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Week in Review: 30 September - 4 October 2024

Financial Markets

For the week, the main stock market indices were essentially unchanged, with the S&P500 gaining 0.2% and the NASDAQ 100 up by 0.1%. The small cap index (Russel 2000) dropped 0.5%. Only the S&P and the DOW closed at an all-time-high, but barely.

Gold dropped slightly (0.2%) but is holding the 2650$/oz level. Silver gained 1.8% and is in the 31-32$ range. We still believe this is the short term high for silver and the next considerable movement is downward, essentially from a fundamental perspective (slowing industrial demand).

The barrel of WTI popped 8.5%, on fears of supply shocks stemming from the Middle East war and stress between Israel, Lebanon and Iran.

Bitcoin fell 5.7% and is heading to the middle of the 53-66k$ range it has been following for the past months.

The relative strength of the US dollar (DXY) is up by 2.1% into the 102 level. The EUR/USD fell to 1.09$, while the USD/JPY is up to 148 JPY.

US M2 money supply metrics have not been updated since the 26th of August.

The national financial conditions index (NFCI) for the week of 23rd September 2024 loosened by 0.8% and doesn't translate signs of financial stress in the markets (this data is delayed by a week).

US bond yields now sit at 3.926% for the 2-year and 3.969% for the 10-year.

The VIX rised slightly to 19, showing that the perception of risk is rising progressively, as investors and speculators seek put options expiring in the next 30 days.


Comment Section

Another average week has passed. On the geopolitics side, we highlight the escalation of war in the middle east, which pushed the dollar and oil higher.
 
Fundamentally, the world economy is slow, with the GDP growth in Europe and China in the low single digits... Are governments going to try to stimulate their economies and try to avoid a recession?
 
The markets have been trading mostly sideways and bullish momentum, in our opinion, has faded. Additionally, the VIX has increased slightly, which shows that the market agrees that the likelihood of a correction is increasing.

A small 3-5% correction in the stock markets is possible at any moment. As we have been saying, the US election next month can add some more turbulence.

Take care, and good luck.


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