CRYPTO UNCERTAINTY
Despite the current expectations of a possible rate cut happening next month, following the latest consumer price index (CPI), Bitcoin’s value dropped significantly, causing a wider market downturn that affected major cryptocurrencies like Ether, Solana, Cardano, BNB Chain, and XRP. In addition, U.S. listed spot Bitcoin ETFs experienced net outflows, particularly Grayscale’s GBTC, while Ether ETFs saw inflows, with BlackRock’s ETHA gaining notably. It is worth noting that analysts have stated that Bitcoin could drop further to around $55,000 before potentially bouncing back. As of 8:00 AM CST, Bitcoin’s value is trading just below the $59,000 mark. Moreover, in a separate development, the U.S. government recently transferred $600 million worth of Bitcoin, which was seized from the Silk Road dark web marketplace, to a Coinbase Prime wallet. This transfer involved 10,000 BTC, and now, the big question is whether the government plans to sell this Bitcoin or hold onto it.
INVESTMENTS ON THE RISE
Although the current value of Bitcoin is low, it has been revealed that alongside Goldman Sachs, Morgan Stanley has also disclosed its substantial investments in various cryptocurrency funds, including BlackRock’s iShares Bitcoin Trust ETF. This information was revealed in a SEC filing as of June 30, where Morgan Stanley disclosed holding over $188 million in shares of the said ETF, amounting to approximately 5.5 million shares for the second quarter of 2024. In addition to the BlackRock investment, Morgan Stanley also reported holding positions in other crypto-related funds such as Valkyrie’s ETF Trust and Fidelity’s Wise Origin Bitcoin Fund. These investments were made prior to Morgan Stanley’s announcement allowing its advisors to recommend Bitcoin ETFs to clients, specifically highlighting IBIT and FBTC. Furthermore, Morgan Stanley also disclosed investments in Grayscale’s Bitcoin Trust and the Ark21Shares Bitcoin ETF. Moreover, this trend extends beyond Morgan Stanley, as other key players like Millennium Management and state pension funds from Wisconsin and Michigan have also ventured into cryptocurrency-linked ETFs. Ultimately, despite the temporary fluctuations in the price of Bitcoin, this institutional backing suggests a level of confidence in the potential of digital assets to provide significant returns over time.
WINNING STREAK
Walmart has announced that it experienced a strong performance in the previous quarter, with nearly 5% revenue growth driven by increased customer traffic at both its physical stores and online platform. As a result, the company has revised its full-year forecast, anticipating sales to rise by 3.75% to 4.75% and adjusted earnings per share to range between $2.35 and $2.43. Walmart has noted that consumer spending habits have been consistent, focusing more on essential items, with a recent uptick in sales of general merchandise like lawn and garden supplies. Moreover, taking into account its significant size and reach as the largest retailer in the U.S., Walmart’s performance serves as an important barometer for the overall economy. Thus, based on Walmart’s recent performance, it can be concluded that consumer confidence and spending is stable. Nonetheless, it is important to remark that despite the recent positive results, Walmart remains cautious about the latter half of the year due to external factors such as the upcoming election and geopolitical tensions.
SHARP DECREASE
According to the latest data from the U.S. Labor Department, there has been a notable decrease in initial applications for unemployment benefits for the second consecutive week, reaching the lowest level since early July. In the week ending on August 10, there was a drop of 7,000 claims to 227,000, which was lower than the expected 235,000 applications. This decline comes at a time when concerns are rising about a slowdown in hiring following the continuous rise in the jobless rate for four months. This recent moderation in the labor market coupled with the latest easing of inflation data are reinforcing expectations for a potential interest rate cut by the Federal Reserve during the September policy meeting. Moreover, it is worth highlighting that despite some fluctuations earlier this year, initial claims have generally remained stable at levels similar to those in 2019. Nevertheless, it is also important to note that jobless claims data can fluctuate from week to week, particularly during the summer months, and this could lead to some temporary discrepancies in the figures.
PRICE PLUNGE
The global iron ore market is currently facing challenges as prices have dropped to their lowest levels since 2022. This is mainly due to concerns of oversupply compared to demand, with Chinese steelmakers reducing production while major miners are increasing exports. China’s significant role as the largest importer of seaborne iron ore has a major impact on setting the tone for the global market, and as a result of these factors, iron ore prices have decreased by about a third this year, making it one of the biggest losers in the commodities market. The ongoing economic slowdown in China has further exacerbated the situation, particularly within the steel industry where product prices continue to plummet. This has prompted the world’s largest steel producer, China Baowu Steel Group Corp., to warn about an industry crisis. Furthermore, the recent sell-off has also had a negative impact on miners’ shares, with stock prices falling significantly.
