SVET Reports
SVET Markets Weekly Update (December 2 - 6, 2024)
On Week 49, equities rose, with the S&P and Nasdaq setting new records, reflecting growing economic optimism as we moved into December. Economic sentiment reached a 21-month high; however, the surge in unemployment and a continued decrease in manufacturing activity have created confusion among traders.
In the Eurozone, the manufacturing sector worsened in November, contributing to a decline in French stocks amid concerns over a potential no-confidence motion in the government. Meanwhile, the yuan weakened to a one-year low, further complicating the economic landscape.
The South Korean won experienced a significant decline following declaration of martial law, while the Brazilian real plunged to a record low. This depreciation was driven by rising inflation expectations, concerns over fiscal policy, and potential tariffs on Brazilian goods.
In the cryptocurrency market, total market capitalization is approaching $4 trillion, fueled by Bitcoin's impressive surge past $100K and Ethereum's rise above $4.1K, positioning it to challenge its ATH. Additionally, spot BTC ETFs have surpassed Satoshi's holdings, reflecting growing institutional interest in the digital asset space.
On Monday equities rose to a new ATH as tech stocks continued to lead the Trump rally. Traders keep disregarding fundamentals reflected in worsening manufacturing data. Investors are now focused on the upcoming jobs report and Fed speeches. French stocks dropped on the threat of a no-confidence motion. The yuan weakened to a one-year low. BTC lingered under 97K as traders continued to accumulate, and ETH stayed above 3.6K.
Details
The Manufacturing PMI was revised upward to 49.7 in November, indicating a stabilization in the sector. New orders declined less sharply, and employment increased. Input cost inflation eased, while output prices rose slightly. Business confidence improved due to the election results and expectations of stronger economic growth. 1Y trend: "Up" (PMI)
Crypto
Crypto trading volume reached a record high of $2.71T in November, driven by increased institutional investment and the growth of DeFi. This surge in activity has benefited crypto exchanges and could lead to further innovation and adoption of digital currencies. (source)
World Markets
The Eurozone manufacturing sector worsened in November, with production, new orders, and employment declining sharply. Key economies experienced significant downturns, while business confidence remained subdued. 1Y trend: "Up" (SP). The Euro Area's unemployment rate remained steady at 6.3% in October, holding at a record low. 1Y trend: "Down" (EU)
The CAC 40 fell 1% due to political uncertainty in France. The threat of a no-confidence motion against the government weighed on investor sentiment, particularly affecting financial and automotive stocks. 1Y trend: "Side"
Spain's manufacturing PMI fell to 53.1 in November, signaling slower growth. While international sales increased, production and new orders softened due to weather disruptions. Employment and purchasing activity also slowed. Despite these challenges, business confidence remained strong. 1Y trend: "Up" (SP). Spain's vehicle sales increased by 6.5% YoY in November. 1Y trend: "Up" (Anfac)
South Africa's manufacturing PMI fell to 48.1 in November, indicating a contraction in factory activity. Weakening demand, rising interest rates, and global uncertainties contributed to the decline. 1Y trend: "Side" (ZA)
Brazil's manufacturing PMI fell to 52.3 in November, indicating slower growth. While new orders remained strong, output, exports, and employment growth slowed. Input and output price pressures eased, but remained elevated. 1Y trend: "Up" (PMI)
Currencies
The offshore yuan weakened to a one-year low of 7.31 due to a stronger US dollar, trade tensions, and concerns over China's economic growth. Weak PMI data and expectations of further Chinese stimulus measures also contributed to the yuan's decline. 1Y trend: "Up, Depreciating"
The Brazilian real weakened to a record low of 6.06 per USD in December. Rising inflation expectations, concerns over fiscal policy, and potential tariffs on Brazilian goods contributed to the depreciation. Reduced Chinese demand for Brazilian commodities further exacerbated the situation. 1Y trend: "Up, Depreciating"
Comment: What's Up with Tariffs and Presidents? (2)
The further in a forest, the more ridiculous the White House sounds in both senses. First, an incoming president threatens 100% tariffs on BRICs if they come out with an alternative to the USD currency. Why do they think BRICs want out of the dollar area? Maybe because it is 'weaponized' by tariff threats? Why is the number of BRICs participants growing like never before in its history? Might it be because their economies have grown out of the 'sandboxes,' and now their elites are thinking of claiming parts of this world for themselves? So, what might be a smart strategy in this situation? Could it be getting more allies on your side? How do you get long-term allies? Perhaps not by 'blackmailing' them, right?
