SVET Markets Weekly Update (Jan 29 — February 2, 2024)

SVET
Coinmonks

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On Week 5, the Fed kept the rate unchanged at 5.5%, but hinted at no cuts in March. This didn’t stop the stock market from reaching ATH on all major indexes, with Meta showing a record 20% growth during one day. Simultaneously, manufacturing activity continues to slow down, and job cuts are increasing in the private sector at a record pace. However, government data shows job increases and unemployment remaining stable at 3.7%.

On the world stage, China’s stocks continued to deteriorate due to traders’ pessimism towards the local economy and CPC’s stimul. Gold, silver, and coffee rose due to geopolitical tensions in the Middle East. The Euro Area registered a slight uptick in GDP YoY, despite the German economy entering a technical recession.

At the same time, BTC and ETH slowed down significantly as traders’ attention shifted to other major cryptocurrencies, leading to a sharp rise of Chainlink, Avalanche, and Polkadot.

On Monday, the Dallas Fed Index hit an eight-month low, and traders reacted by pushing stocks higher, with the S&P 500 and Nasdaq reaching new heights. Tech and consumer staples gained, while energy lagged. Meta hit an all-time high. However, most traders caution anticipating the Fed decision and 19% of the S&P 500 reporting this week. On a world’s stage, China’s industrial profits declined due to a weakening economy. Oil, gold, and silver are on the rise following Houthi rebels’ missile attacks. The crypto market is in deep green, with Cardano outperforming the rest of the major tokens, adding more than 7%. Solana and Polkadot increased more than 5%, while Chainlink, Avalanche, and Polygon made +3%. BTC and ETH lagged the overall market with under 3% growth.

Details

  • The Dallas Fed’s manufacturing index dropped to -27.4 in January 2024, indicating a deeper contraction. The production index hit its lowest since mid-2020, while new orders and shipments also declined. Employment fell to its lowest since mid-2020. Despite this, wage and input costs continued to rise while selling prices remained flat. However, future production index increased to 21.7, suggesting optimism for future growth. Most other forward-looking indexes also improved. (Dallas Fed)

Crypto

  • Crypto-focused funds globally experience a significant $500 million in net weekly outflows, primarily linked to Grayscale’s bitcoin ETF transition. Grayscale’s GBTC sees a $2.2 billion net outflow, overshadowing $1.8 billion inflows into new U.S. bitcoin ETFs. The United States, Switzerland, and Germany, with outflows totaling USD 409M, 60M, and 32M respectively, lead the global outflows. Bitcoin, Ethereum, Polkadot, and Chainlink witness notable outflows, raising concerns across the crypto investment landscape. (source).
  • Binance’s survey in France, Italy, Spain, and Sweden shows strong bullish sentiment among European investors in the face of recent crypto volatility. 73% express optimism about crypto’s future, with 55% exclusively engaging in digital assets. High returns (20%), decentralization (18%), and innovation (17%) are cited as key adoption drivers. Additionally, 55% use cryptocurrencies for daily transactions.(source)

