SVET Reports
Tuesday's Markets Update (November 12, 2024)
On Tuesday, equities declined despite consumer confidence surging to a three-year high, pausing after the post-election rally. The technology and communication services sectors outperformed, while materials, healthcare, and real estate lagged. Gold and oil rebounded as the EU economic sentiment dropped and Indian inflation continued to rise. BTC (at $87K) and ETH (at $3.2K) paused as some traders chose to take some profits off the table.
Details
Small business optimism rose to a three-month high in October, driven by reduced uncertainty following the election. However, challenges like low sales, job vacancies, and inflation persist. While sales expectations improved, they remain negative overall. 1Y trend: "Up" (Nfib)
Consumer confidence surged in November, reaching a three-year high. The improvement was driven by positive expectations for personal finances and the overall economy. This surge in optimism followed recent political events and anticipated economic policies. 1Y trend: "Up" (TMI)
Crypto
On November 12, 2024, BTC's surge raised El Salvador's holdings to over $500M and Bhutan's to over $1B. Bhutan's BTC assets now represent more than one-third of its GDP, while El Salvador's account for only 1.5%. Data indicates El Salvador possesses nearly 5,932 BTC, valued at approximately $516 million at the current price of $87,000. The overall financial situation for El Salvador’s government continues to improve amidst this rally. (source)
World Markets
In November, the ZEW Indicator of Economic Sentiment for the Euro Area dropped to 12.5, falling short of the 20.5 expected. About 62.5% of analysts predicted no change in economic activity, while 25% forecasted improvement and 12.5% expected decline. The current economic situation indicator fell to -43.8, and inflation expectations rose to -13.4. 1Y trend: "Side" (Zew)
India's annual inflation rate surged to 6.21% in October, exceeding expectations and the RBI's target range. Food prices, particularly vegetables and oils, were the main drivers of inflation. This higher-than-expected inflation rate reduces the likelihood of immediate rate cuts by the RBI. 1Y trend: "Side". India's industrial production rebounded in September, growing 3.1% YoY. Manufacturing, electricity, and mining sectors contributed to the growth. The manufacturing sector, particularly coke, basic metals, chemicals, and food products, showed significant expansion. 1Y trend: "Down" (Mospi)
Argentina's monthly inflation rate slowed to 2.7% in October, the lowest in over two years. This marks six consecutive months of disinflation, with annual inflation easing to 193%. While most categories saw slower price growth, food and housing costs remained elevated. 1Y trend: "Down" (Indec)
Comment: What's Up With India?
Indian inflation has risen sharply, particularly in food prices, indicating increasing costs. Meanwhile, sectors with significant government involvement, such as energy and mining, are showing sporadic rebounds, likely spurred by government support. However, the Bank of India is inclined to raise interest rates to combat inflation rather than stimulate production, creating a stagflationary scenario that differs somewhat from other countries like Italy and Mexico.
The overall trend remains the same: inflation is increasing as companies avoid layoffs and continue to raise prices. In India, this situation is exacerbated by substantial government interventions, which intensify inflationary pressures and create potential tensions with the Central Bank. This situation is reminiscent of Brazil, where Lula's government confronted the Central Bank over economic policies. However, it is unlikely that this confrontation will occur in India under the strong leadership of Modi, suggesting that inflation is likely to persist.