On Week 45, the past week was marked by significant market volatility, primarily driven by the Trump’s win. The S&P and Dow surged nearly 5%, buoyed by expectations of pro-business policies under new administration. The Fed’s 25 basis point rate cut further fueled the rally.
However, underlying economic indicators were mixed. Manufacturing activity weakened, while the Eurozone manufacturing sector continued to contract. China unveiled plans to ease local government debt, but the broader economic outlook remains uncertain.
In the commodity markets, oil prices declined due to concerns over global demand, particularly from China. Gold prices remained relatively stable, supported by geopolitical uncertainties and potential inflationary pressures.
Crypto continued their upward trend, with BTC approaching the $77K level and ETH touching ~$3K for the first time in four months. The broader crypto market benefited greatly from the Trump’s Rally, too.
On Monday, equities fell amid a weakening manufacturing sector, with major tech stocks leading the decline as some traders exited the markets prior to the elections. However, after-hours trading presented a mixed picture. Palantir soared on strong earnings, while NXP Semiconductor plunged due to a weak outlook amid broader economic concerns. The dollar and gas prices fell, while gold rose as uncertainties continued to prevail. BTC (66K) and ETH (2.4K) are down but remain stable.
Details
- Factory orders declined in September, continuing a downward trend. Both durable and non-durable goods sectors saw decreases, indicating a weakening manufacturing sector. This aligns with other economic indicators showing a slowdown. 1Y trend: “Side” (Census)
Crypto
- Michigan’s State Retirement System has diversified its crypto investments. It has increased its holdings in ETH ETFs, particularly Grayscale’s ETH Trust and ETH Mini Trust. This move, especially after the recent SEC approval of BTC ETFs, signifies growing institutional interest in ETH. (source)
World Markets
- The Eurozone manufacturing sector continued to contract in October, but at a slower pace than in previous months. While production, sales, and job losses decreased, the rate of decline slowed. However, business confidence reached a one-year low. 1Y trend: “Up” (PMI)
Currencies
- The dollar weakened as polls showed a tighter presidential race. This eased concerns about inflationary policies and led investors to reduce positions benefiting from higher interest rates. The Fed is expected to cut rates on Thursday, balancing inflation and economic slowdown risks. 1Y trend: “Side”
Commodities
- WTI crude oil futures rose 3% to $71.50 per barrel after OPEC+ postponed output increases by a month, extending cuts of 2.2M bpd into December due to falling prices and weak demand. Concerns about potential Iranian retaliation against Israel are also influencing the market. Attention is on the upcoming presidential, and economists expect a 25 bps interest rate cut from the Fed on Thursday amid China’s plans for economic stimulus. 1Y trend: “Side”
- Gold prices stabilized around $2,740 per ounce on Monday after two days of decline, supported by a weaker dollar as markets prepared for the presidential election and Fed decisions. Polls show a tight race, and the Fed is expected to announce a modest 25 bps interest rate cut this week, amid rising tensions in the Middle East boosting gold’s safe-haven appeal. 1Y trend: “Up”
- Natural gas prices dropped due to several factors: lower geopolitical tensions in the Middle East, record-high domestic production, and milder weather forecasts. These factors reduced demand and increased supply, leading to the price decline. 1Y trend: “Up”
On Tuesday, stock futures rose as election results began to emerge. Harris is expected to win Vermont, while Trump is projected to take Kentucky, Indiana, and West Virginia. Investors are also watching the balance of power in Congress, which may affect spending and tax policies. Additionally, markets anticipate a 25 basis point rate cut from the Fed. In regular trading, the Dow, the S&P, and the Nasdaq increased by 1–2%, with strong gains across all sectors. Gold held steady while oil and the Mexican peso rose due to global political uncertainties. Economic activity in key EU member countries continues to slow down. BTC is surging over $70K on expectations of Trump’s victory, leaving ETH far behind at $2.5K.
