Weekly Market Update: Sideways

It’s been another benign few weeks in the market, that’s polite speak for crabbing sideways. Because of holidays in the US there hasn’t been a lot of market changing news. 

In the crypto space OpenSea got a Wells notice from the SEC, AI is gobbling up miners energy assets, Cardano Chang hardfork went live and scammers are pivoting.

In macro market news, the trade wars around semiconductors rumble on. Chips are the new oil it seems. 

Turning to the US, Q2 GDP was revised up, PCE inflation was right on track and critical mineral supply for, (you guessed it) semiconductors is topical again.

In Europe, CPI continues to fall for the group. Concerningly, the manufacturing slump is entrenched and looks likely to remain stalled for some time. Meanwhile,the UK’s new government is building bridges back to Europe. 

In APAC, China’s PMI remained in contraction, however property made some small gains. India’s GDP and PMI’s are still at very good levels, but are showing signs of cooling. Japan and South Korea are seeing signs of recovery in exports and manufacturing. 

The tide may be going out on Australia with retail sales, company profits and job adverts all well down. PMI remains in contraction too. 

In New Zealand business and consumer confidence all improved in July, which was a surprise as company liquidations and mortgage distress are at elevated levels. 

Market sentiment has retraced significantly this week and now sits firmly in fear territory. 

Highlights this week: 

• There is no sugar coating it, the 7 day chart of the top 30 assets looks grim. 
• Our Buy-Sell ratios have reverted back to their long term trends, and on balance you were net buyers this last week. 
• BTC remained popular amongst buyers, as were stablecoins. 
• At the time of writing all the majors were down for the week. BTC dropping 6%, ETH, BNB and XRP down 4%, and SOL was down 15%. 
• FLUX was our best performing asset this week, up 7%.
• NEAR was our worst performer, down 22% this week. 

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

MilkRoad put out a post on different crypto investment strategies. Benchmarking them against the S&P 500 (SPY) was a nice touch. 

Bitcoin fluctuated around $58k at the start of September. Historically, September is a tough month for Bitcoin, but traders are hopeful that a Fed rate cut could turn things around. The thinking is that rate cuts usually pump more US dollars into the economy, which could strengthen Bitcoin’s role as a store of value.

Telegram’s CEO Pavel Durov’s arrest and investigation is being labelled absurd. It looks like the gloves are coming off for Tech titans, content on platforms, free speech (and crime, let’s be real) as well as Governments. 

AI and datacentre companies are buying the energy assets off Bitcoin Miners in the US as they scramble to get enough electricity to power their infrastructure. I don’t hear anyone bleating about how much electricity AI uses though.🤔

NFT marketplace OpenSea has received a Wells notice from the SEC which claims NFTs are securities. It’s getting quite a lot of attention, none of it good. 

More notable updates from the crypto space:

• US crypto companies are throwing a fundraiser for VP Harris.
• Robinhood has added Solana to its coin support. 
• Cardano’s Chang hardfork went live, marking the ecosystem’s big move towards decentralized governance
• Crypto.com is tapping into Standard & Chartered banking network to expand into the UAE. 
• The scammers are pivoting with attacks becoming more targeted on people. Please be safe out there. 
• The SEC has warned the FTX estate against paying out in crypto and stablecoins because they might be securities. 

🌎 Macro news TLDR: Semiconductors are the new battleground.

In a weird way, Nvidia’s success is now a massive anchor. Despite beating estimates, forward guidance disappointed investors leading to a sell off and malaise in equities. 

Last week China started constraining supplies of important metals. This week Japan is signalling they won’t supply advanced chip manufacturing equipment to China. Obviously China’s not happy. 

U.S. economic news

Vice President Harris has widened her lead over former President Trump. Prediction market, Polymarket has it closer. Polls vs prediction. 

In a ‘watch this space’ move, the US is looking to shore up supply of critical minerals that China monopolises in preparation for more trade wars.

US Q2 GDP was revised up to a very healthy 3%. July’s PCE reading came in as expected at 0.2% for both headline and core PCE. Annualised PCE is now at 2.5%. 

Over in Europe….

The UK’s new government is looking to reestablish trade with the EU. 

Spanish CPI fell more than expected, hitting 2.4%, the same was true over in Germany, with August CPI coming in at 2.0% vs an expected 2.3%. 

European CPI for August fell to 2.2% from 2.8% in July. Falling energy prices were a big part of it. Manufacturing PMI for the Eurozone has stalled, coming in at 45.8 for August. New orders, a metric of future PMI output, continue to slow. The word recession is now being thrown around. 

And in Asia Pacific…

August PMI’s from China continue to show manufacturing still in contraction, and they are building up stockpiles or excess commodities. China’s property market eked out some price growth. South Korean exports are up, despite lacklustre China buying. 

India’s Q2 GDP came in at 6.7%, which is a very good result, but still below the 6.9% expected. Staying in India, their PMI dipped in August, coming in at 57.5, down from 58.1.

Japan’s industrial output for July picked up after the dip in June, and August PMI was basically 50. Retail sales were also up.

Australian retail sales for July were disappointing. Flat vs June and up only 2.3% on last year, well below CPI (3.5%). PMI was still in contraction at 48.5, with no good news on the horizon with new orders being down. 

Company profits fell 5.3% year on year, and job adverts are trending down. Tellingly they booked AU$10.7bn current account deficit in the June quarter. Being exposed to China might be catching up with the lucky country. 

New Zealand business confidence rose significantly in August, lifting 23 points versus July, with some of that happening before the rate cuts.

Forward looking indicators are very good. August consumer confidence also improved to 92, but is still well below the historical average of 109.

July building consents also picked up, but are down 22% on last year. Global dairy prices are down and Centrix reports that business liquidations in Q2 are up 36% year on year. Finally, the RBNZ says non-performing housing loans are at an 11 year high.

That’s a wrap for this week. 

Stay tuned for the next update.

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