SVET Markets Weekly Update (April 13–17, 2024)

17 May 2024 by rate3

On Week 20, major stock indexes reached all-time highs, despite worsening macroeconomic data worldwide hinting at a looming recession. Traders are buoyed by expectations that the Federal Reserve will respond to the deteriorating economic conditions with rate cuts sooner than anticipated. However, this optimism is not confirmed by Fed officials, who continue to emphasize a “higher for longer” stance on interest rates.

On the global markets, there is a frenzy in commodities driven by a mix of geopolitical tensions and ongoing tariff wars, compounded by expectations of increased stimulus from China to support its struggling real estate market and consumers.

Meanwhile, the crypto markets experienced a rejuvenation after over a month of bearish declines. This sudden spike followed a rise in stocks, spurred by macroeconomic data indicating a slowdown in inflation, which traders interpreted as a potential catalyst for Fed rate cuts.

On Monday, stocks paused as investors wait for inflation data. Apple surged on news of a potential integration with ChatGPT. Globally, copper prices continued to rise on demand expectations, while the Euro keeps depreciating against the dollar on expectations of ECB cuts. BTC surged above 63K on sudden buying, while ETH remains under 2.9K. The rest of the crypto market is mixed, with Solana adding 2% while Avalanche dropped 1%.

Details

Consumers expect prices to rise faster in the next year, with inflation forecasts hitting a 6-month high of 3.3%. This applies to everyday items like groceries and gas, as well as housing and education. Long-term inflation views are mixed, while wage growth expectations dipped and job security worries rose. (NyFed)
Crypto

Financial advisors rarely talk about crypto with clients (only 1%) due to legal worries. Even though most (89%) have never given crypto advice, a large portion of crypto owners (67%) want professional guidance, especially those looking to grow their holdings or hedge against inflation. As younger, tech-comfortable investors enter the market, demand for crypto and other digital assets is likely to grow. (source)
World Markets

India’s yearly inflation dipped to a new low of 4.83% in April, staying within the central bank’s target. Housing and clothing costs slowed, but food prices rose. This suggests the central bank might keep interest rates steady. (Mospi)
Angola’s inflation hit a 7-year high in April 2024, reaching 28.2%. This ongoing surge is linked to a weaker currency and rising food prices. The government’s efforts to control foreign exchange haven’t helped either.
Currencies

The dollar dipped to 105 as investors awaited US inflation figures that could impact Fed interest rate decisions. Fed officials signaled a wait-and-see approach on rate cuts, despite rising inflation expectations. With mixed economic data, markets are looking to April’s inflation report for clues on future rate changes.
The Euro is strengthening as investors wait for economic data that will influence central bank decisions. The European Central Bank is expected to cut rates sooner than the US Federal Reserve, which might keep the Euro strong. The Bank of England might also follow suit with a rate cut later this year.
The Chinese yuan weakened against the dollar due to a mix of factors. Inflation is rising slightly, while other economic data is weak. The US tariff announcement added pressure. China’s central bank may cut rates to counter this, independent of US actions.
Commodities

Copper prices continue to surge in May (4.76 per pound), hitting a two-year high due to strong demand for electric vehicles, renewable energy and automation. Growing concerns about future shortages fueled the rise as mine production struggles to keep pace. China, a major consumer, continues to import copper despite high prices, while limited supplies squeeze smelters. This trend could lead to a 10% drop in global copper output in 2024.
Comment: It’s Wrong Every Way

From the plains of Ukraine to the seas of the Philippines, from Brazilian jungles to Middle Eastern deserts, from the ice lands of Finland to the grass plains of Africa, we can see that Boomer policy to create a worldwide elite bureaucracy, supported by aviacarriers, to rule the entire world has backfired massively.

We have authoritarians after authoritarians going public and promising us not a better future for ourselves or our children, but a war without borders, sense, or end — a war unleashed for a whole bench of weirdly wrong reasons.

Although everyone on the planet from Gen X, Millennials, and Gen Z, except of course some outlayers, do not want that future for themselves. The majority of Gen X, Millennial, and Gen Z have embraced new communication technologies since birth or young ages, and now all three generations have accumulated enough personal experience of communicating with total strangers from other parts of the world to not believe in Boomers’ nonsense about “nationalities” and “separate paths to a bright future in an underground bunker”.

There is no such thing. Humans have always been cross-pollinating, both physically and mentally, like crazy. In twenty-first century it makes “nationality”, “state”, or “border” purely inventions of megalomaniacs who use the primal fears of crowds to gain and maintain power no matter what.