Details
- Business activity grew slightly in October, driven by the services sector. However, manufacturing continued to decline, and employment decreased across both sectors. Encouragingly, price inflation eased, suggesting reduced cost pressures. 1Y trend: “Up” (SP)
- The trade deficit widened in September due to increased imports and decreased exports. Imports of goods like pharmaceuticals, computers, and cars rose, while exports of products like pharmaceuticals and aircraft declined. This widening deficit suggests a slowdown in the economy. 1Y trend: “Down, Deficit Increasing” (BEA)
- The Logistics Manager’s Index rose in October, indicating strong growth in the sector. Warehousing and transportation utilization increased, while transportation capacity improved. However, inventory levels and costs grew at a slower pace. Overall, the logistics industry is showing positive signs of recovery. 1Y trend: “Up” (LMI)
- Vehicle sales rose to 16M in October, up from September. This is a significant increase from the pandemic low of 8.48M in 2020 but below the ATH of 21.71M in 2001 (16–17M is a long-time medium). 1Y trend: “Up” (NADA)
Crypto
- Polymarket, a prediction platform on Polygon, has reached a record open interest of over $463M, fueled by betting on the 2024 Election Day. Tuesday was its busiest trading day, with $174M in volume, surpassing the previous high of $161 million. Since its launch in 2020, Polymarket has gained significant popularity as a gauge of public sentiment. Currently, it shows Trump at a 62% chance of winning against Harris, despite polls suggesting Harris may have a slight edge. (source)
World Markets
- France’s industrial production fell in September, marking the first decline since May. Both manufacturing and other sectors saw decreased output. While the quarterly trend remains positive, the monthly data suggests a slowdown in industrial activity. 1Y trend: “Side” (Insee)
- Spain’s unemployment rose slightly in October, though it remains at a 17-year low. While most sectors saw increases, construction experienced a decline. Youth unemployment rose significantly. Despite the monthly increase, annual unemployment figures show a 5.7% decrease. 1Y trend: “Side” (ES)
- The UK service sector continued to grow in October, but at a slower pace. New business growth slowed, and export sales accelerated. However, rising costs and uncertainty about the upcoming budget led to increased prices and decreased business confidence. 1Y trend: “Down” (SP)
Currencies
- The Mexican peso weakened due to political uncertainty. Concerns about a potential negative Supreme Court ruling on judicial reform and the possibility of Trump’s return to the presidency have weighed on the currency. While Mexico’s economic data, such as stable unemployment and strong GDP growth, could support some rate cuts, the political risks are currently overshadowing these positive factors. 1Y trend: “Up, Depreciating”
Commodities
- Brent crude oil futures climbed to $75.5 per barrel amid uncertainty from the presidential election, following a 2.9% rise the previous day due to OPEC+ delaying a planned production increase. Market attention is on the election results and China’s National People’s Congress, where additional stimulus may be introduced. OPEC+’s decision was influenced by weak demand and rising non-OPEC supply, while a tropical storm in the Gulf could cut U.S. oil production by about 4 million barrels. 1Y trend: “Down”
- Gold prices remained steady above $2,730 per ounce as markets awaited the presidential election results. Speculation that a Trump presidency could lead to higher inflation has prompted investors to view gold as a hedge against inflation. However, the close election race has moderated these expectations. Additionally, the Fed’s anticipated quarter-point rate cut on Thursday is expected to support bullion by lowering the opportunity cost of holding non-yielding assets, bolstered by hopes of similar moves from other central banks. 1Y trend: “Up”
On Wednesday, stock futures remained steady following a significant rally spurred by Trump’s victory. Major indices reached record highs, with the Dow, S&P, and Nasdaq gaining 3–4%. The small-cap Russell 2000 surged over 5%. Investor optimism centered on anticipated pro-business policies under a second Trump administration, bolstering sectors like financials, energy, and industrials. Meanwhile, megacap tech stocks thrived, while renewable energy and Chinese companies lagged. The dollar is up, while gold, silver, and oil are down. Brazil’s Central Bank hiked its rate for the second time this year amid resurging inflation. BTC has continuously reached new ATHs as more money poured into risk-on assets, driven by traders’ anticipation of Trump’s pro-crypto reforms. Even ETH outperformed, surging more than 10% to $2.7K.
