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MARCH 11, 2024

RECORD BREAKING GROWTH

Bitcoin reached a new record high above $72,000 before slightly retreating to $71,906.60 as of 8:00 AM CST, marking a 70% gain this year due to surging demand in U.S. exchange-traded funds. Other cryptocurrencies, including Ether, Solana, and Avalanche, also saw price increases despite a dip in stock markets before a crucial US inflation report. Investors poured nearly $10 billion into new Bitcoin ETFs in the U.S. over the last two months, driving overall market growth. Moreover, the London Stock Exchange and Thailand’s securities regulator announced their support for Bitcoin and Ether exchange-traded notes, as well as overseas crypto ETFs for retail investors, further encouraging digital asset adoption. Furthermore, technical indicators revealed growing interest from both institutional and retail investors, with a 44% increase in open interest on CME Group’s Bitcoin futures market and strong demand for leveraged long positions.

TREASURY SELL-OFF?

Barclays Plc is advising investors to consider selling 10-year Treasuries as the recent U.S. bond rally appears excessive due to the robustness of the American economy. Yields on the global benchmark have dropped 30 basis points from the year’s peak, driven by expectations of Federal Reserve interest rate cuts. Despite stronger-than-expected economic data, Barclays urges caution and recommends shorting U.S. Treasuries, citing an excessive rally in recent weeks. Analysts highlight the resilient nature of the U.S. economy, yet caution against overly optimistic views. Moreover, let’s take into account that market predictions point to Fed rate cuts beginning in July, supported by indications that the central bank is approaching a decrease in its efforts to combat inflation. Barclays is also raising red flags regarding potential supply increases and the Fed’s plans to reduce overall debt maturity, and while they maintain confidence in solid economic fundamentals, they warn against relying solely on potentially misleading soft data.

OPTIMISIM REMAINS

Analysts at JPMorgan Chase & Co. and Goldman Sachs Group Inc. have highlighted that the valuations of major tech players, such as Apple, Google, Amazon, Facebook, Microsoft, Nvidia, and Tesla, are currently more balanced compared to previous years. This indicates that while there may be worries about potential profit setbacks, these tech giants could potentially outperform conventional companies linked to economic strength. Though some tech stocks, like Nvidia, are thriving, others, such as Apple, are grappling with declining iPhone sales and regulatory challenges. Despite this, there remains a sense of optimism regarding the growth potential of tech stocks in the future. The recent turbulence has not deterred the belief that technology companies still have room for further expansion and could continue to play a key role in the market, even amidst ongoing uncertainties and fluctuations.

INTERNATIONAL NEWS

Japan’s Nikkei share average saw a hefty 2% decline due to chip-related stocks following the downtrend in the U.S. market, compounded by a strengthening yen denting investor sentiment. The Nikkei plummeted by 2.48% to 38,704.10, marking its sharpest daily drop since December 2022, while the broader Topix index also echoed the sentiment with a 2.25% decrease to 2,665.37. An abrupt market correction raised questions on whether Japan’s bullish market is losing momentum or taking a breather for stability. Despite hitting an all-time high last month, surpassing a previous record from December 1989, the Nikkei 225 index closed at 38,820.49 after a 2.2% decline, the most substantial slide since October. The recent pullback stemmed from a revised fourth-quarter GDP for Japan, triggering yen purchases amid speculations on likely monetary policy changes by the Bank of Japan. Furthermore, analysts, including Masayuki Kubota from Rakuten Securities, foresee potential short-term adjustments but maintain confidence in the long-term growth potential of Japanese equities, with the Nikkei currently up nearly 19% this year and having surged by over 28% in 2023.

KEY EVENTS HAPPENING THIS WEEK

Tuesday: NFIB optimism index, consumer price index (CPI), and monthly U.S. federal budget reports for February.

Wednesday: MBA’s mortgage report.

Thursday: Business inventories report for January, U.S. retail sales and producer price index (PPI) report for February, and initial jobless claims for week ending on March 8.

Friday: Import price index report for February, and preliminary consumer sentiment report and Empire State manufacturing survey for March.

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