Friday's Markets Update (January 26, 2024)

26 Jan 2024 by rate3

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.