Tuesday's Markets Update (January 23, 2024)

23 Jan 2024 by rate3

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.