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Week in Review: 10-14 June 2024

Financial Markets (Weekly)

Week-on-week, the main stock market indices were up, with the S&P500 up 1.6%, the NASDAQ 100 up 3.5%, and the RUSSEL 2000 down 1.0%.

Gold rised 1.7%, recovering the price of the previous week. If gold breaks below the 2300$ level, it could fall until ~2150$/oz.  Silver rised 1.3% relative to the previous week, but it seems to be on a down trend (support should be around 28.5$).

The barrel of WTI recovered 4.1% to ~78$ per barrel. Based on the downtrend of the past 8 weeks, we need to watch the 75$ level - if it breaks, the next support is around 68-70$.

Bitcoin fell 4.3% and is around 67000$. It has been in the range of 60k-72k$ since March 2024.

The relative strength of the US dollar (DXY) is slightly up (+0.6%), but has been stable in the range 104-106 since April 2024.

Financial conditions (NFCI) loosened again relative to the previous week.  Based on the current trend, we predict  that financial conditions could hit a wall in the window of August-November 2024, which could be the start of a bigger correction on the markets or coincide with a narrative change (or even a recession).

M2 money supply (USM2) rised slightly and is around 20.867T$.

US bond yields fell considerably over the past two weeks (and seem like they could fall some more), now sitting at 4.71% for the 2-year and 4.22% for the 10-year. 


Comment Section

Although the big-cap tech stocks have been on a rising trend for the past 8 weeks (!!!), the rest of the stock market has been threading water and doing lateral moves (see NYA, VALUG, RUT). The past week, NVDA rised 10+% and AAPL 9+% !!! Funny enough, bitcoin (a so-called risk asset) has been very quiet for the past 15 weeks. The VIX (volatility index) increased slightly but is historically low, indicating that investors are not seeking puts expiring in the next ~25-30 days. Complacency continues, and the narrative about the economy is still positive.

Some people argue that the broad market could now try to catch up to the magnificent big caps. Others say that the AI tech stuff will continue leading the market. We simply don't know, but we don't see market stress over the coming weeks. Anyway, we should not try to forecast the future. Each investor (or speculator) should position himself according to his values and risk tolerance, making investments (or bets) on the areas that he thinks are most promising, or simply buying the entire broad markets (passive investing by buying index funds).

What we recommend is that you keep your risk under control, and liquidity high, so that you can protect yourself and take advantage of good assets at nice prices, whenever they come across your desk.

Good luck.


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