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 11th January 2025.
Oil prices moved higher, Brent Crude at $79.76 from £74.17. Bond yields higher in the week. U.S.and UK, ten year bond yields hitting the 4.80% level. Markets eased across the board down 1.1%, with a positive move in Europe. Currencies : Sterling under pressure again this week, Sterling at $1.22 from $1.24 against the Dollar, down at €1.19 against the Euro from €1.21. The Euro at $1.02 against the dollar from $1.03.
Gold moved higher at $2,687 from $2,642. Bitcoin moved lower $94,195 from $97,876.
So what does this suggest for equity values? Our value index, premium to value is 15.8%, with some stress remaining in Hong Kong. U.S. stocks appear overvalued by 31.9%. European stocks over by 12.9%, Asia now overvalued by 2.5%. Hang Seng stocks still offer value, Shanghai looks value for money compared to U.S. CAC offers value, Nikkei looks over played.
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" ... and we do!
Oil prices moved higher, Brent Crude at $79.76 from £74.17. Bond yields higher in the week. U.S.and UK, ten year bond yields hitting the 4.80% level. Markets eased across the board down 1.1%, with a positive move in Europe. Currencies : Sterling under pressure again this week, Sterling at $1.22 from $1.24 against the Dollar, down at €1.19 against the Euro from €1.21. The Euro at $1.02 against the dollar from $1.03.
Gold moved higher at $2,687 from $2,642. Bitcoin moved lower $94,195 from $97,876.
So what does this suggest for equity values? Our value index, premium to value is 15.8%, with some stress remaining in Hong Kong. U.S. stocks appear overvalued by 31.9%. European stocks over by 12.9%, Asia now overvalued by 2.5%. Hang Seng stocks still offer value, Shanghai looks value for money compared to U.S. CAC offers value, Nikkei looks over played.
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" ... and we do!
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.
Red across the screens this week with a bounce in Europe. US markets were down by -2.0%. In Europe markets were up by 1.3%. In Asia markets were down by -2.2% for a global loss across all markets of -1.1%.
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.
Red across the screens this week with a bounce in Europe. US markets were down by -2.0%. In Europe markets were up by 1.3%. In Asia markets were down by -2.2% for a global loss across all markets of -1.1%.
Monday Morning Markets ... Currencies
Sterling under pressure again this week, closing at $1.22 from $1.24 against the Dollar, and at €1.19 against the Euro from €1.21. The Euro at $1.02 against the dollar from $1.03.
We consider $1.25 and €1.18 as par values but Sterling is now "in play" recent over shoots may push pars into Q2 2025.
Sterling under pressure again this week, closing at $1.22 from $1.24 against the Dollar, and at €1.19 against the Euro from €1.21. The Euro at $1.02 against the dollar from $1.03.
We consider $1.25 and €1.18 as par values but Sterling is now "in play" recent over shoots may push pars into Q2 2025.
Monday Morning Markets ... Bond Yields ...
Bond yields higher in the week in the U.S, UK and Japan. US Ten year Treasury yields were at 4.78 from 4.60. UK ten year gilts were at 4.83 from 4.59. Japanese yields were up 12 basis points at 1.19 from 1.07.
We expect U.S. and U.K. ten year yields to average between 4.25 - 4.50 in 2025.
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 higher in the week in the U.S, UK and Japan. US Ten year Treasury yields were at 4.78 from 4.60. UK ten year gilts were at 4.83 from 4.59. Japanese yields were up 12 basis points at 1.19 from 1.07.
We expect U.S. and U.K. ten year yields to average between 4.25 - 4.50 in 2025.
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%.
, falling to Monday Morning Markets ... Commodities ...
Oil prices Brent Crude basis moved to $79.76 from $76.51 last week. Q4 average was $74.61. Average for the year as a whole was $80.52
Brent crude is projected to trade between $70 and $80 a barrel in 2025, marked at $75 with upside risks tied to US sanctions on Iran.
Market forecasts for Brent Crude Oil in 2025 indicate a generally bearish outlook, with prices expected to remain relatively constrained due to oversupply and weak demand. Here's a summary of the key forecasts:
Reuters survey: Brent crude is projected to average $74.33 per barrel in 2025
EIA forecast: The average price of Brent crude oil is expected to be $74 per barrel for the year, falling to $64 in 2026.
J.P. Morgan : Brent crude will average $73 per barrel in 2025, closing the year below $70
Goldman Sachs forecast: Average oil prices at $76 per barrel in 2025.
Despite OPEC+'s efforts to shore up the oil market, the overall sentiment suggests oversupply and tepid demand growth will likely keep Brent crude prices relatively subdued in 2025. However, geopolitical events and economic policy shifts could introduce volatility to these forecasts.
Weak demand outlook, particularly from China, is putting downward pressure on prices. The U.S. Federal Reserve's interest rate decisions in 2025 could impact economic growth and oil demand. Potential geopolitical tensions could add a $10 uplift to oil prices. Uncertainties related to Iran, Venezuela, and Russia could introduce upside risks.
Oil prices Brent Crude basis moved to $79.76 from $76.51 last week. Q4 average was $74.61. Average for the year as a whole was $80.52
Brent crude is projected to trade between $70 and $80 a barrel in 2025, marked at $75 with upside risks tied to US sanctions on Iran.
Market forecasts for Brent Crude Oil in 2025 indicate a generally bearish outlook, with prices expected to remain relatively constrained due to oversupply and weak demand. Here's a summary of the key forecasts:
Reuters survey: Brent crude is projected to average $74.33 per barrel in 2025
EIA forecast: The average price of Brent crude oil is expected to be $74 per barrel for the year, falling to $64 in 2026.
J.P. Morgan : Brent crude will average $73 per barrel in 2025, closing the year below $70
Goldman Sachs forecast: Average oil prices at $76 per barrel in 2025.
Despite OPEC+'s efforts to shore up the oil market, the overall sentiment suggests oversupply and tepid demand growth will likely keep Brent crude prices relatively subdued in 2025. However, geopolitical events and economic policy shifts could introduce volatility to these forecasts.
Weak demand outlook, particularly from China, is putting downward pressure on prices. The U.S. Federal Reserve's interest rate decisions in 2025 could impact economic growth and oil demand. Potential geopolitical tensions could add a $10 uplift to oil prices. Uncertainties related to Iran, Venezuela, and Russia could introduce upside risks.
We mark Bitcoin at $94,195 from $97,876 last week. The hold above $100,000 a little bit too much for this stage in the cycle.
Analysts forecasts for 2025 range from $70,000 to over $200,000. Multiple analysts project Bitcoin to reach $200,000 by the end of 2025. Some more optimistic predictions range from $250,000 to $500,000. VanEck analysts forecast Bitcoin to hit approximately $180,000 at the cycle's peak. Changelly's technical analysis suggests a more conservative range of $93,072 to $114,857, with an average of $96,455.
Analysts forecasts for 2025 range from $70,000 to over $200,000. Multiple analysts project Bitcoin to reach $200,000 by the end of 2025. Some more optimistic predictions range from $250,000 to $500,000. VanEck analysts forecast Bitcoin to hit approximately $180,000 at the cycle's peak. Changelly's technical analysis suggests a more conservative range of $93,072 to $114,857, with an average of $96,455.
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.
