Thursday's Markets Update (February 29, 2024)

01 Mar 2024 by rate3

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?