least until humanity changes its ways and starts to be driven by reason rather than emotional outbursts or muscle memory.

From this perspective, having a variety of tokens and coins is essential to preventing a monopoly on asset ownership. This thesis certainly clashes with the Austrian School's teachings on the perils of inflation and the need for "hard money." However, the reality is that the economy exists to serve people, not vice versa. In this sense, inflation can be seen as a remedy for human weaknesses of character.

After a week of central bank meetings, on Week 39 investors will turn their attention to macroeconomic data releases in the United States, Europe, and Japan. Key data releases include the PCE Price Index, personal income and spending data, durable goods orders, GDP growth rate, and housing data in the US; inflation rates and business and consumer confidence surveys in Europe; and industrial production, retail sales, and unemployment rate in Japan.

SVET Markets Weekly Update (September 10 - 16, 2023)

On week 37, Nasdaq and BTC both received an unexpected dose of macro-economic positivity with the ECB signaling a halt to its rate hike program, Chinese industrial production growing, and CPI increasing moderately. However, Nasdaq corrected sharply twice during the week (on Tuesday and Friday) as traders grew nervous ahead of the FOMC meeting the following week.

On Monday, Nasdaq jumps up for second winning day. Traders ignored rising inflation expectations focusing on the micro-economic data instead. Tesla, Qualcomm, Meta Platforms rise on positive news. BTC dropped on technicals with Bears testing the important resistance on 25.4K. Other news: Crypto funding dropped almost 10x in 2023.

Details

Inflation expectations for the year ahead increased to 3.6% in August 2023, with expectations for price growth in key areas also rising.

Comment

Consumers returning from their vacations at the beginning of the new working season appear to be less optimistic about inflation. Some of the reasons might be as following.

The price of gasoline, natural gas, and other energy commodities have been rising in recent months. This has contributed to higher inflation expectations, as consumers anticipate that these higher energy prices will be passed on to other goods and services.

The price of food has also been rising in recent months, due to factors such as droughts and crop failures in some parts of the world. This has also contributed to higher inflation expectations, as consumers anticipate that higher food prices will make it more expensive to buy groceries.

Inflation expectations can also be influenced by past inflation levels. If inflation has been high in the past, consumers may be more likely to expect high inflation in the future.

Crypto

Crypto VC funding in 2023 has dwindled significantly compared to 2022. Foresight Ventures rep attributes this to the plateauing of many crypto narratives, such as layer-2 solutions, zero-knowledge proofs, and NFTs.

Comment

In 2022, the crypto space saw a boom in VC funding, with Q2, Q2 bringing $20.3 billion. However, VC funding in the crypto sector has noticeably dwindled in 2023. In the Q1, approximately $2.6 billion worth of crypto VC deals transpired. The second quarter fared even worse, with approximately $2.1 billion distributed across 292 funding rounds, marking one of the weakest performances in the realm of crypto fundraising.

On Tuesday, Nasdaq slide down as inflation worries weigh on tech. Apple unveils iPhone 15, Oracle misses estimates. BTC recovered on a rare occasion of crypto traders anticipating positive macroeconomic updates. Other news: the EU Parliament required crypto-asset service providers to report all EU clients transactions.

Details

Small business optimism decreased in August 2023, with inflation and worker shortage cited as the biggest obstacles.

Comment

The decrease in the NFIB Small Business Optimism Index in August is a sign that business owners are feeling less optimistic about the economy. This is likely due to a number of factors, including inflation and the worker shortage.

Inflation is making it more expensive for businesses to operate, as they have to pay more for raw materials, labor, and other inputs. This is squeezing profit margins and making it harder for businesses to invest and grow.

The worker shortage is also a major challenge for businesses, as they are having difficulty finding qualified employees. This is forcing businesses to raise wages and offer other incentives to attract workers, which is also adding to their costs.

Obviously, the inflationary pressure is not only affecting consumers, but also businesses.

Crypto

Comment

Bureaucrats are motivated to control and tax people. One reason is that they see it as a way to maintain order and stability. Another reason is that they believe that taxation is necessary to fund government programs. Additionally, some bureaucrats simply enjoy the power that comes with controlling other people's lives.

Most bureaucrats do not know how to earn money due to their personal incompetence. This is because many bureaucrats come from wealthy families or have connections that allow them to get ahead without having to work hard. As a result, they do not have the skills or experience necessary to be successful in the private sector.

So, no wonder, that instead of the support for their innovative ideas, drastically improving peoples lives, entrepreneurs get the enforcement from bureaucrats on all continents. Replace then with code, that what we need.

On Wednesday, Nasdaq up as investors assess mixed CPI report. Fed seen holding rates in September, pausing in November. Megacaps gain, Apple down after China bans new iPhone models. BTC continued its micro-rally enhanced by positive macro-data. Other news: CFTC's director warned against "unregulated" DeFi.

Details

Inflation accelerated to 3.7% in August 2023, driven by higher energy prices. However, core inflation slowed to 4.3%.

Comment

The annual inflation rate accelerated. At the same time, core inflation, which excludes food and energy, slowed. This is a reverse trend from what we have witnessed during the first halve of 2023. The Fed faces a serious challenge in raising interest rates without putting government budgets under too much stress or hurting the labor market. They cannot do anything about the price of energy, which is completely driven by geopolitical factors.

The latest increase in inflation was largely due to higher energy prices. The price of gasoline rose 10.3% in August, while the price of natural gas rose 19.8%. These higher energy prices were driven mostly by OPEC+ cutting its production trying the prevent further price downturn.

Crypto

Comment

Agencies are fighting each other in an attempt to control blockchain and crypto. This is a new and rapidly evolving technology, and there is no clear regulatory framework in place. As a result, different agencies are vying for control over this space.

The fight for control of blockchain and crypto is likely to continue for some time. The fight for control of blockchain and crypto is not about "defending" consumers. It is about power. The agencies involved in this fight are all vying for control over this new and potentially lucrative market. They want to be the ones who set the rules and regulations, and they want to be the ones who collect the fees.

The fight for control of blockchain and crypto is a reminder that power is always at play. When new technologies emerge, there is always a struggle for control over them. The outcome of this struggle will have a significant impact on the future of blockchain and crypto, and it will also have a significant impact on the power dynamics in the financial system.

On Thursday, the Nasdaq rose, with Arm Holdings' successful IPO lifting investor sentiment. Headline producer inflation beat estimates, while core PPI met expectations. Also strong economic data indicated the economy resilience. Retail sales increased. BTC extended its rally re-energized by the ECB rate announcement. Other news: House GOP want to control the issuance of CBDCs.

Details

Producer prices rose 0.7% in August, the highest level since June 2022. Energy prices led the increase, while core prices rose 0.2%.

Comment

The producer price index (PPI) is a measure of the prices paid by producers for goods and services. The August increase in PPI shows that input costs for businesses are rising, which is likely to be passed on to consumers in the form of higher prices. This is a sign that inflation is likely to remain elevated in the near term.

The war in Ukraine, OPEC+ political games and most lately China reportedly increased industrial output are a major factors driving up energy prices, which are a major component of PPI.

The Fed is expected to raise interest rates in September again in an effort to cool inflation. However, it is not clear how effective this will be. The Fed's efforts to curve inflation by suppressing demand may have reached their limits. The US economy is already slowing, and raising interest rates further could tip it into recession.

Crypto

Republicans in the House of Representatives are pushing for legislation to prevent the Federal Reserve from issuing CBDCs without express approval from Congress.

Comment

Outdated politicians can only help crypto by delaying their own stupid proposals amid their fight against each other.

Many politicians in the world are still stuck in the old ways of thinking and are not open to new technologies like cryptocurrencies. They are often quick to make knee-jerk reactions to things they don't understand, and this can lead to bad policy decisions that stifle innovation.

The good news is that the outdated politicians and their corrupt fight against each other are only delaying the inevitable adoption of cryptocurrencies. The technology is too powerful and too disruptive to be stopped. As more and more people learn about the benefits of cryptocurrencies, the demand for them will only grow.

In the end, the outdated politicians will be left behind as the world moves on to a new era of finance. Cryptocurrencies will become the new normal, and those who embrace them will be the ones who benefit the most.

Macroeconomics

ECB hikes rates for 10th time, signals end of tightening cycle. The refinancing operations rate reached a 22-year high of 4.5%. The deposit facility rate set a new record at 4%.

ECB Forecasts:

Comment

The Japanese government's decision to allow startups to raise funds with digital assets is a sign that they are taking a forward-thinking approach to the technology. This is in contrast to many other governments, which have been slow to embrace cryptocurrencies and other digital assets.

The Japanese government's decision not to raise interest rates is also a sign that they are taking a cautious approach to the economy. The Federal Reserve, on the other hand, has been raising interest rates in an attempt to combat inflation. However, this has raised concerns that it could lead to a recession.

Japanese government's willingness to experiment and try new things is a sharp contrast with outdated Boomer's financial and economic policies, practiced elsewhere in the world.

Comment

Macroeconomics

China's industrial production grew at a faster-than-expected pace in August, rising 4.5% year-on-year, the strongest expansion since April.

Comment

China is the world's second-largest economy, and its growth is important for the global economy. The country is a major exporter of goods and services, and its demand for commodities such as oil, copper, and soybeans helps to keep prices high. This can lead to inflation in other countries, as businesses pass on higher costs to consumers.

For example, China's industrial production growth in August was driven by a recovery in manufacturing activity, which rose 5.4%. Mining output also grew, rising 2.3%.

The rebound in industrial production is a positive sign for the Chinese economy, which has been struggling to recover from a recent slowdown. However, it also led to an increase in prices for major commodities. For example, the price of copper rose by 2.5% in August, while the price of oil rose by 1.5%. This could lead to higher inflation in other countries, as businesses pass on higher costs to consumers.

According to the IMF, China's economic growth is expected to slow to 4.8% in 2023, from 8.1% in 2022. Despite the slowdown, China's growth is still expected to be higher than the global average of 3.6%. This means that China will continue to be an important driver of global growth. However, the country's growth will also continue to have a significant impact on commodity prices and inflation.

FYI: China is the world's largest consumer of commodities, accounting for about 15% of global demand and also the world's largest exporter of goods, accounting for about 13% of global exports.

In Week 38, all eyes will be on the Fed Press Conference (Wednesday, September 20) announcing the Fed Rate Decision (projection: no change at 5.5%). Therefore, long-term investors will stay on the sidelines and indexes will be volatile within narrow ranges.

SVET Markets Weekly Update (September 5 - 9, 2023)

On a short Week 36, Nasdaq went down due to increasing inflationary worries, while BTC traded sideways in an all-too-familiar pattern.

On Tuesday, Nasdaq closed slightly higher, but was pressured by rising oil prices and concerns about global economic growth. The energy sector rose, while Airbnb and Blackstone climbed after news that they will join the S&P 500. Tesla also rose after reports of production rebound in Shanghai. BTC was trading sideway while FSB and IMF warned against total ban on crypto.

Commodities

The OPEC+ alliance, led by Saudi Arabia and Russia, agreed to extend its voluntary oil production cuts of 1 million barrels per day until the end of December. This decision was made to support the stability and balance of oil markets. Russia also extended its voluntary reduction in oil exports by 300,000 bpd until the end of the year. The extension of the oil production cuts came despite concerns about the health of the Chinese economy. The services PMI at the world's largest crude importer disappointed, which weighed on oil prices. However, the overall impact of the production cuts was to push WTI crude oil prices to a 9-month high.

