On Week 27, stocks reached new highs as unemployment rose to the highest in nearly three years.
Meanwhile, BTC crashed below $54K due to prolonged selloffs by whales amid increasing geopolitical worries, particularly after a significant shift in the UK government where pro-crypto politicians lost their positions following the Labour Party’s win. ETH also declined despite positive ETF news.
On world’s markets, the French stock market dipped, reflecting broader European trends, as investor caution before key elections overshadowed slightly lower inflation data. Brazil’s real weakened, nearing an all-time low, amidst political turmoil despite a robust private sector and labor market. President Lula Da Silva called for prioritizing economic realities over financial demands, criticizing high interest rates.
On Monday, stocks opened the second half of the year. Tech giants led the way, with Tesla surging ~6% and Meta seeing gains despite EU regulatory concerns. The ISM Manufacturing PMI showed a slower contraction in the sector, and traders will monitor key indicators this week to assess the monetary policy outlook. In global markets, EU manufacturing activity worsened, the Brazilian real is reaching record depreciation levels amid the growing feud between Lula and the Central Bank, while crude oil climbed to two-month highs on Middle East geopolitical tensions. BTC and ETH surged to their highest levels in a week, driven by rate cut expectations.
Details
- Manufacturing PMI edged down to 3-month high of 51.6 in June. New orders and production kept growing, but at a slower pace. Employment surged to a 21-month high. Price hikes slowed down, but business sentiment weakened due to soft demand. 1Y trend: “Up” (PMI)
Crypto
- Filipinos can now use USDT, a digital currency pegged to the US dollar, to pay for their social security contributions. This new option applies to the government-run SSS program, which offers financial aid to employees and administers social security and employee compensation benefits. (source)
World Markets
- Eurozone manufacturing activity worsened in June, with production falling at the fastest pace in 2024. Despite a slight upward revision in the PMI to 45.8, it remains below the long-term average. New orders, employment, and purchasing all dropped. Businesses raised prices due to increasing input costs. However, there is a positive outlook for production in the next year. 1Y trend: “Up” (PMI)
- Japan’s manufacturing PMI dipped slightly in June but remained in expansion for the second month. Output rose for the first time in a year, but new orders fell due to weak foreign demand. Employment continued to grow, but purchasing activity declined. Price pressures intensified, with both input and output costs rising significantly. Business sentiment improved to its highest point this year. 1Y trend: “Down” (PMI)
- China’s factory activity grew faster than expected in June, reaching a two-year high. Production, new orders, and stockpiles increased, but export growth slowed. Employment stabilized and backlogs rose. Input price inflation surged, while factories raised prices for the first time this year. Business optimism declined due to competition and market uncertainty. 1Y trend: “Up” (PMI)
- Indonesia’s inflation rate dropped to a 9-month low of 2.51% in June, beating expectations. Food prices led the decline, while transport and furnishings saw some increase. Core inflation also dipped slightly. This keeps inflation within the central bank’s target range. 1Y trend: “Side” (BPS)
- India’s manufacturing sector grew faster in June than May, fueled by strong demand. Hiring surged to a 19-year high, and companies stockpiled materials. Prices remained elevated, but rose at a slower pace. While manufacturers expect continued growth, their near-term production outlook dipped slightly. 1Y trend: “Up” (PMI)
- Spanish manufacturing grew for a fifth month in June, but at a slower pace than May. This was due to positive demand conditions being outweighed by some uncertainty following European elections. Businesses added staff but reported rising input costs and lower confidence than earlier in 2024. 1Y trend: “Up” (PMI)
- Italy’s manufacturing PMI remained in contraction territory in June, though it rose slightly from May. New orders and output fell sharply, but job cuts slowed. Supplier delays eased, but material costs soared. Despite cost pressures, firms lowered prices to stay competitive. A majority of manufacturers expect production to increase in the next year. 1Y trend: “Up” (PMI)
- French manufacturing PMI continued to decline in June, marking 17 months of contraction. New orders, production, and employment all fell. Despite the downturn, manufacturers are cautiously optimistic about future growth, though less so than previously. Prices rose at a record pace due to rising input costs. 1Y trend: “Down” (PMI)
