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MAY 8, 2024

CONTRASTING TRENDS IN CRYPTOS

Solana (SOL) has been a standout performer in the cryptocurrency market recently, with a significant 2.28% increase in its value over the past day. Within the Solana ecosystem, tokens like Jupiter’s token (JUP) and Dogwifhat (WIF) have seen impressive gains. JUP has surged by 25% to $1.14, while WIF has soared by over 35% to $3.28 in the last 7 days. This surge in Solana-related tokens comes as new tokens are being deployed on the network using the SPL standard, with a record-breaking 14,648 new tokens introduced in a single day and an ongoing influx of approximately 10,000 tokens daily for the past two weeks. Moreover, in stark contrast, Bitcoin and Ethereum has dipped below the $63,000 and $3,000 marks respectively as of 8:00 AM CST. However, it is worth noting that despite this downward momentum, both Bitcoin and Ethereum have experienced modest increases over the past week, with Bitcoin up by 4.05% and Ethereum by 2.20%.

SLIGHT DIP BUT STILL CHALLENGING

Mortgage rates have seen a notable increase since the year’s start, reaching an average of around 4% for a 30-year fixed-rate mortgage, but a recent slight decrease to 3.75% sparked a surge in refinancing applications. This decrease particularly benefited first-time homebuyers utilizing FHA loans. Nevertheless, despite this upturn in refinancing interest, it is important to highlight that the overall demand remains lackluster compared to the previous year, with mortgage applications down 15% year-over-year due to the elevated rates. Thus, homebuying is still challenging, with home prices rising by an average of 10% nationwide while the inventory of available properties continues to be limited. Moreover, the uncertainty surrounding inflation’s effects on future rates is likely shaping borrowers’ decision-making processes against the backdrop of the current state of the housing market.

CREDIT CARD DEBT BURDEN EASED

Consumer borrowing in the U.S. experienced a slight 1.5% uptick in March, marking a significant decline from recent months, primarily driven by a moderation in credit card debt. The Federal Reserve reported a $6.27 billion increase in total consumer credit for March, which is notable drop from the previous month’s $14.12 billion surge. Within this, revolving credit, which includes credit card debt, saw a mere $152 million rise, contrasting with a decline observed in 2021, while non-revolving credit, covering school and vehicle loans, saw a $6.1 billion increase. Moreover, throughout the first quarter of 2024, consumer credit expanded at an annualized rate of 3.2%, with revolving credit increasing by 5.7% and non-revolving credit by 2.2%. Furthermore, this data is likely to soothe market anxieties about consumers struggling with rising expenses and interest rates.

STRONG EARNINGS BOOST STOCK

Reddit shares have surged 14% following a strong performance in its first earnings report since going public. The company impressed investors with robust revenue growth and improved profitability, leading to a positive outlook for the future. Reddit’s success was attributed to its efforts in expanding its advertising business and securing content licensing deals with AI-focused companies like Google. As a result, with a market valuation of over $9 billion, Reddit’s share price has risen to $56.97. In addition, analysts have praised Reddit’s potential for growth in ad revenue, citing its vast user-generated content and partnership opportunities. Furthermore, it is worth remarking that despite its relatively small valuation compared to competitors, Reddit is still expected to continue its upward trajectory in the market.

INTERNATIONAL NEWS

Morgan Stanley is predicting a potential slowdown in the rapid gains seen in China’s stock market, advising investors to focus on individual stocks and specific investment themes to capitalize on improved investor confidence. The bank has highlighted that while the rebound in Chinese equities has sparked optimism that the market has bottomed out, analysts are divided on the sustainability of this growth, citing concerns over weak earnings growth and a cooling real estate sector. The Hang Seng Index in Hong Kong has shown signs of decline following a 10-day winning streak, with overbought signals suggesting a possible correction in the market. Morgan Stanley notes that China’s consumption levels and housing market may experience a prolonged recovery, leading to ongoing deflationary pressure and potential impact on corporate earnings.

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