Crypto

Global financial bodies, including the Financial Stability Board (FSB) and the International Monetary Fund (IMF), warned that banning cryptos is not effective and may create risks.

On Wednesday, Nasdaq closed lower as strong economic data raised inflation concerns and bets against Fed rate cuts. The ISM Services PMI unexpectedly jumped to 54.5 in August, pointing to the strongest growth in the services sector in six months. Oil prices held at November level highs, which raised further concerns about a rise in inflation. BTC continued the boring sideway move as regulators keep pressuring companies to disclose their crypto-holdings more comprehensively through regular accounting reports.

Details

The services sector grew at the fastest pace in six months in August, as measured by the ISM Services PMI. The index unexpectedly jumped to 54.5, beating expectations of 52.5. All the sub-indexes showed improvement, with business activity, new orders, employment, and inventories all rising. However, price pressures also intensified.

Crypto

New US accounting standard will require companies to report crypto assets separately in financial statements, not as intangible assets.

On Thursday, the Nasdaq closed lower as investors worried about the Federal Reserve's plans to raise interest rates. Tech stocks fell the most, with Apple down 2.9%. Lower-than-expected jobless claims and strong labor costs data pointed to a tight labor market, which could keep the Fed on track to raise rates. BTC has a small up-tick despite Fed Barr spoke against crypto again.

Details

The number of filings for unemployment benefits fell to the lowest level since February. Continuing claims also fell to the lowest level since mid-July. This data suggests that the labor market remains strong despite the Federal Reserve's tightening cycle.

Crypto

Fed Barr said: Non-federally regulated stablecoins could pose significant risks to financial stability and policy. A robust federal framework is needed before they become widely adopted.

On Friday, Consumer credits disappointed but Nasdaq and energy stocks rose slightly, while Apple shares edged up after a sharp decline in the previous two sessions due to news that Chinese government workers were banned from using iPhones. G20 doubled down on its pan to implement "the travel rule" while BTC got down 25K again.

Details

Consumer credit increased by $10.4 billion in July 2023, below market expectations of $16 billion. Revolving credit, such as credit cards, increased by $9.6 billion, while non-revolving credit, such as auto and student loans, increased by $773 million.

Crypto

G20 leaders want to quickly implement a global framework for regulating cryptocurrency.

Macroeconomics

Inflation in Russia rose to 5.2% in August, the highest level in six months. The central bank is expected to raise interest rates to combat inflation, which is forecast to reach between 4.5% and 6.5% by the end of the year. Food and non-food prices rose, while services inflation slowed. Also, Russia's GDP grew by 4.9% year-on-year in the second quarter of 2023, marking the country's first expansion since the invasion of Ukraine. The growth was driven by a recovery in domestic demand and foreign trade, with sectors such as manufacturing, construction, and retail all contributing. However, health and social services contracted. Additionally, Russia's budget deficit widened to a record high of RUB 2.361 trillion in the first eight months, as revenues fell and expenses rose. Revenues dropped by 3.5%, while expenses rose by 11.8%. The widening deficit is being driven by sanctions against Russia's energy sales and the war in Ukraine.

On the other side of the conflict, the inflation in Ukraine slowed in August, decelerating to 8.6% from 11.3% in July. The slowdown was seen across most categories, with the most significant impact in recreation & culture, household appliances, housing & utilities, health, and food & non-alcoholic beverages. However, transportation inflation accelerated. On a monthly basis, consumer prices fell by 1.4%.

Commodities

The FAO Food Price Index fell in August 2023, the eighth consecutive month of decline, reaching its lowest level since April 2021. All major food categories declined, except sugar, which rose due to concerns over the impact of El Niño.

Comments

The ongoing war in Ukraine has had a significant impact on the global food market. However, market forces have been able to redistribute food production to areas that are unaffected by the war, such as Oceania and Australia. This has helped to keep food prices stable and prevent a global food crisis.

In Ukraine, food inflation has actually fallen in recent months. This is due to a number of factors, including the government's efforts to control prices and the increased activity of entrepreneurs who are taking advantage of the situation to start new businesses.

These developments demonstrate the power of market forces to respond to shocks and disruptions. They also highlight the importance of decentralization in economic management. Governments should not try to micro-manage the economy. When governments intervene too heavily, they can often do more harm than good.

In the present day, with advanced technology and communication, it is much easier for governments to destroy economies than to create them. This is because governments can easily disrupt the free flow of goods, services, and capital. They can also impose regulations that make it difficult for businesses to operate.

The best way to ensure economic prosperity is to create a decentralized system where market forces are allowed to operate freely. This will allow the economy to adapt to change and respond to shocks more effectively.

Here are some specific examples of how market forces have helped to redistribute food production and keep food prices stable during the war in Ukraine:

Week 37 will see a flurry of economic data releases, with key indicators from the US, Europe, UK, China, Brazil, India, and Australia. Investors will be closely watching inflation data, retail sales, GDP growth, unemployment rates, industrial production, and other indicators for signs of economic health.

SVET Markets Weekly Update (August 27 - September 2, 2023)

On week 35, we have an increased optimism setting in due to expectations that the Fed is less likely to raise rates. Nasdaq was rising sharply at the start of the week, but corrected at the end by reaching key resistance levels. On the other hand, BTC first rose due to optimism regarding the Grayscale ruling, only to then fall due to profit taking.

On Monday The Fed Dallas Manufacturing Index improved, but it remained in negative territory. The Nasdaq closed a bit higher on technicals, as traders largely remained undecided ahead of a batch of economic data. In other news, Binance is considering withdrawing from Russia.

Manufacturing activity in Texas improved slightly in August, but still pointed to challenging conditions. Production, new orders, shipments, capacity utilization, and capital expenditures all declined. Labor market measures suggested slower growth in employment and shorter workweeks. Price pressures remained subdued, while wage growth accelerated. Expectations for future manufacturing activity were mixed.

Crypto

Binance is considering withdrawing from Russia due to legal risks. The exchange has already removed five sanctioned Russian lenders from its peer-to-peer service.

On Tuesday, Job openings fell and the Nasdaq rose sharply, boosted by expectations that the Fed will pause interest rate hikes in September. Tesla and Nvidia were among the top gainers. BTC surged on Grayscale’s win against the SEC.

Details

Job openings (JOLTs) in the US fell to a 22-month low in July 2023, as the labor market cooled after months of Fed tightening. The decline was widespread, with openings down in most major sectors and regions. However, there were some pockets of strength, such as in information and transportation.

On Wednesday, GDP increased less than expected but the Nasdaq index was volatile. HP shares tumbled more than 10% after the company lowered its profit outlook. Investors are likely to exercise caution ahead of the release of the monthly jobs data on Friday. BTC corrected sharply on a short-term holders' profit-taking spree. In other news, Uniswap pool was declared not to be an "investment contract."

Details

GDP grew at a slower pace in the second quarter, with growth driven by consumer spending and government spending. However, exports declined and residential fixed investment slumped.

Crypto

Uniswap won a legal battle against allegations that it violated certain provisions of the Securities Act. The judge ruled that Uniswap's liquidity pools did not meet the definition of an investment contract and that Uniswap was not a "statutory seller" under the Securities Act.

On Thursday, the Nasdaq rose slightly for the fifth consecutive day, as investors awaited the release of the US jobs report on Friday. The core PCE price index rose 0.2% in July, but job cuts surged by more than 200% from the previous month. Salesforce stocks rose, while the dollar fell. BTC had a day of a deep correction as traders rushed to take profits from a previous run.

Details

Core PCE inflation in the US rose 0.2% in July, matching market expectations. The annual rate of inflation rose to 4.2%, still above the Fed's target of 2%.

On Friday, The Nasdaq declined by 0.2% on Friday, despite job data showing that the labor market is cooling, giving the Fed room to pause the tightening cycle. Technicals were again in play, as traders took profits from the key resistance zone of 14-14.1K. BTC went sideways all day.

Details

The unemployment rate rose to 3.8% in August 2023, the highest since February 2022. The number of unemployed people increased by 514,000 and employment levels rose by 222,000

Comment

I attended Stanford Blockchain Week (SBW) all week long, so my comments will focus on that event, not on the general state of the economy and cryptocurrency, as I did in previous posts.

The Ethereum ecosystem is rapidly evolving after converting from PoW to PoS. Here are some of the key developments, as I observed it on the SBW:

Here are some additional thoughts on the state of the Ethereum ecosystem:

Overall, the Ethereum ecosystem is in a strong position. It has a growing community, a vibrant developer ecosystem, and a number of promising developments that will help Ethereum to stay the leading platform for decentralized applications in a medium-term, at least.

In week 36, economic data releases will focus on services PMI, factory orders, and foreign trade data in the US. Interest rate decisions will be announced in Australia and Canada. Inflation rates will be monitored in Turkey, South Korea, the Philippines, Mexico, and Russia. GDP growth figures will be released for Australia, South Africa, and Switzerland. Services PMI readings will be assessed for China, Spain, Italy, and Brazil.

SVET Markets Weekly Update (August 20 - 26, 2023)

During Week 34, markets fluctuated between hope and despair, depending on traders' predictions of how FOMC members might (or might not) interpret different pieces of macroeconomic data. These exercises in mind-reading led to volatility in all world markets, except for cryptocurrency, where most bewildered players simply stayed on the sidelines after the alleged massive sell-off of Tesla's BTC.

The fact that in the 21st century the livelihood of billions of people hinges on the decisions of a few aging, non-elected men is astonishing, given the long history of corruption and ineffectiveness of such a "system." Another mind-blowing fact is how willingly and even enthusiastically the overwhelming majority of so-called "financial professionals" accept this system without even a hint of doubt or an attempt to seek out alternatives, which, as we all know, have been created by us over the past 10 years in blockchain and, specially, in DeFi.

On Monday, The Nasdaq rebounded from its strong resistance level of 13,200. Technicals outweighed traders' concerns over higher Treasury yields. On the crypto side, the negative sentiment fallout after Thursday's BTC crash totally defined players' strategies, which were basically to "wait and see."

Currencies

The dollar index held firm on Monday as investors grew confident that the Fed will continue to raise interest rates. China's central bank lowered its one-year loan prime rate, while the euro and pound rose.

Comment

Other developments on the Forex market:

• The euro rose to $1.055 on Monday, its highest level since June 20th.
• The pound sterling rose to $1.233 on Monday, its highest level since June 15th.
• The Australian dollar fell to $0.697 on Monday, its lowest level since November 2022.
• The New Zealand dollar fell to $0.635 on Monday, its lowest level since November 2022.
• The Japanese yen fell to 138.15 on Monday, its lowest level since February 2022.

These moves in currency markets reflect investors' expectations about the future direction of interest rates. Investors are betting that the Fed will continue to raise interest rates in an effort to combat inflation. This is making the dollar more attractive to investors, who are seeking higher yields.

China's central bank, on the other hand, is taking a more dovish approach to monetary policy. The People's Bank of China (PBoC) lowered its one-year loan prime rate by 10 basis points on Monday. This is the first time the PBoC has lowered interest rates since April 2022. The PBoC is hoping to stimulate economic growth by making it cheaper for businesses to borrow money.

