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FEBRUARY 26, 2024

MIXED MARKET

Over the weekend, Bitcoin’s prices remained relatively stable around $51,500, while Ether climbed back to the $3,100 level. Notably, tokens from the Ethereum layer-2 platform, Mantle (MNT), surged by an impressive 30%, reaching a lifetime peak of 93 cents, without a clear immediate cause for the boost, though it coincided with mantleETH (mETH) – a staked version of Ether – reaching the $1.5 billion value-locked mark the previous week. Nonetheless, not all cryptos reported good performances as other tokens like XRP, ADA, and AVAX experienced a slight decline of around 1% in the last 24 hours, while BNB saw a modest increase of 1.2%. Moreover, there is also the believe that Bitcoin could potentially see a short-term drop as the crypto market has shown signs of selling despite record highs in global equity indices, potentially indicating a growing cautious approach among investors.

NVIDIA’S SELL-OFF

Prior to Nvidia Corp.’s earnings report, hedge funds were heavily invested in tech stocks, particularly Nvidia, however, shortly after the tech company released its results, professional managers began selling off their positions at a rapid pace, reaching the fastest pace in seven months, as stated by Goldman Sachs Prime Brokerage. This is because although there is still strong confidence in the tech sector, as evidenced by the put-call skew moving lower and the retail activity in Nvidia being high, there are also growing concerns about the sustainability of current market momentum, especially as the Nasdaq 100 has experienced losses in three of the last four trading sessions. Consequently, traders are taking profits from their tech investments and reinvesting in less volatile areas, such as companies that produce household products, which have seen the most buying activity in the past 10 weeks. Moreover, as of now the market remains uncertain, and in the upcoming days, the focus will be on economic data and indications regarding the timing of the next potential rate cut.

STOCK ON THE RISE

Berkshire Hathaway Inc.’s stock has seen a substantial surge of up to 5.5%, potentially bringing the company’s market value closer to $1 trillion, based on its stable performance throughout the day. This rise is largely attributed to the company’s strong fourth-quarter operating earnings, which totaled $8.48 billion, a significant increase from the $6.63 billion reported in the same period the previous year. The improved earnings were driven by enhanced insurance underwriting and investment income due to higher interest rates and milder weather. Moreover, Berkshire’s shares have risen by almost 15% over the past year and increased by approximately 17% as of last Friday in 2024, bringing the company’s market value to $905 billion. Nonetheless, despite this impressive progress and its positive performance, the company is facing challenges in finding suitable investment opportunities as cash reserves have reached a record high of $167.6 billion and Chairman Warren Buffett has expressed frustration over the lack of substantial deals that could lead to exceptional company performance.

DECLINES AS INVESTORS AWAIT

As investors await key economic data set to be published this week, which could provide hints about the outlook for interest rates and the state of the economy, the outcome of the Federal Reserve’s easing cycle and the prospects of interest rate cuts are looming heavily over the markets. Gold prices slipped as expectations of the Federal Reserve’s easing cycle were reduced. There is a cautious anticipation of a key inflation reading coming out this week, which is likely to provide an updated view on the timing of interest rate cuts. Consequently, spot gold edged down 0.1% to $2,033.89 per ounce, after rising to its highest since February 7. Meanwhile, oil prices also fell on, extending losses on the perception that higher than expected inflation could delay cuts to high-interest rates. Brent crude futures fell 39 cents, or 0.5%, to $81.23 a barrel, with U.S. West Texas Intermediate crude futures (WTI) down 34 cents, or 0.4%, at $76.15. U.S. Furthermore, treasury yields were mixed as 10-year Treasury yield dropped by 1 basis point to 4.248%, indicating a slight decrease in long-term interest rates, while the 2-year Treasury yield remaining unchanged at 4.69% suggests stability in short-term interest rates.

KEY EVENTS HAPPENING THIS WEEK

Monday: New home sales report for January.

Tuesday: S&P case-shiller home price index, durable-goods orders, and durable-goods minus transportation reports for January, and consumer confidence report for February.

Wednesday: First GDP revision for fourth quarter, advanced U.S. trade balance in goods, retail and wholesale inventories reports for January, and speech from Atlanta Fed President Raphael Bostic.

Thursday: Initial jobless claims for week ending on February 24, nominal personal income and spending, PCE index, pending home sales reports for January, Chicago Business Barometer (PMI) report for February, and speeches from Atlanta Fed President Raphael Bostic, Chicago Fed President Austan Goolsbee, Cleveland Fed President Loretta Mester, and Kansas City Fed President Jeff Schmid.

Friday: Construction spending report for January, final S&P U.S. manufacturing PMI, ISM manufacturing and final consumer sentiment reports for February, and speeches from Dallas Fed President Lorie Logan, Fed Governor Chris Waller, Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly.

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