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SVET Reports

Monday's Markets Update (August 19, 2024)

On Monday, stocks maintained their upward trend, capitalizing on the previous week's gains and adding over $3 trillion in value from this month's lows. The S&P and the Nasdaq marked their eighth consecutive day of gains. Investor optimism is high ahead of a key speech by Powell. Globally, the euro, yen, and British pound are up sharply as the dollar dropped to its eight-month low on renewed hopes for Fed cuts. Gold is at its highs as geopolitics remain tense. Meanwhile, BTC and ETH are stuck under $60K and $2.6K amid political uncertainties.

Crypto

The Wisconsin Investment Board recently revealed significant investments in BTC ETF in a filing with the SEC. It now holds about $100 million in BlackRock's Bitcoin ETF, increasing its shares from approximately 2.45 million in May to about 2.9 million as of June 30. Notably, it no longer holds shares in the Grayscale Bitcoin Trust, which it had previously invested in. This board manages Wisconsin's public retirement and trust funds, typically focusing on traditional financial assets. (source)

World Markets

Malaysian economy continues to grow. Malaysia's imports surged 25.4% in July, hitting a record high. Strong domestic demand drove growth across sectors, especially manufacturing and agriculture. Imports from major partners like Chin and the US increased, while those from Saudi Arabia declined. 1Y trend: "Up" (Dosm)
Thailand's economy grew by 2.3% YoY - faster than expected in Q2, driven by exports and increased government spending. While private consumption slowed due to high costs, industrial output rebounded. The overall outlook is positive, with expected growth between 2.3% and 2.8% for the year, boosted by tourism recovery. 1Y trend: "Side" (Nesdc)
Comment: China's Stasis

China's housing market is in crisis. Home prices are plummeting, and developers are struggling with debt. The government is hesitant to bail them out, fearing overreliance on real estate and attempting to modernize the economy by pushing for tech. This is impacting world's demand for resources, a crucial sector for the global economy.

Currencies

The dollar is falling to its eight months low, as investors bet on Fed rate cuts. Weak economic data and recession fears are driving the decline. The yen, Aussie, and kiwi are gaining ground against the dollar. Markets await Fed Chair Powell's speech for further clues on interest rates. 1Y trend: "Up"

Commodities

Gold holds near its record high amid geopolitical tensions and economic uncertainty. Investors seek safe haven as US-Middle East conflict escalates and Ukraine-Russia tensions rise. Market expects Fed rate cuts but awaits Powell's speech for clarity. 1Y trend: "Up"
Oil market continued to oscillate between deteriorating world's economy and rising Middle East tensions. Prices plunged over 2% as ceasefire talks in Gaza and weak Chinese demand weigh on the market. Secretary of State Blinken is pushing for a ceasefire to ease geopolitical tensions. OPEC and IEA cut demand forecasts, adding pressure to oil prices. 1Y trend: "Up"

Comment: World's Status

Markets are in disarray. Geopolitics is being pushed towards confrontations from all sides. With weakening resistance from the dominant world power, whose internal political struggles overshadow any external policies, the global landscape is increasingly unstable.

Additionally, due to the over-tightening of the Fed, the world’s economy is actively declining, leading to growing unemployment. Exceptions include certain localities in Southeast Asia, like Malaysia and Taiwan, which are benefiting from businesses relocating their activities from China.

The dollar is down, but other currencies are fluctuating as central bankers begin to weaken their policies in response to deteriorating local economies. Overall, we are on the brink of stagflation. Bankers will fear cutting rates enough to boost the economy because of inflation concerns, while entrepreneurs will be reluctant to produce as rates remain high and costs continue to rise, exacerbated by ongoing energy inflation and increased geopolitical tensions.

This situation will persist until a political change occurs, bringing new leaders who embrace a more practical, less ideological approach to politics. In the meantime, the trader's game is volatility.