The moves in currency markets are likely to continue to be volatile in the near term. Investors will be closely watching the Fed's next policy meeting, which is scheduled for September 20-21st. If the Fed signals that it is planning to raise interest rates at a faster pace, the dollar could continue to appreciate. However, if the Fed takes a more cautious approach, the dollar could come under pressure.

On Tuesday, ratings agencies S&P and Moody's downgraded some US banks due to economic headwinds. The Nasdaq closed slightly higher, with Tesla and Apple offsetting losses from Nvidia and AMD. BTC was stagnant, moving sideways throughout the day, as a result of the aftershock following its Thursday flash crash, with most traders on the sidelines.

Stocks

Japanese stocks rose for the second straight session on Tuesday, with technology stocks leading the gains. Investors scooped up shares following a sharp correction in the sector.

Comment

The Japanese stock market has been through a number of major phases over the past few decades. In the 1980s, the market experienced a period of rapid growth, known as the Japanese bubble economy. However, the bubble burst in the early 1990s, and the market has been in a state of stagnation ever since.

There are a number of factors that have contributed to the Japanese stock market's long period of stagnation. One factor is the country's aging population. As the population ages, there are fewer people who are working and contributing to economic growth. This has led to slower economic growth, which has in turn weighed on corporate earnings and stock prices.

Another factor that has contributed to the Japanese stock market's stagnation is the country's high savings rate. Japanese households save a large portion of their income, which means that there is less money available to invest in stocks. This has also weighed on stock prices.

Despite the long period of stagnation, there have been some positive signs for the Japanese stock market in recent years. In particular, the technology sector has been a bright spot. Japanese technology companies have been investing heavily in research and development, and they have been successful in developing new products and services. This has led to strong earnings growth for many technology companies, and it has boosted stock prices in the sector.

The technology sector is still relatively small compared to other sectors in the Japanese stock market, such as finance, real estate, and retail. However, the technology sector is growing rapidly, and it is becoming increasingly important to the Japanese economy. As the technology sector continues to grow, it is likely to have a positive impact on the Japanese stock market as a whole.

On Wednesday, Nasdaq had its field day, rising more than 1% during its best day in about two months, following fresh data suggesting that service inflation is easing. Meanwhile, with its sudden breach of the 30K-28K support zone, BTC has entered pronounced bearish conditions and is now hovering just above critical 26K support. Everyone is wondering whether and when it will follow through to 22K-20K.

Details

The US services sector slowed in August as high interest rates and inflation weighed on consumer spending. The S&P Global US Services PMI fell to 51, the slowest expansion in six months. New business declined at the fastest pace since the start of the year, while business activity slowed the most in six months. Employment growth was also restrained by low demand for new business.Business confidence improved in August, supported by hopes of greater client demand as interest rates approach their peak.

Comment

When service inflation is so persistent and its causes are not entirely clear, but at the same time, you know for certain that your government budget deficit is rising, you might ask yourself the following question: How can we estimate the inflationary pressure of the US budget deficit on the overall economy? For example, how much percentage point of inflation is added yearly by a 20% expansion of the US budget?

The relationship between government budget expansion and inflation is complex and can be influenced by various factors, including the overall economic conditions, monetary policy, global market dynamics, and more. Moreover, each of the mainstream economic schools of thought has different answers to this question.

Overall, we have a mess of contradicting views, as is usual for the economics discipline. Therefore, so-called policymakers are free to choose what suits them better, depending on circumstances and their personal motives. This is what creates a big mess in the world, which is ruled by several gigantic nation-states that are headed by out-of-control bureaucracies whose inherent interests have nothing to do with the interests of the rest of humanity.

Details (2)

In July 2023, sales of new single-family homes in the United States climbed to the highest level since February 2022. Sales were up in the West and Midwest, but down in the South and Northeast. The median price of new homes sold was $436,700, while the average sales price was $513,000. There were 437 thousand houses left to sell at the end of July, corresponding to 7.3 months of supply at the current sales rate.

Comment

Again and again, we have seen from new macro-data how precarious it is to trade based on macro-data during the unwise monetary authority policies, which use outdated theories and unreliable sources of macro-data.

On the one hand, we have a deterioration of all business activities, which is the goal of the Fed. On the other hand, this deterioration creates an artificial deficit and lack of competition in the most crucial domestic markets—real estate, transportation, healthcare, etc.—which further boosts prices, creating this hellish cycle that we have entered thanks to several old, delirious men headed by Mr. Powell.

Crypto

Comment

In the past two years, it became painstakingly obvious that crypto markets can barely survive without excessive liquidity, despite the unquestionably high quality of the code and amazing technical sophistication of crypto entrepreneurs, who are coming out with incredible ingenious solutions, specifically for layer 2-3 tradefi.

There were a couple of things that became clear as day in 2022-2023 bear cycle.

First, all G20 governments (on the level of law enforcement agencies and central bankers) are more or less unanimous in their pursuit of de facto prohibitive crypto regulations. In some countries, such as the US, there are still some lobby politicians fighting for our cause, brandishing monetary freedom as freedom of speech. However, their (and our) battle is definitely uphill, at least under the present generation of 70-80+ aged, tech-fearful bureaucrats and their core aging Boomers constituency.

In other countries, like China, authorities are much less inclined to listen to lobbying and simply want to directly control cryptocurrency, mostly through implementing central bank digital currencies (CBDCs) and forcing every citizen to use them. Of course, in this situation, free-crypto (DeFi) is a direct competitor and, even worse, a political opponent. Therefore, it will be dealt with accordingly.

Of course, there is a third category of countries left: those in huge social and economic troubles, like Malta, Estonia, El Salvador, Nigeria, or Argentina. In these countries, authorities sometimes consider "playing with crypto" as a last resort, or because they believe that "it can't possibly get worse." However, even in these countries, as soon as the situation improves even slightly (as has happened in Estonia and Nigeria) or a leading pro-crypto figure is changed (Malta), bureaucrats immediately "switch into reverse" and start to eradicate all notions of DeFi and revert to CBDCs (as Nigeria has done).

Yes, it is true that there is a fourth category: reasonable bureaucrats, such as those in Switzerland, Hong Kong, Singapore, or Japan (although this is becoming less and less true). There are also a number of very small states (such as some in the Caribbean) that fall into this category. In these countries, smarter politicians prevail for some magical reason. I believe this is mostly because these countries are effectively ruled by very sophisticated financial elites, who are basically outsmarting the hardcore idiots in the SEC, Fed, IMF, FSB, and other "world regulators." However, whatever the reason, these countries are by no means stable for crypto, because they are and will definitely be under increasing pressure from the ruling plutocrats in DC and Brussels, who will sooner or later require them to shut down the rest of our freedoms.

So, if you ask me, our only hope is that the number of "crypt-refuge states" (those in the 3rd and 4th categories mentioned above) will not drop to zero in the foreseeable future before the complete overhaul of the existing financial system begins. Obviously, this is only possible under extreme circumstances, which none of us want to imagine, or when an entirely new generation of young politicians is somehow willing (big "if") to start the fundamental reforms of all the world's governing mechanisms, which probably will not begin for another 15-30 years.

I know, that many of you are much more optimistic politically than myself, and I hope you're right. So let's now consider a brighter side of our crypto-real - a growing adaption.

There are so many contradictory (and widely different) estimates of that figure that it can only be done approximately. For example, according to CryptoMode, as of November 2021, Uniswap V2 had over 518,000 monthly active users. Then, in 2023, Decrypt reported that Uniswap has around 2.5 million users in total. At the same time, according to data from Dune Analytics (personally, I doubt that those numbers are correct), Uniswap had 30.3 million monthly active users (MAUs) in June 2023. This was an increase from 17.5 million MAUs in June 2021.

Overall, according to many estimates, the total number of blockchain users in 2021 was around ~50 million. This number grew to ~100 million in 2023. This growth is being driven by the increasing adoption of blockchain technology in a variety of industries, including supply chain, banking, tradfi, and NFTs.

Here is a breakdown of the number of blockchain users in 2021 and 2023, by industry. (Please note that these figures are for your interest only and should not be used in scientific research. They are highly speculative and may contradict the information in the preceding paragraphs.)

• Supply chain: 15 million users in 2021, 20 million users in 2023
• Banking: 10 million users in 2021, 15 million users in 2023
• Tradfi: 5 million users in 2021, 10 million users in 2023
• NFTs: 1 million users in 2021, 5 million users in 2023

The growth of blockchain adoption is being driven by a number of factors, including the following:

• The increasing need for secure and transparent record-keeping
• The potential for blockchain to reduce costs and inefficiencies
• The growing popularity of cryptocurrencies and other digital assets

So, some more sophisticated, youngest category of customers are actively adapting our technologies, and we can say that our kung fu is strong. However, our opponents use guns and are simply eradicating us by point-blank shooting. What should we do?

Probably, our market has come to the point where there is no more "us." There are at least three different categories of crypto-related businesses:

Comment

Across the government, there seems to be an entrenched assumption that an individual’s desire to keep the details of their life private means they’re engaging in wrongdoing. This overly simplistic assumption is not supported by the law or the reality of exactly why privacy is so important to countless law-abiding citizens in their everyday lives. Nor does it adequately balance the 21st century citizen’s right to privacy with the need to ensure the government can effectively enforce the law.

Across the government, there is an assumption that an individual's urge to keep the details of their life private means they are engaging in wrongdoing. This assumption is not supported by the law or the reality of why privacy is so important to countless law-abiding citizens in their everyday lives.

For example, a recent study by the Pew Research Center found that 72% of Americans believe that the government should not be able to collect their phone records without a warrant. Additionally, 63% of Americans believe that the government should not be able to track their movements without a warrant. These numbers suggest that the vast majority of Americans believe that they have a right to privacy, even if they are not engaging in any wrongdoing.

The government's assumption that privacy is only important for people who are doing something wrong is not only inaccurate, but it is also dangerous. When the government assumes that everyone is a potential criminal, it creates a climate of fear and distrust. This can make it difficult for people to speak out against injustice or to participate in their democracy.

The government needs to strike a balance between its need to enforce the law and its citizens' right to privacy. This balance can be achieved by ensuring that the government only collects personal information when it is necessary and that it uses that information in a responsible manner.

Macroeconomic

The dollar index rose to its highest level in eleven weeks on Friday after Powell's speech.

Comment

Forex traders are betting that the Fed will continue its hawkish monetary policy for the time being. This is despite some signs of economic weakness, which could lead more dovish members of the FOMC to vote against further rate hikes.

The continuation of the Fed's hawkish policy will depend on whether or not the current inflationary environment is similar to the 1970s. During that period, inflation came roaring back after the Fed stopped raising interest rates. However, there are some key differences between the current economy and the 1970s, such as the strong labor market and low unemployment rate. I believe that we are not in a repeat of the 1970s. The economic fundamentals are very different today.

On week 34, there will be released data on employment, inflation, and economic growth, including JOLTs (Tuesday, August 29), Core PCE Price Index (Thursday, August 31) and Unemployment Rate (Friday, September 01). Accordingly, traders might be jittery, and as a consequence, markets could be volatile.

Investors will also be watching for inflation figures from the Euro Area, Germany, France, Italy, Spain, and Switzerland. Flash manufacturing PMI readings will be released for China, South Korea, India, Russia, Spain, Italy, and Canada. Finally, Turkey, India, Brazil, and Canada will report their Q2 GDP growth figures.