- German manufacturing dipped again in June, despite a small upward revision in the PMI. Production and new orders contracted at a faster pace, and companies continued to reduce stockpiles. Employment also declined as firms completed work faster than they received new orders. Although price pressures eased slightly, the outlook for the sector improved somewhat. 1Y trend: “Up” (PMI)
Currencies
- Brazil’s real weakened in July, almost reaching its all-time-low, amid political turmoil and despite a strong private sector and labor market. President Lula Da Silva urged the next leader to prioritize economic realities over financial demands, questioning high interest rates. The central bank defended them as necessary for controlling inflation, while economic indicators show a strong private sector and low unemployment rate, supporting the bank’s stance on maintaining high interest rates to manage inflation. 1Y trend: “Up”
Commodities
- WTI crude oil futures rose 2.2% to $83.38 per barrel, its highest level in two months, due to expectations of increased summer demand and concerns about potential supply disruptions from the Middle East conflict between Israel and Iran-backed Hezbollah. Additionally, OPEC+ extended output cuts until 2025, and a hurricane is approaching the Caribbean, potentially impacting oil and gas production. Investors await Fed Chair Powell’s comments and upcoming economic data. 1Y trend: “Up”
- Lumber prices dropped to a 14-month low in July due to reduced demand for wood and construction materials. The US housing market is struggling, with pending home sales decreasing 2.1% in May and housing starts plummeting 5.5% to a 3-year low. Building permits also fell 2.8% to their lowest level since June 2020. The housing market faces ongoing challenges due to strict credit conditions. 1Y trend: “Side”
On Tuesday, major stock indexes hit new highs, fueled by gains in big tech despite a slight increase in the JOLTS report and Powell signaling continued high rates. Tesla surged +10% after strong deliveries. In global markets, uranium hit a two-week high as many countries announced their intention to triple their nuclear power by 2050. BTC and ETH dipped again slightly, along with the rest of the crypto market, due to continuing investor uncertainty on rates.
Details
- Job openings unexpectedly jumped in May to 8.1M, exceeding expectations. This reverses a prior downward trend. Job growth occurred in government and manufacturing sectors, while leisure and education saw declines. Regional openings increased in most areas except the South. 1Y trend: “Down” (BLS)
- Economic optimism gained ground in July, reaching a 6-month high of 44.2. This was driven by improvements in consumer outlook for the next 6 months (up 10.6%) and personal finances (up 8.4%). However, the index remains in negative territory overall, extending a 35-month stretch. 1Y trend: “Side” (source)
Crypto
- Crypto VC investments (92) dipped in June compared to May (153), with fewer projects (down 40%) and less money raised ($697M, down 30% from $990M). However, there’s a positive twist: both figures are still higher (+42%) than June 2023 (480M). (source)
World Markets
- Eurozone inflation dipped to 2.5% in June, lower than May’s 2.6%. This matched expectations. Price increases slowed for food and energy, but core inflation remained unchanged at 2.9%, despite forecasts of a decrease. Inflation varied across countries. 1Y trend: “Down” (Estat)
- Eurozone unemployment hit a record low of 6.4% in May, but the number of unemployed people increased. Spain has the highest rate (11.7%), while Germany has the lowest (3.3%). The rate was 6.5% a year ago. 1Y trend: “Down” (Estat)
- The French stock market (CAC 40) dipped 0.7%, mirroring European trends. Investor caution again ahead of key elections overshadowed slightly lower inflation data. Opponents of France’s National Rally (RN) intensified their efforts to prevent the far-right party from gaining power, with more candidates announcing they would withdraw from this weekend’s run-off election to avoid dividing the anti-RN vote. 1Y trend: “Up”
Commodities
- Uranium prices hit a two-week high in July at $86 per pound. This rise comes amid a global push for nuclear power, with countries like China building 22 of 58 global reactors, and Japan restarting its reactors program. However, a US ban on Russian imports threatens supply chains. The US and 20 other countries intend to triple their nuclear power by 2050 while assessing their ability to fill the gap without Russia. 1Y trend: “Up”
On Wednesday, stocks rose in a shorter session, with the S&P and Nasdaq hitting new all-time highs as weaker economic data fueled investor belief in an interest rate cut by the Fed. The data showed a slowdown in services and job growth. Tesla continued its strong performance. On global markets, gold is up as the dollar is down. BTC fell to $60K again, possibly due to upcoming repayments by Mt. Gox and whales preparing for geopolitical volatility.
