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MARCH 27, 2024

PROFITABILITY IN MINING

In February, Bitcoin mining proved more profitable than in January due to a 15% increase in the price of Bitcoin and a 9% rise in the network hashrate according to a report by investment bank Jefferies. This resulted in U.S. mining companies contributing a smaller share of Bitcoin, accounting for 17.5% of the total network. Marathon Digital, previously reliant on third-party providers for machine hosting, transitioned to acquiring some hosting services as a defensive measure in anticipation of the halving, a move endorsed by Jefferies. Consequently, Jefferies maintained a hold rating on Marathon Digital shares, lowering the price target to $24 from $30 due to downtime at Applied Digital sites impacting future uptime assumptions. Additionally, Jefferies raised the price target on Argo Blockchain to $1.50 from $1.20 in response to the heightened Bitcoin price. This adjustment was made with consideration for Argo Blockchain’s reduced capital expenditure on facility development, enabling the company to allocate funds towards purchasing additional miners and enhancing hashrate more swiftly.

STEADY BUT UNCERTAIN

Following the release of the latest data from the Conference Board, it was revealed that U.S. consumer confidence has remained steady this month. The consumer confidence index, which gauges Americans’ views on current economic conditions and their outlook for the next six months, held at 104.7 in March, slightly down from 104.8 in February. Short-term expectations for income, business, and job market fell to 73.8 from 76.3, which suggests that there is still room for a recession happening soon. In addition, consumers expressed worries about food and gas prices, as well as the U.S. political environment with the upcoming presidential election. Therefore, as per consumers expectations, the outlook for the next six months remains uncertain. Nevertheless, despite this, it is worth remarking that views on current conditions improved to 151.0 from 147.6.

DECLINE IN APPLICATIONS

As stated by the Mortgage Bankers Association (MBA), there was a 2% drop in applications for refinancing home loans last week, with a 9% decrease compared to the previous year. This decline is due to slightly higher mortgage rates, which have been dissuading borrowers from seeking new loans with less favorable rates. Nonetheless, it is worth noting that those with older mortgages are likely still benefiting from lower rates. Moreover, homebuyers are being cautious, with a 0.2% decrease in mortgage applications for purchasing homes and a 16% decline from last year. This suggests that many could be waiting for lower rates and more homes to become available. Furthermore, the overall market is hoping that gradual rate changes will boost housing activity, however, as of now, mortgage rates are expected to stay steady until new economic data is released next week.

SWIPE FEE SETTLEMENT

After a long history of accusations regarding inflated swipe fees and anti-steering rules, Visa and Mastercard have agreed to a $30 billion settlement aimed at limiting credit and debit card fees for merchants. This settlement, one of the largest in U.S. history, seeks to address allegations dating back to 2005 that the two financial giants charged excessive swipe fees and prevented merchants from promoting cheaper payment methods through anti-steering rules. Small businesses are expected to benefit most from these changes. In addition, experts believe that this settlement will empower merchants to compete on prices, potentially resulting in significant savings that could be passed on to customers in the form of decreased prices. The settlement is awaiting court approval, and follows a $5.6 billion class-action settlement upheld last year, which did not address the imposition of fees, and did not encompass all retailers.

INTERNATIONAL NEWS

The Japanese yen reached a 34-year low against the U.S. dollar as market expectations of further interest rate hikes by the Bank of Japan (BOJ) diminished following the comments from the central bank expressing caution in unwinding its loose monetary policy. In addition, the yen’s depreciation also stemmed from the wider yield gap between Japanese and U.S. government bonds, making U.S. dollar-denominated assets more attractive for investors in carry trades. Moreover, as a response to the major decline, Japanese officials have expressed their readiness to take the necessary measures to encounter any fluctuations in the yen, and highlighted that the reason behind the plunge was speculative trading activity. As a result, the yen managed to rebound slightly, while the Japanese stock market remains on a hold mode as traders are preparing for end-of-quarter rebalancing.

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