SVET Markets Weekly Update (August 13 - 19, 2023)

In Week 33, China's worsening economic situation and US economic resilience both disappointed traders. This first led to a sharp decline in the Nasdaq, which triggered a BTC flash crash. Overall, it appears that markets have entered the "uncertainty about everything" phase, which can last for a prolonged period of time.

During this phase, traders, monetary authorities, and the general public are all very confused about the nature of global events and their future direction. This leads to most players taking conservative positions, either by taking a bearish stance or withdrawing from the market.

In turn, this diminishes volumes and creates opportunities for sudden bull "attacks." Therefore, markets may experience prolonged periods of sideways or downward movements, interspersed by sudden price spikes in both directions.

On Monday, Nasdaq was boosted by technicals, helped by a jump in shares of Nvidia and joined by other megacap stocks, including Alphabet and Amazon. Nonetheless, BTC continued its bearish side-move. Other news: Coinbase launched a grassroots movement. The Japanese economy grew faster than expected. The libertarian candidate who seeks to abolish the Central Banks is leading in the Argentinian presidential election.

Crypto

Comment

This initiative is highly important. We definitely need a grassroots movement to influence politicians whose position on crypto is simply unacceptable and harms the country's future and its competitive stance on the world stage.

According to a recent survey, 63% of Americans believe that cryptocurrency is a legitimate investment, and 55% believe that it has the potential to revolutionize the financial system. However, many politicians remain skeptical of cryptocurrency, and some have even proposed legislation that would ban it outright. This is despite the fact that cryptocurrency has the potential to create jobs, boost economic growth, and make the financial system more efficient.

A grassroots movement could help to educate politicians about the benefits of cryptocurrency and persuade them to adopt more supportive policies. It could also help to build public support for cryptocurrency and make it more difficult for politicians to ban it.

In addition to the survey data, here are some other reasons why a grassroots movement is needed to support cryptocurrency:

Macroeconomics

The Japanese economy grew at a faster-than-expected pace of 1.5% in the second quarter of 2023, led by a rebound in exports and a decline in imports. This was the second straight quarter of expansion and the fastest pace since the fourth quarter of 2020.

Comment

Fed monetary policy is misguided and counterproductive. The Japanese government kept interest rates low, allowing businesses to access credit more easily. In contrast, bankers all over the World are blindly following the Fed's lead, raising interest rates, which is making the inflation problem worse, by not allowing businesses to re-adjust and to start cutting production costs.

According to the Bank of Japan, the average lending rate for small businesses in Japan was 0.9% in June 2023. This is significantly lower than the average lending rate for small businesses in the United States, which was 4.7% in June 2023. The lower interest rates in Japan made it easier for businesses to borrow money to increase goods export.

The Fed's monetary policy is based on the assumption that raising interest rates will cool the economy and bring down inflation. However, this assumption is based on the outdated notion that inflation is caused by too much money chasing too few goods. In reality, inflation is caused by a variety of factors, including supply chain disruptions, the war in Ukraine, and rising energy prices. Raising interest rates will not address these underlying causes of inflation, and it is likely to make the problem worse.

The Argentine central bank raised its key interest rate to 118% in an emergency move on August 14th, as financial markets reacted to Javier Milei's surprise victory in the primary election. Milei is a far-right politician who opposes the central bank and his victory spooked investors.

Comment

There is a growing discontent with old, unqualified, and arrogant central bankers and the atrocious totalitarian financial system they have imposed on us all over the world. In Argentina, people made this clear by supporting a libertarian candidate who proposes, among other things:

These proposals are exactly what we need all over the world right now. We need to get rid of bureaucratic red tape, allow free market forces to work properly, and abolish the central banking system, which constrains our basic freedoms and prevents economic growth.

Currencies

The offshore yuan depreciated to 7.30 per dollar, its weakest level in over nine months, as disappointing economic data and another interest rate cut weighed on the currency. The PBoC lowered its one-year MLF rate by 15 basis points to 2.5%, while new bank loans in China tumbled 89% in July.

The Chinese economy grew by 0.4% in the second quarter of 2023, the slowest pace in over two years. The unemployment rate in China rose to 5.5% in July, the highest level since February 2020. The value of the Chinese yuan has fallen by more than 5% against the US dollar in the past year.

Comment

The Chinese government is trying to alleviate the consequences of a prolonged lockdown, which put millions of people out of work and had a devastating impact on the Chinese economy. In an effort to stimulate growth, the Chinese central bank has maintained a very low interest rate, even as inflation has risen in other parts of the world. However, the Chinese economy is still struggling, as the US economy, a major Chinese export market, has slowed down.

On Tuesday, the Nasdaq fell on better-than-expected retail sales, concerns about China's slowdown, and Fitch's hints of a rating downgrade for major banks. Despite a sudden drop in the NY Manufacturing and Housing Market Index, traders ignored looming recession worries and bet on the Fed continuing to tighten monetary policy. Bitcoin remained bearishly hovering above 29K. In other news, Jacobi Asset Management launched a "first Bitcoin ETF in Europe" gimmick, and crypto miners announced a new lobbying group in DC.

Details

Retail sales in the US rose 0.7% in July, beating expectations and marking a fourth consecutive increase. Sales were boosted by Amazon's Prime Day and strong spending in other categories, such as food services and clothing. However, sales fell at furniture stores and electronics retailers. Excluding autos, gas, building materials and food services, retail sales surged 1%.

Comments

Despite all efforts by the Boomer-infected Fed to kill the demand side of the economy, consumers are demonstrating extraordinary stubbornness, which infuriates the elders-in-charge who expect total obedience. When they say "drop your consumption level," all we have the right to do is ask "how low?" That is how they think, and the fact that consumers do not obey only means more repressions (aka rate hikes) ahead.

Manufacturing activity in New York state declined in August, as the NY Empire State Manufacturing Index sank to -19, below market forecasts of -1.

Comment

The latest economic data suggests that the economy may be starting to crackle, but economic participants have not yet seemed to believe it. Labor market indicators point to relatively steady employment levels, but a shorter average workweek. This suggests that companies are reluctant to lay off workers, but there are simply fewer and fewer jobs available. How long can this last? The current outlook is for six months, and it is possible that the economy could start to deteriorate within that period.

Here are some additional statistical data that support this view:

It is important to note that the economy is still growing, but it is growing at a slower pace than in recent years. If the trend of declining employment and job openings continues, it is possible that the economy could enter a recession in the next six months.

The NAHB Housing Market Index unexpectedly fell to 50 in August, down from 56 in July. This was the lowest reading since June 2022 and well below expectations. The decline was driven by a drop in buyer traffic and expectations for future sales.

Comment

No matter how many times economic professionals, including absolute majority of non-partisan economists, repeat that a major overhaul of the real estate legislation is urgently required to allow a massive program of construction of much cheaper and technologically advanced housing units all across the country, the Boomer-heavy bureaucratic political cohort completely ignores it because of their own entrenched economic interests.

Boomers own almost all of the real estate in the country, and its ridiculous overpricing, coupled with tremendous barriers to new construction, is simply too profitable for them to let that be changed any time soon. Meanwhile, more and more hard-working families are finding themselves in an absolutely dire situation, with both galloping mortgage rates and an accelerating price of housing. What can go wrong, right?

Crypto

Comment

That is a marketing gimmick.

The European Union prohibits the use of ETFs for single assets like Bitcoin or gold. This is because ETFs are regulated as collective investment schemes, and EU regulations require that collective investment schemes invest in a diversified portfolio of assets.

Guernsey, where the product is registered, is not a member of the EU, so it is not subject to these regulations. However, there are Bitcoin ETPs (Exchange Traded Products) that have been available in the EU for several years. These ETPs are structured as debt securities, and they mirror Bitcoin's performance.

In other words, ETFs are not allowed to invest in a single asset like Bitcoin because they are considered to be too risky. However, ETPs are allowed to invest in Bitcoin because they are structured as debt securities, which are considered to be less risky.

The terms ETF and ETP are often used interchangeably, but there is a technical difference between the two in the EU. An ETF is a type of ETP, but not all ETPs are ETFs.

An ETF is a fund that tracks an underlying index, such as the S&P 500 or the FTSE 100. ETFs are traded on exchanges just like stocks, and they can be bought and sold throughout the day. ETFs are typically very liquid, meaning that they can be bought and sold easily without affecting the price too much.

An ETP is a broader term that encompasses all exchange-traded products, including ETFs, ETCs (exchange-traded commodities), and ETNs (exchange-traded notes). ETCs track the price of a commodity, such as gold or oil, and ETNs track the performance of an underlying index, but they are not backed by any assets. This means that if the issuer of an ETN defaults, investors could lose all of their money.

In the EU, ETFs are regulated under the UCITS (Undertakings for Collective Investment in Transferable Securities) Directive. This directive sets out a number of requirements for ETFs, such as diversification requirements and liquidity standards. ETPs that are not UCITS compliant are not subject to the same requirements, which can make them more risky for investors.

In general, ETFs are considered to be a more conservative investment than ETPs. This is because ETFs are backed by assets and they are regulated under UCITS. However, ETFs may not be as suitable for investors who are looking for exposure to a specific commodity or index. In these cases, an ETP may be a better option.

Comment

That's all nice, and it is understood that it is a gesture of self-defense. The White House is calling for a punitive 30% excise tax on mining operations for the "harms they impose on society." However, this group does not have any first-rate names from our space backing them up on medias. Additionally, overall political support for crypto is now based on a strong antipathy of one side of the aisle to another, rather than on reasons. Nonetheless, this is better than nothing.

Macroeconomics

The cost of shipping goods worldwide rose on Tuesday (~1130), with the Baltic Exchange's main sea freight index reaching its highest level in seven weeks. The capesize index, which tracks vessels that transport iron ore and coal, rose 1.7%, while the panamax index, which tracks ships that carry coal or grain, rose 3.4%. The supramax index also rose 3.6%.

Overall, the index has remained in a narrow corridor since June, indicating an absence of notable economic growth around the world.

Comment

The Baltic Dry Index (BDI) is a shipping index that tracks the cost of shipping dry bulk commodities, such as iron ore, coal, and grain. The index is calculated based on the average freight rates of a basket of ships (23 different shipping routes).

Why did the Baltic Exchange Dry Index reach its maximum of around 12,000 during the mortgage debt crisis of 2007-2009, even though this had nothing to do with the costs of shipments, but only increased to around 6,000 during the 2020 worldwide lockdowns and major supply chain disruptions?

There are a few reasons:

In contrast, the BDI only reached a peak of around 6,000 in 2020. This was despite the fact that the lockdowns caused major disruptions to global supply chains and led to a surge in demand for shipping services.

There are a few reasons for this discrepancy.

In addition, the lockdowns also led to some temporary measures that reduced the need for shipping, such as the closure of factories and the reduction in travel. These measures also contributed to the lower BDI in 2020.

Overall, the BDI is a complex, very volatile index that is influenced by a number of factors.

On Wednesday, US Treasuries rose to their highest level in 15 years, and the Nasdaq tumbled following the release of the FOMC minutes, forming a bearish pattern on daily charts. BTC fell below 29K, confirming a downside trend. Other news: Uzbekistan created some limited opportunities for cryptocurrency businesses. Singaporean exports and imports dropped by approximately 20% due to the weak global tech sector.

