NewsLetter August 2024

All the information in this letter is NOT to be considered financial advice; it is the author’s personal views and agreed views of others from their overviews of present markets,

Some of the content will be a summary of articles I have read and believe the author got most or all of it bang on, some will be statistics that have been check for validity, but all will be content I believe is of use or interest to margincall.club members.

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Welcome to the August 2024 edition of the margincall.club FinTech Newsletter.

I will provide you with an overview of key financial events and market developments from the past month (July) and what effect those events could have in July and beyond, as always the goal is to help you stay informed and to make your own well-informed decisions.

I will also visit any of the price predictions given in the July 2024 letter to see what played out and what didn’t and why.

Financial Market Highlights July:

Stock Market:
- Dow Jones Industrial Average: Fell 60.32 points Friday, or 0.15%, to close at 38,920.54. (On December 29, 2023, the Dow Jones Industrial Average (DJIA) closed at 37,689.54. This figure marks the final closing value for the DJIA in 2023, reflecting an increase of 3.27% for the year-to-date 2024)
- S&P 500: Lost 18.67 points, or 0.34%, to finish at 5,440.81. (The S&P 500 closed at 4,769.83 on December 31, 2023. This represents a year-to-date gain of 14.06% for 2024)
- Nasdaq Composite: Declined 112.45 points, or 0.63%, to end at 17,610.15. (On December 29, 2023, the Nasdaq Composite closed at 15,011.35. This shows a year-to-date increase of 17.32% for 2024)

For the week, the Dow and S&P 500 each slipped 0.2%. The Nasdaq Composite rose 0.1% for the week, marking its fifth consecutive week of gains. All three indexes saw gains in July, with the S&P 500 now showing a year-to-date gain of 15.1%.

Updated figures for the July close:

Dow Jones Industrial Average: Closed at 39,150.92. (This represents a year-to-date gain of 3.88%)
S&P 500: Closed at 5,475.23. (This represents a year-to-date gain of 14.79%)
Nasdaq Composite: Closed at 17,820.36. (This represents a year-to-date gain of 18.73%)

For the month, the Dow rose 0.6%, the S&P 500 gained 1.3%, and the Nasdaq Composite advanced 1.6%. All three indexes continued their upward trend from June into July, maintaining positive momentum for 2024.

Although U.S. stocks ended lower Friday, the S&P 500 showing 3 straight weeks of advances as markets closed the first half of 2024 with gains overal.

Economic Indicators:

· GDP Growth: The U.S. GDP grew at an annualized rate of 2.9% in the second quarter of 2024, indicating a robust economic performance driven by strong consumer spending and business investment. The services sector, particularly in travel and leisure, showed significant growth, while manufacturing and exports experienced moderate increases.

· Inflation: Inflation remained a concern with the Consumer Price Index (CPI) rising by 3.2% year-over-year. Core inflation, excluding food and energy, increased by 2.8%. Higher prices were observed in housing, healthcare, and transportation, though the rate of increase has slowed compared to the previous quarter, indicating some stabilization.

· Employment: The U.S. unemployment rate fell to 3.5% in Q2 2024, reflecting a tight labor market. Job gains were seen across various sectors, including technology, healthcare, and construction. However, wage growth slowed slightly, suggesting that while employment is strong, the pressure on wages may be easing.

· Interest Rates: The Federal Reserve maintained the federal funds rate at 5.25%, emphasizing a data-driven approach amid persistent inflationary pressures. The Fed signaled that future rate hikes are possible but will depend on forthcoming economic data, particularly related to inflation and employment.

· Consumer Confidence: Consumer confidence rose in the second quarter, with the Consumer Confidence Index reaching 108.4. Improved job prospects, wage growth, and lower energy prices contributed to the optimistic outlook. However, concerns about inflation and potential interest rate hikes moderated the overall sentiment.

· Stock Market: The stock market showed resilience with the S&P 500 gaining 6.5% in Q2 2024. Tech stocks led the rally, bolstered by strong earnings reports and advancements in artificial intelligence. The Dow Jones and Nasdaq also posted significant gains, reflecting broad-based market optimism.

· Factors Influencing the Next Month: Several factors could influence the economy in the coming month, including upcoming Federal Reserve meetings, inflation reports, and employment data. Additionally, corporate earnings season and geopolitical developments will be closely monitored by investors and policymakers alike.

· Geopolitical Events: Geopolitical tensions, particularly between the U.S. and China, remained high. Trade negotiations are ongoing, with both sides imposing tariffs on various goods. Additionally, conflicts in the Middle East and Eastern Europe have implications for global energy prices and supply chains.

· Energy Prices: Energy prices stabilized in Q2 2024 after a volatile start to the year. Crude oil prices hovered around $75 per barrel, while natural gas prices declined due to increased supply. Renewable energy investments continued to grow, supported by favorable government policies and technological advancements.

· Consumer Spending: Consumer spending remained robust, driven by high employment levels and rising wages. Retail sales increased by 4.1% year-over-year, with significant contributions from the automotive and e-commerce sectors. However, rising inflation has begun to pinch household budgets, particularly for lower-income families.

