SVET Reports
SVET Markets Weekly Update (April 22–26, 2024)
On Week 17, BTC and ETH moved sideways, mostly recovering from a mid-week ~4% slump. Stock indexes closed with their first bullish candle in 5 weeks, propelled by good corporate reports, while expectations for a Fed rate cut dissipated. Globally, the yen weakened to generational lows due to dollar strength and the BOJ’s dovish stance, while oil and other commodities continued their rise on geopolitical worries coupled with renewed expectations for China’s recovery.
On Monday, stocks started strong as short-term traders stepped in to buy amid technical overselling, bolstered by a perceived geopolitical relief. However, most investors are still on the sidelines, watching key economic data and earnings reports from major companies this week. Globally, gold and the dollar dropped on hints of easing tensions in the Middle East. BTC and ETH followed stocks into the green zone, reaching above 66K and 3.2K, respectively. The rest of the crypto market also performed well, with Avalanche, Monero, and Uniswap increasing by more than 5%.
Details
The Chicago Fed’s economic activity index rose to a 5-month high in March (+0.15), exceeding expectations (+0.09). Employment and production indicators increased, while housing and consumption showed slight declines. (ChFed)
Crypto
Hong Kong’s securities association is proposing a self-regulatory model for the city’s crypto firms. They believe this will improve industry oversight and maintain Hong Kong’s competitiveness as a financial center. The proposal involves crypto firms monitoring each other and suggests delegating some licensing power from the regulator to the industry itself. (source)
NYSE is considering a shift to 24/7 trading hours, similar to cryptocurrency markets. This follows a surge in retail investor activity and the popularity of round-the-clock trading platforms.(source)
World Markets
Eurozone consumer confidence held steady at -14.7 in April below expectations of -14.0 but near a two-year high, on hopes of lower interest rates in the future.
China’s central bank kept key lending rates steady despite stronger GDP growth and a weakening yuan. This suggests ongoing support for the economy facing headwinds from property and trade, even though recent loan data fell short of expectations. (PBC)
Macau tourist arrivals jumped 39% in March to 2.72 million, nearing to 80% of March 2019 level. Mainland Chinese visitors surged 94%, while Hong Kong and Taiwan also saw increases. International arrivals are still recovering (584Th, 68% of 2019 level). (MO)
Lebanon’s inflation rate dropped significantly to 70.4% in March, the lowest in nearly 4 years. This follows a broad slowdown in most categories, including food and housing. Prices are still rising slightly month-to-month, but at a much slower pace.
Currencies
The dollar weakened slightly but remained near a six-month high. Strong economic data and hawkish Fed comments are leading investors to believe the Fed will delay or even avoid interest rate cuts this year. Key economic reports this week will be watched for further clues
The euro held on 1.06, near a five-month low against the dollar. Investors are waiting for economic data to see if the ECB and Fed will cut interest rates as planned. Recent signs of inflation and a strong US economy are making rate cuts less likely.
The British pound fell to a five-month low (1.23) versus the dollar as dovish comments from Bank of England officials dampened expectations of an imminent rate cut.
Commodities
Gold prices plunged over 2% to around $2,330 per ounce on Monday. This drop comes after tensions in the Middle East eased and investors shifted to riskier assets. Additionally, comments from a Fed official dampened hopes of imminent interest rate cuts, reducing the appeal of gold. Investors are now looking ahead to US economic data for clues on future rate decisions.
Oil prices hovered near four-week lows around $82 a barrel on Monday. Investors weighed the uncertain situation in the Middle East against plentiful oil supplies. While Iran downplayed recent attacks, the US imposed new sanctions targeting Iranian oil exports. Additionally, rising inflation concerns and higher US crude stockpiles dampened hopes of an interest rate cut, leading investors to hold off on oil purchases.
On Tuesday, stocks rose, led by communication services, industrials, and healthcare, while PMI data indicated a slowdown in the manufacturing and services sectors. Internationally, gold continued its slide due to dollar strength and reduced negativity from geopolitical news in the media. BTC and ETH chilled above 66K and 3.2K, respectively, while the rest of the crypto market remained mostly flat.