Details

The US 10-year Treasury yield rose to its highest level since 2007 in August, as investors worried about the Fed's plans to raise interest rates and concerns about inflation persisted. The minutes from the FOMC's latest meeting showed that most officials agreed on a 25bps rate hike, but some expressed caution about overtightening. Strong industrial growth data and remarks from Minneapolis Fed President Kashkari also pressured bonds.

Comment

It appears that market sentiment has pivoted from "The Fed is done" to "More hikes ahead." Strong economic data suggest that there is plenty of room for Powell to continue pressuring corporations into submission, and for them to start laying off employees en masse, which the Fed expects will stop service-side inflation. In that situation, many traders might decide to revert their positions and take a bear market stance for at least the next six months or so, until unemployment starts to rise to levels that might be worrisome to the Fed. However, those levels are not known.

Crypto

Uzbekistan approves a local bank to participate in national crypto card project. This bank will be a subject to the Special Regulatory Sandbox Regime. This allows the bank to offer special services in the Uzbekistan crypto space, including the development and implementation of a virtual bank card products. The Special Regulatory Sandbox Regime was created by the Ministry of Justice on December 30, 2022, and it provides a framework for entities in the Uzbekistan crypto space to test new products and services in a controlled environment.

Comment

The United States is losing its pace of innovation to other countries, even to those that have never been technologically prominent. In 2022, the United States ranked 6th in the Global Innovation Index, behind Switzerland, Sweden, the Netherlands, Singapore, and Finland. This is a significant decline from its ranking of 1st in 2011.

There are a number of factors that have contributed to this decline, including:

The recent incarnation of politicians in the United States have been particularly hostile to innovation. They have cut funding for R&D, drastically reduced immigration of "best and brightest" into USA, and imposed tariffs on imported goods. These actions have made it more difficult for American businesses to innovate and compete.

The only hope for the United States to regain its position as a leader in innovation is to get rid of these politicians and elect leaders who are committed to supporting innovation. We need to invest in R&D, make it easier for businesses to innovate, and create a more open and welcoming environment for entrepreneurs.

Here are some additional statistical data that support the decline of innovation in the United States:

Macroeconomics

Singapore's non-oil domestic exports (NODX) fell by 20.2% year-on-year (yoy) in July 2023, worse than expected. This was the 10th straight month of contraction and the steepest drop since January. The decline was driven by faster falls in sales of both electronic and non-electronic products. Shipments of electronic products shrank by 26.1% yoy, while those of non-electronic products fell by 18.5%. Sales fell to most of Singapore's major markets, except the US.

Comment

This 20% decline corresponds to a 10-20% layoff rate in major tech companies in the Valley. These layoffs are likely due to the policies of baby boomer politicians, who are more focused on their own safety and geopolitical dominance than on innovation.

In return for these policies, we have gotten nothing: no security, no stability, no dominance, and no economic growth. The only way forward is to get rid of baby boomer politicians and elect a new generation of leaders who are focused on our individual prosperity and constant innovations - the only way to face growing economic, social and geopolitical challenges.

Javier Milei, a new politician in Argentina, is an example of this new breed of leader. He is not afraid to challenge the bureaucracy and lay off government employees, even if it means making unpopular decisions. Milei's policies are focused on reducing taxes, cutting regulations, and promoting free markets. He believes that these policies will create a more prosperous and innovative economy.

It is time for the world to follow Argentina's lead and elect a new generation of leaders who are focused on innovation and economic growth. We cannot afford to continue with the failed policies of the baby boomers.

Here are some additional statistical data to digest:

On Thursday, The Philadelphia Manufacturing Index skyrocketed, but traders ignored all data as the Nasdaq plunged under 13.4K on a continuing technical sell-off with a nearest support level at around 13K. This served as a catalyst for Bitcoin's sharp (and long overdue after two months of unprecedented stagnation) correction to 25K, with other coins following suit (for example, Ethereum touched 15,500). As a result, the Market Sentiment Indicator changed sharply from bullish 53 to bearish 37. In other words, crypto is back to normal :)

Details

The Philadelphia Fed Manufacturing Index rose to 12 in August (market forecasts was -10), the first month of growth since August 2022. New orders and shipments were positive for the first time since May 2022, but employment declined further.

Comment

The recent sudden ups and downs in a number of orders suggest that the Federal Reserve's (Fed) monetary policy has become very confusing to all market participants, not just traders. This is because the Fed has been sending mixed signals about its intentions, raising interest rates in an effort to combat inflation while also signaling that it is willing to be patient and not raise rates too aggressively. This uncertainty has created a volatile market environment, with investors unsure of how to position themselves.

One way to measure the uncertainty in the market is to look at the VIX index, a measure of implied volatility in the S&P 500 index. The VIX index has been rising in recent months, reaching its highest level since March 2020. This suggests that investors are increasingly worried about the future of the economy and the Fed's ability to manage it.

The Fed's monetary policy is based on the Keynesian orthodoxy, which holds that the government can use fiscal and monetary policy to manage the economy. However, the Keynesian orthodoxy has been criticized for being too simplistic and for not taking into account the complexity of the real economy. In the case of the current economic situation, the Fed's attempts to combat inflation by raising interest rates are likely to have a negative impact on economic growth. This is because higher interest rates will make it more expensive for businesses to borrow money, which could lead to layoffs and slower investment.

The bottom line is that the Fed's monetary policy is creating uncertainty and volatility in the market. This is likely to continue in the near future, as the Fed tries to balance the need to combat inflation with the need to avoid a recession.

On Friday, with the absence of macro news, Nasdaq tested its major support on 13.2K and managed to close in the green. BTC tried to stabilize after Thursday's flash crash, hovering above 26K, with a possible retest on 25K. Other: A recent report (Fortune) stipulates that VC to crypto dropped 90% from the previous year.

Crypto

Comment

Some venture capitalists (VCs) blame the crypto industry for its inability to address the needs of its users and challenge it to bring in another billion users. VCs are essentially saying that the crypto industry needs to start complying with regulations, stop being so revolutionary, and adopt "travel rules" (which are regulations that require crypto exchanges to share information about their customers with each other). Only then, they say, will the crypto industry be able to achieve mass adoption.

FYI:

Macroeconomics

Retail sales in Mexico grew 5.9% year-on-year in June 2023, the strongest since January. This was the 28th consecutive month of retail growth. Textile, self-service, and department stores recorded strong sales.

Comments

The nearshoring of manufacturing from China and other sanctioned countries to Mexico is a prime example of how market forces can shape the workforce. The influx of new manufacturers has created jobs and increased incomes, which has led to a rise in consumer spending. In 2022, the Mexican jewelry industry saw a strong growth of 19.4% year-on-year, driven by this increased demand. The jewelry industry is a major contributor to the Mexican economy, employing over 1 million people. This growth is expected to continue in the coming years, as Mexico remains a competitive manufacturing destination for companies looking to reduce their supply chain risks and costs.

In week 34, which usually marks the start of a period of vacations when many market participants won't be at their trading stations, there will not be much macro data to inspire volatility, aside from the Durable Goods Orders report on Thursday, August 24, and Powell's speech on Friday, August 25. Therefore, it is expected that traders will mostly be on the sidelines, waiting for any new developments around which they can build their short-term strategies.

SVET Markets Weekly Update (August 7 - 11, 2023)

On Week 32 Moody's cut the ratings of several banks, while CPI decreased and inflation increased less than expected. However, PPI increased, surprising the markets. Nasdaq responded by declining, while BTC continued to hover over 29K, in the absence of a catalyst.

On the crypto front, the Fed announced a new supervisory program for financial institutions engaged in crypto-related activities. Additionally, PayPal is set to launch its own stablecoin, and Binance has become the first fully licensed cryptocurrency exchange in El Salvador.

On the foreign side, European natural gas prices rose sharply due to concerns about dwindling LNG flows to Europe. Industrial production in Argentina contracted due to China's economic deceleration. Meanwhile the Russian budget deficit widened to a record as Belorussian inflation reached its lowest level in decades.

Overall, the week was volatile as anticipated, with macroeconomic data increasing uncertainties among market players. This uncertainty is also supporting BTC at its present levels, preventing a long-overdue correction.

On Monday, consumer credit expanded unexpectedly, with the NASDAQ being lethargically volatile as Apple and Tesla retreated. As traders await the Thursday's CPI report, BTC made a brief plunge under 29K again, confirming its bearish trend. Other news: Hong Kong's SFC warned crypto-investors, Bowman (Atlanta Fed) anticipated additional rate increases, and Carbon Credits are down on slowed manufacturing in the EU.

Details:

Total consumer credit in the US increased sharply in June, with non-revolving credit, such as auto and student loans, leading the way (+6%). Revolving credit, such as credit cards, fell slightly (-0.6%).

Comment:

Why did consumer non-revolving credit jump so drastically in June 2023, while revolving credit dropped?

There are a few possible explanations for this trend. One possibility is that consumers are making big purchases now, before prices go up even more. Inflation is high, and consumers are expecting prices to continue to rise. They may be taking out loans to finance large purchases, such as cars and homes, in order to lock in a lower price.

However, this spike in non-revolving credit also looks seasonal. The average quarterly growth rate for non-revolving credit in Q1 and Q2 is around 3%. It is more likely that consumers are taking out student loans to pay for college, which typically starts in September.

On the other hand, the sharp drop in revolving credit (from 8.1% in May and 13.7% in April) may be a sign that consumer confidence in the economy is starting to become shaky. This is not a good sign for the economy as a whole, as consumer credit is one of its main growth drivers. For reference, the total accumulated consumer credit in the economy is USD 4.9 trillion and it has increased almost 25% in 5 year.

Crypto

Macroeconomics

Russia: The yield on the Russian 10-year OFZ soared to 11.6% in August, the highest since the invasion of Ukraine, amid a widening budget deficit and a hawkish central bank. The government is heavily dependent on bond issuance to finance its deficit, and the central bank is raising interest rates to combat inflation.

Comment:

The national treasury reported a financial shortfall of RUB 2.6 trillion in the first half of the year, a record high for the period. This was due to the ongoing war, which continued to drain resources, and the state's essential revenue streams were harmed by low energy prices.

• While higher oil prices temporarily improved the budget's revenue stream, Urals contracts are now trading above the EU's price cap, increasing geopolitical risk in the market.
• As a result, Moscow is heavily reliant on bond issuance to finance its financial shortfall, which is driving up yields.
• In the meantime, the Russian Central Bank raised its key interest rate by 100 basis points to 8.5 percent, signaling that the risks of inflation increasing have significantly increased since the start of the third quarter, making more interest rate hikes in upcoming meetings likely.

Carbon Credits: The price of carbon permits in the European Union fell to EURO 87 per tonne, the lowest in two months, as investors anticipate less demand for permits due to a weak manufacturing sector. The decline in German industrial production in July highlights the impact that higher interest rates are having on European manufacturing.

Comment:

Carbon permits work by setting a cap on the total amount of CO2 or GHGs that can be emitted. Companies that emit more than their allotted amount of CO2 or GHGs must either reduce their emissions or purchase carbon permits from companies that have emitted less than their allotted amount. This creates a market for carbon permits, which drives down the cost of reducing emissions.

The size of the carbon permit market is still relatively small, but it is growing rapidly. In 2020, the global carbon permit market was worth an estimated $85 billion. This is expected to grow to $250 billion by 2030.

