BULLISH SIGNS
The ether (ETH) market, after experiencing a significant 20% drop in the four weeks leading up to July 5, is showing strong signs of recovery and potential bullish momentum. Yesterday, the price of Ethereum’s native token surged over 4% to hit $3,050, demonstrating resilience by bouncing off critical support levels. This upward movement, combined with other indicators that measure market demand and investor sentiment, suggests that ETH may have reached a bottom ahead of the anticipated launch of spot ether ETFs in the U.S. later this month. Notably, the previous trading discounts on platforms like Coinbase and Grayscale have disappeared, signifying reduced selling pressure and increased buyer confidence. Specifically, Coinbase’s ETH/USD pair has aligned with Binance’s ETH/USDT pair, and Grayscale Ethereum Trust’s discount to net asset value has vanished for the first time in over two years. This shift is seen as a positive sign of confidence, bolstered by expectations of SEC approval for Ethereum ETFs around mid-July. Analysts forecast that these ETFs could generate substantial investor demand, enhancing Ethereum’s market presence. Furthermore, technical indicators, such as maintaining key support levels and forming a double bottom pattern, indicate a potential for continued recovery.
UNSTOPPABLE RALLY?
The stock market’s record rally shows no signs of slowing down, as stated by seasoned market experts. It has been noted that despite growing concerns about a concentrated rally in mega-cap technology stocks, stretched valuations, and indicators pointing to an impending economic slowdown, many remain optimistic largely due to impressive earnings reports. Analysts have set record-high forward earnings expectations for the S&P 500, forecasting a continuous rise, which is considered essential for sustained market momentum. Furthermore, experts expect market breadth to improve as more companies exhibit positive changes in their forward earnings, and while the S&P 500’s current high forward price-to-earnings ratio might seem alarming, the median ratio remains reasonable, suggesting the market is not overvalued. Moreover, there is a lot of enthusiasm about the role AI is playing in market dynamics, as for instace, Corning experienced a 10% surge after announcing robust demand driven by AI technologies.
SIGNIFICANT RISE
Yesterday was a significant day for Intel Corp as its stock surged by over 6%, and this rally was driven by positive analyst coverage and excitement over upcoming processors. The company’s prospects in the artificial intelligence (AI) market and gaming hardware sector have generated considerable interest. As a result, Intel is being seen as a top candidate for AI advancements in the latter half of 2024, and its new features like Microsoft’s Recall AI is pushing the tech company further up. Microsoft’s Recall AI is a feature that allows users to easily revert to earlier points in their computer data histories, which is expected to boost demand for Intel’s upcoming Lunar Lake CPUs for PCs and mobile devices, anticipated to debut either this year or in early 2025. Additionally, reports surfaced over the weekend that Intel is preparing to launch a new graphics processing unit (GPU), known as Battlemage. This GPU will be built using Taiwan Semiconductor Manufacturing’s advanced four-nanometer technology and is aimed at the gaming market, with a planned release in 2025.
GROWING DEBT
According to the latest consumer credit report, many Americans have spent the savings they built up during the pandemic and are now relying more on credit cards and other payment methods to manage their spending. The rising cost of living is adding extra stress to household finances, which is leading to a slowdown in consumer spending. Furthermore, the data shows that retail sales barely increased in May, and figures from previous months were revised downward. Household debt, including mortgages, reached a record $17.7 trillion in the first quarter of 2023. Moreover, since the pandemic began, consumers have added $3.4 trillion in debt, often at higher interest rates. In May, credit card interest rates reached nearly 22.76%, close to a record high, while car loans from commercial banks had rates around 8.2%. According to the New York Fed, as of March, 3.2% of outstanding debt was in some stage of delinquency, which, though still lower than in late 2019, marks an increase across all types of debt. This combination of factors is contributing to financial strain for many households and indicating a potential further slowdown in consumer spending.
CAUTIOUSLY OPTIMISTIC
The National Federation of Independent Business (NFIB) reported a slight increase in its Small Business Optimism Index, which reached 91.5 in June, up one point from the previous month. This marks the third consecutive rise in 2024. Nonetheless, it is worth noting that despite the uptick, the index remains significantly below its historical average of 98, a trend that has persisted for 30 consecutive months. Inflation remains a top concern for small business owners, with 21% citing it as their biggest challenge, although this is slightly down from May. NFIB Chief Economist Bill Dunkelberg highlighted that Main Street does not seem very optimistic about the economic outlook for the rest of the year as rising compensation costs are leading to higher prices across the board, and small business owners do not expect any relief from inflation in the near future. Thus, as we brace for what lies ahead, the overall sentiment is one of caution and uncertainty.