World Markets

  • Shanghai Composite drops 0.92% to 2,883, and Shenzhen Component falls 2.06% to 8,582 as healthcare and tech stocks decline. US bill proposing a ban on Chinese biotech firms collaborating with the US government raises concerns, impacting sectors like semiconductors and AI. WuXi Apptec, Zhongji Innolight, and TCL Zhonghuan lead losses. Chinese regulators suspend lock-up share lending for short selling to stabilize equity markets.
  • China’s industrial profits decline 2.3% YoY to CNY 7,685.83 billion in 2023, marking a second consecutive annual fall amid economic challenges. State-owned firms see a softer profit shrinkage (-3.4%), while the private sector experiences growth (2.0%). Specific sectors, including chemical manufacturing, face notable declines, while others, such as ferrous metal smelting, show substantial profit increases. In December, industrial profits rise by 16.8% YoY, marking the fifth consecutive monthly increase.
  • Ibovespa fell 0.5% below 128,400 due to caution before monetary decisions by Brazil’s central bank and the US Fed. Vale’s shares dropped 1.8% amid management concerns and Evergrande’s impact, affecting the mining sector. Gol faced the day’s worst performance, impacted by US judicial issues and a credit downgrade. Meanwhile, Magazine Luiza rose 2.8% following a R$1.25 billion private capital increase.
  • Pakistan’s central bank maintains a 22% key interest rate for the fifth time, citing improved external accounts and increased reserves. Inflation, expected to decline faster from March, is projected at 23%-25%, with a medium-term target of 5%-7% now set for September 2025. The GDP growth target remains 2%-3%.
  • Zimbabwe’s annual inflation rises to a ten-month high of 34.8% in January 2024, up from 26.5% in December. Food, services, and currency depreciation contribute, with the local unit losing over a third of its value against the dollar this year. Monthly consumer prices surge by 6.6%, the highest in seven months.

Currencies

  • The dollar index rose to 103.7, approaching mid-December levels, as traders anticipated the Fed’s policy decision. Focus is on potential hints about the timing and pace of interest rate cuts. Betting odds for a 25bps rate cut in March and May are approximately 49% and 50%, respectively. Increased buying against the Euro is driven by expectations of ECB rate cuts in April. The dollar also strengthened against the British pound ahead of the Bank of England’s decision.
  • The Indian rupee hovers around 83.1 per USD, slightly weaker than a mid-January high. Traders await the federal budget for potential reforms, with the Finance Ministry optimistic about 7%+ growth, backed by structural reforms. The central bank intervenes to prevent the rupee from falling below its record low of 83.4.

Commodities

  • Gold rises to nearly $2,030/ounce amid Middle East tensions. Houthi rebels’ missile attack on an oil tanker and drone attack on US forces drive safe-haven demand. Cautious investor sentiment prevails ahead of the US Federal Reserve’s policy decision, with expectations of a steady interest rate. Strong US economic data and hawkish Fed comments reduce the likelihood of a March rate cut to 48%, down from 86% in December.
  • Silver prices steady near $23/oz as investors await Fed meeting and US economic data, including jobs report. Traders hope for signs of a cooling labor market and softer Fed tone. Silver remains supported by geopolitical risks in Middle East, including attacks on US service members and commercial shipments.

On Tuesday, job openings increased, while the Dallas Fed reported a drop in service sector activity and home prices continued to rise, dampening hopes for a 25bps rate cut by the Fed. As a result, stocks were mixed: the S&P 500 and Nasdaq declined, while the Dow Jones edged slightly higher. Corporate earnings were also mixed, with UPS sinking and GM soaring. Microsoft, Nvidia, and Meta hit all-time highs.

On world markets, the German economy entered a technical recession, while the EU zone still showed barely perceptible growth. The Mexican economy slowed. The crypto market was mostly in green, with Chainlink surging above 4%, followed by Solana at +3.5%. Ethereum showed a +3% increase, while Bitcoin’s gain was less than 1%.

Details

  • The number of job openings in December 2023 surged to 9.026 million, up 101K from the previous month and above consensus. Professional and business services saw a gain, but wholesale trade experienced a decrease. Job openings increased in the South (+115K) and Northeast (+12K) but decreased in the Midwest (-22K) and West (-4K).(BLS)
  • The Dallas Fed’s service sector index for Texas fell to -9.3 in January, suggesting worsening business conditions. The outlook and revenue indexes also declined, while labor market measures showed continued employment growth with shorter work weeks. Input and selling price pressures eased, while wage growth remained unchanged.(Dallas Fed)
  • Home prices rose 5.4% year-on-year in November, but fell 0.2% month-on-month, with Detroit and San Diego reporting the highest gains and Portland the only city with declining prices. Seattle (-1.4%) and San Francisco (-1.3%) had the largest declines MoM. (SP)