· Supply Chain Dynamics: Supply chain disruptions eased in Q2 2024, thanks to improved logistics and inventory management. However, some sectors, like semiconductors and pharmaceuticals, still faced challenges. Companies continued to diversify their supplier base to mitigate risks and enhance resilience.

· Fiscal Policy: Fiscal policy remained supportive, with continued government spending on infrastructure and social programs. Tax revenues increased due to economic growth, allowing for a slight reduction in the federal deficit. Policymakers are considering additional measures to support affordable housing and education.

· Technological Innovations: Technological innovations surged, particularly in AI, biotech, and renewable energy. Investments in AI-driven automation and machine learning applications grew, enhancing productivity across various industries. Biotech advances contributed to healthcare improvements, while renewable energy technology reduced costs and increased efficiency.

· Conclusion: The second quarter of 2024 was marked by strong economic growth, robust employment? moderate inflation. While challenges remain, particularly in managing inflation and geopolitical risks, the overall economic outlook should be positive, but I don’t feel that. Continued advancements in technology and supportive fiscal policies are expected to drive sustained growth but the story is beginning to fray at the edges, the promises is not quite meeting with results, but that is my thought.

Cryptocurrency Update:

The general consensus for cryptocurrency in August 2024 can be summarized as follows:

1. Market Sentiment:

The cryptocurrency market is experiencing cautious optimism. While there is excitement about technological advancements and new projects, regulatory uncertainties and macroeconomic factors are causing investors to remain vigilant.

2. Bitcoin and Major Altcoins:

Bitcoin (BTC) continues to hold its position as the leading cryptocurrency, showing stability around the $50,000 mark for any unexpected drops. Major altcoins such as Ethereum (ETH), Binance Coin (BNB), and Cardano (ADA) are also performing well, benefiting from ongoing network upgrades and increased adoption.

3. Regulatory Landscape:

Regulatory scrutiny remains a significant factor. Governments and regulatory bodies are working on clearer frameworks, particularly focusing on anti-money laundering (AML) and know-your-customer (KYC) regulations. This has both positive and negative implications, as clarity could boost institutional investment, but stringent rules could stifle innovation.

4. DeFi and NFTs:

Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) continue to gain traction. DeFi projects are attracting users with innovative financial products, while NFTs are expanding beyond art and collectibles into domains such as gaming and real estate.

5. Institutional Interest:

Institutional interest in cryptocurrencies remains strong. Major financial institutions and corporations are exploring blockchain technology and cryptocurrency investments. This is seen as a sign of growing mainstream acceptance and potential for long-term growth.

6. Technological Developments:

Significant technological developments are ongoing. Ethereum’s transition to Ethereum 2.0, with its proof-of-stake consensus mechanism, is closely watched. Other projects focusing on scalability, interoperability, and privacy are also in the spotlight.

7. Macro-Economic Factors:

Global macroeconomic factors, including inflation and interest rate decisions, are impacting the cryptocurrency market. Cryptocurrencies are often seen as a hedge against inflation, which could drive demand if inflationary pressures persist.

8. Adoption and Integration:

Adoption of cryptocurrencies for payments and as a store of value is increasing. More merchants are accepting cryptocurrencies, and there is growing interest in integrating blockchain solutions into various industries such as supply chain, healthcare, and finance.

9. Challenges and Risks:

The market faces challenges such as security risks, including hacking and fraud, volatility, and environmental concerns related to energy-intensive mining processes. Addressing these issues is crucial for the sustainable growth of the cryptocurrency ecosystem.

In summary, the general consensus for August 2024 is one of cautious optimism, with strong interest in technological advancements and growing adoption balanced by regulatory uncertainties and macroeconomic challenges.

Market Threats

For August 2024, several threats could impact the stock market, potentially influencing investor sentiment and market performance:

1. Economic Data Releases:

Upcoming economic data, such as inflation rates, employment figures, and GDP growth, could impact market sentiment. Unfavourable data might increase concerns about economic health and future growth prospects, Japan continues to be a cloud that could bring a storm.

2. Federal Reserve Policies:

Any hints from the Federal Reserve regarding potential interest rate hikes or tightening monetary policy could lead to market volatility. Investors are particularly sensitive to changes in policy that might affect borrowing costs and economic activity.

3. Inflation Concerns:

Persistent inflation remains a significant threat. Higher-than-expected inflation could lead to increased costs for businesses, reduced consumer spending, and potential rate hikes by the Federal Reserve.

4. Geopolitical Tensions:

Ongoing geopolitical conflicts, especially between major economies like the U.S. and China, could disrupt global trade and economic stability. Escalations in conflicts could lead to market uncertainty and sell-offs.

5. Corporate Earnings Reports:

Disappointing earnings reports from major companies can negatively affect market sentiment. Investors will be closely monitoring these reports for indications of how companies are managing costs, inflation, and economic challenges.