Details
- Job cuts decreased in June compared to May, but were still higher than a year ago. This is the highest June number since 2009 (excluding 2020). Consumer products and tech saw the most cuts. Construction cuts surged in June. 1Y trend: “Up” (CHL)
- Private businesses added 150K jobs in June, lower than expected. Service sectors led growth, while manufacturing and mining declined. Leisure and hospitality hiring surged, preventing a weaker report. The economist noted uneven job growth, and a slowdown in wage increases for those switching jobs. 1Y trend: “Up” (ADP)
- Jobless claims unexpectedly rose to 238K in late June, near a 10-month high. Continuing claims also climbed to 1.86 million, the most since November 2021. 1Y trend: “Up” (DOL)
- Services sector unexpectedly contracted in June, hitting a 4-year low (48.8 PMI). This is worse than forecasts (52.5) and May’s reading (53.8). Business activity and new orders also dropped. Survey results show a general slowdown and ongoing job cuts. Inflationary pressures remain, though some price increases have eased. 1Y trend: “Down” (ISM
Crypto
- According to DARPA, governments are taking action focusing on areas where quantum computing might bring benefits, like materials science, but the technology’s effectiveness in nonlinear differential equations remains uncertain. (source)
World Markets
- The Eurozone service sector grew for a fifth month in June, but at a slower pace. New business slowed due to weaker export demand, but domestic orders remained strong. Employment growth eased but stayed positive. Price pressures declined but haven’t reached pre-pandemic levels. Business confidence improved. 1Y trend: “Up” (PMI)
- The Eurozone economy grew slowly in June, with services barely expanding and manufacturing contracting. New orders fell, and job growth eased. Though price hikes slowed, businesses remained optimistic about future service sector activity. This is a revised reading, up slightly from a preliminary estimate. 1Y trend: “Up” (PMI)
- Russia’s unemployment rate reached a record low of 2.6% in May, even though the number of unemployed people went up. This rate was better than expected, but still higher than May 2023’s 3.2%. 1Y trend: “Down” (ROS)
Currencies
- Weak economic data, like a shrinking service sector, led investors to believe the Fed might cut interest rates. The dollar weakened as a result. Investors are waiting for clues from the Fed’s minutes and jobs data later this week. 1Y trend: “Up”
Commodities
- Gold prices surged to a one-month high, fueled by a weakening dollar and falling Treasury yields. This follows economic data suggesting a slowdown in the US economy and raising expectations of Federal Reserve rate cuts in September. A similar trend is anticipated in other countries like the UK and China. Lower interest rates make holding gold, which doesn’t offer interest, more attractive. 1Y trend: “Up”
On Thursday, while the largest stock markets are closed for a national holiday, the UK’s index rose as general election polls suggested the Labour Party may secure a majority. In global markets, the Brazilian real strengthened after Lula promised to address fiscal imbalances. BTC dipped below $57K, its lowest in two months. Potential sell-offs by Mt. Gox creditors receiving long-awaited payouts are adding to the whales’ sell pressure.
Crypto
- Long-term BTC investors (holding over 155 days) have been cashing in on profits recently, with their Spent Output Profit Ratio (SOPR) metric hitting highs above 10. This surge in profit-taking by these typically resilient holders might have contributed to the recent BTC price drop below $57K. (source)
World Markets
- The UK’s FTSE 100 index rose. Meanwhile, the UK’s general election was ongoing, with early polls suggesting the Labour Party may secure a majority, ending the Conservative Party’s 14-year rule. 1Y trend: “Up”
Currencies
- The Brazilian real strengthened to over 5.5 per USD after President Lula da Silva’s meetings with ministers aimed to address fiscal imbalances. The president directed a cut in mandatory expenses and committed to a new fiscal framework, which will aim for balanced public accounts. 1Y trend: “Up”
On Friday, stocks hit new records after June jobs data showed a slowdown. Internationally, gold and silver surged on renewed hopes for rate cuts. BTC continued its descent, dipping below $54K due to whales’ protracted selloffs amid increasing geopolitical worries. This was underscored by a fundamental change in the UK government, where almost all pro-crypto politicians lost their jobs overnight following the Labour Party’s groundbreaking win. ETH followed despite positive ETF news.
