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 September 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 (August) and what affect those events could have in September and beyond. As always, the goal is to help you stay informed and make well-informed decisions.
I will also revisit any price predictions given in the August 2024 letter to see what played out, what didn’t, and why.
Financial Market Highlights August:
1. Stock Market:
Dow Jones Industrial Average: Fell 98.67 points on the last trading day of August, or 0.25%, to close at 39,052.25. (On December 29, 2023, the DJIA closed at 37,689.54, marking a year-to-date gain of 3.62%).
S&P 500: Lost 22.45 points, or 0.41%, to finish at 5,452.78. (The S&P 500 closed at 4,769.83 on December 31, 2023, representing a year-to-date gain of 14.33%).
Nasdaq Composite: Declined 145.78 points, or 0.81%, to end at 17,734.58. (On December 29, 2023, the Nasdaq Composite closed at 15,011.35, showing a year-to-date increase of 18.16%).
For the week ending August, the Dow and S&P 500 each fell 0.3%, while the Nasdaq Composite slipped 0.4%. Despite this, all three indexes showed gains in August, maintaining their upward trend for 2024.
Updated figures for the August close:
Dow Jones Industrial Average: Closed at 39,052.25. (This represents a year-to-date gain of 3.62%).
S&P 500: Closed at 5,452.78. (This represents a year-to-date gain of 14.33%).
Nasdaq Composite: Closed at 17,734.58. (This represents a year-to-date gain of 18.16%).
For the month, the Dow dipped 0.3%, the S&P 500 gained 0.6%, and the Nasdaq Composite advanced 0.7%. Although U.S. stocks ended lower on the last day of trading in August, the S&P 500 had shown steady growth, indicating resilience in the market.
Economic Indicators:
GDP Growth: The U.S. GDP grew at an annualized rate of 2.7% in the second quarter of 2024, slightly down from the previous estimate of 2.9%. Strong consumer spending and business investment remained the primary drivers, while the manufacturing sector faced slight contractions due to higher input costs.
Inflation: Inflation remained persistent, with the Consumer Price Index (CPI) rising by 3.4% year-over-year. Core inflation, excluding food and energy, increased by 2.9%. Higher prices continued in housing, healthcare, and transportation, reflecting ongoing inflationary pressures.
Employment: The U.S. unemployment rate held steady at 3.5% in August 2024. Job gains continued across key sectors like technology, healthcare, and construction. However, wage growth remained sluggish, suggesting that inflation might be tempering wage increases.
Interest Rates: The Federal Reserve maintained the federal funds rate at 5.25% in August, but hinted at possible future hikes if inflation doesn’t moderate. The Fed remains committed to a data-driven approach.
Consumer Confidence: The Consumer Confidence Index fell slightly to 107.2 in August, reflecting concerns over inflation and potential interest rate hikes, despite positive employment figures.
Stock Market: The stock market showed moderate gains in Q3 2024, with the S&P 500 continuing its upward trend, albeit at a slower pace than earlier in the year. Tech stocks remained strong, although concerns about valuations began to surface.
Factors Influencing the Next Month: Several factors could influence the economy in September, including the Federal Reserve’s September meeting, where further interest rate guidance might be provided, as well as new inflation and employment data.
Geopolitical Events: Geopolitical tensions, particularly between the U.S. and China, remain a significant concern. Trade disputes continue, and the situation in Eastern Europe adds to the global economic uncertainty.
Energy Prices: Energy prices saw an uptick in August, with crude oil prices rising to around $78 per barrel, driven by supply concerns and geopolitical tensions.
2. Cryptocurrency Update:
The general consensus for cryptocurrency in September 2024 can be summarized as follows:
1. Market Sentiment: The cryptocurrency market remains cautiously optimistic, with Bitcoin maintaining its position around the $58,000 mark despite some volatility.
