Thursday's Markets Update (April 11, 2024)

11 Apr 2024 by rate3

On Thursday, stocks rebounded on technical over-sold indicators after yesterday's slump despite rising PPI and falling unemployment. The rise was led by Apple and Nvidia (up over 3%). The Fed likely wants to see further improvement before cutting rates. Internationally, the ECB holds its rate steady at 4.5%, prompting depreciation of the EURO on dovish comments, while oil is edging up due to growing tensions in the Middle East. BTC and ETH lingered just above 70K and 3.5K, respectively. Most of the crypto market is in the red, led by Uniswap, which dropped 10% on an SEC prosecution.

Details

Producer prices (PPI) rose modestly (0.2%) in March, the least since December. This follows a larger increase in February. Prices for services remained steady, but goods prices dipped slightly due to lower gasoline costs. Despite the monthly slowdown, annual producer inflation reached a 10-month high (2.1%). (BLS)
Jobless claims dropped to a 1-month low (211th) in the week ending April 6th, defying expectations. This reversal follows an upward revision in the prior week's data. The tight labor market aligns with the strong jobs report, potentially giving the Fed more room to keep interest rates high to fight inflation. (DOL)
30-year fixed mortgage rates hit a 1-month high at 6.88% on April 19th, up slightly from the prior week. This rise mirrors a similar increase in Treasury yields. Inflation data may seem stable, but financial markets are wary. Mortgage rates were significantly lower (6.27%) a year ago. (Fred)

Crypto

Grayscale's Bitcoin ETF saw a surprisingly small outflow ($18 million) on Wednesday, a record low. This follows comments from the CEO suggesting selling pressure is fading. Analysts point to lower bankruptcy-related sales and high fees (1.5%) as reasons for the shift. (source)

World Markets

The ECB kept interest rates at record highs (4.5%) for a fifth month. While inflation is easing, the bank remains cautious due to high service prices. They might cut rates if they're confident inflation is on track to their 2% target. Future decisions will depend on data. (ECB)
China's consumer inflation slowed sharply in March, rising only 0.1% YoY vs expectations of 0.4%. Food prices led the decline, falling due to lower pork and vegetable costs. Non-food inflation also eased. This comes after a larger increase in the previous month. Monthly CPI saw its biggest drop in 3 years. (CH)
Brazilian retail sales defied expectations, rising 1% in February (following a revised 2.8% jump in January). This suggests consumer strength despite high interest rates. Sales growth was driven by pharmaceuticals, furniture & electronics, and personal care items. However, lower sales of food and fuel limited a steeper increase. Year-on-year, sales surged 8.2%, the highest in nearly two years. (IBGE)
Argentina's central bank cut interest rates again (down to 70%) despite raging inflation (over 275%). This is the 3rd cut since December. It is prompted by Milei's libertarian ideology, which aimed at maintaining the competition among producers rather than cutting off their money sources. While inflation has slowed recently, the country still faces recession and rising poverty despite positive investor sentiment. (BCRA)

Currencies

The euro dropped to a 2-month low ($1.07) after the ECB held rates steady. The ECB hinted at future rate cuts if inflation keeps falling. Investors are now expecting a small rate cut in June and a bigger one by year-end.
China's Yuan strengthened (7.25) after the central bank set a stronger exchange rate (7.0968) and data showed lower inflation. This follows a weakening due to hot inflation data from oversees. Strong car sales suggest recovering consumption.

Commodities

Oil prices stayed above $86 per barrel on worries of a wider Middle East conflict disrupting supply. Stalled peace talks between Israel and Hamas and potential Iranian retaliation for suspected Israeli attacks are fueling concerns. This comes despite a larger-than-expected US oil inventory build.

Comment: Markets Are Markets

Hearing "meme-coins" raises the brows of many. However, markets are markets and there is no "easy money" in any of them. Doubts? Just take a look at what experienced meme-coin traders are advising their followers:

Rely on past successes. Find meme coins that are 1st on their blockchain;
Buy when nobody else wants to buy;
Set aside 20%-30% of your profits in a separate wallet.
Be in the 1% minority;
Have patience and conviction;
Don’t blindly cut losses quickly if you have a sound thesis;
Make contrarian plays.
(source)
Want more pragmatic advises? Here you go:

Not constantly rotating capital
Utilizing sniper bots
Following insiders
Maintaining small bets
Adhering to a consistent strategy
Sticking with winning trades while cutting losses
(source)
So, basically, they are advising prudent capital management, thorough research, sticking to winners while cutting others short, and contrarian thinking. So much for "a Gen-Z casino" :) I bet even the old Warren would be proud :)