Instead of what we are proposing is not “multi-polarity” (which means the several authoritarians and their families ruling us for eternity), but decentralization — meaning that we, the three generations, rid ourselves of megalomaniacs in power and govern ourselves with the tools we have created.

Yes, there may be wars, and they may even be bigger ones, but they will not result in the incredible misery and enslavement that Boomer-led governments promise us.

Eternal War or Decentralized Resistance. You choose!

On Tuesday, stocks rose a bit as investors digested the mixed inflation data. Producer prices climbed in April. Powell cautioned about inflation and advised staying patient with rate hikes. However, markets still expect cuts by September. Meme stocks like GameStop and AMC soared. On the world markets, copper prices continued to edge u, while German investors’ confidence increased on GDP growth expectations. BTC fluctuated back to 61K, dragging most of the crypto market into the red again. At the same time, meme-coin Pepe surged again by more than 3% (+30% in the past seven days).

Details

Small business confidence ticked up slightly to 89.7 (previous 88.5) in April, but remains low. Inflation is still the top concern, but fewer plan price hikes. Hiring is up a bit, with many open positions unfilled. Sales outlook is still negative, though less so. Overall, cost pressures persist, and owners are pessimistic. (Nfib)
Core producer prices, excluding food and energy, surged 2.4% year-over-year in April, the highest in 8 months. However, a 3.9% rise in cost for portfolio management was a main factor. Monthly prices also jumped sharply, exceeding expectations. (BLS)
Consumer debt hit a record $17.69 trillion in Q1 2024, up $184 billion from the previous quarter. Mortgages and auto loans drove the increase, while credit card balances dipped slightly. Delinquency rates rose to 3.2%, but are still lower than pre-pandemic levels. (NYFed)
Crypto

Wisconsin became the first US state to invest in Bitcoin, buying nearly $100 million worth. (source)
World Markets

German economic confidence jumped to a two-year high in May (to 47.1 from 42.9), exceeding expectations. Both current conditions and future outlook improved, fueled by strong Q1 GDP and positive signs in Europe and China. Sectors like construction and domestic spending are seeing a brighter future. (Zew)
South Africa’s unemployment hit a new high of 32.9% in Q1 2024, with over 8 million jobless. Job losses were widespread, except in trade and manufacturing. The broader unemployment rate, including discouraged workers, is even higher at 41.9%. Youth unemployment remains stubbornly high at nearly 60%. (ZA)
Palestine’s inflation dropped to 33.5% YoY in April, down from a record high 37% in March. Prices for some goods like food decreased, while others like tobacco increased more quickly. Monthly inflation fell to -1.9%. (Pcbs)
Currencies

Dollar dropped after mixed inflation data. Producer prices surged, but a prior month’s revision offered some ease. Fed Chair Powell signaled holding rates despite inflation concerns. Markets now look to tomorrow’s CPI data for clues on future rate cuts. Dollar weakened against most major currencies except the yen and Euro.
The Chinese yuan hovered near a two-week low of 7.24 against the dollar before a key Chinese interest rate decision. The central bank is likely to hold rates, but economic signals are mixed. Import growth surprised analysts, while exports remained steady.
Commodities

The price of Brent crude oil stayed around $83.50. It rose slightly the day before due to worries about Canada’s wildfires impacting their oil production. Iraq reversed course and said they’ll follow OPEC+ production cuts, easing some supply concerns. Investors are now waiting for reports this week for a clearer picture of the oil market.
Comment: The Dawn of the Cortex Era

There’s one striking difference between bones of Neanderthals found in Europe as well as in Asia up to the Altai Mountains and those of Homo Sapience found all across the world. Besides crane size and bone structure, which mark Neanderthals as smarter and much stronger than our early ancestors, more than 50% of all Neanderthals’ remains have marks of violence imposed on them by other Neanderthals. On the other hand, Homo Sapiences’ “domestic violence” percentage was much lower.

It doesn’t mean that Neanderthals were just brutes. Not at all, they were remarkably tolerant too, but only to members of their own small groups. For the rest of the Neanderthals’ world, they had only one means of communication — the weaponed aggression. Not surprisingly, then, that there had never been too many Neanderthals around. Estimates put their number to about 10 thousand at around 45,000–40,000 BC — same as the number of humans living at the same time. However, we are still here, and they are not. All because our genetic predecessors used much more apt adaptation and survival strategy — tribal cooperation.