2. Bitcoin and Major Altcoins: Bitcoin (BTC) showed resilience, hovering around $59,800. Ethereum (ETH), boosted by the ongoing transition to Ethereum 2.0, traded around $2,580, although Eth’s BTC value dropped 20% from >0.053 BTC< to >0.0425< not what I expected but the yen carry trade caused that drop. Binance Coin (BNB) and Cardano (ADA) also saw moderate gains.
3. Regulatory Landscape: Regulatory scrutiny intensified, with the SEC issuing new guidelines for crypto exchanges. While this could limit some operations, clearer regulations are expected to boost institutional confidence.
4. DeFi and NFTs: DeFi and NFTs continue to gain momentum. DeFi platforms are seeing increased adoption, and NFTs are expanding into new areas such as real estate tokenization.
5. Institutional Interest: Institutional interest remains strong, with several major banks exploring blockchain technology and cryptocurrency investments.
6. Technological Developments: Significant developments continue, particularly in blockchain scalability and privacy solutions, with Ethereum’s ongoing upgrades at the forefront.
7. Macro-Economic Factors: Global macroeconomic factors, including inflation and interest rate expectations, continue to impact the crypto market, with some investors viewing cryptocurrencies as a hedge against inflation.
8. Adoption and Integration: Cryptocurrency adoption is growing, with more retailers accepting crypto payments and blockchain being integrated into various sectors.
9. Challenges and Risks: Security risks and volatility remain, along with regulatory challenges, particularly in the U.S. and Europe.
3. Market Threats:
For September 2024, several threats could impact the stock market:
1. Economic Data Releases: Unfavorable data, particularly regarding inflation and GDP growth, could negatively impact market sentiment.
2. Federal Reserve Policies: Any signals of further tightening monetary policy could lead to increased market volatility.
3. Inflation Concerns: Persistent inflation remains a major threat, potentially leading to higher costs and reduced consumer spending.
4. Geopolitical Tensions: Ongoing tensions between the U.S. and China, as well as conflicts in Eastern Europe, could disrupt markets.
5. Corporate Earnings Reports: Disappointing earnings reports could hurt investor sentiment.
6. Regulatory Changes: Potential new regulations, especially in the tech and finance sectors, could pose risks.
7. Supply Chain Disruptions: Continued or renewed disruptions could impact production and profitability.
8. Energy Prices: Rising energy prices could squeeze margins and reduce profitability.
9. Technological Disruptions: Companies failing to adapt to technological changes could face operational challenges.
10. Consumer Confidence: A drop in consumer confidence could reduce spending and hurt sectors like retail.
11. Global Economic Slowdown: Signs of slowing growth in Europe and Asia could reduce demand for U.S. exports.
12. Market Valuations: Concerns about high valuations may lead to increased volatility.
Investment Insights:
1. Market Analysis:
My stance remains the same regarding El Salvador and Argentina. The new Argentinian president’s potential backtracking on promises could lead to significant market impacts, particularly given ongoing pressure from the IMF.
The EU’s draught law banning self-custody wallets is a development to watch closely, especially as similar sentiments are spreading to the U.S.
Digital transfer services in the African sub-continent are gaining momentum, and those supporting these services are likely to do well through year-end.
In the past month, BRICS (Brazil, Russia, India, China, and South Africa) has made notable progress in strengthening its geopolitical and economic influence. During the BRICS summit in August 2024, the group expanded its membership by inviting six new countries: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This expansion marks a significant step toward increasing the bloc’s global representation, particularly in the Global South.
Economically, BRICS nations have been working on establishing a new trade settlement system that reduces reliance on the U.S. dollar, promoting the use of local currencies in trade among member countries. This initiative is part of a broader effort to create a multipolar global financial system, challenging the dominance of Western financial institutions.
Furthermore, the group has intensified collaboration on sustainable development, with a focus on energy transition and digital economy initiatives. China and India, in particular, are leading efforts to develop joint infrastructure projects and technological innovations that benefit all member states.