The major markets for carbon permits in Europe, Asia, and the Americas are:

• Europe: The EU ETS is the largest carbon permit market in the world. It covers about 45% of the EU's greenhouse gas emissions.
• Asia: China has the world's second largest carbon permit market. It covers about 20% of China's greenhouse gas emissions.
• Americas: The Regional Greenhouse Gas Initiative (RGGI) is the largest carbon permit market in the Americas. It covers about 10% of the electricity sector in the northeastern United States.

The growing carbon permits market can be viewed as a global bureaucracy expansion index. While carbon permits are intended to use market forces to help the environment, they cannot exist without a constantly expanding government bureaucracy. While they may fluctuate and decline as the global recession hits markets, the overall trend of world bureaucratization is only upwards.

This is because carbon permits are a form of government regulation. They are created by governments and enforced by governments. In order for carbon permits to work, governments must be able to track and monitor emissions, issue permits, and enforce compliance. This requires a large and violent bureaucracy.

Currencies

Mexico: The Mexican peso has fallen from its near-eight-year high as investors await inflation data and monetary policy decisions. The peso is still one of the top-performing currencies year-to-date, thanks to high interest rates, political stability, and "nearshoring".

The Mexican peso has experienced a rapid devaluation (from 10 to 24 Pesos / USD) since the 1990s due to a number of factors, including:

• The Mexican financial crisis of 1994: The Mexican financial crisis of 1994 was a major economic crisis that caused the peso to lose over half of its value against the US dollar. The crisis was caused by a number of factors, including high government debt, low foreign reserves, and a large trade deficit.
• The 2008 financial crisis: The 2008 financial crisis also had a significant impact on the Mexican peso. The crisis caused a global economic slowdown, which led to decreased demand for Mexican exports. This, in turn, led to a decrease in the value of the peso.
• The trade deficit: Mexico has a large trade deficit, which means that it imports more goods and services than it exports. This puts a strain on the peso, as it makes it more difficult for Mexico to earn foreign currency.
• Political instability: Mexico has experienced a number of political crises in recent years, which have also contributed to the devaluation of the peso. These crises have led to uncertainty about the future of the Mexican economy, which has made investors less willing to invest in Mexico.
• The war on drugs: The war on drugs has also had a negative impact on the Mexican economy. The war has led to violence and instability in many parts of the country, which has made it difficult for businesses to operate. This, in turn, has led to a decrease in economic growth, which has put pressure on the peso.

The devaluation of the peso has had a number of negative consequences for Mexico. It has made it more expensive for Mexicans to import goods and services, which has led to inflation. It has also made it more difficult for Mexican businesses to compete with foreign businesses. Additionally, the devaluation has eroded the value of savings and investments.

However, since 2020, the Mexican peso has reversed its course and started to appreciate against the US dollar. This is due to a number of factors, including:

• Active reshoring: As the enclosure has led to supply chain disruptions, many companies have begun to reshore their manufacturing operations to Mexico. This has increased demand for the peso.
• US Fed's policies: The US Federal Reserve's (Fed) decision to print trillions of dollars in quantitative easing (QE) has led to inflation in the United States. This has made the US dollar less attractive to investors, and has led to increased demand for the peso.

It remains to be seen whether the Mexican peso will continue to appreciate against the US dollar in the long term. However, the recent appreciation is a positive sign for the Mexican economy.

Commodities

Platinum: Prices have fallen in August to around $920 per ounce, hovering near a one-month low. This is due to ongoing concerns about demand for platinum, especially from China. New data showed that electric vehicle sales in China grew to over 30% of total sales in July, signaling a slowdown in the demand for platinum-heavy catalytic converters in combustion engines.

Comment

Although the percentage of new electric car sales in China has grown to over 30%, the percentage of electric vehicle production in the world is still very low, at around 6%. This means that the demand for platinum from the automotive sector is still relatively strong, despite the growth of electric vehicles.

The World Platinum Investment Council has projected a considerable deficit of 983,000 ounces for 2023, reaching the highest level seen since the 1970s. This suggests that there is still strong demand for platinum from both industrial and investment sources.

The growth of electric vehicles is a long-term trend, but it is still in its early stages. The demand for platinum from the automotive sector is likely to decline in the coming years, but it will not disappear entirely. Platinum is still used in a number of other applications, such as jewelry, electronics, and dentistry.

The percentage of electric vehicle production in the world is expected to grow to 20% by 2025 and 50% by 2030. However, even at these levels, the demand for platinum from the automotive sector will still be significant.

Overall, the outlook for platinum demand is mixed. The growth of electric vehicles will put downward pressure on prices in the short term. However, the long-term outlook remains positive due to the increasing demand for platinum from other sectors.

Platinum is a rare and valuable metal, and it is not easily replaced by other materials. This means that the demand for platinum is likely to remain strong in the long term.

On Tuesday, Moody's cut the ratings of several banks, causing major banking stock turmoils across the globe, especially in the EU, as the Nasdaq remained unchanged. Meanwhile, small business owners' optimism is up, while consumers' is down, pointing to a potential economic weakness ahead coupled with rising consumer indebtedness. On the crypto side, BTC surged on PayPal's launch of a stablecoin as the Fed announced a crypto-firm onboarding program.

Details:

Moody's downgraded credit ratings of 10 small to mid-sized US banks and warned it may downgrade major lenders. The rating agency cited declining profitability and asset quality, particularly in commercial real estate portfolios, as reasons for the downgrades.

The rating agency said that "many banks' Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital." Moody's also warned that "a mild recession looms and asset quality looks set to decline," particularly in some banks' commercial real estate portfolios.

Comment

Obviously, not everyone in the world is buying into the Fed's fantasies that everything is perfect in the economy. The Fed has been raising interest rates in an effort to combat inflation, but this is leading to slow economic growth and then straight forward to a recession. The Moody's downgrades suggest that these concerns are not unfounded, at all.

As a result, the political divide over the economy is likely to get worse in the months ahead. The Fed will need to tread carefully if it wants to avoid further alienating businesses and consumers.

NFIB Small Business Optimism Index increased to 91.9 for a third consecutive month in July 2023, but owners remain concerned about inflation and hiring. At the same time, American economic optimism (The IBD/TIPP Economic Optimism Index) hit a 12-month low of 40.3 in August 2023, as consumers remain concerned about inflation, also, and the pace of wage growth.

Comment

The difference in optimism between small business owners and consumers is likely due to the fact that small business owners are more focused on the immediate future, while consumers are more focused on the long-term. Small business owners are seeing strong sales and profits right now, so they are optimistic about the short-term outlook. However, consumers are worried about the long-term impact of inflation and the threat of a recession. Besides, one is for July, the other for August, so it might be just a catching-up issue.

It is possible that small business optimism will start to decline in the coming months, as the economic outlook worsens.

US consumer debt rose to a new record of $17.06 trillion in Q2 2023, up $16 billion from the previous quarter. Credit card balances increased by $45 billion, or 4.6%, to $1.03 trillion. Mortgage debt remained relatively stable at $12.01 trillion. New mortgage originations increased to $393 billion, up from $324 billion in the previous quarter. Student loan balances declined by $35 billion to $1.57 trillion. Credit card delinquencies are at an 11-year high.

Comment

The increase in credit card balances suggests that Americans are using credit cards to finance everyday expenses. This could lead to issues down the road if consumers are unable to repay their debts. it is accompanied, by the increase in credit card delinquencies, showing that more people are struggling to make their credit card payments.

On the other hand, the decline in student loan balances might be attributed to that less loans are originated as people take less of those faced by increased rates. The decline in mortgage suggests that the housing market is cooling off. However, the increase in new mortgage originations shows that some people are still taking on new debt to buy homes.

Overall, those numbers demonstrate that the surprising resilience of the economy can be also attributed to continuing consumer spending exuberance, supported by increasing wages (although at a slower rate).

Crypto

Comment

The Fed's decision to launch a new supervisory program instead of a full ban on cryptocurrencies is a positive development for the industry, of course. It shows that the Fed is willing to acknowledge the potential benefits of cryptocurrencies, and it is not trying to shut down the industry altogether.

This positive news may explain why the crypto market is up, while stocks are down mostly. Investors may be viewing the Fed's decision as a sign that cryptocurrencies are here to stay, and they are betting that the industry will continue to grow in the future.

On the other hand, it creates unnecessary red tape and bureaucracy, which will make it more difficult for businesses to operate in the space. This will likely lead to higher costs for businesses and consumers, and it could stifle innovation.

The Fed's program is also shrouded in the rhetoric of "consumer protection," but this is a smokescreen. The real goal of the program is to give the Fed control over the cryptocurrency industry. The Fed is worried about the potential for cryptocurrencies to disrupt the traditional financial system, and it wants to be able to regulate them in order to protect its own interests.

The Fed's program is a clear example of government overreach. It is an attempt by the government to stifle innovation and competition in the financial sector. The program is also likely to be inefficient and corrupt. Bureaucrats are not experts in the cryptocurrency industry, and they are likely to make decisions that are not in the best interests of consumers.

Comment

PayPal's move to launch its own stablecoin is a significant development in the world of digital finance. It signals PayPal's commitment to the space and its willingness to take on the risks and challenges of developing a new form of currency.

The crypto markets have reacted over-positively to the news. However, big corporations have a history of attracting the attention of politicians. We all know what it leads too, don't we?

There is also the risk that PayPal's stablecoin could distract customers from truly decentralized forms of payments. Decentralized payments are based on blockchain technology and do not rely on a central authority like PayPal. This makes them more secure and resistant to censorship. However, they are also more complex and difficult to use.

Currencies

Brazil: The Brazilian Real weakened against the US Dollar (4.9 per USD) as markets digested minutes from the Brazilian Central Bank's meeting, which showed that the bank was less hawkish than expected. The Real is still up 8% against the Dollar this year, thanks to strong commodity exports and a dovish central bank.

Comment:

The Brazilian Real was falling all throughout the 1990s to the US Dollar (from below 1.0 to around 4), but then reversed drastically in September 2002 and then strengthened during the next 10 years (until July 2011) from 4 to around 1.5. Then, again, the Real started to weaken compared to the US Dollar, reaching around 5.8 in 2020. Then again, it reversed on Fed aggressive money printing and got lower to 4.9 in August 2023.

There are a number of factors that contributed to the Brazilian Real's decline in the 1990s. One factor was the country's high inflation rate. Inflation in Brazil reached a high of 5,910% in 1990, and it remained high throughout the decade. This high inflation rate made the Real less attractive to investors, and it led to a decline in its value.

Another factor that contributed to the Real's decline was the country's large budget deficit. The Brazilian government was running a large budget deficit in the 1990s, and this put pressure on the value of the Real. To finance its budget deficit, the Brazilian government was forced to borrow money from foreign investors. This borrowing put upward pressure on interest rates in Brazil, which made it more expensive for businesses to borrow money and invest. This, in turn, led to slower economic growth, which further weakened the value of the Real.

The Brazilian Real began to strengthen in September 2002 for a number of reasons. One reason was the election of Luiz Inácio Lula da Silva as president. Lula promised to reduce inflation and to improve the economy, and his election led to an increase in investor confidence in Brazil. This, in turn, led to a stronger Real.

Another reason for the Real's strengthening was the rise in commodity prices. Brazil is a major exporter of commodities, and the rise in commodity prices in the early 2000s led to a surge in export earnings for Brazil. This surge in export earnings helped to strengthen the Real.

