SVET Reports
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, stocks indexes closed near record highs, with the S&P 500 and the Dow Jones rising. Nvidia surpassed a $2 trillion valuation. Crypto market was mixed with BTC and ETH edging down about one percent while some major alts such as Bitcoin Cash, Polkadot, Cosmos and Cardano showing a positive dynamic with Uniswap rocketing up by more than 53% and closing above 11 at its 2-years 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.