Details
Service sector weakened in April (according to the Richmond Fed) with falling revenue and spending. However, demand rebounded and firms remain optimistic about the future, despite rising costs. (RFED)
Building permits fell again in March to a 6-month low, despite a small rise in the West. This drop reflects continued weakness in the housing market due to high borrowing costs. Single-family permits also declined. (Census)
Private sector barely grew in April according to a key SP PMI survey. Both manufacturing and services slowed down, with new orders falling and employment declining for the first time in almost 4 years. This suggests rising interest rates and inflation are hurting the economy.(SP)
Crypto
A group in Switzerland is proposing a law change to add Bitcoin to the Swiss National Bank’s reserves. This would require collecting signatures for a public vote and potentially changing the country’s constitution. It’s a way for citizens to propose changes to laws or the constitution. People collect signatures on a petition, and if enough are gathered, the proposal goes to parliament for a vote. (source)
World Markets
Germany’s manufacturing PMI edged up slightly in April but remains in contraction. New orders fell sharply, and demand remains weak. However, there are signs of improvement, with slower production declines and rising optimism. (PMI)
France’s factory activity contracted for the 15th month in April, worse than expected. New orders plunged, output fell, and employment continued to decline. Manufacturers are also facing rising input costs and are pessimistic about the future. (PMI)
India’s business activity grew at the fastest pace in nearly 14 years in April. Both manufacturing and services boomed, with record highs in new orders and foreign sales. Employment rose slightly, and businesses remain optimistic about the future. However, inflation continues to be a concern. (PMI)
Currencies
Dollar weakened after data showed a slowdown in manufacturing and services sectors, renewing expectations of interest rate cuts by the Federal Reserve later this year. Investors are watching key economic data this week for confirmation.
The Japanese yen hit a new 34-year low (154.8) against the dollar, raising concerns about excessive weakness. Finance Minister Suzuki warned of potential intervention, while BOJ Governor Ueda left the door open for future rate hikes to combat inflation. Investors are watching the BOJ’s policy meeting this week for further clues.
Commodities
Gold prices plunged to a three-week low below $2,300 per ounce. Easing tensions in the Middle East and a strong dollar fueled the decline. Investors are waiting for key US economic data for further clues on rate cuts.
On Wednesday, stocks are mostly in the red as economic reports continue to send mixed signals, reflecting deteriorating fundamentals but still showing strong consumer morale. Internationally, commodities are still on the rise, with copper reaching a two-year high. BTC suddenly plunged by 4% prompting the rest of the crypto market to follow suit, with Bitcoin Cash, Cardano, Avalanche, Chainlink, and Solana decreasing by 4% or more.
Details
Orders for durable goods like machinery and vehicles jumped 2.6% in March, exceeding expectations. This was the biggest increase since last November. Transportation equipment led the surge, with strong demand for civilian aircraft and autos. Even categories with prior declines saw improvement. Business spending plans also showed a slight increase. (Census)
Mortgage rates continued to climb for the third week in a row, reaching a 5-month high of 7.24% for a 30-year fixed-rate loan. This increase tracks with rising Treasury yields as investors bet on the Fed delaying or avoiding interest rate cuts. (MBA)
Crypto
The market for borrowing and lending cryptocurrencies using NFTs as collateral reached $2 billion in Q1 2024, up 44% from the prior quarter. NFT holders are using these loans to invest in other assets, but analysts expect the money to eventually flow back into established cryptocurrencies and blue-chip NFTs. (source)
World Markets
Germany’s business confidence rose for the third month in a row, hitting a 1-year high (89.4) in April. This is likely due to hopes of lower interest rates from the ECB and some easing of inflation. Manufacturers and service providers are more optimistic, while traders and constructors remain downbeat. (IFO)
UK manufacturers are feeling more optimistic, with expectations for rising output reaching a six-month high. However, costs remain high and are expected to keep rising, potentially pushing up prices for consumers.
Indonesia’s central bank raised interest rates to a record high (6.25%) to fight inflation (increased to 3.05% in March) and support the weakening rupiah currency. This is the first rate hike this year and aims to keep inflation within target. (BI)
Currencies
Dollar held after felling following data showed slowing US growth, adding to expectations of Fed rate cuts. A strong euro, British pound, and Australian dollar due to positive economic data in those regions also pressured the greenback. Investors are watching key US economic reports this week for clues on future interest rates.