6. Regulatory Changes:

Potential regulatory changes, particularly in sectors like technology, finance, and healthcare, could pose risks. Stricter regulations or unexpected policy shifts might impact company operations and profitability.

7. Supply Chain Disruptions:

Ongoing or new supply chain disruptions could impact manufacturing and distribution, leading to increased costs and reduced profitability for companies across various sectors.

8. Energy Prices:

Volatility in energy prices, including oil and natural gas, could affect industries reliant on these resources. High energy costs can squeeze profit margins and increase operating expenses for many companies.

9. Technological Disruptions:

Rapid technological changes and cybersecurity threats pose risks to businesses. Companies failing to adapt to new technologies or protect against cyber threats could face operational and financial difficulties.

10. Consumer Confidence:

A decline in consumer confidence can reduce spending, impacting sectors like retail, automotive, and travel. Economic uncertainty, inflation, or job market concerns could contribute to declining consumer confidence.

11. Global Economic Slowdown:

Signs of a global economic slowdown, particularly in key markets such as Europe and Asia, could reduce demand for U.S. exports and negatively impact multinational companies.

12. Market Valuations:

Concerns about high market valuations may lead to increased volatility and corrections. If investors believe stocks are overvalued, they might reduce exposure, leading to price declines.

In summary, while the stock market may continue to show resilience, these threats underscore the importance of cautious and informed investing, as external factors can significantly impact market performance.

Commodities and Forex:

I don’t provide updates in this letter on commodities like oil, gold, and Fiat currencies as these are assets that are affected by market trends and all the above.

Investment Insights:

Market Analysis:

I stand by what I said before as this is a macro view regarding El Salvador, Argentina on the other hand seems to be falling to pressure from the IMF, as I said last month there is news that the new Argentinian President is going back on his word, that’s not good.

The draught law in the EU banning all self-custody wallets seems to have spread to the US, but I do believe that would be challenged in the European and US courts under constitution and EU human right’s laws!

The developments in fiscal digital transfer service in the African sub-continent seem to be gathering momentum.

With growing support by a number of Governments in the African sub-continent, expect any service looking to promote these services will do well till year end.

Investment Strategies & Featured Asset:

Nothing has changed here from last month, my Macro view is you want to have a foot in both traditional and crypto markets and you have to look at data miners and companies like Micro strategy.

The miners can switch to data storage and Micro Strategy will most probably capitalise some Bitcoin to cover costs of purchase if BTC goes >4X as that would be prudent to reduce debt, much the same as a stock buyback.

If you see any ATM company looking to use those machines when idle to mine Bitcoin or a company that is using renewables, solar, water and wind to power miners all would be worth doing Due diligence to see if they are investable.

Plus any deals you hear about between Ai and data storage companies would be worth due diligence time.

The only thing I would add to that is buy some tradeable bullion, gold or silver coins.

Financial News:

Global Financial News:

Said this in June, please, if you used online orders for your shopping in the last 4 years please could you look to see what those orders cost if you hit the re-order button (make sure you don’t have auto pay)

I said this last month and it remains my view. If you use a home delivery shopping app for your weekly groceries, try going back 2 to 3 years and using the “re-order” button and compare the prices, that is your real inflation.

Events in Ukraine, Gaza and Iran continue to escalate which could see a chain reaction in events, that would move US markets down as stated before.

1. Interest Rate Rises have to start to reduce soon – with more to Come from countries outside the US.

I still hold that June, maybe now July will see a rate cut, should be small at first. Watch the numbers on this, if it’s below 0.25 they don’t feel in control, if its 0.25 or above they feel in control. (the fed state what data they use, google it to educate yourselves).

As last month

2. Food Prices will rise in 2024 and 2025 more than inflation.

– Global food prices are expected to stay elevated in 2024 due to factors like drought, excessive rain, the war in Ukraine, and Gaza plus high energy costs impacting global farm production.

– The politicians have run out of smoke and the mirrors are broken, western countries that have only experienced single figure inflation are now experiencing inflation in the >20%< range on consumer edible’s.

People are seeing those price increases and shrinkflation (the producer’s art of reducing the amount in a packet and still making look the same!) the only way to reduce those increases is less tax on the costs of transport and in the supply chain, which means reduction in tax income which in turn means more cow bell!

I would add to this that companies will exploit “Shrinkflation” in products, less product same price strategies!

Personal thoughts:

This was in Junes newsletter, well No1 just paid out!

I said this last month, I had been trying to place that bet for a long time, expect 1. To play out this month, July, there is an issue with donations, if they replace Biden with an air drop candidate they have to return Biden campaign donations, something I didn’t know, however it is not a big hurdle to overcome.

This is not advice of any kind, just a view I have, if you can find a company to cover this bet let me know as I want to place this play bet, and it is a bet:

Joe Biden will announce he will not stand for a second term.
Kamila Harris (the now US VP) will be sworn in as the first US woman president.
Gavin Newsom will be the democratic party nominee.

Individual odds and the accumulator.

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James,

Margincall.club