The Real began to weaken again in 2011 when the global economy was still recovering from the aftermath of the 2008 financial crisis. Slow growth and uncertainty in major economies, including the United States and Europe, led investors to seek safer assets, such as the US Dollar. This increased demand for the Dollar put downward pressure on many emerging market currencies, including the Brazilian Real.

The Real's decline reversed only in August 2020 due to the Fed's aggressive money printing. The Fed began to print money in an effort to stimulate the US economy, and this led to a decline in the value of the US Dollar. The decline in the US Dollar made the Real more attractive to investors, and it led to a strengthening of the Real.

Macroeconomics

Russian budget deficit widened to a record 2.817 trillion rubles in the first 7 months of 2023 from a surplus of 557 billion rubles a year ago. Revenues fell 7.9% to 14.5 trillion rubles, oil and gas revenues plunged 41.4% to 4.2 trillion rubles, while expenses soared 14% to 17.3 trillion rubles. The government is forced to raise borrowing and tap rainy-day fund to cover the deficit.

Comment

The sanctions and a slowing Chinese economy have caused a decline in oil and gas revenues, which are a major source of government income. The war is a major drain on the budget, of course. The government is also providing subsidies to businesses and individuals to offset the impact of the sanctions. The widening budget deficit and the rise in government spending are unsustainable in the long term. The government will need to find ways to reduce its spending or increase its revenues.

On Wednesday, investors are nervous in the wake of Thursday's CPI data release. As a result, Nasdaq sharply corrected downward on technicals, while EU stocks recovered after Tuesday's slump. At the same time, BTC continued its whales' games, bewildering retail traders who are trying to position either for a crash or a sudden jump. Other news: Binance is up and running in El Salvador, the mortgage rate reached a 10-month high, and natural gas prices rose sharply on lower US supply.

Details:

Mortgage rates in the US surged to 7.09% in the first week of August 2023, the highest level since November 2022.

Comment:

The reason why mortgage rates re-established their rising trend in February 2023 despite the fact that the Fed was raising rates very quickly in October-February is likely due to a combination of factors.

• First, the Fed's rate hikes were not enough to offset the rising inflation. Inflation in the US has been at a 40-year high, and it is likely to remain high for some time. This is putting upward pressure on mortgage rates, as lenders demand higher interest rates to compensate for the risk of inflation.

• Second, the intensification of the war in Europe and rising political and military tensions with China have also contributed to the rise in mortgage rates. That have created uncertainty in the global economy, which is making investors more risk-averse and demanding higher interest rates.

• Finally, the downgrading of the US government debt rating also contributed to the rise in mortgage rates. The downgrade made investors more wary of lending money to the US government, which led to higher interest rates on all types of debt, including mortgages.

Crypto

Comment

The SEC's current stance on cryptocurrency is aggressive and politically motivated. This is likely due to the fact that the SEC is under pressure from Boomers-lawmakers to crack down on cryptocurrency exchanges. I believe that the SEC's approach is misguided and ultimately harm the US economy.

The SEC's aggressive stance is driving cryptocurrency businesses out of the US. This is bad for the US economy because it is taking away innovation and talent. The US has always been a leader in financial innovation, and the SEC's actions are threatening to undermine this position.

In addition, the SEC's politically motivated approach is creating uncertainty in the cryptocurrency market. This is discouraging investment and making it difficult for cryptocurrency businesses to operate. The SEC needs to take a more balanced approach to cryptocurrency regulation. It needs to be clear and consistent in its enforcement, and it needs to be open to dialogue with the cryptocurrency industry.

Commodities:

European natural gas prices rose sharply (30% to more than EUR 40 per megawatt-hour) today, despite record-high gas storage levels. The increase was driven by concerns about dwindling LNG flows to Europe, as well as higher demand from Asia. Also, US's exports of liquefied natural gas (LNG) are currently more lucrative for the markets in Asia in September, October, and November. As a result, there may be less LNG available this month. It is added by worker protests that impact LNG supply in Australia.

Comment

Despite the fact that the USA is exporting more liquefied natural gas (LNG) to Asia, fuel reserves in Europe are at their highest level ever for this time of year. The European Union wants them to be 90% full by November, and many countries, such as Spain and the Netherlands, have already met or exceeded this goal. Germany and Italy are close behind, but France is at 78% due to energy supply problems caused by strikes earlier this year.

This is a perfect example of how the market mechanism can work without government intervention. While supplies to the EU are cut from the East due to the war, LNG flows from the opposite side of the world more than compensate for that deficiency. If governments do not interfere, markets will do their job much faster and smoother.

Macroeconomics

Industrial production in Argentina contracted by 2.3% year-on-year in June, the first decline since February. The slowdown was driven by a decline in food and beverages output, as well as other sectors such as machinery and equipment, wood, paper, and printing. Production of basic metals and oil refining rose at a slower pace.

Comment

The decline in industrial production in Argentina is mostly due to China's economy deceleration. China is Argentina's largest trading partner, and a slowdown in China's economy will have a ripple effect on Argentina's economy.

However, more broadly speaking, we must not forget that the current deceleration of economic activities all around the world is the direct result of the over-centralized, hyper-bureaucratized system of governance that dominates our planet.

The current economic calamities began with the decision of governments to shut down the global economies in 2020. Today, we can say with complete certainty that it has proved to be an absolutely stupid and ineffective choice. It was a major shock to the global economy, and it is likely that the full economic impact of that choice, made for us by aging, technically outdated, and frightened Boomers (with the unique exception of the Swedish government led by 56-year-old Stefan Löfven), will be felt for several decades.

The "quarantine" exposed the weaknesses of centralized decision-making, and it is clear that we need to find a better way to manage our economies in the future. The centralized states are simply incapable of coping with the complicated realities of today. We need to decentralize our economies and give more power to local communities. This will allow us to be more responsive to change and more resilient to shocks.

On Thursday, CPI got down while the inflation got up less than expected which energized markets on the opening but NASDAQ closed in the negative on increased traders uncertainties and bearish technicals. At the same time, BTC continued its record stretch of an suspense inactivity.

Details

Inflation

Comment: It is possible that the increase in energy prices in July is a seasonal effect. The summer months are typically the hottest months of the year, and people use more energy to cool their homes and businesses. This can put a strain on energy supplies and drive up prices.

Consumer Price Index rose 0.2% in July, the same as in June. Shelter (30% of the total index) was the biggest driver of inflation, accounting for over 90% of the increase. Food and energy prices also rose, but at a slower pace than in June. Core inflation, which excludes food and energy, rose 0.2% in July, the same as in June.

Comment

It supports my conjecture. The Fed raising rates start to feed inflation as lenders continue to increase prices in anticipation of the higher rates. This is because lenders have borrowed money at a low interest rate, and they are now passing on those low interest rates to borrowers. However, as the Fed raises rates, lenders will need to charge borrowers higher interest rates in order to cover their own costs. This will lead to higher prices for goods and services, as businesses pass on the higher interest costs to consumers.

In addition, many lenders used bank loans to purchase properties in order to lend it to businesses and families. This means that they are now more exposed to rising interest rates, as they will need to pay more interest on their own loans. This could lead them to increase prices even further in order to cover their costs.

Macroeconomics

The Bank of Mexico kept its interest rate unchanged at 11.25% in August 2023, as widely expected. Inflation has eased in recent months, but remains high. The central bank expects inflation to converge to its target of 3% in the fourth quarter of 2024. The bank will continue to monitor inflation closely and take action as needed.

Comment

The Federal Reserve (Fed) is the most powerful central bank in the world, and its monetary policy decisions have a significant impact on the global economy. As a result, many other central banks around the world tend to follow the Fed's lead when it comes to setting interest rates.

There are a few reasons for this. First, the US economy is the largest and most influential economy in the world. When the US economy is doing well, it tends to boost economic growth in other countries. This is because the US is a major trading partner for many countries, and when the US economy is strong, it means that there is more demand for goods and services from other countries. This can lead to increased exports and economic growth in those countries.

Second, the US dollar is the world's reserve currency. This means that it is the currency that is most widely used to conduct international trade and finance. When the Fed raises interest rates, it makes it more attractive for investors to hold US dollars. This can lead to an increase in the value of the dollar, which can make it more expensive for other countries to import goods and services from the US. This can have a negative impact on economic growth in those countries.

Third, many other central banks around the world have a peg or a currency board system that ties their currency to the US dollar. This means that they are legally obligated to keep the value of their currency within a certain range of the US dollar. When the Fed raises interest rates, it can lead to an appreciation of the US dollar, which can put pressure on other central banks to raise their interest rates in order to maintain the value of their currency peg.

On Friday, PPI increased, surprising the markets. As a result, Nasdaq dove, pulled down by AMD and Nvidia, as traders bet on the Fed keeping rates higher for longer. BTC hovered over 29.4K, still waiting for a catalyst. Other news: One more senator supports a reasonable regulatory framework for crypto, standing against the "Dirty Garry" war on blockchain. Belorussian inflation hit a record low.

Details:

Producer prices (PPI) in the US rose 0.3% in July, led by services and goods prices. Year-on-year, the PPI rose 0.8%.

Comment

The producer price index (PPI) is an important economic indicator to follow because it measures the prices paid by producers for goods and services. These prices are then passed on to consumers, so a rising PPI can signal that inflation is on the rise.

The rising PPI and services sector PPI are sending a negative signal to markets. This is because they suggest that inflation is becoming more widespread and that the Federal Reserve may need to raise interest rates more aggressively in order to bring inflation under control.

The Fed is known to pay particular attention to services side inflation. This is because services are a large and growing part of the economy, and because services inflation is often more persistent than goods inflation.

Additionally, the Fed may believe that it is easier to control services inflation than goods inflation. This is because services workers are often less unionized than goods workers, and they have less bargaining power with their employers (and, consequently, the Fed).

Crypto

Comment

It is important to have the support of at least some lawmakers in order to achieve our goals. However, as we can see from the Brazilian example, political support can be a double-edged sword. Bureaucrats not only keep rising taxes but also often demand high sums of money in exchange for their support. In Brazil, for example, a study by Transparency International found that over 70% of lawmakers had accepted bribes in the past year.

Macroeconomics

Inflation in Belarus slowed to 2.7% in July 2023, the lowest level since records began in 1992. The decline was driven by a fall in prices for non-food items, while prices for services and food rose slightly. On a monthly basis, consumer prices rose by 0.3%, the same as in June.

Comment

The low non-food inflation in Belarus, the country next door to the raging war in Ukraine, can be explained by two factors: rigorous price controls from the state apparatus and a fall in imports from Belarus's major trade partners, Russia and China. Additionally, there has been an increased demand for potash (a fertilizer that is essential to the world's food industry) from Belarus's major import partners, Russia, Poland, and Germany.

The combination of these factors has helped to keep inflation in Belarus relatively low, despite the ongoing war in Ukraine. The state apparatus has been able to control prices by setting maximum prices for certain goods and services. The fall in imports has reduced the supply of goods in Belarus, which has helped to keep prices up. And the increased demand for potash has boosted exports and generated foreign exchange income for Belarus.

Week 33, investors will be watching closely for economic data releases from the US, China, Eurozone, Japan, Germany, India, UK, Canada, Norway, Philippines, and New Zealand.

