SVET Reports
SVET Markets Weekly Update (September 23–27, 2024)
On Week 39, stocks closed in positive territory, helped by a 3% GDP growth in Q3. In contrast, the eurozone economy contracted in September. The People’s Bank of China has implemented several drastic measures to stimulate growth leading to Chinese stock market having a best week since 2008. Silver prices surged to a 12-year high due to the Fed easing and geopolitical tensions. BTC crossed the 200MA and continued to test the $66K mark, while ETH remains stuck below $2.7K.
On Monday, stocks reached new highs, yet again. Intel shares rose on investment news, while Tesla gained ahead of its robotaxi launch. Economic data, however, raised concerns about growth, with manufacturing at a 15-month low and job market indicators weakening. Internationally, EU economy contracted sharply while gold, natural gas, and coffee all rose in a combination of geopolitical and climatic factors. ETH took the lead, slowly rising to 2.7K, while BTC stalled just under its 200MA.
Details
The manufacturing sector continued to shrink in September, with new orders falling at the fastest pace in over a year. This led to lower production, slower delivery times, and job cuts. Input prices declined to a six-month low due to lower energy costs and reduced supply chain pressures. 1Y trend: “Down” (SP)
The Chicago Fed National Activity Index increased in August, indicating a slight improvement in economic activity. Production rose, while employment remained stable. Sales, orders, and inventories declined, and personal consumption and housing weakened. The three-month moving average showed a slight decrease. 1Y trend: “Side” (CFed)
Crypto
Betting odds for Harris and Trump have remained nearly equal since the Sept. 10 debate, with the election approaching. Polls indicate a close race, especially in swing states. Harris currently leads in betting markets, reflecting a 55.6% chance of winning compared to Trump’s 50%. Recently, the odds have stayed consistent, with Harris maintaining her polling strength, contrasting with Trump’s earlier preference in August. (source)
World Markets
The eurozone economy contracted in September, with manufacturing and service sectors both declining. Germany and France are both heavily affected after “Olympics effect” dissipated. New orders, backlogs, and exports fell, while job losses rose. Input costs slowed, but output prices increased slightly. Economists warned of impending stagnation. 1Y trend: “Side” (SP)
The French manufacturing sector continued to contract in September, although the rate of decline slowed slightly. New orders, particularly from North America and Germany, remained weak, leading to a sharp drop in output. Job cuts slowed, and input prices eased. Manufacturers remain pessimistic about future prospects. 1Y trend: “Down” (SP)
The HCOB Flash Germany Composite PMI fell to a new low in September, indicating a deepening contraction in the private sector. Manufacturing output declined sharply, and service sector growth stalled. Businesses reported weaker demand, reduced investment, and concerns about the economy. Price pressures eased, and business expectations turned pessimistic. 1Y trend: “Side” (SP)
The Dutch economy grew by 1% in Q2, rebounding from a previous decline. Net trade contributed positively, with exports outpacing imports. Government spending increased, while household consumption fell. Dutch GDP grew by 0.8% on a yearly basis. 1Y trend: “Up” (CBS)
Commodities
Natural gas prices rose to their highest level in nearly two months (2.5) due to potential supply disruptions from a tropical storm and lower-than-expected storage increases. 1Y trend: “Side”
Gold prices made new record high, propelled by expectations of lower interest rates and rising geopolitical tensions. The escalating conflict between Israel and Hezbollah has further boosted gold’s appeal as a safe-haven asset. 1Y trend: “Up”
Arabica coffee prices have reached 13-year highs (2.6) due to dry weather in Brazil, the world’s largest producer. Forecasts indicate limited rainfall for the rest of September, raising concerns about sufficient October rains. This dry spell is the worst since 1981. Robusta coffee prices are also rising after a typhoon damaged crops in Vietnam. 1Y trend: “Up”
On Tuesday, markets edged up, lifted by Nvidia’s surge, despite consumer confidence dipping to a 3-year low and the Richmond manufacturing sector dropping to its lowest level since May 2020. Internationally, Chinese stocks skyrocketed thanks to lavish CCP stimulus. Silver prices also soared over 5%, catching up to gold as investors look for a safe haven. BTC and ETH remain largely unchanged, continuing to demonstrate some upward potential.