The second 'move' is from an outgoing president pardoning his own sibling after swearing he would never do that :) By the way, that came right after the same person promised to submit his post to a 'younger generation' and then, without pause, stated on all cameras, 'mmmm... rather not.' This really sounds a big bell about the current 'governance mechanism,' which is staking our fate and the fate of the Earth on capricious and unpredictable personalities. Even aside from those ridiculous events, it has been absolutely clear even 10-15 years ago that the centralized, 'wise leaders' based opaque governance mechanism is one of the last remnants of the Middle Ages, which we have to get rid of. We have already developed and proven blockchain-based algorithmic consensus, which make the implementation of direct democratic governance at all levels a question of 'ASAP.'
On Tuesday, equities closed mixed. The S&P and Nasdaq reached new highs, driven by strong tech stocks, while the Dow declined. Job market data lowered expectations of a Fed rate cut. Tesla's stock fell due to declining shipments. The South Korean won weakened after the declaration of martial law. UK retail sales reversed their previous growth as Turkish inflation marked six months of decline. BTC wavers in the 95-96K range as the rest of the major coins increased by 2%-5%.
Details
The Logistics Manager's Index (LMI) remained above 50 in November, indicating continued growth in the logistics sector. However, growth slowed slightly compared to the previous month. Inventory levels declined, while warehousing and transportation capacity increased. Input costs and warehousing prices rose, reflecting higher inventory levels. 1Y trend: "Up" (LMI)
Job openings increased to 7.744M in October, exceeding expectations. Job openings rose in professional and business services, accommodation and food services, and information. However, job openings declined in the Northeast and Midwest. While hires and separations remained stable, quits and layoffs were unchanged. 1Y trend: "Down" (BLS)
Economic optimism increased in December, reaching a 21-month high. Confidence in government economic policies improved significantly. However, personal financial outlook and six-month economic outlook declined slightly. 1Y trend: "Up" (TECH)
Crypto
South Korea has decided to delay the implementation of its crypto capital gains tax until 2027. This decision comes after initial opposition from the ruling party and concerns about its impact on the crypto market. (source)
World Markets
UK retail sales fell 3.4% in November, reversing previous growth. Weak consumer confidence, delayed Black Friday, and Storm Bert's impact contributed to the decline. All retail categories and regions experienced a downturn. 1Y trend: "Down" (BRC)
Australia's current account deficit narrowed to AUD 14.1B in Q3, but remained in deficit for the sixth consecutive quarter. Lower export prices and weaker global demand contributed to the smaller surplus in goods and services. While net primary income improved, net secondary income worsened. 1Y trend: "Down" (AU)
Turkey's annual inflation rate declined to 47.09% in November, marking the sixth consecutive month of slowing inflation. While overall inflation eased, food prices accelerated. Core inflation also declined. 1Y trend: "Down" (TR)
South Africa's GDP grew by 0.3% YoY in Q3, missing market expectations. This marks a slower pace of growth compared to previous quarters. 1Y trend: "Down" (ZA)
Brazil's GDP grew 4.0% in Q3, driven by strong performance in industry and services. While agriculture contracted, household consumption and investment grew significantly. Exports increased, but imports grew faster, leading to a wider trade deficit. 1Y trend: "Up" (BR)
Currencies
The South Korean won weakened significantly after President Yoon Suk Yeol declared martial law. The currency later recovered slightly after authorities intervened. Inflation remained below the central bank's target, leading to recent interest rate cuts. Investors are awaiting final GDP figures for further insights into the economy. 1Y trend: "Up, Depreciating"
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 :)
On Thursday, equities closed lower as investors awaited the key November jobs report. While the S&P and Nasdaq declined slightly, tech stocks like Tesla and American Airlines saw gains. Jobless claims increased, and expectations for a Fed rate cut strengthened. Fresh EU construction data confirmed the worsening economy. International arrivals to Vietnam skyrocketed, driven by an inflow of tourists from all over the world, led by China and Russia. BTC reached 100K for the first time in human history after Chinese traders joined the efforts on yesterday's evening session and then corrected sharply in the morning as traders engaged in 'selling the news.' ETH touched 4K and dropped like a rock to 3.4K, following BTC. The crypto market capitalization is nearing $4 trillion.