Crypto

  • Blockchain analysts report that Grayscale has slowed BTC transfers to Coinbase, amid a rising price for the asset. The current BTC value from the recent transfer is below $200 million, representing less than half of last week’s average daily volume. (source)

World Markets

  • The Euro Area had a small gain in Q4 2023 while the overall trend has been down since January 2022. France (0.7%) and Italy (0.5%) leading the expansion and Spain (2%) and Portugal (2.2%) experiencing strong growth. Germany’s economy shrank while Ireland (-4.8%) recorded a steep decline.(EUROSTAT)
  • Germany’s economy shrunk by 0.2% in Q4 2023, in line with expectations, and entered a technical recession due to rising prices and borrowing costs. (Federal Statistical Office)
  • Mexico’s GDP expanded by 2.4% in Q4 2023, slower than expected and lower than the previous quarter. Primary, secondary, and service sectors saw slower growth, with 2023 growth at 3.1% compared to 3.9% in 2022. (INEGI)

Commodities

  • Nickel futures continued its downward movement even after China’s stimulus announcement and Nornickel’s production forecast. The overall trend remains bearish due to excess supply from world’s top exporters, Indonesia, Philippines and China. As the International Nickel Study Group forecasts, in 2023 metal’s excess supply was 223K metric tons and is expected to widen to 239K in 2024.

On Wednesday, the Fed kept the rate unchanged at 5.5% but hinted at no cuts in March; as a result, stocks tumbled, with the Dow, S&P 500, and Nasdaq showing deep losses in the communication services, tech, and energy sectors. In the world markets, China’s manufacturing is unexpectedly stable, while Brazil’s Central Bank cut its rate to 11.25%, and South Korean exports surged due to a more than 50% increase in chip sales. The crypto market is in the red, following Wall Street, with Solana and Polygon dropping 3% and 2%, respectively. Both BTC and ETH are down 1%.

Details

  • Fed maintained the funds rate at 5.25%-5.5% in January 2024, as expected. Policymakers indicated rates would not be reduced until inflation moves sustainably towards 2%. Powell suggested rate cuts may begin this year, but not in March. The Fed removed reference to further rate hikes and noted inflation has eased, but remains elevated.(FOMC Minutes)
  • Mortgage applications in the US decreased by 7.2% in the week ending January 26, 2023. Applications to buy a home dropped by 11.4%, while those to refinance a home loan increased by 1.6%. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 6.78%. Low existing housing supply is limiting options for prospective buyers and keeping home-price growth elevated, which is constraining home purchase activity.(MBA)
  • Private businesses added 107K jobs in January 2024, below expectations. Leisure and hospitality led the growth with 28K jobs followed by trade, transportation and utilities (23K), construction (22K), education/health services (17K) and financial activities (7K). Pay growth slowed, with job-stayers seeing a 5.2% increase and job changers a 7.2% gain.(ADP)
  • The Chicago PMI fell to 46 points in January 2024, down from 47.20 points in December 2023. This was below the historical average of 54.66 points, indicating a contraction in manufacturing activity. The index had reached a record high of 81.00 points in November 1973 and a record low of 20.70 points in June 1980. (ISM)

Crypto

  • Coinbase and Ripple are major donors to the Fairshake super PAC, which supports pro-crypto politicians. Coinbase has contributed $24.5 million, with CEO Brian Armstrong donating an additional $1 million. Ripple has donated $20 million, while Andreessen Horowitz and Electric Capital have donated $20 million and $500,000 respectively, according to Bloomberg.(source)
  • Bitcoin miners transferred over 4,000 BTC (~$173 million) to cryptocurrency exchanges, marking the largest single-day selling since May 16, 2023. However, the selling pressure did not impact mining portfolio reserves, which have remained stable since January, according to on-chain analytics firm CryptoQuant.(source)
  • Binance has regained its position as the world’s most dominant crypto exchange, capturing nearly 50% of the global market share. The resurgence can be attributed to a spike in trading volume fueled by Binance’s zero-fee promotion in December 2023 and the hype surrounding the United States Securities and Exchange Commission (SEC) approving several spot Bitcoin exchange-traded funds (ETFs) (source).

