Friday's Markets Update (March 29, 2024)

29 Mar 2024 by rate3

On Friday, the stock market is closed for the Easter break. Powell delivered his remarks at the San Francisco Fed, indicating he's not in a hurry to cut rates, contrary to majority expectations. This may reflect negatively on Monday's market opening. Globally, gold continues to outperform, hitting a new ATH at $2,230 while steel prices fall to 4 years low on weakening Chinese economy. BTC and ETH remained within narrow ranges of $72K-$68K and $3.6K-$3.4K on hourly charts, forming a double top pattern on daily ones. Meanwhile, Bitcoin Cash keeps rallying, rising approximately four times YoY and outperforming all major alts except Solana, which surged approximately eight times YoY.

Details

Core inflation (PCE), excluding food and energy, remained steady in February at 0.3% monthly and 2.8% annually. Personal income grew, but at a slower pace than January. Spending surged in February, driven by services like finance and transportation, along with car purchases. This suggests inflation might be plateauing, while consumer confidence is rising. (BEA)

Crypto

Bitcoin Cash (BCH) saw a dramatic reversal in mid-February, skyrocketing 55% in a week. This surge comes ahead of a key event: the halving on April 3rd, which cuts new coin creation in half. This, along with the launch of BCH futures contracts on Coinbase and a rising network hash rate, has fueled a return of investor interest and speculation about BCH's future. Even BCH co-founder Roger Ver is reigniting the debate about BCH's role as the "true" Bitcoin. (source)
A UK government task force published a report exploring how blockchain technology can be used in investment funds. This builds on their earlier work and looks at using tokens as collateral and streamlining the investment process. The government welcomes this progress, highlighting the UK's position as a leader in financial innovation. (source).
Crypto analysts argue that cryptocurrencies, particularly meme coins and NFTs, are better suited for the modern attention economy than Web2 platforms, which struggle to accurately measure and compensate user attention. (source)

World Markets

Ukraine's current account deficit shrank significantly to $111 million in February 2024, compared to $705 million a year earlier. This is due to a sharp drop in both service and good imports. Smaller surpluses from other areas partially offset this improvement. (UA)
Vietnam attracted $4.6 billion in foreign investment in the first quarter of 2024, up 7.1% YoY. Pledges for future investment also rose, indicating continued growth. Manufacturing received the most investment, with Singapore and Hong Kong as the top sources. (MPI)

Currencies

Commodities

Gold prices remained near record highs above $2,230 despite thin trading. This is due to expectations of central banks cutting rates, including the Fed's possible move in June. Geopolitical tensions also boosted demand for safe-haven gold.
Steel prices plunged to a 4-year low due to weak demand in China. Steel mills are taking in iron ore, but production is down as construction slows. This reflects a gloomy outlook on China's property market despite government attempts to boost it.

On Week 12, locally focus is on jobs data and economic activity indicators. Globally, inflation reports and manufacturing health are key. Trade data and interest rate decisions will also be watched closely.

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Comment: On falling PMI in major States.

So, we still have burgeoning stocks coupled with a weakening economy, along with Powell's constantly dwindling influence. He continues to play political games in an election year, giving the market hints on impending cuts, only to retract them, trying to navigate between pressure from both Democrats and Republicans. Meanwhile, economic data from the week confirmed the economic slowdown.

Democrats are worried about their falling popularity among key, low-income electorate due to high rates, affecting mortgages and slowing the economy. Plus, accumulated inflation pressure is unbearable. At the same time, Republicans enjoy rates, which undermine Democrats' position. Let's see how things develop.

In Kansas, the main manufacturing industries heavily impacting regional PMIs include transportation equipment manufacturing (35%), machinery manufacturing (25%), and food manufacturing (20%).

Corporations such as Spirit AeroSystems Holdings Inc., Textron Aviation, and Cargill are major players in transportation equipment manufacturing, machinery manufacturing, and food manufacturing respectively, significantly influencing regional PMIs.

In Chicago, the dominant manufacturing sectors influencing regional PMIs are machinery manufacturing (30%), fabricated metal product manufacturing (25%), and food manufacturing (20%).

Prominent corporations like Caterpillar Inc., John Deere & Company, and Archer-Daniels-Midland Company are key contributors to machinery manufacturing, fabricated metal product manufacturing, and food manufacturing respectively, impacting regional PMIs.

In Michigan, key manufacturing industries significantly affecting regional PMIs are transportation equipment manufacturing (40%), machinery manufacturing (25%), and fabricated metal product manufacturing (20%).

Companies like General Motors, Ford Motor Company, and Fiat Chrysler Automobiles are dominant players in transportation equipment manufacturing, significantly affecting regional PMIs.

So, falling regional PMIs indicate a rapidly worsening situation in key industries such as transportation, food, and machinery across the country. The Fed must pay attention to that.