REACCUMULATION WAVE
According to crypto traders, the altcoin market is currently in a phase of “reaccumulation”, indicating a potential shift towards a new upward cycle after breaking out from a prolonged accumulation period. This phase is characterized by altcoins stabilizing and rebounding significantly, with a 58% increase following their emergence from the consolidation stage. During this phase, investors typically take advantage of price dips to accumulate altcoins, anticipating future price appreciation. However, recent market data suggests that smaller cryptocurrencies have underperformed compared to Bitcoin, indicating that the full-fledged altcoin season may not have started yet. In addition, Bitcoin’s market dominance also shows an increasing trend, with a 56.56% share of the overall crypto market, reflecting a reallocation of investments from altcoins to Bitcoin.
NOT OVER YET
Goldman Sachs analysts have stated that the recent technology stock sell-off is not over just yet as investors’ focus is still moving away from big tech stocks, driven by concerns over excessive spending on artificial intelligence, slower earnings growth, and inflated valuations. This redirection is causing a surge in interest in small-cap stocks, indicating a reassessment of market trends. The disparity between the substantial investment in AI technology and uncertainties surrounding its profitability has raised alarms among analysts, prompting fears of a potential market correction. Moreover, investors are eagerly anticipating the earnings reports from major tech players due this week, in hopes of gaining insights into the market’s future trajectory.
SOLD AT LOSS
In response to the potential for interest rate cuts by the Federal Reserve, U.S. regional banks are selling bonds at a loss in order to reinvest the proceeds in higher-yielding securities. This strategy, previously unthinkable, is now being adopted by banks like PNC and Truist, with the aim of increasing their long-term income. In addition, other banks, like Regions and Webster, are also making similar moves to adjust to the changing rate environment. The hope is that by adjusting their bond portfolios now, banks can better weather the expected interest rate changes in the future. However, it is important to remark that not all regional banks are taking this approach, as some remain cautious about high deposit costs and troubled borrowers.
INTERNATIONAL NEWS
The Bank of Japan (BOJ) is preparing to implement a plan for quantitative tightening and potentially raise interest rates after a prolonged period of monetary easing. This decision has caused speculation and uncertainty among investors, leading to fluctuations in the yen and Japanese stock market. While some analysts predict a rate hike due to inflation trends, others are more cautious, considering the impact on economic growth. Alongside this, the BOJ is expected to announce a plan to reduce bond buying, which could further influence their policy decisions. Additionally, the recent volatility of the yen, as well as pressure from government officials to support the currency and control inflation, add complexity to the situation. Moreover, it is worth noting that the outcome of this meeting will not only have implications for the Japanese economy but also for global markets, especially with the closely watched Federal Reserve meeting following shortly after.
KEY EVENTS HAPPENING THIS WEEK
Tuesday: S&P Case-Shiller home price index (20 cities) report for May, job openings report for June, consumer confidence report for July, and earnings reports from Advanced Micro Devices and Microsoft (after market closes).
Wednesday: Employment cost index report for second quarter, ADP employment and Chicago business barometer (PMI) reports for July, FOMC interest-rate decision, and speech from Fed Chair Powell.
Thursday: U.S. productivity report for second quarter, construction spending report for June, S&P U.S. manufacturing PMI and ISM manufacturing reports for July, initial jobless claims for week ending on July 27, and earnings reports from Apple and Amazon (after the market closes).
Friday: Factory orders report for June, and U.S. employment and unemployment rate reports for July.
