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Week in Review: 9-13 September 2024 - The FED Put!

Financial Markets

For the week, the main stock market indices were up, with the S&P500 recovering 4% and the NASDAQ 100 up 5.9%. Last week's losses were eliminated. The small cap index (Russel 2000) was 4.4% in the green.

Gold closed the week at a new all-time-high of 2577$/oz. Silver followed gold and popped 10%! We now need to see if silver holds the current levels or if it fails and returns to the 28-30$ range.

The barrel of WTI recovered 1.7% but still looks bearish.

Bitcoin followed the stock market direction, but with less enthusiasm, recovering 7.8%. It still seems likely that bitcoin will trade in the range of 53-66k$ in the following weeks.

The relative strength of the US dollar (DXY) was nearly unchanged and around 101. The EUR/USD is at 1.109$, while the USD/JPY is down to 140.8 JPY.

US M2 money supply has not been updated this week.

The national financial conditions index (NFCI) for the week of 2nd September 2024 loosened by 2.9% and doesn't translate particular signs of financial stress in the markets (this data is delayed).

US bond yields now sit at 3.584% for the 2-year and 3.655% for the 10-year. The yield curve is now uninverted and with its normal up-rising slope.

The VIX fell to the 16-17 level and showed less market fear. The VIX might rise again next week, due to the FED announcement (in case the market reaction is negative).


Comment Section

The week of the FED put has arrived.
 
A 50 bps cut could pump the markets for a few days or weeks (followed by an obvious correction), while a 25 bps could tip the markets in a downward direction a bit sooner (due to fears of recession and lack of obvious near term good news in the economy).
 
We don't try to guess. Thus, we are staying on the sidelines to see the market reaction by Wednesday and through the end of the week.

Volatility will come, and with it option premiums will increase, presenting good opportunities.

Take care, and good luck.



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