Details
- The average interest rate for 30-year fixed-rate mortgages rose to 6.81% for the week ending November 1, 2024, marking the highest rate since late July. This increase is attributed to rising Treasury yields and expectations that the Federal Reserve will delay lowering interest rates. Additionally, the likelihood of a Trump victory in the presidential election is also influencing rates. Jumbo loan rates reached 6.98%, while FHA-backed mortgage rates decreased to 6.75%. 1Y trend: “Side” (MBA)
Crypto
- The number of BTC millionaires surged from 121,061 on October 7 to 132,842 by November 6, adding 11,487 new millionaires. (source)
World Markets
- The Eurozone private sector stagnated in October, with manufacturing contracting and services growing at a slower pace. Germany and France experienced shrinking activity, while Spain, Ireland, and Italy saw growth. Demand weakened, and employment fell sharply. Price pressures eased, and business confidence declined. 1Y trend: “Up” (SP)
- Eurozone producer prices declined in August, driven by lower energy costs. While some goods categories saw price increases, overall, producer inflation eased. Month-over-month, prices fell significantly, indicating softening inflationary pressures. 1Y trend: “Up” (EU)
- German factory orders surged in September, driven by large-scale orders for transportation equipment. Both domestic and foreign demand increased, with a significant boost from the Eurozone. While some sectors saw declines, overall, the data points to a recovery in manufacturing activity. 1Y trend: “Side” (DE)
- France’s private sector activity contracted at the fastest pace in nine months in October. Both manufacturing and services sectors declined, driven by falling new orders, especially exports. Employment decreased, and business confidence weakened. While input costs rose at a slower pace, output prices remained relatively stable. 1Y trend: “Up” (SPG)
- The Central Bank of Brazil raised its interest rate by 50 basis points to 11.25% to combat persistent inflation. The decision was influenced by concerns about inflation expectations, resilient service sector inflation, and global economic uncertainties. While the domestic economy remains strong, the bank aims to balance inflation control with economic growth. 1Y trend: “Down” (BR)
Commodities
- WTI crude oil futures remained stable above $72, recovering from an earlier drop of over 3%. Investors are evaluating the effects of Trump’s policies and recent EIA data on the energy market. A second Trump term is expected to boost economic growth and consumption, but concerns about trade tariffs hurting China’s economy may reduce oil demand. Meanwhile, the EIA reported a larger-than-expected increase in U.S. crude inventories, and Gulf oil producers began evacuating workers due to Tropical Storm Rafael. 1Y trend: “Side”
- Gold prices fell below $2,670, down from the October 30 peak of $2,758, as Trump’s presidential win bolstered the dollar and led investors to sell gold. The election outcome was less competitive than expected, with no contest anticipated. Markets are adjusting to expectations of higher Fed interest rates, reducing demand for gold. The Fed is expected to announce a 25bps rate cut, addressing inflation risks amid a weakening job market. 1Y trend: “Up”
- Silver prices fell below $32, the lowest in nearly a month, as Donald Trump’s presidential win boosted the dollar and led investors to retract safe-haven positions. The election outcome was less competitive than expected, and market sentiment anticipated higher Fed interest rates, reducing gold demand. Trump’s campaign promises of tax cuts and tariff increases raised concerns about inflation and deficits. The Fed is expected to announce a 25bps rate cut while addressing inflation and job market risks. 1Y trend: “Up”
On Thursday, equities rose, extending the post-election rally. The tech sector led the gains, fueled by the Fed’s 25 basis points rate cut and hopes for reduced regulation under Trump’s administration. However, bank and financial services stocks declined due to concerns about potentially higher interest rates and increased fiscal deficits. Gold, oil, and the dollar stabilized. The Eurozone construction sector continued to contract, while the Argentine manufacturing sector’s decline slowed. BTC and ETH are in deep green, with ETH leading the charge for the first time in almost half a year with a 6% gain.