Details
The manufacturing sector in the Richmond 5th District contracted further in September. It is the steepest decline since May 2020, with shipments, employment, and new orders all declining. However, firms remained optimistic about future prospects, expecting improvements in shipments and new orders in the coming months. Prices paid increased while prices received decreased slightly. 1Y trend: “Down” (RFed)
Home prices rose 5.9% in July, slowing from June but still above 5% for the ninth straight month. New York, Las Vegas, and San Diego saw the biggest increases, while Portland and Denver had the slowest growth. 1Y trend: “Up” (SP)
Crypto
The crypto exchange Exodus donated $1.3M to Stand With Crypto (SWC), a crypto advocacy group, to support their efforts in the upcoming elections. SWC has endorsed 21 candidates and believes that this year’s election is crucial for the future of crypto. With this donation, the total donations to SWC reached $2.79 million. (source)
World Markets
The PBoC has taken several drastic steps to stimulate the economy, including cutting interest rates and reserve requirements. These measures aim to boost lending, lower borrowing costs, and increase investment. The central bank hopes to achieve the government’s growth target of around 5% despite recent economic weakness.
Currencies
The Chinese yuan appreciated to 16-month-low after the People’s Bank of China announced a series of stimulus measures. These measures included interest rate cuts and reductions in reserve requirements. This economic boost is expected to help China achieve its 5% GDP growth target for 2024. 1Y trend: “Down (Strengthened)”
Commodities
Silver prices soared over 5%, reaching levels not seen since May. This spike was driven by rising tensions in the Middle East and expectations of further US interest rate cuts. Investors sought safe-haven assets like silver amid fears of a renewed Iran-Israel conflict and China’s economic stimulus measures. 1Y trend: “Up”
On Wednesday, stocks were mixed, with energy stocks declining while tech stocks gained, led by Nvidia, Intel, and AMD, suggesting strong AI demand. The overall market sentiment remains cautious due to concerns about a slowing economy, despite the recent rate cut. Internationally, the Euro rose (strengthened) to a 14-month high on Fed easing and China stimulus, while Argentina’s economy shrank less than expected, confirming some success of Milei’s drastic cost-cutting economic policies. BTC and ETH were stalled on 63K and 2.5K.
Details
The number of building permits issued in the US increased slightly in August MoM. Most regions saw increases, with the Midwest experiencing the largest jump. However, the West saw a slight decline. Single-family home permits and those for larger buildings both rose. 1Y trend: “Down” (Census)
Mortgage rates have been declining for eight weeks in a row, hitting a new low since September 2022 (6.13%). This drop is due to the Fed’s interest rate cut. However, jumbo mortgage rates have increased slightly. 1Y trend: “Down” (MBA)
Crypto
Despite growing cryptocurrency ownership (15.5% of global 560M holders), its adoption as a payment method remains low. While many Americans own crypto, the majority (80%) still prefer traditional payment methods like credit cards for online shopping (10% prefer mobile wallets), with less than 1% (approximately 0.5%) using crypto. This suggests that crypto is often seen as an investment rather than a daily currency. Additionally, limited availability of crypto as a payment option among retailers (only 4% offer it) further hinders its widespread use. (source)
World Markets
The consumer confidence index in France increased in September for the first time in seven months. This rise was driven by less pessimism about personal finances and living standards, as well as improved views on savings and employment prospects. However, concerns about future inflation persisted. 1Y trend: “Up” (Insee)
Argentina’s economy shrank less than expected in July , with a 1.3% YoY decline. This improvement was driven by rebounds in utilities and mining, as well as slower contractions in construction and manufacturing. Seasonally adjusted data showed growth, while the trend-cycle indicator slightly declined. 1Y trend: “Side” (Indec)
Currencies
The Euro rose above $1.11–14 month high — due to positive news from China and hints of a rate cut from the Fed. However, disappointing economic data in the Eurozone, particularly in Germany, increased expectations for an ECB rate cut. The Ifo business climate index for Germany fell to 85.4 in September, and recent PMI data showed a return to contraction in the Euro Area. The ECB had already reduced interest rates in September and hinted at more cuts to come. 1Y trend: “Up”
On Thursday, stocks were mixed, with the S&P reaching a new ATH before closing in red, while the Dow gained a bit on the economy showing growth. Semiconductor stocks performed well. Internationally, silver reached a 12-year high, while the Euro area money supply reached a new record of 16.4 trillion. BTC and ETH lingered below 66K and 2.6K
Details
