Monday Morning Markets ...
This is our Monday Morning Markets Update. Every week we update our analysis of equities, bond yields, exchange rates, commodity prices and crypto.
Prices marked Saturday 20th April 2024.
Oil prices moved lower. Bond yields moved higher. Equities moved lower. Currencies moved as the Dollar hardened against Sterling on rate talk. Gold moved higher closing at $2,413 from $2,374 dollars. Bitcoin moved lower closing at $63,821 from $67,471
So what does this suggest for current values? Our value index, surplus to value is 5.4%, with significant stress still evident in Hang Seng to a lesser extent now Shanghai. U.S. stocks appear overvalued by 12.1%. European stocks over by a more modest 8.9%. China stocks offer value, the Nikkei rally looks over played but is repricing.
Top line, "Cash no longer Trash, (Jamie Dimon), Bonds are Garbage ( Bill Gross), Equities Are Overvalued (Everyman), Bitcoin is worthless (Jamie Dimon), Most NFTs are junk (John Hargrave)". "Crypto is a ‘hot ball of money’ with very little intrinsic value", says hedge fund Starkiller Capital.
When it comes to understanding market moves, "Any explanation is better than none" (Nietzsche). Be careful out there ... and remember ...
"To understand the markets, you have to understand the economics" ...
Prices marked Saturday 20th April 2024.
Oil prices moved lower. Bond yields moved higher. Equities moved lower. Currencies moved as the Dollar hardened against Sterling on rate talk. Gold moved higher closing at $2,413 from $2,374 dollars. Bitcoin moved lower closing at $63,821 from $67,471
So what does this suggest for current values? Our value index, surplus to value is 5.4%, with significant stress still evident in Hang Seng to a lesser extent now Shanghai. U.S. stocks appear overvalued by 12.1%. European stocks over by a more modest 8.9%. China stocks offer value, the Nikkei rally looks over played but is repricing.
Top line, "Cash no longer Trash, (Jamie Dimon), Bonds are Garbage ( Bill Gross), Equities Are Overvalued (Everyman), Bitcoin is worthless (Jamie Dimon), Most NFTs are junk (John Hargrave)". "Crypto is a ‘hot ball of money’ with very little intrinsic value", says hedge fund Starkiller Capital.
When it comes to understanding market moves, "Any explanation is better than none" (Nietzsche). Be careful out there ... and remember ...
"To understand the markets, you have to understand the economics" ...
Monday Morning Markets ... Equities ...
We track ten markets in our global equities model. The Dow, S&P and NASDAQ in the U.S.A, the FTSE, CAC and Dax in Europe. In Asia, Nikkei, Hang Seng, Shanghai and BSE feature.
In the U.S.A. markets were down by -2.9 %. The DOW held ground but the S&P and Nasdaq were pummeled.
In Europe markets were down by -0.7% as the CAC held ground. In Asia, markets were down by 2.6% with the Nikkei down by over 6%.
We track ten markets in our global equities model. The Dow, S&P and NASDAQ in the U.S.A, the FTSE, CAC and Dax in Europe. In Asia, Nikkei, Hang Seng, Shanghai and BSE feature.
In the U.S.A. markets were down by -2.9 %. The DOW held ground but the S&P and Nasdaq were pummeled.
In Europe markets were down by -0.7% as the CAC held ground. In Asia, markets were down by 2.6% with the Nikkei down by over 6%.
Monday Morning Markets ... Currencies
The Dollar moved higher this week on latest inflation data. Sterling traded a $1.24 against the Dollar from $1.25. The Euro traded at $1.07 from $1.06. Sterling slipped to €1.16 against the Euro from €1.17.
We measure Sterling at Dollar $1.27 in the first quarter of 2024. Our Q1 Euro estimate is €1.17. The Euro Dollar cross rate is marked at $1.09.
The Dollar moved higher this week on latest inflation data. Sterling traded a $1.24 against the Dollar from $1.25. The Euro traded at $1.07 from $1.06. Sterling slipped to €1.16 against the Euro from €1.17.
We measure Sterling at Dollar $1.27 in the first quarter of 2024. Our Q1 Euro estimate is €1.17. The Euro Dollar cross rate is marked at $1.09.
Monday Morning Markets ... Bond Yields ...
Bond yields moved higher in the week in the U.S, and UK. US Ten year Treasury yields were at 4.62 from 4.52. UK ten year gilts were at 4.23 from 4.14. Japanese yields held at 0.84. Markets were spooked by latest U.S. inflation data. Fed may hold back on rates cuts as talk of rate hikes emerge.
We expect U.S. and U.K. ten year yields to average between 4.00 - 4.50 in 2024 but this may be pure nostalgia.
In the UK, prior to the Great Financial Crash [2000 - 2008] the average inflation rate was 2.0%, the average UK bank rate was 4.50%. Ten year gilt yields averaged 4.50%. Thirty year gilts averaged 4.60%. The average growth rate was 2.5%. The average unemployment rate was 5.0%. Earnings averaged 3.9%.
Bond yields moved higher in the week in the U.S, and UK. US Ten year Treasury yields were at 4.62 from 4.52. UK ten year gilts were at 4.23 from 4.14. Japanese yields held at 0.84. Markets were spooked by latest U.S. inflation data. Fed may hold back on rates cuts as talk of rate hikes emerge.
We expect U.S. and U.K. ten year yields to average between 4.00 - 4.50 in 2024 but this may be pure nostalgia.
In the UK, prior to the Great Financial Crash [2000 - 2008] the average inflation rate was 2.0%, the average UK bank rate was 4.50%. Ten year gilt yields averaged 4.50%. Thirty year gilts averaged 4.60%. The average growth rate was 2.5%. The average unemployment rate was 5.0%. Earnings averaged 3.9%.
Monday Morning Markets ... Commodities ...
Oil prices Brent Crude basis moved to $87.29 from $90.45 last week. We score oil prices at $82.08 in Q1 2024. Modeled at $80.00 to $85.00 dollars in 2024, Oil prices moved lower last week as fears for geopolitical security and supply side issues subside. China appears as the "price governor" or so it appears.
The range of oil price forecasts for Brent Crude in 2024 varies among different financial institutions and agencies. Here are some of the key forecasts:
Oil prices Brent Crude basis moved to $87.29 from $90.45 last week. We score oil prices at $82.08 in Q1 2024. Modeled at $80.00 to $85.00 dollars in 2024, Oil prices moved lower last week as fears for geopolitical security and supply side issues subside. China appears as the "price governor" or so it appears.
The range of oil price forecasts for Brent Crude in 2024 varies among different financial institutions and agencies. Here are some of the key forecasts:
- Bank of America predicts Brent prices will average $90 per barrel in 2024.
- Goldman Sachs initially predicted Brent prices to average $94 a barrel in 2024 but later revised its forecast to a range of $70 to $90 per barrel.
- The U.S. Energy Information Administration (EIA) expects the Brent spot price to average $83 per barrel in 2024.
- The five top U.S. banks expect a median Brent price of $85 for 2024
We mark Bitcoin a $63,820 Saturday from $66,776 last week. The push to $70,000 too much to hold for the moment. Prices eased below $64,400 as "halving" loomed.
That's all for this week ... "to understand the markets you have to understand the economics" and we do ...
© 2024 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.
© 2024 John Ashcroft, Economics, Strategy and Financial Markets, experience worth sharing.