Tuesday's Markets Update (February 13, 2024)

13 Feb 2024 by rate3

On Tuesday, yearly inflation continued to decrease (3.1%) but the monthly core inflation rose higher than expected and that, coupled with technical indicators set on the over-bought, caused markets to overreact, leading to all major stock indexes dropping sharply. On the world's markets, Euro hit 3-m-low on lower chances of early rate cuts by Fed and economic sentiments in Eu rose slightly. Crypto market was also in red, with BTC correcting more than 1% and ETH - flat. Litecoin (-6%), BCH (-4%), Chainlink (-3%) declined more than the rest of alts' market. Other news: 8.2M 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.