The economy grew at 3% in Q3, with upward revisions to government spending and imports offsetting slower consumer spending and exports. Overall, the economy performed better than initially estimated in 2023 and 2022. 1Y trend: “Side” (BEA)
Factory orders unexpectedly held steady (+0%) in August, defying expectations of a decline. While orders for transportation equipment fell, those for fabricated metal products and machinery increased. Overall, excluding transportation, new orders rose, indicating continued strength in the manufacturing sector. 1Y trend: “Side” (Census)
Crypto
Chainlink forecasts that the tokenized asset market will reach $10T by 2030. Asset managers are finding it challenging to handle these complex and risky assets efficiently. Tokenization offers solutions like real-time settlements, global liquidity, and fractional ownership, making it easier for investors to participate. (source)
World Markets
The Money Supply M3 in the Euro Area increased to 16.4T euros in August 2024 from 16.3T euros in July. This marks an ATH for the Euro Area’s money supply. Trend was reverted to growth since Aug 2023 after 8 months of contraction. 1Y trend: “Up” (ECB)
Commodities
Silver prices surged to a 12-year high ($32.5/oz) in late September. This rise was fueled by expectations of interest rate cuts by Fed, which were confirmed with a larger-than-expected 50bps cut. The Fed’s outlook suggests further easing due to a weakening labor market and softening inflation. Additionally, stimulus measures in China boosted silver prices, benefiting industries like electrification and solar panel manufacturing that rely on silver. 1Y trend: “Up”
On Friday, stocks closed mixed, with the S&P and Nasdaq falling slightly while the Dow reached a new record. Investors weighed recent mixed data. The PCE price index hit its lowest level since Feb 2021, while the Michigan consumer index reached a 5-month high. Internationally, EU economic sentiment declined, while natural gas prices jumped to a 3-month high due to a hurricane causing power outages. BTC crossed the 200MA and continued to test $66K, while ETH is still stuck under $2.7K.
Details
The PCE price index rose 2.2% in August, the lowest since February 2021. This is down from 2.5% in July and below expectations of 2.3%. 1Y trend: “Side” (BEA)
The University of Michigan consumer sentiment index rose to 70.1 in September, the highest in five months. This was higher than the preliminary reading and market expectations. Consumers were more optimistic about current conditions and future prospects. Inflation expectations for the next year fell slightly, while those for the next five years rose. 1Y trend: “Down” (SCA)
Crypto
ETF assets exceeded $10T in September 2024, driven partly by $20B inflows into crypto ETFs. Investors have allocated $691B to US ETFs this year, with crypto ETFs contributing 3%. Bloomberg predicts ETF assets will reach $25T within a decade. (source)
World Markets
The Euro Area’s economic sentiment indicator (ESI) slightly declined in September (96.2) from August’s high (96.5). While optimism rose in services, consumer and construction sectors, pessimism deepened in industry and retail. France and Germany saw ESI decline, while Spain and Italy experienced significant increases. Employment expectations remained stable, but economic uncertainty rose. 1Y trend: “Side” (EC)
Brazil’s unemployment rate dropped to 6.6% in August 2024, the lowest since 2014. This is good news for the economy and allows the central bank to raise interest rates to combat inflation. The number of unemployed people decreased by 500,000, while net employment reached a new high of 102.5 million. 1Y trend: “Side” (IBGE)
China’s stock market had a best week since 2008. This followed policy announcements aimed at boosting economic growth, including a cut in bank reserve requirements and interest rates. High-growth sectors like technology, healthcare, consumer, new energy, and finance led the gains. 1Y trend: “Side”
Currencies
The Japanese yen rose 1% against the dollar after former defense minister Shigeru Ishiba won the leadership of Japan’s ruling party. Ishiba is seen as less dovish than his rival, Sanae Takaichi, and favors economic stimulus. Tokyo’s core inflation rate slowed to 2% in September, supporting the Bank of Japan’s cautious approach to rate hikes. 1Y trend: “Side”
Commodities
Hurricane Helene caused a 5% surge in natural gas prices. The storm forced Gulf of Mexico producers to cut output, leading to power outages in several states. Despite the storm’s impact, LNG exports remained strong, supporting prices. While gas production has been affected, the majority of US output remains secure. Natural gas prices have seen a substantial increase this week. 1Y trend: “Side”
Week 40, will be busy with the labor market report and speeches from Fed officials, including Powell. Key data to watch includes JOLTS job openings, ISM Manufacturing and Services PMI, and factory orders. Inflation data will be released for several countries, including Germany, Italy, and South Korea. Japan will report on industrial production and retail sales, while China releases PMI data. Australia, Brazil, and South Korea will also report trade data.
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