Details
- Unemployment rose to 4.1% in June, the highest in nearly 3 years. This is despite adding 116,000 jobs. More people are entering the workforce (participation rate up to 62.6%), but not finding jobs as quickly. 1Y trend: “Up” (BLS)
Crypto
- Britain’s big election shakeup could hurt crypto. The new government’s priorities likely won’t include crypto, and key industry supporters lost their seats. This means less regulatory clarity and a potentially less crypto-friendly environment. (source)
World Markets
- Eurozone retail sales in May 2024 barely rose (0.3%) compared to last year, a significant slowdown from the historical average growth of 1.07%. This follows record highs in April 2021 and lows in April 2020. 1Y trend: “Up” (source)
- Eurozone construction slumped in June, with PMI hitting a new low (41.8) since mid-2020. Falling orders led to job cuts, lower material purchases, and a cautious outlook for the future. 1Y trend: “Down” (PMI)
- Spain’s factory output grew a modest 0.4% in May, below expectations (1.4%). Production rose for consumer goods but fell for energy and capital goods. This follows a weak April (0.2% increase). 1Y trend: “Side” (INE)
Currencies
- The British pound rose to $1.28, its highest level in three weeks, after the Labour party won the parliamentary election, ousting the Conservative party after 14 years. Labour’s emphasis on economic stability and strict spending guidelines boosted market confidence, making the pound a “safe haven” asset. Analysts predict a rate cut in August and expect this political shift to benefit British investments. 1Y trend: “Side”
Commodities
- Silver surged towards $31.5 in July, its highest since May, when it reached 11-year’s highest, on hopes of a Fed rate cut in September. A weak US jobs report and a slowdown in services pressured the dollar, boosting silver. Expectations of Chinese stimulus and rising solar demand due to record-breaking solar farm connections also fueled the rally. 1Y trend: “Up”
On Week 28, investors watching for inflation data, Fed Chair testimony, and consumer sentiment. Europe holds elections, while several countries announce interest rates and inflation figures. UK releases GDP and retail data. China and India share economic updates.
Comment: The Rise and the Fall Of Moderates
After presidential debates season began on both sides of the Atlantic, it has become increasingly obvious that a middle way, pursued by “moderate” political parties, led by 70–80 year olds, has proved to be absolutely ruinous.
The wave of Resentment threatens now to flatten the economic and social terrain to the level of the 1930s by re-introducing a strict government control over our economic and social lives.
All of this is underlined by rapidly growing geopolitical tensions, which look like a bad replica of 1900th Imperial powers conflicts over resources and global dominance.
It is, of course, doesn’t make any sense except that it redirects government powers to the most violent part of the Boomer’s ruling class.
We have to lay the blame for that madness at the feet of Moderate Boomer politicians, who in their endless arrogance simply forgot to materially compensate 90% of the population for the emotional trauma and hardships of the world’s open economy, where severe competition led to a sharp rise in inequality.
Boomer politicians disregarded a primitive psychological phenomenon, which makes most humans discontent and stressed not because they are hungry or physically threatened but because someone else lives much better than them.
Instead of urgently introducing Universal Basic Income (UBI) and making radical steps by allowing some small but politically dangerous parts of society to go their own ways, even if they want to found their new, independent countries, Boomers continued to force-feed their “unification” agenda to everyone on Earth without any regard to reality on the ground.
Yes, we could have had several small aggressive states led by atrocious regimes. That’s bad enough but still tolerable. Instead, now we risk to have the largest economies in the world led by unrestrained ideologues.
The List of Boomer’s Blunders:
- Not asserting a seamless transfer of political power to technologically savvy and much more inventive Gen X/Millennials;
- Not initiating a massive social support programs, including UBI, for lower strata of population;
- Not allowing a full economic and political independence to rebellious regions and states;
- Not initiating large political power decentralization reforms, instead over-concentrating power in a few hands.
Here are potential consequences of Boomer’s policies:
- A massive surge in anti-capitalist sentiments among Millennials and Gen Z;
- A threat of police-states’ re-built in the center of Europe;
- An increased probability of World War III.
It’s the price people have to pay because several ruling Boomers didn’t even consider the possibility of global decentralization, which, of course, limits greatly their “authorities” but which might have been helping now to avoid a 1930s Resentment.
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