World Markets

  • China’s Caixin Manufacturing PMI remained unchanged at 50.8 in January 2024, beating market expectations of 50.6. This marked the third consecutive month of growth in factory activity. The reading indicates that manufacturing activity in China is expanding, as a PMI above 50 indicates growth, while a reading below 50 indicates contraction.(SP)
  • Brazil’s central bank cut the Selic rate by 50 bps to 11.25% in January 2024, as expected. The committee noted economic activity indicators align with an anticipated slowdown and consumer headline inflation continues to decrease. Committee members anticipate a similar reduction in upcoming meetings to sustain the necessary contractionary monetary policy for disinflation. The total easing cycle’s magnitude will depend on factors such as inflation dynamics and long-term expectations.(BCB)
  • Japan’s 10-year government bond yield rose above 0.7%, hitting its strongest level in six weeks, as BOJ Governor Kazuo Ueda’s comments revived speculation about a possible shift in monetary policy. Ueda suggested that the BOJ will reexamine its massive stimulus program if wage rises continue to increase the likelihood of achieving the 2% inflation target. However, the BOJ maintained its ultra-loose monetary policy at its first meeting this year, keeping its key short-term interest rate at -0.1% and retaining the 1% upper limit on the 10-year Japanese government bond yield. Japan’s unemployment rate fell to 2.4% in December, while domestic industrial production and retail sales grew less than expected.
  • In December 2023, Spain’s retail trade grew by 3.1% YoY, marking the 13th straight month of growth, driven by non-food sales, particularly personal equipment and other goods. Annual retail sales increased by 6%. However, on a monthly basis, retail trade decreased by 0.7% — the 5th month of a slowing growth rate.(INE)
  • Italy’s unemployment rate fell to 7.2% in December 2023, the lowest in 16 years, beating market forecasts of 7.6%. Youth unemployment also declined to 20.1%, the lowest since July 2007, pointing to a resilient labor market.(ISTAT)
  • Brazil’s Q4 2023 unemployment rate fell to 7.4%, below the expected 7.6%, marking the lowest rate since February 2015. The number of employed individuals reached a record high of 100.985 million, with the employment rate rising to 57.6%.(IBGE)
  • South Korean exports in January 2024 rose 18% YoY, beating expectations, due to a surge in semiconductor exports. Sales of chips, cars, display products, and home appliances increased. Exports to the US and China grew, reversing a decline in 2023 caused by falls in chip sales and global economic uncertainties.(MOTIES)

Currencies

  • The Russian ruble weakened past 89 per USD, near its lowest level in three weeks, due to uncertainty caused by conflicting views between the Central Bank and the government on currency controls. While the government proposed extending capital controls until the end of the year, the CBR officials declined the idea. The ruble remained supported by the central bank’s FX interventions and reduced demand for yuan and greenback due to seasonal factors.

On Thursday, recent data showed rising jobless claims accompanied by drastically increased cuts in the private sector and slowing labor cost growth. Stocks reacted with a moderate rise. Financials underperformed while communication services outperformed. On the world’s markets, the Euro area’s inflation declined to 2.8% while unemployment held at 6.8% with Spain recording 11%. Also, the BoE kept its rate at 5.25% and the Nigerian Naira plummeted on the central bank’s factual devaluation. On the crypto market, traders followed WS buying in the dip and brought most popular tokens into the green with Chainlink leading the charge with a 9% increase. BTC and ETH growth is much less pronounced (around +1%).