Details
Employers announced 57,727 job cuts in November, primarily driven by the automotive sector. This marks a year-to-date increase in job cuts, with challenges such as potential tariffs, competition from Chinese EV manufacturers, and leadership changes contributing to the automotive sector's struggles. 1Y trend: "Up" (CH)
Initial jobless claims rose to 224K in the week ending November 30. While this is an increase, the overall labor market remains strong. The four-week moving average rose slightly, but non-seasonally adjusted claims decreased. 1Y trend: "Up" (DOL)
The trade deficit narrowed to $73.8B in October, as both exports and imports declined. Exports decreased due to lower sales of industrial supplies and consumer goods, while imports fell for items like computers, automobiles, and crude oil. The deficit narrowed with major trading partners like China, Mexico, Canada, and the EU. 1Y trend: "Down, Increasing" (BEA)
International arrivals to Vietnam surged 38.8% YoY in November, reaching a five-year high. Visitors from Asia (mainly led by China (68%), South Korea (26%), Japan (21.4%), and Taiwan (25.5%)), America (specifically from the US (16.5%)), Europe (particularly from Russia (89.1%), the UK (20.3%), and France (30.4%)), Australia, and Africa all increased. 1Y trend: "Up" (GSO)
Crypto
The total cryptocurrency market capitalization is nearing $4T, driven by BTC's surge past $100K. Increased institutional adoption and positive regulatory developments are fueling this growth.
World Markets
The Eurozone Construction PMI fell to 42.7 in November, indicating a worsening contraction in the sector. New orders declined sharply, leading to job cuts and reduced input buying. While cost pressures increased, business confidence remained subdued. 1Y trend: "Up" (PMI)
Euro Area retail sales increased 1.9% YoY in October, slightly above expectations. 1Y trend: "Up" (EU)
Spain's industrial production increased by 1.9% YoY in October, exceeding expectations. Capital goods output rebounded strongly, while growth in other sectors eased. 1Y trend: "Up" (ES)
The French Construction PMI rose slightly to 43.7 in November 2024, but remained below the 50-point threshold, indicating continued contraction. While residential construction showed some improvement, commercial and civil engineering work declined. Input costs increased, and business confidence remained pessimistic. 1Y trend: "Up" (PMI)
The German Construction PMI fell to a 2.5-year low of 38 in November. Housing and commercial activity declined sharply, and new orders fell due to fewer opportunities and high prices. Input costs rose, but subcontractor rates declined. Employment continued to fall, and business sentiment worsened. 1Y trend: "Up" (PMI)
UK new car registrations fell 1.9% YoY in November. While electric vehicle registrations increased, sales of petrol and diesel vehicles declined. 1Y trend: "Down" (SMMT)
On Friday, equities rose, with the S&P and Nasdaq setting new records. A stronger-than-expected jobs report for November increased expectations of a Fed rate cut. Tech stocks led the rally, while healthcare stocks declined due to the death of a major industry executive. The unemployment rate increased to the second highest level in three years, while consumer sentiment reached a five-month high, continuing to confuse bears. The EU GDP growth rate increased but remained below 1%. The world's food price index reached a ten-month high, driven by vegetable oil and dairy products. BTC rose above $100K again, with ETH surging above $4.1K and poised to challenge its ATH. Spot BTC ETFs have surpassed Satoshi's holdings.
Details
The unemployment rate rose to 4.2% in November - the second highest in 3 years - as the labor force participation rate declined. 1Y trend: "Up. The broader U-6 unemployment rate, which includes discouraged workers and underemployed individuals, rose to 7.8% in November. 1Y trend: "Up (BLS)
Consumer sentiment rose to a five-month high of 74 in December. Current conditions improved significantly, driven by perceptions of favorable buying conditions for durables. However, future expectations declined slightly. Inflation expectations increased for the year ahead but decreased for the five-year outlook. 1Y trend: "Down. (SCA)
Crypto
Spot BTC ETFs have surpassed Satoshi Nakamoto as the world's largest Bitcoin holder, accumulating over 1.1 million BTC. This milestone highlights the growing institutional interest and adoption of BTC. (source)
World Markets
The FAO Food Price Index rose 0.5% in November, reaching a 10-month high. Vegetable oil prices surged, while dairy prices increased slightly. Cereal and sugar prices declined, and meat prices edged down. 1Y trend: "Up" (FAO)
The Eurozone GDP grew 0.9% YoY in Q3, marking the best performance since Q1 2023. 1Y trend: "Up" (ES)
Currencies
The Indian rupee remained near record lows around 84.6. The RBI maintained the key repo rate but lowered the cash reserve ratio to ease liquidity and support growth. Despite this, the rupee is pressured by a strong dollar and concerns over India's slowing economy. The central bank also lowered its GDP growth forecast and raised its inflation forecast. 1Y trend: "Up"
On Week 50, key economic indicators will be released globally. Inflation data will be published, while central banks in the Euro Area, Australia, Canada, Brazil, and Switzerland will announce their monetary policy decisions. Other key data releases include inflation figures from various countries, China's economic indicators, Germany's trade data, UK's GDP and industrial production, and Australia's labor report and business confidence. Japan will release the Tankan manufacturing index.