Details
- The Fed cut interest rates by 25 basis points to 4.50–4.75%, as expected. While the economy continues to grow and the labor market remains strong, inflation has slowed but remains above the Fed’s 2% target. The Fed will continue to monitor economic data and adjust rates accordingly. 1Y trend: “Side” (Fed)
- Jobless claims rose slightly in the last week of October, but remained below recent averages, suggesting a resilient labor market. However, total claims increased, signaling potential weakness. While some states like California and Michigan saw increases, Florida experienced a decline after hurricane-related volatility. 1Y trend: “Up” (DOL)
Crypto
- France’s gambling regulator, the National Gaming Authority (ANJ), is likely to block access to Polymarket. This decision reflects growing concerns about its classification as gambling under French law. Polymarket, which gained popularity during the presidential election with over $3.2B in wagers, allows users to bet on various outcomes using cryptocurrency. A French trader’s significant $30M bet on Trump reportedly caught the ANJ’s attention, highlighting the platform’s regulatory challenges. (source)
World Markets
- The Eurozone construction sector continued to contract in October, though at a slower pace. New orders declined across sectors, leading to decreased employment and input buying. Germany experienced the sharpest decline, while France and Italy saw milder contractions. While cost pressures eased, job cuts persisted, especially in Germany and France. 1Y trend: “Down” (PMI)
- Eurozone retail sales grew 2.9% YoY in September. This is a significant increase compared to the historical average of 1.09%. While the pandemic years saw extreme fluctuations, with record highs and lows, the recent growth indicates a recovery in consumer spending. 1Y trend: “Up” (EU)
- Germany’s trade surplus narrowed in September, as exports declined and imports increased. Exports to the EU and third countries, including China and the UK, weakened. Imports from the EU and non-EU countries, notably China and Russia, grew. Despite the monthly decline, Germany still maintains a significant trade surplus for the year. 1Y trend: “Down” (DE)
- The Bank of England cut its interest rate by 25 basis points to 4.75%, as expected. This decision was driven by slowing inflation, particularly in services. However, the Bank anticipates that the government’s expansionary budget could push inflation higher in the short term. Despite this, the Bank forecasts a gradual decline in inflation over the medium term. 1Y trend: “Side” (UK)
- Argentine industrial production continued to decline in September, though at a slower pace. Most sectors contracted, but the rate of decline eased in some areas. Food and beverage production accelerated, and manufacturing rebounded. MoM, industrial output increased, indicating a potential stabilization in the sector. 1Y trend: “Down” (AR)
- China’s exports surged in October, driven by anticipation of future tariffs. This marked the fastest growth in nearly two years, with significant increases in shipments to various regions, including the US, EU, and ASEAN. For the year-to-date, exports have grown steadily, boosted by strong performance in sectors like agriculture, electronics, and automobiles. 1Y trend: “Down” (CN)
Currencies
- The dollar index slightly recovered but remained lower at 104.5 as traders analyzed the latest FOMC decision. The Fed cut the fed funds rate by 25bps, and Powell emphasized decisions will be made on a case-by-case basis. Investors anticipate a further rate cut in December and significant cuts in 2025, while the dollar rallied 1.7% following Trump’s victory. 1Y trend: “Side”
Commodities
- Gold remained around $2,700 following a 25 basis point rate cut by the Fed. Fed Chair Powell stated that upcoming elections wouldn’t affect Fed decisions, while noting that positive economic data has lessened downside risks. Markets anticipate higher interest rates due to the new president’s policies aimed at increasing tariffs and cutting taxes, which could lead to larger deficits and inflation. Gold dropped 3% yesterday as Trump’s victory strengthened the dollar, prompting investors to sell. 1Y trend: “Up”
On Friday, equities rose to record highs once again, driven by optimism over Trump’s victory, a Fed interest rate cut, and surging consumer sentiment. The S&P surpassed 6,000, while the Dow reached 44,000 for the first time. Tesla’s stock surged more than 8% after achieving a $1 trillion valuation. For the week, the S&P and Dow increased by almost 5%. The dollar is up while oil is down as gold holds. EU stocks fell due to a massive shift of capital to the other side of the Atlantic. The CCP revealed a plan to reduce China’s municipal debt from CNY 14 trillion to CNY 2 trillion over the next five years. Brazilian inflation continues to accelerate, and Italian manufacturing hit a year low. BTC and ETH continue to rise, with BTC testing $77K and ETH, which has seen drastic growth since the election, standing just below $3K for the first time in four months.
Details
- Consumer sentiment rose to a seven-month high in November, driven by improved expectations for personal finances and business conditions. However, current conditions weakened slightly. Inflation expectations declined for the year ahead but increased for the next five years. 1Y trend: “Up” (SCA)
Crypto
- The Ethereum Foundation released a financial report revealing a $970 million treasury, down from $1.6 billion in 2022. Most funds are in Ether (ETH), reflecting their belief in Ethereum’s future. The report emphasizes conservative management and outlines new conflict of interest policies to address past issues. They also plan to focus on Layer 1 & 2 development and zero-knowledge cryptography advancements. (source)
World Markets
- France’s trade deficit widened in September, reaching a 12-month high. Exports fell due to weaker sales of industrial products, transport equipment, and energy products. Imports also declined, but at a slower pace. This widening deficit reflects a challenging global trade environment and weaker domestic demand. 1Y trend: “Side” (FR)
- China’s current account surplus surged to a 2-year high in Q3, driven by a record-high goods trade surplus. Weak domestic demand forced Chinese companies to export more to meet sales targets. While the services and primary income deficits narrowed, the secondary income surplus contracted. 1Y trend: “Up” (CN)
- China has implemented measures to ease local government debt burdens (CNY 14.3 Trillion in 2023), including raising the debt ceiling and allowing debt swaps. This aims to free up funds for public spending, especially as land sales, a key revenue source, have declined. While the measures provide some relief, they fall short of the expected broader fiscal stimulus.
