Week in Review: 24-28 June 2024

Financial Markets (Weekly)

Week-on-week, the main stock market indices were mostly unchanged (S&P500 and NASDAQ 100), while the RUSSEL 2000 was up by 1.4%.

Gold was barely changed (+0.2%) and is holding the ~2320%/oz level. If gold breaks below the 2300$ level, it could fall until ~2150$/oz. Silver fell 1.4%, and still seems to be in a downward trend (the next support should be around 28$).

The barrel of WTI rised 1.1% to ~82$ per barrel. It looks like WTI could continue in the range of 75-85 USD/bbl over the next weeks.

Bitcoin fell 2.5% and is around 61300$. It has been in the range of 60k-72k$ since March 2024, and if if falls below 60k the sentiment might turn more bearish and risk averse.

The relative strength of the US dollar (DXY) is slightly up (+0.3%), and has been stable in the range 104-106 since April 2024.

Financial conditions (NFCI) have halted the loosening trend and may tighten a bit in the next days or weeks. We now need to see if this is a trend reversal (and sentiment change within the financial systems) or a minor correction.

M2 money supply (USM2) rised 0.5% relative to the previous week and is around 20.936T$. This supports the theory that any stock market correction should be slight.

US bond yields rised this week and now sit at 4.76% for the 2-year and 4.4% for the 10-year.

Comment Section

This week didn't establish new record highs in the main stock market indices. The Nvidia price was unchanged for the week and might have a pullback of ~5% while the price consolidates before further gains (or a trend reversal). This can pull back the market a little bit during the next week. The Russel 2000 continues mostly in a sideway trend (within a range).

The VIX (volatility index) is still historically low, indicating that investors are not seeking puts for protection (expiring in the next ~25-30 days). High yield bond spreads are still small, indicating low stress on the credit markets (good credit availability).

On the political side, the week was marked by a bad performance of Joe Biden in the first presidential debate. This candidate needs to be replaced.

On the macroeconomic side, it seems that the consumer is a bit stressed and more conscious about new purchases. This signals a slowing economy during the rest of the year, which is fundamentally negative for the worldwide economy (stagnation).

Good luck.

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