Month: June 2024

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U.S. inflation at 2.6% in May 2024 from a year ago

U.S. PCE

The core Personal Consumption Expenditures (PCE) price index witnessed a modest increase of 0.1% (seasonally adjusted) for the month and has risen 2.6% from the previous year – broadly as expected by analysts.

May 2024 experienced the lowest annual rate since March 2021, the Federal Reserve’s inflation target is 2%.

Personal income grew by 0.5% for the month, surpassing the estimated 0.4%. However, consumer spending saw a 0.2% rise, falling short of the 0.3% expected.

Data according to U.S. Bureau of Economic Analysis

Note: PCE represents Personal Consumption Expenditures. It measures consumer spending in the United States by tracking expenditures on goods and services. The PCE price index particularly tracks variations in household living costs, serving as a primary indicator of inflation.

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“Meet Bill and Bet!”

UK election betting scandal

UK Election betting scandal mars politicians and the police!

Just when you think the state of UK politics couldn’t get any worse… it does!

The ‘clicky’ inner circles of both the Conservative and of the Labour Party with their mucky little antics – placing bets on the date of the UK election – KNOWING THE OUTCOME!!

Why would anyone behave in this way?

No wonder the public are utterly disenfranchised with politics. The morally bankrupt behaviour and greed shown by some in both the Conservative and Labour Party is breathtaking and bereft of any basic moral compass.

These people are broken and should not be in positions of trust representing our country.

And the police too!

UK election betting scandal
“Meet Bill and Bet!”

Billy and Betty off to place their bets!

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Japanese yen slumps to fresh 38-year low against the U.S. dollar

Yen slumps against dollar

On Friday 28th June 2024, the Japanese yen dropped to its lowest point in 38 years, surpassing the 161 threshold against the dollar reached for the first time since December 1986.

The yen has faced challenges, slipping beyond the 160 mark again.

Since the Bank of Japan concluded its negative interest rate policy and reportedly abandoned its yield curve control policy in March 2024, the yen has been on a consistent decline.

After this policy change, the yen breached the 150 level against the U.S. dollar and hit 160 in late April 2024, which prompted intervention by the country’s finance ministry.

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Two asteroids star in Earth weekend fly-by starting 28th June 2024

Asteroid in Earth fly-by

There are two massive asteroids that will fly past Earth this week.

Asteroid (415029) 2011 UL21

Size: Approximately 7,600 feet long

Distance from Earth: It will pass by Earth at a distance of more than four million miles (over 17 times further than our moon).

Visibility: Visible with small telescopes through Sunday, appearing brightest on Friday.

Asteroid 2024 MK:

Size: Between 400 and 850 feet long

Distance from Earth: It will fly significantly closer, passing at about three quarters the distance to the moon.

Visibility: Best view from Hawaii or South America, but also visible from the southern United States.

NASA

NASA Asteroid live

Bennu asteroid

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“SS Sunak – rats deserting the Sinking Ship!”

Sinking Ship!

SS Sunak – rats deserting a Sinking Ship!

UK Election: I don’t know if it’s just me but… where are all the Conservative Party cabinet BIG hitters?

Sunak has very little support, if any from his cabinet!

Where is Jeremy Hunt, the Chancellor of the Exchequer for example?

He’s not that visible on the election campaign trail. His absence could easily be construed as ‘distinctly unhelpful.’

Where is he?

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Amazon achieves a $2 trillion market cap for the first time

2 trillion

During intraday trading on Wednesday 26th June 2024, Amazon’s market capitalisation surpassed $2 trillion.

The company now stands among other tech giants like Nvidia, Apple, Alphabet, and Microsoft, which have also achieved a market cap of over $2 trillion ($3 trillion for in Nvidia Apple and Microsoft).

Amazon’s shares have experienced a significant increase in the past year.

Amazon one year chart from 27th June 2023 – 26th June 2024. Share price: 193.61

Amazon one year chart from 27th June 2023 – 26th June 2024. Share price: 193.61
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“Here… I think you may need this!”

Take cover!

UK election engulfed in yet another politically charged fallout from scandalous greed driven morally bankrupt politicians, and police. All connected to the inner workings of a failed government bereft of any sense of moral duty. The opposition Party are implicated too!

Why?

Is this really the best we can do?

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Nvidia rebounds after half a trillion market cap slump

Hot AI

To put this figure into some perspective, the loss is comparable to the GDP output of a small country, such as Norway, Singapore, or the UAE, for example.

Global semiconductor stocks experienced volatility on Tuesday following a decline in Nvidia’s shares from the previous trading sessions.

Shares of chip firms in Europe and Asia fell in early trade as investors reacted to Nvidia losing more than $500 billion in market capitalization over three trading days. Some of the stocks recouped losses, however, as shares in the U.S. chipmaking giant recovered around 6 – 6.5% as of Tuesday 25th June 2024.