- Brazil’s annual inflation rate accelerated to 4.76% in October, exceeding expectations and the central bank’s target range. Rising food and housing costs were the main drivers, fueled by drought, weaker currency, and strong economic activity. The central bank has already tightened monetary policy to combat inflation. 1Y trend: “Up” (Ibge)
- Russian car sales surged 51% YoY in October, reaching a 17-year high (av.: 150,272.48; ATH (Apr. 2008): 291,020.00; ATL (May 2022): 24,268.00). This significant increase follows a period of decline due to sanctions and supply chain disruptions. While the market is recovering, it remains below pre-pandemic levels. 1Y trend: “Up” (AEB)
- The FAO Food Price Index rose in October 2024, reaching a 10-month high. Vegetable oils, sugar, and dairy prices increased significantly, driven by factors like unfavorable weather conditions and strong global demand. Cereal prices also rose due to concerns over winter crop sowing. However, meat prices declined slightly. (FAO)
- Italian industrial production fell sharply in September, marking the steepest decline YoY. This follows a period of declining output, reflecting weak domestic and global demand. While the pandemic years saw extreme fluctuations, the recent trend indicates a slowdown in the Italian manufacturing sector. 1Y trend: “Down” (IT)At the same time, Italian retail sales rebounded strongly in September 2024, defying expectations of weaker consumer spending. Both food and non-food sales increased, marking the fastest growth in several months. This suggests that Italian consumers may be more resilient than initially anticipated. 1Y trend: “Down” (IT)
Comment: Reconciling Contradictory Economic Indicators in Italy
The recent economic data from Italy presents a puzzling picture, with falling industrial production on one hand and soaring retail sales on the other. Here are three potential explanations for this apparent contradiction:
1. Inventory Adjustments: Businesses may be reducing their inventory levels to align with slower demand, leading to decreased production. At the same time, consumers may be increasing their spending on goods and services, driving up retail sales. This could be a temporary adjustment phase as businesses adapt to changing economic conditions.
2. Sectoral Shifts: The decline in industrial production may be concentrated in specific sectors, such as manufacturing, while other sectors, like services, may be experiencing growth. This could be due to factors such as global trade tensions, technological advancements, or shifts in consumer preferences. Retail sales, on the other hand, may be driven by growth in sectors like hospitality, tourism, or e-commerce.
3. Statistical Discrepancies: There may be statistical discrepancies or measurement errors in the data, leading to inaccurate conclusions. It’s important to consider the methodology used to collect and process the data, as well as potential biases or limitations. Further analysis and clarification from statistical agencies may be necessary to fully understand the underlying trends.
In my opinion, the first two factors are more likely to be at play. This is supported by data from the EU, where the service sector continues to grow. However, over time, as the economy adjusts and potential stagflation takes hold, retail sales growth may also slow down.
Currencies
- The dollar index rose to 104.7, ending the week 0.4% higher. Investors evaluated the impact of the Fed’s recent 25 bps rate cut and Trump’s election win on interest rates and growth. Powell hinted at uncertainty regarding future rate cuts, with a nearly 68% chance of another cut in December. Meanwhile, consumer sentiment reached a seven-month high, indicating strong spending, though the data does not reflect reactions to the election. 1Y trend: “Side”
Commodities
- Oil prices fell, as concerns over Hurricane Rafael eased and China’s stimulus measures disappointed. While some support came from potential US sanctions on Iran and Venezuela, overall sentiment was bearish due to weak Chinese demand and deflationary pressures. 1Y trend: “Side”
- Gold prices held steady near $2,700 after the Fed’s 25bps rate cut. The Fed acknowledged easing labor market conditions and progress on inflation but remained cautious. Chair Powell refrained from giving specific future rate guidance. The recent presidential election results are not expected to significantly impact the Fed’s short-term policy stance. 1Y trend: “Up”
On Week 46, investors will focus on key economic indicators this week. Inflation, retail sales, and Fed officials’ speeches will be closely watched. China’s economic data, including loans, investment, and retail sales, will be crucial. Europe will see UK unemployment and GDP figures, German sentiment, and Eurozone inflation data. Other key events include Japan’s GDP, Russia’s inflation, Mexico’s rate decision, and India’s inflation data.
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