Week in Review: 12-16 August 2024

Financial Markets

For the week, the main stock market indices were positive, with the S&P500 gaining 3.9% and the NASDAQ 100 up by 5.4%. The small cap index, the Russel 2000, also gained a bit (3.2%).

Gold is up by 3.1% and closed the week at an all-time high of 2506$. In our opinion, gold is now subject to more bullish momentum before any considerable retracement or correction, unless the macroeconomic or interest rate outlook changes dramatically. Silver gained 5.7% and is defending the 28$/oz level in the near term.

The barrel of WTI fell 2.1% and sits around 75$ per barrel. WTI has been trading around an average of 78$ and on a range that is narrowing in amplitude. We still think that during August or September we might see a bigger move either to the upside (above 82$) or to the downside (below 72$).

Bitcoin is up by 1.5% this week and continues on a sideways to slightly downward trend. The next support is around 52000$.

The relative strength of the US dollar (DXY) fell by 0.7%. If the DXY continues falling, the next support should be around 100-101. The EUR/USD had a good week (+1%), while the USD/JPY has stabilized around 147$.

US M2 money supply and the national financial conditions index (NFCI) have not been updated this week.

US bond yields now sit at 4.05% for the 2-year and 3.88% for the 10-year. The yield curve remains inverted but is getting closer to uninversion.

Comment Section

After the scare of the 5th of August 2024, the markets have recovered very fast and seem to be heading back to all-time highs. If stocks are to keep heading up, they will have to surpass several resistance levels and continue climbing the wall of worry. The earnings season was quite reasonable, and the outlook was not bad. However, there is nothing especially bullish to propel the stock markets up. The bond market might have overreacted a bit too much to the downside (in terms of yields).

The Jackson Hole Economic Symposium (22-24 August 2024) could be the catalyst that tips the markets and brings some momentum in either direction. Let's wait for Thursday and Friday to see what the FED officials say, and most importantly, what reaction the market participants have!

Take care, and good luck.

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