Commodities
Copper prices are nearing two-year highs due to supply disruptions. A major mine closure and Western sanctions on Russia limited copper concentrate. However, high prices are curbing some Chinese demand, and some investors are taking profits. A weaker dollar due to slower US business activity is also supporting copper prices.
On Thursday, stocks recovered after falling at opening as GDP growth came in much weaker than expected at 1.6%, while inflation remained high. Disappointing earnings from Meta and IBM added to the morning’s dump. Globally, the yen hit a new high at 155, faced with a rising dollar, while Brent stabilized at 88 due to a temporary pause in the Middle East situation. BTC and ETH lingered above 64.7 and 3.1 after Wednesday’s slump. The rest of the crypto market was mostly in the green, with Uniswap and Polygon adding up to 3%.
Details
The economy grew slower than expected in Q1 2024, at an annual rate of 1.6%. Consumer spending, especially on goods, weakened. Business investment slowed too while spending on services increased. Government spending remained positive. Trade also contributed to the slowdown as exports fell and imports jumped. (BEA)
Core inflation rose faster than expected in Q1, hitting 3.7% annualized. This is up from 2% in the prior quarter and exceeds forecasts (3.4%). Overall inflation also rose, reaching 3.4% annualized. (BEA)
Jobless claims unexpectedly fell to a 2-month low of 207,000, further indicating a tight labor market. This gives the Fed more flexibility to delay rate cuts and focus on controlling inflation. (DOL)
The Kansas City Fed’s manufacturing index plunged in April to -13 from March’s -9, with production and new orders down. Activity weakened across durable and non-durable goods. Despite the slowdown, businesses are slightly more optimistic about the future, especially regarding production. (KFed)
Crypto
Turkey leads the world in using stablecoins, relative to its GDP. This is because the Turkish lira is volatile. The report suggests this trend is happening in other countries with unstable currencies, like Georgia. (source)
World Markets
UK car production dropped 27% in March due to factory adjustments for new electric car models. This is despite steady domestic demand. Exports fell sharply, but electric vehicles still make up a significant portion of production. The industry expects continued volatility as factories shift to electric vehicle production. (SMMT)
Currencies
The Japanese yen hit a new 34-year low (155) against the dollar as the Bank of Japan meets. While the BOJ is expected to hold rates steady, comments from the Governor Ueda suggest future hikes if inflation rises or the yen weakens further.
The Mexican peso weakened to a five-month low (17.1) against the US dollar. This comes as Mexican inflation rose and economic activity surged, suggesting the Bank of Mexico might raise interest rates. However, investor focus is on the US Fed’s hawkish stance due to high US inflation and a strong job market, which strengthens the dollar.
Commodities
Oil (Brent) prices held steady around $88 a barrel after dropping earlier. Investors are unsure how delayed US rate cuts might affect oil demand. Strong US economic data suggests the Fed may hold rates higher. Focus is now on US GDP and inflation data this week. Despite this, a surprise drop in US oil stockpiles and easing tensions in the Middle East are providing some support to oil prices.
On Friday, stocks increased after positive earnings reports from tech giants, putting major indexes on track for their first green week in five as consumer sentiment fell below expectations. Internationally, the yen reached heights not seen since the 1990s, while copper increased a two-year high. The crypto market traded sideways mostly, with BTC and ETH hovering above 63.5K and 3.1K.
Details
PCE inflation rose to a 4-month high of 2.7% YoY in March, exceeding expectations (2.6%). This follows a historical trend of inflation averaging 3.3% over the past decades, with peaks as high as 11.6% in 1980 and lows of -1.47% in 2009. (BEA)
Consumer confidence fell slightly in April to a 2.5-year high, driven down by a more negative outlook on the future, according to the University of Michigan. Inflation expectations rose modestly. Consumers are uncertain about the economy but not worried about global events yet. (SCA)
Crypto
BTC investments are slowing down with investors pulling $218M out of the ETF products after a key economic report showed weaker growth. This reduces expectations of Fed interest rate cuts, which typically make investors avoid riskier assets like Bitcoin. This comes after a strong start following the launch of several Bitcoin ETFs in January. (source)
World Markets
Spain’s unemployment rate jumped to a one-year high of 12.29% in Q1, exceeding expectations (11.8%). The number of unemployed rose and the labor force participation rate dipped. (INE)
Russia’s central bank kept interest rates at a record 16% to fight inflation. Strong economic growth and limited production capacity are pushing prices up. Labor shortages due to mobilization are making it worse. The bank expects inflation to stay high this year and keeps rates high, even though the economy is doing better than expected.