The FOMC minutes (Wednesday, August 16), retail sales (Tuesday, August 15), and industrial production (Wednesday, August 16) in the US are all expected to be major releases. China industrial production and retail sales, GDP and inflation for the Eurozone, Japan GDP growth and inflation, Germany economic sentiment, wholesale and consumer prices for India, inflation, unemployment and retail sales for the UK, Canada CPI, Australia unemployment data, and interest rate decisions from Norway, the Philippines and New Zealand are also on the radar.

SVET Markets Weekly Update (July 31 - August 4, 2023)

On Week 31, Fitch downgraded the US credit rating, sending markets into correction mode. The Fed of Dallas' Manufacturing Index rose, while the unemployment rate decreased.

Crypto News

On the crypto side, Grayscale reported that markets were recovering but warned of significant downside risks due to macro factors. Coinbase showed a 13% decline in revenue, and Gensler turned his attention to suppressing AI.

Macro News

• Russia's stock index soared on the back of a growing economy.
• Ukraine's current account switched to a surplus due to falling imports and increased exports.
• The Mexican economy showed strong growth, driven by re-shoring and rapidly expanding auto exports.
• The Brazilian central bank cut its interest rate, as it sees the local economy expanding and inflation subsiding.
• The Central Bank of Egypt hiked its interest rate to a record high in an effort to curb galloping food and energy prices, which the Bank can't control anyway, making business conditions in the country even more difficult to entrepreneurs.

In the commodities sector, rice prices are rising on expectations of drought in Thailand and India's trade restrictions.

Overall, all major central bankers, except for the most intelligent ones, such as those in Japan and Brazil, continue to pursue an insane policy of sacrificing their local economic growth in favor of short-term political gains and the purely academic, illusory goal of "getting inflation under control." Inflation in food and energy prices is not something that central banks can control by definition.

Meanwhile, the global economy continues to rebalance itself, even in the face of these bureaucrats, thanks to entrepreneurs who are taking advantage of current opportunities and temporary imbalances in some markets to boost internal production as, for example, in Mexico, New Zealand, and Brazil.

Stock and crypto markets, on the other hand, are entering a state of lethargic correction. This is due to a general oversold condition and a lack of growth impulses, as it is widely expected that the Fed will not begin to ease monetary policy until 2025.

On Monday, manufacturing in Texas improved, but was still in contraction. NASDAQ went dormant as investors awaited new macro-updates this week (PMI, jobs). Some of them were betting that the closure of the Powell interest rate hike campaign was close, while others waited for a spectacular crash to happen, as the economy started to crumble under the excessive Fed pressure on lending markets. Meanwhile, BTC prices continued to hover just above 29K, setting a record for being stuck at this level for so long.

Details: The Fed of Dallas' Manufacturing Index rose in July to -20, with most sub-indexes showing some improvement. Production remained relatively stable, indicating that the state's manufacturing sector is still in contraction. Labor market measures suggested faster growth in employment and longer workweeks, while inflationary pressures increased, but wage growth showed signs of moderation.

Ron DeSantis, the Republican governor of Florida and a potential 2024 presidential candidate, said in New Hampshire that he would end the Biden administration's "war on bitcoin and cryptocurrencies.". It's nice to see a politician acknowledge the White House Administration's crusade against coins. Of course, we all know that politicians lie all the time, but the situation with political support for crypto is so desperate that we're glad to have even liars on our side.

Russia: The ruble-based MOEX Russia index soared by 2.2% to close at 3,074 on Monday, the highest since the crash triggered by Russia's invasion of Ukraine in February 2022 and reaching its pre-enclosure levels. Sberbank and VTB shares surged more than 6% and 3%, respectively, on the back of strong profit growth and guidances. Rosseti and its local subsidiaries also saw their shares soar after posting strong profit growth. The rally in the MOEX Russia index is a sign that investors are becoming more optimistic about the Russian economy. However, the market remains volatile, and there is still a risk of further sanctions from the West.

Ukraine: Country's current account switched to a surplus of USD 0.120 billion in June 2023 from a deficit of USD 0.173 billion in the corresponding month of the previous year.

You might ask yourself, how it happened? This is the country in a bloodiest war since WW2. Ukraine is subsidized by EU and USA with its GDP shrunk 30%. How might it be that its current account is positive? Here are some explanations of this phenomenon giving the intricacies of contemporary inter-governments trade and accounting.

There are several objective reasons why Ukraine's current account switched to a surplus in June:

The combination of these factors has led to a current account surplus for Ukraine. However, it is important to note that this surplus is likely to be temporary. As the war drags on, imports are likely to start to recover, and exports may start to decline. This could lead to a current account deficit in the future.

Now, you might ask yourself: "I thought that US and EU foreign aid has also to be reflected on the current account, increasing the deficit. Is it not?"

That is correct. Foreign aid is typically recorded as a negative entry on the current account. However, there is a way to account for foreign aid in a way that does not distort the current account balance. This is done by treating foreign aid as a capital inflow, rather than a current account inflow. This means that the foreign aid would be recorded as a positive entry on the capital account, which would offset the negative entry on the current account.

The reason for doing this is that foreign aid is not really a trade transaction. It is a transfer of money from one government to another, and it does not represent a purchase of goods or services from the recipient country. Therefore, it is more accurate to treat foreign aid as a capital inflow, rather than a current account inflow.

In the case of Ukraine, the foreign aid that it has received from the United States and the European Union has been used to finance imports of essential goods and services. This has helped to offset the decline in imports that has been caused by the war. As a result, Ukraine has been able to maintain a current account surplus, even though it has received a significant amount of foreign aid.

Mexico: The Mexican economy continued its strong growth in the second quarter of 2023, expanding by 0.9% quarter-on-quarter. This was the seventh consecutive period of growth, and the best performance among North American economies. Growth was broad-based, with all sectors of the economy contributing. Services expanded by 1%, manufacturing by 0.8%, and primary industries by 0.8%. The strong growth is being driven by a number of factors, including strong domestic demand, low unemployment, and rising wages. The government's fiscal stimulus is also playing a role. Importantly, this growth occurred despite Banxico’s aggressive tightening, following Fed's "lead".

Wheat: Wheat prices in the US have been volatile in recent weeks, as the war in Ukraine has disrupted global supply chains. Wheat futures touched a five-month high of $7.6 per bushel on July 26th, but they have since fallen sharply to $6.7 per bushel. The decline was driven by forecasts of rain in the Midwest and North Dakota, which eased concerns about crop damage as a result of the heatwave. The drop also outweighed the impact of Russia's shelling of grain infrastructure in Ukraine, which could have limited exports.

On Tuesday, Fitch lowered US rating but leaving markets unperturbed, PMI registered nine consecutive months of decline, job openings are at its lowest in 10 months, Nasdaq dipped a little on traders indecision, BTC continued to stagnate.

Details: The ISM Manufacturing PMI edged higher to 46.4 in July 2023, but below expectations. The ninth straight month of contraction in manufacturing activity (readings below 50) was driven by weak demand, slowing production, and ample supplier capacity. Prices fell at a slower pace, employment fell more, and supplier deliveries increased.

Job openings in the US fell to 9.582 million in June, the lowest since April 2021. Transportation, warehousing, and utilities, state and local government education, and federal government saw declines, while health care and social assistance and state and local government, excluding education, saw increases.

USA Rating: Fitch downgraded the US's credit rating from AAA to AA+, citing concerns about the country's fiscal health, citing "the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance" as well as "the repeated debt-limit political standoffs and last-minute resolutions". Fitch expects government debt to rise to 6.3% of GDP in 2023. Agency also mentioned tightening credit conditions, weakening business investment and a slowdown in consumption potentially leading to a mild recession.

However, the downgrade was met with a muted (if any) reaction from the stock market. This is likely because investors have become increasingly skeptical of rating agencies' credibility after 2007 financial debacle. Back then, several rating agencies gave AAA ratings to subprime mortgage securities that later turned out to be worthless.

Thailand: Country's manufacturing PMI fell to 50.7 in July 2023, the softest in 11 months, as output rose the least since June 2022. The trade war between the United States and China is having a negative impact on Thailand's manufacturing sector. Thailand is a major exporter to China, and the trade war has led to lower demand for Thai exports.

Myanmar: Country's manufacturing PMI increased to 51.1 in July 2023, the sixth straight month of expansion, boosted by a continued rise in customer demand and output. Myanmar's manufacturing sector is benefiting from a number of factors, including: strong economic growth, Myanmar's economy is growing at a rapid pace; low labor costs, Myanmar has some of the lowest labor costs in the region; strategic location, Myanmar is located in a strategic location between China and India, and this makes it a good hub for manufacturing exports to both countries.

On Wednesday, NASDAQ reacted violently to Fitch's decision, tumbling down by more than 2%. BTC, however, remained unperturbed above 29K. Other updates: Grayscale's report pointed to macro risks for crypto; Stock markets are falling across the EU following the US lead; the Brazilian central bank cut its key interest rate further than expected.

Italy: Italian stocks fell 1.15% on Wednesday after Fitch downgraded the US government's credit rating. The banking sector was among the biggest laggards. It shows how fundamentally flawed and unfair the contemporary, hyper-centralized financial system is.

The question of why the Italian stock market is falling after the US credit rating downgrade while the US market is rising has a distressing answer.

Fitch Ratings downgraded the US's credit rating from AAA to AA+. This was the first time in 70 years that the US's credit rating had been downgraded. The downgrade was due to concerns about the US's budget deficit and debt levels.

There are a few reasons why Italian shares sank after the US credit rating was downgraded. First, investors became more risk-averse and stock markets around the world fell. Italian shares were particularly hard hit, as Italy is one of the countries that is most vulnerable to the European debt crisis.

Second, the downgrade increased concerns about the stability of the global financial system. This led to a flight to safety, as investors sold riskier assets, such as Italian shares, and bought safer assets, such as US Treasuries (zic!).

Finally, the downgrade made it more expensive for Italy to borrow money. This is because investors demand a higher risk premium when lending money to countries with lower credit ratings. This increase in borrowing costs could make it more difficult for Italy to finance its government debt, which could lead to a sovereign debt crisis.

So, as is currently the case in every country in the world, the poor pay for the wealthy's debts and receive nothing in return but senseless political rhetoric. What can go wrong? :)

Brazil: The Brazilian central bank cut its key interest rate by 50 basis points to 13.25%, exceeding market expectations. The committee said that the easing cycle will depend on the evolution of inflationary dynamics.

The Brazilian central bank's decision to cut interest rates is a significant departure from the policies of the Fed, which has been raising rates in an effort to combat inflation. The Fed's policies have been criticized by most of independent economists, who argue that they are harming economic growth and leading to a recession.

The Brazilian central bank's decision is a sign that some countries are willing to take a different approach to monetary policy. These countries are not willing to sacrifice economic growth in order to try to curb food and energy prices inflation, which is driven by factors outside of their control.

The Brazilian central bank's decision is also a sign that these countries are starting to assert their independence from the US-led monetary system. They are no longer willing to follow the lead of the Fed.

The Brazilian central bank's decision is a welcome development. It shows that there are other countries that are willing to take a more thoughtful approach to monetary policy. The Fed's policies are suffocating economic growth and harming entrepreneurs. The Brazilian central bank's decision is a step in the right direction.

Albania: The Bank of Albania held the key policy rate at 3% in August 2023. Inflation is expected to cool, but normalization is not ruled out amid persistent risks.

There are a few reasons why the inflation rate in Albania is so low after the war hit the EU in 2022, especially compared to neighboring more developed countries like Italy: