BOUNCE BACK

The cryptocurrency market has experienced a modest recovery, with almost every token in the top 100 by market cap showing gains compared to the previous day. This upward trend resulted in over $87 million in liquidations over the past 24 hours, with $56 million stemming from short positions, as stated by CoinGlass. Let’s remember that the market had been on a downward trend for the past two weeks, with Bitcoin dropping as low as $59,780 on Monday, and tye contributing factors to this decline include the sell-off of seized Bitcoin by the German government and impending movements of Bitcoin held by the defunct crypto exchange Mt. Gox. In addition, it is worth noting that significant liquidations, which amounted to over $360 million when Bitcoin dipped below $60,000 on June 24, have had notable impacts, prompting analysts to monitor “accumulation whales” – large investors who may be capitalizing on lower prices to amass more assets. However, as mentioned, the crypto market managed to switch direction as as of 8:00 AM CST Bitcoin is trading above the  $61,000 mark, while Ethereum is trading at above the 3,300 mark. Furthermore, Memecoins such as Pepe (PEPE) and Dogwifhat (WIF) have performed particularly well, achieving gains of 15.9% and 16.8%, respectively. Nevertheless, despite the overall positive market performance, those with short positions suffered, and long positions were not entirely spared either, with around $30.9 million in long positions being liquidated.

BOOMING RETURNS

Over the past year, a new kind of exchange-traded fund (ETF), known as the leveraged single-stock ETF, has gained significant attention. These funds, unlike traditional ETFs that hold a diversified portfolio of stocks, focus on a single stock and use leverage to amplify returns, which can result in substantial profits or losses. One notable example is the T-REX 2X Long NVIDIA Daily Target ETF, which has skyrocketed 425% year-to-date despite experiencing a 30% drop following a recent 16% correction in Nvidia’s share price. These funds are designed primarily for short-term day trading, nevertheless they have also been attracting retail investors interested in potentially high returns, as evidenced by discussions on the r/LETFs subreddit, which has 27,000 members. However, not all agree as some investors are questioning the wisdom of holding these funds long-term despite their impressive short-term gains. Moreover, it is worth noting that funds like the GraniteShares 2x Long NVDA ETF and Direxion Daily NVDA Bull 2X Shares have together amassed $5 billion in assets, highlighting their popularity. Nevertheless, other single-stock leveraged ETFs targeting major tech companies like Apple, Alphabet, Amazon, Meta Platforms, and Microsoft have not seen similar success, collectively drawing just $444 million. In addition, Tesla-focused funds have also broken the billion-dollar mark but have shown volatile performance, with some down 70% since their peaks.

STUBBORN RATES

Following a weaker-than-expected spring housing market, the outlook for summer has not improved as home prices continue to rise, keeping mortgage rates high, and the slight increase in home listings has not impressed potential buyers. These factors are reflected in weekly mortgage demand, which has remained stagnant for the second straight week. According to the Mortgage Bankers Association, total mortgage application volume edged up just 0.8% last week. The average contract interest rate for 30-year fixed-rate mortgages dipped slightly from 6.94% to 6.93%, marking the lowest rate in over three months but not enough to drive significant activity. Refinance applications stayed the same week-to-week but were 26% higher than the same period last year. In addition, although mortgage applications for new home purchases rose by 1% for the week, they were still down 13% from a year ago. Furthermore, MBA economists have noted that many homeowners are reluctant to refinance due to already having substantially lower rates as while housing supply has increased by 18% over the past year, the market remains tight.

RECORD-BREAKING SAVINGS

The average 401(k) savings rate, which combines employee contributions and company matches, has held steady at historic levels due to simplified plan designs. In 2023, the average combined savings rate was approximately 11.7%, consistent with the record high set in 2022, as revealed by Vanguard’s annual review covering over 1,500 plans and nearly 5 million participants. In addition, a separate report from Fidelity showed even higher savings levels, with a combined rate of 14.2% for the first quarter of 2024, based on data from almost 26,000 corporate plans and nearly 24 million participants. Both Vanguard and Fidelity recommend saving 12% to 15% of your income, including employer contributions, to ensure a secure retirement, and experts advise increasing your savings rate by at least 1% annually to reach this benchmark. Moreover, according to Vanguard, nearly 25% of participants saved more than 10% of their earnings last year, and 43% increased their savings rate. Additionally, an estimated 14% of participants reached the 401(k) contribution limit of $22,500 for those under 50 – a trend that has remained steady since 2020.

SUMMER DEMAND HOPES

Crude oil futures have climbed as investors eagerly awaited the latest U.S. inventory data, hoping to gauge gasoline demand during the summer. After a brief pause, both West Texas Intermediate and Brent crude showed significant gains for the month—5.9% and 4.9%, respectively—reflecting optimism for stronger fuel demand ahead. Today, West Texas Intermediate is priced at $81.53 per barrel, up by 0.87%, while Brent stands at $85.66 per barrel, up by 0.76%. Meanwhile, gasoline and natural gas prices have shown mixed trends, with gasoline up 20.5% year-to-date and natural gas up 7.7%. Moreover, the Department of Energy’s oil and gasoline inventory data, scheduled for release at 11.30 AM CST, is highly anticipated to confirm the demand uptick, and analysts from PVM noted that demand is expected to rise over the summer, especially with OPEC+ production cuts in effect until October. However, it is worth noting that a Reuters poll suggests U.S. inventories might have decreased by 2.9 million barrels for oil and 1 million barrels for gas last week, while geopolitical tensions between Israel and Lebanon, particularly involving Iran-backed Hezbollah, have added to concerns, potentially impacting crude oil supplies.