Details

  • US employers announced 82,307 job cuts in January 2024 — a 136% increase from the 34,817 cuts announced in Dec 2023, the most in ten months and the highest January total since 2009. The financial (23238) and technology (15806) sectors experienced the most job cuts. Layoffs were driven by economic trends, anticipated policy changes, and increased automation and AI adoption.(Challenger)
  • Unemployment benefit claims rose for a second week to 224K, the highest since November, with California, NY, and Oregon experiencing the most significant increases. Continuing claims also rose, reaching a nine-week high, indicating a soft slowdown in the labor market.DOL
  • The ISM Manufacturing PMI improved to 49.1 in January 2024, the highest since October 2022, indicating a less severe contraction in the manufacturing sector. Demand and output stabilized, while inventories fell at(ISM)

Crypto

  • Ethereum has seen a price and activity resurgence, with data showing 101K new ETH addresses created daily alongside 484K interacting, 28% faster than three months ago. This growth signals a thriving ecosystem for the second-largest cryptocurrency.(crypto)
  • Polygon Labs laid off 60 employees, about 19% of its workforce. Departing staff received severance packages while remaining employees will get at least a 15% raise starting in 2024, reflecting continued web3 job market demand.(source)

World Markets

  • The Euro Area inflation rate declined to 2.8% YoY in January 2024, meeting expectations. The core inflation rate eased to 3.3%, still reaching the lowest level since March 2022. On a monthly basis, consumer prices fell 0.4% after rising 0.2% in December. (Eurostat). FYI: Euro Area (Zone) is a monetary union, which accept EURO as their currency. Euro Area excludes: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, and Sweden.
  • The Euro Area unemployment rate held steady at a historically low 6.4% in December 2023, as expected, with youth unemployment dipping to 14.4%. The number of unemployed fell by 17 thousand on the month to 10.909 million. Spain had the highest jobless rate at 11.7%, while Germany had the lowest at 3.1%.(Eurostat)
  • Bank of England kept the Bank Rate unchanged at 5.25% for the fourth consecutive time, in line with expectations. Two policymakers preferred a 25bps increase, while one preferred a decrease. The central bank acknowledged more balanced inflation risks and expected GDP growth to gradually pick up. CPI inflation is projected to temporarily hit the 2% target in Q2 2024 before increasing again in Q3 and Q4.(BoE)

Currencies

  • The Nigerian naira hit a record low of 1,250.5 per USD, nearing the parallel market rate, after the central bank revised its exchange rate methodology, marking the currency’s second devaluation in seven months. This steep drop defies efforts by the central bank and government to boost forex liquidity despite a backlog of $7 billion in matured forwards. The bank warned banks against underreporting transactions amid risks of misinformation and manipulation. About $2.5 billion of the backlog has been paid across key sectors, though dollar shortages persist for Africa’s largest economy.

On Friday, the latest data shows that unemployment remains steady at 3.7%, and the economy continues to add jobs at an increasing rate. Despite this, stocks have reached record highs again, boosted by strong results from tech giants. Meta surged a record +20%, Amazon gained ~8%, and Nvidia rose ~5%. On the world’s markets, Chinese stock indexes continue to decrease due to trader pessimism regarding the effectiveness of government stimulus and the ongoing Evergrande turmoil. Cryptocurrencies were in the green again with Chainlink leading the market with a +7% increase, followed by Avalanche (+6%). However, BTC (-1%) and ETH (-1%) paused as investors reallocated into other major cryptocurrencies.

Details

  • Total nonfarm payroll employment rose by 353K (projected 180K) and the unemployment rate remained steady at 3.7% in January 2024, below the forecasted 3.8%. The activity rate was the same at 62.5%, the lowest since February 2023. The number of unemployed decreased by 144 thousand to 6.12 million, while employed individuals dropped by 31 thousand to 161.15 million. (BLS)
  • And the answer is that the U-6 unemployment rate, accounting for all forms of unemployment, rose to 7.2% in January 2024 from 7.1% the prior month.(BLS)
  • Consumer sentiment (according to the University of Michigan) rose to a 2.5-year high in January as expectations improved (mostly because of a sharp rise in consumers expectations), though assessments of current conditions weakened somewhat. Longer-term inflation expectations edged up but remained relatively subdued.(UoM)