Overall, BRICS continues to gain momentum as a significant counterbalance to Western-led international institutions, pushing for a more inclusive global governance structure.
2. Investment Strategies & Featured Asset:
Diversifying between traditional and crypto markets remains key. Data miners and companies like MicroStrategy continue to be strong plays, with an eye on their strategies for capitalizing on Bitcoin.
Look for opportunities in companies utilizing renewable energy for mining and in those making deals between AI and data storage companies.
Financial News:
1. Global Financial News:
If you’ve used online grocery shopping in the last few years, compare the current prices with those from 2-3 years ago using the “re-order” button to see your real inflation rate.
Events in Ukraine, Gaza, and Iran continue to pose risks to U.S. markets.
Interest rates are expected to begin decreasing soon, with potential cuts by the Federal Reserve later this year, though much depends on upcoming data.
2. Food Prices:
Global food prices are expected to stay high due to various factors, including extreme weather and geopolitical conflicts. Expect
prices to remain at elevated levels through year-end.
Crypto Trends and DeFi News:
Crypto Adoption: Crypto adoption continues to rise despite regulatory challenges. Look for a steady increase in DeFi projects and more large-scale partnerships involving NFTs.
Personal Finance Tips:
- Rebalance Your Portfolio: Given the current market conditions, it’s a good time to review and potentially rebalance your investment portfolio, there seems to be a move toward Bio Tech
There are several biotech newcomers gaining traction in 2024, driven by innovations in gene editing, RNA therapies, and cell therapies.
Finding companies in the fields below that take your interest could be worth the time and effort to do good due diligence on.
1. Gene Editing & CRISPR Technologies: The rapid advancement in gene editing, particularly with CRISPR, is transforming the biotech landscape. Companies focused on improving the specificity and safety of these technologies, such as creating more precise nucleases and innovative RNA editing techniques, are becoming increasingly prominent. This growth is further fueled by the potential to address a wide range of genetic conditions through more sophisticated and targeted therapies.
2. RNA Interference (RNAi) Therapies: Arrowhead Pharmaceuticals is emerging as a key player in the RNAi space, particularly with its Targeted RNAi Molecules (TRiMs) platform. This platform is expected to produce significant clinical trial results in 2024, potentially leading to new drug applications and further market growth.
3. Cell and Gene Therapies: The field of cell and gene therapies continues to grow rapidly, with over 3,700 therapies in development. The momentum in this area is reflected in the increasing number of clinical trials and anticipated FDA approvals, particularly for CAR-T therapies, which are set to revolutionize treatments for blood cancers and other conditions.
These areas highlight the ongoing innovation and potential of newcomers in biotech, making them ones to watch in 2024 and beyond.
2. Emergency Fund: Ensure your emergency fund is well-stocked, especially with economic uncertainties on the horizon.
3. Cryptocurrency Investments: Be cautious with crypto investments; while the market shows promise, it’s still highly volatile but as I have said and posted in my February newsletter, I see Bitcoin at >$115,000< before the year end and north of $500k before September 2025, and I still believe that to be right.
4. Retirement Planning: Stay focused on long-term retirement planning, even in the face of short-term market fluctuations, set your time line and stick to a plan.
5. Tax Planning: Consider tax-efficient investments and strategies, especially as tax laws may change soon.
Final Thoughts:
As we head into September, remain vigilant and prepared. The market is full of opportunities, but it also comes with risks. Stay informed, diversify your investments, and consider both traditional and digital assets as part of your strategy.
What’s next?
Expect ongoing volatility in both the stock and crypto markets. We could see more developments in the crypto regulatory landscape, which will likely impact market sentiment.
Stay tuned for more updates in next month’s letter.
Conclusion:
That’s it for this month’s newsletter. Remember to stay informed and always do your research before making any financial decisions. Here’s to another month of smart investing.
Regards,
James
Trade informed not blind, make use of the free indicators you can get on margincall.club
