Wednesday's Markets Update (December 4, 2024)

05 Dec 2024 by rate3

On Wednesday, all three major indices reached record highs, with the Dow closing above 45K for the first time. Positive tech sector performance and strong earnings reports boosted market sentiment. On the other hand, Powell stated that he isn’t hurried to cut interest rates. Notable corporate movements included Salesforce rising 11.1% and Marvell Technology jumping 23%. The yuan strengthened after the Bank of China’s moves. The Brazilian real also strengthened as market confidence in the fiscal policies rose. BTC is approaching 99K while ETH is on a run, rapidly moving to 3.9K.

Details

The Composite PMI rose to 54.9 in November, reaching a 31-month high. While manufacturing output declined, the services sector grew strongly. New orders increased, and input price inflation eased. 1Y trend: "Up" (PMI)
Private businesses added 146K jobs in November, a slowdown from the previous month. While service sectors like education, trade, and professional services saw job growth, manufacturing shed jobs. Wage growth for both job-stayers and job-changers increased. 1Y trend: "Side" (ADP)

Crypto

Indonesia's cryptocurrency market has seen a significant surge in 2024, with transaction volumes reaching $30B. This represents a 350% increase compared to the previous year. The recovery is attributed to easing regulatory pressures and increased investor interest. (source)

World Markets

The Eurozone Services PMI was revised slightly higher to 49.5 in November, indicating a contraction in service sector activity. New business declined, while employment growth continued. Input and output prices increased at a faster pace, and business confidence weakened. 1Y trend: "Up" (PMI)
South Africa's consumer confidence declined slightly in Q4, but remains high compared to recent years. Positive developments like government stability, lower inflation, and interest rate cuts have boosted consumer sentiment. 1Y trend: "Up" (ZA)

Currencies

Powell highlighted US economic resilience amid inflationary pressures, with the dollar index steady at 106.3. ISM Services PMI dropped to 52.1 in November, while ADP reported 146,000 private sector jobs added. Market expectations now lean towards a 75.5% probability of a December rate cut, with attention turning to the upcoming jobs report for further economic insights. 1Y trend: "Side"
The offshore yuan strengthened to 7.29 per dollar after the People's Bank of China set a stronger daily fixing. This move aimed to stabilize the currency amid a stronger dollar and ongoing trade tensions. While the manufacturing PMI showed improvement, the services PMI weakened, highlighting uneven economic recovery in China. 1Y trend: "Up, Depreciating"
The Brazilian real strengthened after recent declines, as Finance Minister Haddad expressed confidence in the fiscal package and its potential impact on fiscal stability. Strong GDP growth in Q3 also supported the currency. However, concerns remain about the implementation of the fiscal package and its impact on economic growth. 1Y trend: "Up, Depreciating"

Comment: What's Up With The World? (2)

USA - D.O.G.E; China - keeps thinking harder about invading Taiwan; Ukraine - the war moves closer to nuclear warhead deployment; Middle East - calm before a storm; Germany - coalition collapse; France - government almost ousted; Brazil - fiscal crisis; Argentina - Milei's reforms face opposition; S. Korea - president is about to be fired - and all of that just in the past 30 days, and all of it is accompanied by cool, "business-as-usual" commentaries in mass media. Let me tell you that it is not "usual" at all.

In fact, that's the most widely spread heated geopolitical situation of our lifetime. Those who follow me know that in my sporadic publications, I've been commenting on the worldwide generational crisis since 2017, and I'm not alone. Today, there are literally hundreds of accomplished political and economic analysts stating that we're on the verge of a fundamental world turning. I know that 99% of you would disregard that message, again, and it's "normal". In fact, exactly that gives me hope that we still can miraculously land on all four wheels :). So, I'd appeal to the remaining 1% - you'd better be prepared with your portfolios. Rules of thumb: keep taking profits, and preserve at least 30-40% of all your assets in cash.

Of course, with so many things ready to go wrong at the same time, it's impossible to predict what and when "staff" will give way in the world, and how severe the consequences will be as a result. I'm not a proponent of various apocalypse scenarios. I'm sure that the world will sooner or later stabilize in a new shaky balance, as it always has in the past with a regularity of 80-100 years, as one "core" generation of politicians violently changes power with their predecessors. However, from a portfolio management perspective, my message has remained the same over the past three years - Volatility is The King.

So, again, fasten your belts, accumulate cash, be ready to quickly deploy and enjoy the ride if you can :)