Currencies
DXY rose after inflation data came in higher than expected, strengthening expectations of continued high interest rates. However, a weaker-than-expected GDP report later caused some uncertainty. Strong underlying inflation and a tight labor market cloud the picture for potential rate cuts in 2024.
The Japanese yen hit a 34-year low (156) against the dollar as the Bank of Japan kept interest rates unchanged. Despite rising inflation forecasts and a healthy economy, the BOJ’s dovish stance weakened the yen. Authorities are watching for signs they might intervene to stop the yen’s decline.
Commodities
Copper prices continued to soar reaching 2-years high due to supply concerns. Mine shutdowns in Panama, Zambia, and South America threaten production. China, a major producer, plans to cut output. Strong demand for copper in electric vehicles is fueling the price increase.
On Week 18, The Fed interest rate decision is the main event, followed by key jobs and manufacturing data. Earnings reports from major companies like Amazon and Apple will also be watched closely. Internationally, inflation data from various countries and GDP figures for several economies are on the agenda. Manufacturing data from China and other countries is also being released.
Comment: Coins With the Face.
Watching meme coins rise and rise on the Solana layer made me salute Adam Smith and his “invisible hand” once again.
After staying in crypto for 10 years, I thought I had seen it all, but new, younger, and bolder generations of degens can’t stop astonishing me with their sturdiness and adaptability. The Boomers high-post in governments and corporations continue to throw shell after shell at them in the form of regulations, registrations, and limitations with the sole purpose of forcing them to live the same dumb and obedient lives their parents lived. However, degens keep inventing new ways to live fast and fully.
Boomers think it’s just a bunch of teens sitting in their mother’s basement, lured by dangerous and mostly foreign strangers into nefarious schemes of printing funny money and pyramid schemes in their way to an undeserved fortune.
Nothing could be further from the truth. In fact, if you follow the lifecycle of many meme coins, you can watch the human dramas developing in new “virtual settings”, but still ruled by the same iron law of “supply and demand”, just as in the slow-moving “business-lives” of Boomers and X-Gens but at a lightning-fast speed.
Take, for example, the story of Slerf ($SLERF) developers who “burned the LP and the tokens that were set aside for the airdrop” while “mint authority was already revoked.” The developer also added, “Guys, I f***** up. There is nothing I can do to fix this. I am so f****** sorry.”
In the Boomer-infested world, it is equivalent to not paying promised dividends to your shareholders because you accidentally burned your bank with an army-issued flamethrower. So, Boomers would sell it. However, the next day, this meme coin did the opposite — it rallied and rallied hard to a market cap of over $400 million with trading volumes on Solana exceeding $3 billion in two days.
You can argue that this is madness, but I say you are wrong. It’s a teamwork. A team of thousands of degens read the post and trusted that this developer was just a human prone to mistakes — not a crook, as Boomers would think him to be before publicly crucifying him and sending him off to Sing-Sing or somewhere.
Nope. Those thousands of degens were smart enough to understand in split seconds that this is a real business they are running, and it is in their best interest to keep it going, no matter what happens. So, they bought instead of selling.
If you now start moralizing and saying that these small pieces of code are worthless and “produce nothing,” and that these degens should “find a job” instead of “speculating”, I would kindly remind you that Boomers have managed to build and defend a world that provides those degens — mostly Gen Z — with zero jobs, zero cash, zero equities, zero hope, and the vision of three upcoming apocalypses — AI, Climatic and Thermonuclear.
So, please, keep your opinions to yourself before you understand why degens are in such a hurry to live their lives to the fullest, like billions of beautiful but one-season-only butterflies.