If you are not persuaded, look to the mirror. Where are your big sharp teeth and other necessary appendages of aggression? They are gone with those who were stupid enough to use them against their own kind. A negative selection process was in play for millions of years. We are the proud result — a smart but defenseless and caring animal with a lot of friends. We have to stay such if we want to succeed in that survival game.

Yes, a hypothalamus with its urge to eat, to multiply or to fight or flight, is still right in the center of our brain, but so many of us act like it is the brain. It is not. Most of our brain mass is there for us to communicate, to interact and to invent.

So, yes, we had had “great” man-apes like Ashurbanipal, Genghis Khan or Napoleon grabbing huge pieces of land and exterminating millions of humans for the sake of their own egos. But their “empires” were short-lived and Romans or Persians, or Brits managed to build much longer world-wide presence based on a cooperation as much as on a violence. So, we — humans — are slowly but surely evolving from being hypothalamus-driven monkeys to cortex-led individuals.

Let’s not stop there just because several aging ape-man on a top are currently enslaved by their primordial instincts rather than by better parts of their cranial cavity.

On Wednesday, stocks rose sharply on a low core inflation surprise, supported by the decline in retail sales. The S&P and Nasdaq hit new all-time highs, with tech stocks leading the gains. Globally, silver reached a 10-year high due to a weaker dollar. BTC reacted strongly to the stock rise, jumping up 6%, while other coins followed suit, with Solana, Polkadot, and Avalanche adding more than 7%.

Details

Core inflation, excluding food and energy, fell to a 3-year low of 3.6% in April, down from 3.8% previously. Housing costs remain high but are rising slightly slower. Overall inflation is moderating, matching forecasts. CPI rose to a new high of 3.4% in April (313.55, averaged 123.74 points 1950–2024, ATH 313.55 in Apr 2024, ATL 23.50 in Feb 1950), below expectations. This follows a slightly higher increase in March. (BLS)
Retail sales unexpectedly stalled in April after a weak March. This indicates a slowdown in consumer spending, with some categories like clothing showing growth but others like furniture dropping. Core retail sales, rose slightly. (Census)
Manufacturing in New York contracted further in May (Empire State Index -15.6). New orders and employment continued to fall, but businesses are cautiously optimistic about a future rebound. (NYFed)
Crypto

El Salvador mined nearly 474 Bitcoin worth $29 million using geothermal energy from the Tecapa volcano since 2021, boosting its national crypto holdings to over $354 million. (source)
World Markets

The Eurozone bounced back in Q1 2024, growing 0.3% after a period of stagnation. This is the strongest quarter since late 2022, with key economies like Germany and France showing improvement. The outlook is positive with inflation easing and growth expected near 0.8% for the year, fueled by consumer spending and trade. However, investment growth might slow down. (EU)
India’s trade gap widened to $19.1B in April, exceeding expectations and reversing March’s improvement. Imports surged 10.3% year-over-year despite a weaker rupee, driven by expensive gold, oil, and electronics. Exports grew at a slower pace (1.1%), with some gains in electronics and chemicals. (IN)
Peru’s economic growth came to a halt in March, dropping 0.28% compared to last year. This follows two months of gains. Construction and several service sectors led the decline, while agriculture and hospitality continued to grow. Mining slowed but remained positive.
Inflation in Nigeria keeps rising, hitting a 28-year high of 33.69% in April. This is due to a weaker naira and subsidy removals. Food prices surged the most, but housing, utilities, and transportation also climbed. Even core inflation (excluding volatile items) hit a record high. While the monthly price increase slowed slightly, inflation remains a major challenge. (Nig)
Currencies

The dollar index fell to a five-week low on renewed Fed cuts hopes, again :)
The Euro strengthened to a five-week high on expectations of central banks in both the US and Europe cutting rates.
Commodities

Silver prices surged to 10-years-highs above $29 due to weaker-than-expected inflation data. Slower price increases and stalling consumer spending raise hopes for a Fed rate cut in September.
On Thursday, stocks seesawed and closed in the red, still holding near record highs as housing and industrial data hinted at a recession. GameStop and AMC plunged. On the world’s markets, EU stocks held around the flatline despite easing inflation as the Japanese economy contracted. BTC (-2%) and ETH (-3%) declined.

