Market Observations - Dec 4
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One month to go, the scores so far:?Crypto 93.8%, Stocks 17.1%, Gold 11.6%, H.Y. bonds 9.3%, I.G. bonds 5.3%, Cash 4.6%, U.S. dollar 0.0%, Commodities -0.6%, Gov’t bonds -0.8%, Oil -5.4% YTD
Crypto Market Rundown: ?
Momentum continued through the weekend. The global crypto market cap is now $1.49T, a 3.04% increase since we last reported on Friday. The total market volume over the last 24 hours is $46.8B, a 24.91% increase day/day. Total volume in DeFi is currently ~$5.1B, or 10.96% of all volume. BTC.D (Bitcoin dominance) is still on the rise, now at 52.22% - most alts are still following in the upward projection.?
Top 5 Gainers on Uphold Ascent in the past 24H
Top 5 Losers on Uphold Ascent in the past 24H
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Econ Brief 12/01:?The U.S. consumer continues to defy expectations for a material slowdown amid elevated prices. A perceived sense of purchasing power seems to perpetuate a willingness – justified or not – for consumers to keep spending. However, momentum is fading as short-term supplements, such as a drawdown of savings, a ramp-up of credit card spending, and 401(k) emergency withdrawals, are inching closer to exhaustion.
According to Adobe Analytics, shoppers spent a record $9.8 billion online for black Friday, up 7.5% from last year. Shopping at physical stores, furthermore, was up 2-5%, with a 4.6% increase in in-store traffic, the strongest in recent years, according to RetailNext. The momentum carried into Cyber Monday, which saw sales jump nearly 10% from last year to $12.4 billion, surpassing expectations and marking a record high.
U.S. Friday Market Wrap
The bulls continued their parade today, with the S&P closing at a new year-to-date high and the Russell 2000 roaring to a 3% gain. The Dow rose to another new high for 2023, adding 294 points or 0.82%, and the Nasdaq gained 0.55%.
All eleven S&P sectors closed green. Real estate +2.10% led, and technology +0.19% lagged.
November’s ISM manufacturing PMI showed that the U.S. economy could still be headed for a slowdown as new orders and factory employment declined. Meanwhile, Federal Reserve Chairman Jerome Powell called talks of cutting rates’ premature,’ reiterating that more rate hikes could still be on the table.
Dell shares retreated 6% from all-time highs after reporting mixed third-quarter results. Like other tech firms, earnings were strong, but revenues fell short of expectations.
The shiny metal is hitting new all-time highs. But still, some are perplexed as to why it’s rallying. Bears argue that gold should not be rallying in the current environment. After all, inflation continues to trend back toward the Fed’s 2% target, and the economy is holding up well thanks to a strong labor market and consumer spending. And with the risk-free rate still above 5%, some investors and traders argue there are better alternatives to gold and precious metals as a group.
Despite that pushback, prices continue to trend upward, with some analysts forecasting a rise to $2,500 and $3,000 in 2024. We’ll have to wait and see who is correct, but for now, bulls have the clear edge as prices close at their highest level ever.
While stocks are getting all the attention lately, bonds are making history. Well, one bond ETF is.
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Vanguard’s Total Bond Market ETF ( BND ) is the first bond exchange-traded fund to cross $100 billion in assets under management (AUM). That’s despite a massive bond rout over the last eighteen months, where prices have been pummeled in the face of higher interest rates.
However, two of this year’s biggest trends benefited the fund. The first is that investors flocked to fixed income’s higher yields, causing inflows to various fixed-income-related products like bond ETFs. Additionally, the move away from the mutual fund structures to lower-cost (and more tax-efficient) exchange-traded funds continued.
?OpenAI’s GPT store is delayed until next year.?Given the unexpected drama over the last few weeks, the company has to postpone one of its highly-anticipated features. The GPT store will be a marketplace for users of OpenAI’s GPT builders to sell and share the GPTs they’ve built. It’s unclear how much, but OpenAI says it will pay people who made their own GPTs based on how much their creation is used.
UAE pledges $30 billion in climate-related funds.?The United Arab Emirates is looking to silence critics by contributing the massive sum to a new fund that aims to divert private sector capital towards climate investments and improve financing for the Global South. The fund’s (Alterra) board will be chaired by Sultan al-Jaber, who controversially serves as COP28 president and head of state oil giant ADNOC.
Rates have come back firmer today, perhaps as some recognized the market overshoot. The U.S. 2-year yield is up nearly 7bps after falling 14 before the weekend. The 10-year yield is almost 6bps higher, around 4.25%.
Ahead of the start of the North American session, the USD is firmer against all the G10 currencies except the Japanese yen. Most of the freely accessible emerging market currencies are also softer.
Gold has been on a wild ride. It shot up to a little more than $2135 before reversing lower and is now near $2065.
The MSCI Asia Pacific Index has rallied for the past three weeks but struggled to start the new week. South Korea, Australia, and India were notable exceptions. India’s stocks were encouraged by Prime Minister Modi’s party’s (BJP) success in the weekend state elections. The 2% gain is the largest of the year.
After rallying the past three days, Europe’s SXXP is treading water: little changed in a narrow range.
U.S. index futures trading with a softer bias.
The market is judging that OPEC+ voluntary cuts may not materialize so much, and demand may weaken. After peaking near $80 last Thursday, January WTI slipped below $73 a barrel earlier today but has returned to near $74. Resistance is now seen near $75.?
Caixin reports November services and composite PMI first thing tomorrow. Like the manufacturing PMI before the weekend, Caixin services and composite PMI are seen ticking up, unlike the “official” (Chinese Federation of Logistics) PMI. It would be the second consecutive increase in the services PMI. A rise in the composite would be the first in six months. November trade and inflation data are due later this week. The soft economic data and deflationary conditions underpin expectations that the PBOC could cut reserve requirements before the end of the year.
Japan’s final PMI composite reading is also due first thing tomorrow. The preliminary reading of 50 was the lowest of the year. Still, the focus turns back to prices with tomorrow’s Tokyo CPI. The Tokyo CPI, like the Eurozone’s preliminary estimate and the US CPI, provides a reasonably good estimate of the national figures (for Japan and the Eurozone) and the PCE deflator, which the Fed targets in the U.S. Price pressures in Japan are moderating, and inflation is expected to have slowed at both the headline and core measures.
Fed Chair Powell was crystal clear: “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so.” Initially, rates rose, and the dollar extended its gains, but quickly these moves were unwound. The two-year yield fell to a new low on the day (4.57%), and the dollar turned broadly lower. The market is pricing in nearly a 67% chance of a Fed cut in Q1 24. This seems exceptionally aggressive ahead of Friday’s jobs report, where the median forecast looks for a 180k increase in nonfarm payroll. The crucial link may not be between wages and inflation but between employment, income, and demand. Today, the U.S. sees factory orders and revisions to durable goods orders. We already know the auto strike was disruptive, and Boeing orders have been halved since September.
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Please note that Uphold and its affiliates do not provide investment, tax, or legal advice. This message is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice and before taking any action you should consult your own advisors. Note that digital assets such as cryptocurrencies present unique risks for investors. Please see our disclaimer regarding risks specific to holding digital assets before investing.