Crypto

  • Tether Holdings reported a record-breaking Q4 2023 net profit of $2.85 billion (beating JP Morgan), contributing to a $6.2 billion annual net profit. The company removed secured loans from token reserves, achieving 90% cash backing, and invested $1.45 billion in sustainable energy, Bitcoin mining, data infrastructure, AI, and P2P telecommunications technology.(Tether)
  • DeFi’s Daily Unique Active Wallets hit a record 5.3 million with a 262% surge in social dapps. The DeFi sector’s Total Value Locked reached $110 billion. NFT trading volume was at $1.5 billion, with Blur leading but focusing on high-value NFTs. $41 million in crypto assets were lost to hackers.(DappRadar)
  • Polkadot experienced exceptional growth in Q4 2023, with a 93% increase in active parachain addresses and a 150% surge in Cross-Consensus Mechanism Format transfers. This highlights the growing adoption of Polkadot’s specialized blockchains and enhanced interoperability.(source)

World Markets

  • The Shanghai Composite and Shenzhen Component fell 1.46% and 2.24% respectively, hitting a four-year low due to economic uncertainties and negative investor sentiment. Despite stimulus measures, concerns over Evergrande’s liquidation and potential US bans led to significant losses in growth stocks.
  • In December 2023, Brazil’s Industrial Production rose 1% YoY, surpassing 0.1% forecasts and November’s 1.3%. Historically, the average annual growth rate is 1.68%, reaching 37.20% in 1991 and -27.70% in 1990.(IBGE)

Comment: About the Secretary of Labor interview on the Reuters’ channel.

Watching all markets across the world at once and trying to gauge how it reflects on crypto every day for more than one year has put me in a non-enviable position.

This is especially true when I have also constantly listened to political commentaries coming from top-positioned bureaucrats, notably those responsible for economic conditions in the country. One of those emanated from the Secretary of Labor today.

That person came full throttle, congratulating the government for the amazing results they achieved with keeping employment so low, inflation high, and GDP growing. Then, the journalist asked, ‘Why then do people can’t feel that which reflects in upcoming elections’ polls?’

(Like, yes, what about the sky-high mortgage rates, unbelievable costs of food and housing, evaporated bank accounts, mounting lay-offs, and complete destruction of whole sectors of the economy like SME banks, start-ups and innovations, SME finance, and crypto to name just a few?

And, yes, “thanks” to the Boomers’ outstanding smear campaign against crypto, we still have 95% of the population absolutely oblivious to the decentralized governance and income-earning alternatives we have created for them during the past 15 years.)

It was absolutely dumb striking to see how the Secretary started to mumble something like, ‘We work so hard, but people just too stupid to not recognize that.’ That speaks volumes about the soundness of the current political system, which acts now like a dystopian movie about gigantic moving cities which fight each other on the face of dilapidated Earth led by straightforward delusional and mentally deficient megalomaniacs and their small cliques.

These “elected officials” completely ignore reality outside of their high-raised, bulletproof cockpits, driving with eyes wide shut, without front-windows, relying on their medieval dials board. All those “legitimated gangsters” do now is keep cheering the crowd with only goal in mind — to prolong their stay in power for as long as they could, whatever the cost for the rest of us.

And by the way, all alternatives on the so-called elections (and I am talking worldwide, where more than 50% of the world’s population will come into voting cabins this year) are not a tiny-tiny better. So, investors, buckle your seatbelts. So much fun ahead.

On Week 5, trader focus on major corporate earnings and FED’s insights. Globally, attention turns to interest rates, inflation, trade data, and economic indicators from countries like Australia, India, China, and Germany.

Evernomics — Digital Wealth Growth Intellectual Contracts Platform — is your way to invest into your bright future without hassle.

For more reports : https://evernomics.com/

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SVET
Coinmonks

Angel Investor (20+ years), Serial Entrepreneur (14+ companies), Author (> 1M views), Founder of Evernomics, 40+ Countries