This follows a significant drop in Nvidia’s share value, which fell 13% over three consecutive sessions from the record highs achieved on Thursday 20th June 2024.

On Monday 24th June 2024, Nvidia’s stock closed down 6.7%, marking its second-largest decline of the year, yet the shares began to recover in early trading on Tuesday 25th June 2024.

Last week, the company surpassed Apple and Microsoft to become the most valuable U.S. company, achieving a market capitalization of over $3.4 trillion. However, by the end of Monday, Nvidia’s market value had declined by more than $540 billion from its intraday record on Thursday 20th June 2024.

Nvidia reported that the demand for its highly sought-after artificial intelligence graphics processing units (GPUs) continues to be strong.

Companies such as Microsoft, Google, Amazon, and Meta are investing billions of dollars in these chips to enhance their data centres and cloud services.

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“The sun is the most important thing in everybody’s life, whether you’re a plant, an animal, or a fish, and we take it for granted”.

Sunset

Danny Boyle

(See Wikipedia)

Daniel Francis Boyle (born 20th October 1956) is an English director and producer. He is known for his work on films including Shallow Grave, Trainspotting and its sequel T2 Trainspotting, The Beach, 28 Days Later, Sunshine, Slumdog Millionaire, 127 Hours, Steve Jobs, and Yesterday.

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Nvidia slips by 13% in three days after momentarily becoming most valuable company

AI on fire

The Dow Jones Industrial Average gained as investors rotated out of ‘hot’ chip stocks, including Nvidia.

Nvidia shares fell a little under 7% on Monday 24th June 2024, the chipmaker’s third down day in a row. The stock is down 13% from its peak last week.

Other stocks that also experienced drops on Monday were some of the biggest gainers of late due to their exposure to the artificial intelligence (AI) feeding frenzy.

Investors may be taking profits and locking in gains in Nvidia and similar momentum stocks after a number of extremely busy trading months.

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Bitcoin tumbles back to $60,000

Bitcoin falling

The price of the cryptocurrency Bitcoin was down more than 6% at close to $60,000 on Monday 24th June 2024 – its lowest level in more than a month and about 17% from its March 2024 record.

In the past week, it’s fallen more than 10%.

Crypto investment products reportedly notched a second consecutive week of outflows, according to analysts. Last week, they saw their lowest trading volumes globally since the U.S. Bitcoin ETFs launched in January 2024.

Bitcoin one day chart 24th June 2024 at around $60,000 (CoinMarketCap)

Bitcoin one day chart 24th June 2024 at around $60,000
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Have you heard of the ‘Sahm Rule’ recession indicator?

Rules in a book

The ‘Sahm Rule’ serves as a heuristic indicator employed by the Federal Reserve to ascertain the onset of a recession in the economy.

The Sahm Rule is a real-time evaluation tool based on monthly unemployment data from the Bureau of Labor Statistics (BLS). Named after economist Claudia Sahm, it forecasts the onset of a recession when the three-month moving average of the national unemployment rate (U3) increases by 0.50% or more compared to its lowest point in the preceding 12 months.

This simple yet effective indicator helps policymakers monitor economic cycles and respond accordingly

Time to cut according to the ‘Sahm Rule’

Sahm has reportedly stated that the Fed is taking a significant risk by not implementing gradual rate cuts now. Last week, Federal Reserve officials significantly reduced their forecasts for rate cuts this year, shifting from three anticipated reductions noted in the March 2024 meeting to just one.

According to the creator of a well-established rule for predicting recessions, the Federal Reserve is risking an economic contraction by not lowering interest rates immediately.

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Nvidia briefly surpassed the individual stock market values of Germany, France and the UK

Market Cap up

The little-known company, Nvidia, now stands alongside Apple and Microsoft in market cap valuation thanks to AI.

In just a little over a year it has all but tripled its market valuation and become a go to investment on Wall Street and around the world.

Nvidia’s market capitalization has recently individually surpassed the total value of the German, French, and U.K. stock markets.

With a market cap exceeding $3.4 trillion, Nvidia now stands above these significant European stock markets in valuation.

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S&P 500 breaches 5500 but closes slightly lower as Nvidia pulls back from its meteoric rise

S&P 500

The S&P 500 retreated on Thursday 20th June 2024, having momentarily surpassed the 5500 for the first time ever, as Nvidia, a favourite stock with Wall Street investors, relinquished its earlier gains.

The S&P 500 index fell 0.25% to end at 5473. Earlier in the session, the S&P 500 gained around 0.34% to hit a new all-time high.

