SVET Reports
Tuesday's Markets Update (September 17, 2024)
On Tuesday, stocks traded flat to the red as investors awaited the Fed's rate decision tomorrow. The market is divided on the size of the expected rate cut (25 or 50 points). Mega-cap stocks showed mixed performance. Retail sales unexpectedly rose in August, defying expectations. Internationally, the economic sentiment for the Euro Area dropped to an eleven-month low. BTC and ETH attempted to surge yet again, with BTC reaching above $60K, where it was met by strong bear resistance, unlikely to soften before political uncertainties ease.
Details
Retail sales rose slightly in August, defying expectations of a decline. Sales increased in various categories, including miscellaneous stores, nonstore retailers, and health and personal care stores. However, sales fell in sectors like gasoline stations, electronics, and food. Excluding certain categories, retail sales rose 0.3% in August. YoY retail sales rose 2.1% in August compared to the previous year, following a revised 2.9% increase in July. Since 1993, retail sales have averaged 4.75% year-over-year growth, with a record high of 52.5% in April 2021 and a record low of -19.9% in April 2020. 1Y trend: "Down" (Census)
Industrial production remained unchanged in August YoY. Manufacturing output rose slightly, but mining and utilities production declined. 1Y trend: "Side" (FED)
The NAHB/Wells Fargo Housing Market Index increased in September, breaking a streak of declines. The gauge for current sales conditions, sales expectations, and buyer traffic all improved. The share of builders cutting prices also decreased. This suggests a slight improvement in the housing market. 1Y trend: "Down" (Nahab)
Crypto
65 countries are actively exploring CBDCs. All G20 nations are involved, with 19 in advanced stages. 44 countries are piloting CBDCs, it's 22% increase from previous year. This global trend is driven by declining cash usage and concerns about cryptocurrencies and tech giants' influence on money creation. (source)
World Markets
The ZEW Indicator of Economic Sentiment for the Euro Area continued to decline in September, reaching an eleven-month low. This reflects growing uncertainty about the economy and monetary policies. Analysts are divided on the outlook, with more expecting no change or a deterioration. The current economic situation and inflation expectations have also worsened. 1Y trend: "Down" (ZEW)
Japan's trade deficit narrowed in August, but remained above expectations. Exports increased for the ninth consecutive month, but at a slower pace than forecast. Imports grew at the slowest rate in five months, falling short of estimates. 1Y trend: "Up (improved)" (JP)
India's trade deficit widened to $29.7 billion in August, the highest in ten months. Exports declined by 9.3%, while imports increased by 3.3%. Rising shipping costs and a slowdown in China are impacting exports. 1Y trend: "Down (worsen)" (IN)
Mongolia's trade surplus narrowed in August, primarily due to a surge in imports, particularly of vehicles, machinery, and appliances. Exports grew at a slower pace, led by sales of natural stones and precious metals. China was Mongolia's largest trading partner (exports - 91.9%, imports - 40.2%; Russian exports - 25%), both for imports and exports. 1Y trend: "Down (worsen)" (MN)
Indonesia's trade surplus narrowed in August despite a surge in exports. Exports to major markets like the US, Japan, ASEAN, and the EU grew significantly. However, imports also rose due to government import duties. For the year, Indonesia's trade balance remains positive but has declined compared to the previous year. 1Y trend: "Side" (ID)
Commodities
Sugar prices have risen (20) due to lower production in Brazil and rising oil prices. While India's large crop and Thailand's production challenges have influenced prices, overall global supply concerns remain. 1Y trend: "Down"
Palladium prices hit a five-month high (1040), driven by increased ETF holdings, primarily due to rising European demand. Analysts predict that palladium prices may face downward pressure in the long term due to potential decreases in global vehicle production and the substitution of palladium with platinum in autocatalysts. 1Y trend: "Side"
Comment: What's Up With International Trade
From the yearly trends, it is evident that, despite the nationalistic rhetoric from politicians and the buoyant patriotic sentiments among consumers worldwide, there is already a clear delineation between the winners and losers in this childish yet brutal game of 'millennia-old national prestige and hereditary honor.'
As expected, the winners are economies characterized by a strong technological base and a focus on high-quality machinery exports, such as Belgium and Japan. In contrast, the losers are primarily nations with limited technological potential—mainly resource-dependent and agricultural producers, such as Indonesia, India, and Mongolia.
It is important to note that this does not imply that these economies are not experiencing growth. For instance, India reported a year-on-year GDP increase of 8-9%, making it the best-performing economy on Earth in 2024. However, this growth is driven by low-tech industries and service-oriented internal consumption, particularly in densely populated countries.
Additionally, the exports from resource-driven economies have been significantly impacted by the slowing Chinese market, which, due to the policies of CCP, has become increasingly closed off to external goods and services.
As a result, the world is gradually entering a new era marked by self-isolation from advancements in technology under the guise of 'sovereignty.' Many nations are relying on their large and still-growing populations and internal markets, which have been bolstered over the past 40 years by unprecedented economic openness and cooperation.
This shift may lead to a sharp drop in the standard of living, particularly for the lower-income strata of the population. Also, it could also exacerbate internal conflicts, ultimately resulting in increased migratory movements of people driven by desperation.