Details

Building permits dropped 3% in April, missing expectations. Permits for apartments sank to a 4-year low, while single-family permits also declined. Only the South and Northeast saw permit increases, with all other regions experiencing decreases. (Census)
Housing starts rebounded in April (5.7%) but missed expectations (1.42M). High costs continue to dampen the market, with single-family starts dipping. Construction rose in some regions but fell in others. (Census)
Jobless claims fell slightly to 222,000 but remain above average, suggesting a weakening labor market. (DOL)
The Philly Fed manufacturing index fell sharply in May, missing expectations. New orders and shipments contracted for the first time in months. Despite some positive signs in employment indicators, factories are still shedding jobs. Prices remain elevated but below historical averages. Businesses are cautiously optimistic about future growth. (PhilFed)
Crypto

Tokenized treasuries, digital versions of government bonds on blockchains, are surging in popularity. About $1B in treasury notes has been tokenized on blockchain. The launch of a major tokenized treasury fund by BlackRock is seen as a key driver, with data showing a sharp rise in tokenized treasuries since then. (source)
World Markets

Turkey’s vehicle sales plunged to a 16-month low of 75,919 units in April, down significantly from March’s 109,828. This follows a record high of 158,653 units in December 2023. (Osd)
Italian inflation dipped to 0.8% in April 2024, down from 1.2% in March. This suggests the ECB’s policies are working as inflation falls across most goods and services. Energy prices continue to decline, except for regulated energy. (Istat)
Japan’s economy shrank more than expected in Q1 2024, contracting 0.5%. Weak consumer spending, down for a fourth quarter, and a drop in capital expenditure led the decline. Despite a quake and production cuts, net trade wasn’t a major drag. (Cao)
On Friday, after record highs mid-week, stocks were flat. Investors are weighing potential interest rate cuts against mixed economic signals. While some sectors gained, meme stocks continued to slide. Mega-cap tech saw mixed results, but major indexes are still up for the week. Globally, silver jumped, closing a statistically rare 90x gap with gold, while nickel, aluminum, and copper continued to rise on a mixture of supply concerns and hopes for rate cuts. BTC was pushed up again to +66K by optimistic bulls, staking in a continuation of the stock rally. ETH went over 3K for the first time in two weeks. SOL, LINK, AVAX, and BCH increased by 4% or more.

Crypto

South Korea’s crypto market is booming with 12.9% of the population actively trading (6.45M traders). DailyTsurged 24% and market cap rose 53% in a year (KRW 43.6T). However, the volatility (61.5%) remains high. (source)
World Markets

Eurozone inflation remained stable at a 3-year low of 2.4% in April, down significantly from 7% a year prior. Services and some goods saw price slowdowns, while food and energy prices showed mixed movement. Core inflation, excluding volatile items, hit a 26-month low, and the European Commission expects inflation to fall further in 2025. (Estat)
Russia’s economy grew faster than expected in Q1 2024 (5.4%), but concerns linger. The rise is fueled by war spending, raising doubts on long-term health. High inflation and workforce loss due to mobilization threaten further growth. IMF forecasts 3.2% growth for 2024, while the Ministry of Economy is more cautious at 2.8%. (Rstat)
Currencies

Chinese yuan weakened to 7.23 after mixed economic data. Factory output surprised on the upside, but consumer spending remained weak. Real estate investment continued to decline. To counter this, China launched a stimulus program by auctioning special bonds.
Commodities

Silver surged to a decade high of $30 per ounce, driven by strong investor and industrial buying. Physical demand is high, while investment funds remain on the sidelines. The gold-to-silver ratio is narrowing (from 90 to 70, suggesting silver could climb further if the US economic data stays positive and interest rates fall.
Copper prices soar near record highs (5.13) on worries about tight supply and rising Chinese demand fueled by stimulus and infrastructure spending. Speculation of limited mine expansion due to mergers and acquisitions further intensifies supply concerns.
Aluminum prices hit a near two-year high in May at $2.6K per tonne due to concerns about tight supply. Sanctions on Russia, logistical problems, and potential power issues in China all fueled the price increase.
Nickel prices jumped to an eight-month high (21K) due to unrest in New Caledonia, a key producer. Protests and riots there threaten to disrupt nickel mining, raising concerns of shortages despite a projected surplus. This, along with inflation fears and green energy optimism, fueled the price increase.
On Week 21, Fed members speeches and global central bank decisions will be in traders’ cross hair, PMI readings for manufacturing and services across major economies, plus inflation updates and retail sales data are expected. Earnings season winds down with reports from key companies.