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 14th September 2024.
Oil prices steady. Bond yields were lower. Markets closed higher in Europe and the U.S, lower in Asia. Currencies unchanged in the week., Sterling level against the Dollar and against the Euro. Gold slightly higher at $2,579 from $2,525 dollars. Bitcoin moved higher at $59,949 from $54,485.
So what does this suggest for equity values? Our value index, premium to value is 9.6%, with significant stress still evident in Hang Seng, to a lesser extent Shanghai. U.S. stocks appear overvalued by 26.3%. European stocks over by 10.0%, Asia undervalued by -7.5%. Hang Seng and Shanghai stocks offer value, the Nikkei looks over played along with U.S. stocks.
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 14th September 2024.
Oil prices steady. Bond yields were lower. Markets closed higher in Europe and the U.S, lower in Asia. Currencies unchanged in the week., Sterling level against the Dollar and against the Euro. Gold slightly higher at $2,579 from $2,525 dollars. Bitcoin moved higher at $59,949 from $54,485.
So what does this suggest for equity values? Our value index, premium to value is 9.6%, with significant stress still evident in Hang Seng, to a lesser extent Shanghai. U.S. stocks appear overvalued by 26.3%. European stocks over by 10.0%, Asia undervalued by -7.5%. Hang Seng and Shanghai stocks offer value, the Nikkei looks over played along with U.S. stocks.
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.
Markets rallied this week. In the U.S.A. markets were up by 4.2 %. In Europe markets were up 1.6%. In Asia, markets were down by -0.7%. An all equities gain of 1.7% in the week.
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.
Markets rallied this week. In the U.S.A. markets were up by 4.2 %. In Europe markets were up 1.6%. In Asia, markets were down by -0.7%. An all equities gain of 1.7% in the week.
Monday Morning Markets ... Currencies
Sterling steady against the Dollar and against Euro this week. Sterling at $1.31 against the Dollar from $1.31. Sterling at €1.18 against the Euro from €1.18 Against the Dollar, the Euro traded at $1.11 from $1.11.
We measure Sterling at Dollar $1.26 in the second quarter of 2024. Our Q2 Euro value is €1.17. The Euro Dollar cross rate is marked at $1.08. We consider $1.25 and €1.17 as par values for end 2024.
Sterling steady against the Dollar and against Euro this week. Sterling at $1.31 against the Dollar from $1.31. Sterling at €1.18 against the Euro from €1.18 Against the Dollar, the Euro traded at $1.11 from $1.11.
We measure Sterling at Dollar $1.26 in the second quarter of 2024. Our Q2 Euro value is €1.17. The Euro Dollar cross rate is marked at $1.08. We consider $1.25 and €1.17 as par values for end 2024.
Monday Morning Markets ... Bond Yields ...
Bond yields moved lower in the week in the U.S, UK and Japan. US Ten year Treasury yields were at 3.65 from 3.71. UK ten year gilts were at 3.77 from 3.88. Japanese yields were lower at 0.83 from 0.84.
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 lower in the week in the U.S, UK and Japan. US Ten year Treasury yields were at 3.65 from 3.71. UK ten year gilts were at 3.77 from 3.88. Japanese yields were lower at 0.83 from 0.84.
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 $71.61 from $71.06 last week. We score oil prices at $84.64 in Q2 2024. Modeled at $80.00 - $85.00 dollars in the second half of 2024.
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:
Downward Revisions According to a recent Reuters poll, analysts have lowered their 2024 Brent Crude price forecast for the first time since February, with the average prediction now at $84.01 per barrel. This downward revision reflects diminishing supply risks from the conflicts in the Middle East and Ukraine
Oil prices Brent Crude basis moved to $71.61 from $71.06 last week. We score oil prices at $84.64 in Q2 2024. Modeled at $80.00 - $85.00 dollars in the second half of 2024.
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
Downward Revisions According to a recent Reuters poll, analysts have lowered their 2024 Brent Crude price forecast for the first time since February, with the average prediction now at $84.01 per barrel. This downward revision reflects diminishing supply risks from the conflicts in the Middle East and Ukraine
We mark Bitcoin at $59,949 Saturday from $54,485 last week. The outlook for Bitcoin prices in 2024 is characterized by a mix of bullish and bearish sentiments, influenced by various market dynamics and expert predictions. The crypto struggles to break through the $70,000 dollar mark. $40,000 is in prospect.
Bullish Predictions
Several analysts foresee significant price increases for Bitcoin. PlanB, a renowned crypto analyst, predicts that Bitcoin could reach $100,000 soon, driven by the 200-week moving average and the stock-to-flow model. Similarly, 10x Research projects a rally to $83,000 based on technical analysis, particularly the inverted head-and-shoulders pattern, which suggests a bullish breakout. Changelly's forecast also indicates a potential rise, with Bitcoin possibly reaching $77,549 by June 2024 and peaking at $94,376.33 in November 2024.
Bearish and Volatile Predictions
Despite the optimistic outlook, there are also expectations of volatility and potential downturns. For example, Bitcoin's price fell by 3.25% recently due to strong U.S. job data and a reduction in holdings by large investors, indicating that macroeconomic factors can significantly impact Bitcoin's price. Additionally, CoinDCX predicts fluctuations, with Bitcoin potentially dropping to $52,500-$54,600 before recovering.
Bullish Predictions
Several analysts foresee significant price increases for Bitcoin. PlanB, a renowned crypto analyst, predicts that Bitcoin could reach $100,000 soon, driven by the 200-week moving average and the stock-to-flow model. Similarly, 10x Research projects a rally to $83,000 based on technical analysis, particularly the inverted head-and-shoulders pattern, which suggests a bullish breakout. Changelly's forecast also indicates a potential rise, with Bitcoin possibly reaching $77,549 by June 2024 and peaking at $94,376.33 in November 2024.
Bearish and Volatile Predictions
Despite the optimistic outlook, there are also expectations of volatility and potential downturns. For example, Bitcoin's price fell by 3.25% recently due to strong U.S. job data and a reduction in holdings by large investors, indicating that macroeconomic factors can significantly impact Bitcoin's price. Additionally, CoinDCX predicts fluctuations, with Bitcoin potentially dropping to $52,500-$54,600 before recovering.
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.
