Monday's Markets Update (April 29, 2024)

29 Apr 2024 by rate3

On Monday, stocks are mixed as investors monitor key earnings reports this week and await the Fed's rate decision on Wednesday. No rate change is expected. Comments on inflation will be closely followed. Tesla surged after receiving approval for its driver-assistance system in China. Internationally, the yen sharply rebounded, purportedly after BoJ intervention. BTC and ETH continued to drift lower, with the rest of the crypto market lazily following suit.

Details

Texas manufacturing continued to struggle in April, with a key index flat at -14.5. However, there are signs of potential improvement. New orders rose, and production, capacity utilization, and shipments indexes turned positive. While companies remain cautious, their outlook improved, and they expect future production to pick up. (FedD)

Crypto

In a study of a probability of profiting with meme-coin researchers find out that over 99.5% of memes created on the Runes platform have not gained traction. Analysts say most are acquired through airdrops or cheap "fair launch" minting. (source)

World Markets

German consumer prices rose 0.5% in April, slightly lower than expected. This follows a similar increase in March. Historically, German inflation has averaged a low 0.21% monthly increase, with past highs and lows far outside the recent range. (DeStat)
Spain's inflation rose slightly to 3.3% YoY in April, driven by higher gas and food prices. Core inflation and that on monthly basis dipped, however, and remains below forecasts. (INE)
Business confidence in the Eurozone fell in April, with manufacturers especially pessimistic, reaching a 2-year low. Service providers, retailers, and constructors also saw morale decline. However, consumer sentiment edged up slightly. Inflation expectations also dipped a bit. Business sentiment worsened in France and Italy, but improved in Spain, Germany, and the Netherlands. (EU)

Currencies

The Japanese yen rebounded after falling to a 34-year low. This suggests possible intervention by Japanese authorities to curb the yen's weakness. The Bank of Japan kept interest rates low, making the yen less attractive compared to higher-yielding currencies.

Comment: Is That It?

Powell aims for low inflation around 2% and economic growth at 2-3%, reminiscent of his youth. However, achieving this may be challenging given current economic realities.

For over 30 years, the global expansion of US corporations and economic growth relied on the weaknesses of currencies in Asia, Latin America, and Africa. This allowed the US treasury to print money and export inflation. However, this dynamic has changed.

In the present circumstances, Powell's goal of 2% inflation may only be possible if the economy enters a recession, resulting in stagnation or even deflation.

While factors like cheap labor from Mexico have helped in the past, geopolitical tensions and shifts in global manufacturing may impact future pricing dynamics.

If Powell continues to prioritize a 2% inflation target, it could lead to stagflation, where economic growth is limited by rising prices.