S&P 500 one day chart 20th June 2024

S&P 500 one day chart 20th June 2024

The Nasdaq Composite dropped 0.79% to finish at 17721. The Dow Jones Industrial Average (Dow) jumped around 299 points, to close at 39134.

Nvidia lost ground and handed the Market Cap crown back to Microsoft after briefly enjoying the accolade for just 2 days. At one point, Nvidia trimmed around $240 billion off its Market Cap as investors took profits.

Will Nvidia regain the crown in the coming weeks? Probably.

Nvidia one day chart 20th June 2024

Nvidia one day chart 20th June 2024
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Anthropic releases its most powerful AI Chatbot

Chatbot

Anthropic, a rival to OpenAI, unveiled Claude 3.5 Sonnet on Thursday, touting it as their most advanced AI model to date.

Claude has joined the ranks of widely used chatbots such as OpenAI’s ChatGPT and Google’s Gemini. Founded by former OpenAI research leaders, Anthropic has secured backing from major tech entities like Google, Salesforce, and Amazon. Over the past year, the company has completed numerous funding rounds, reportedly amassing approximately $7.3 billion.

The announcement comes after Anthropic introduced its Claude 3 series of models in March, followed by OpenAI’s GPT-4o in May 2024. Anthropic has stated that Claude 3.5 Sonnet, the initial model from the new Claude 3.5 series, surpasses the speed of its predecessor, Claude 3 Opus.

“It shows marked improvement in grasping nuance, humour, and complex instructions, and is exceptional at writing high-quality content with a natural, relatable tone,” the company said in a blog post.

It can also write, edit and execute code in a real time workspace open for the user to engage.

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“I’ve been saving this for a rainy day, Mr. Sunak – but I think you might need it now.”

Umbrella for Sunak

Bank of England offers no election help to Rishi Sunak as the UK interest rate is held at 5.25%. Not that they should.

But the UK inflation is on target now at 2% so that’s some consolation. The PM claimed credit as the inflation target was met – happily informing us that his plan was working. But isn’t it the job of the Bank of England to maintain inflation at 2%?

Not that they have done a very good job of that either.

Soggy wet politics!

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No change as Bank of England holds interest rate at 5.25%

UK interest rate

UK interest rates have been left unchanged at 5.25% by the Bank of England (BoE)

The Bank has maintained the interest rates at 5.25% for the seventh consecutive time to combat inflation, resulting in increased mortgage repayments and higher savings rates.

The interest rates, at their peak for the past 16 years, have been sustained at 5.25%. Currently, there are indications of a shift in stance, with a growing consensus for a potential reduction in August 2024.

UK interest rate and inflation chart June 2021 – June 2024

UK interest rate and inflation chart June 2021 – June 2024
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The unloved stock market rally: exploring why many investors are hesitant to embrace this record-breaking run

Unloved rally

The unloved rally: A paradox

The S&P 500 and Nasdaq have been reaching all-time highs with remarkable frequency, notching nearly thirty record days in 2024, including four in the past week. Despite this stellar performance, a considerable number of investors remain hesitant. Let’s explore the reasons behind this paradox.

Lingering recession fears

The recollection of the 2022 bear market continues to trouble investors. The swift escalation of monetary policy by the Federal Reserve at that time generated widespread uncertainty and apprehension. This has led many investors to maintain a cautious stance, concerned that the past may repeat, even amidst a surging market. Maybe less of us expected the AI driven stock buying frenzy to scale such highs so quickly?

Scepticism

Investors are inherently sceptical. Amidst a relentless market rally, uncertainty emerges. Can this be sustained? Is a correction looming? This scepticism may hinder investors from wholeheartedly participating in a bull market, despite what the statistics indicate.

Emotional baggage

Investment isn’t solely a game of numbers; it’s equally a matter of emotions (although it shouldn’t be). Investors bearing the scars of past losses may find their emotional baggage weighing heavily on their decisions. The fear of experiencing another market crash can cloud rational judgement, leading them to forgo opportunities for potential gains.

The ‘easy money’

The stock market’s significant rise from the lows of 2022 has convinced some that the phase of ‘easy money’ is over. Investors who did not capitalize on the early stages of the rally might think they have missed out, causing hesitation to engage fully. That’s where I am right now – but waiting for a ‘pullback’.

Navigating the dilemma

For individuals caught between caution and the fear of missing out (FOMO), the following strategies could be considered.

Diversification

Distribute your investments among various asset classes. Diversification serves to reduce risk and acts as a safeguard against the unpredictability of the market.

Long-term perspective

Keep in mind that investing is akin to a marathon, not a sprint. It’s important to concentrate on long-term objectives instead of short-term market movements.

Education

Inform yourself about market cycles, historical patterns, and the effects of monetary policy. This should empower more informed decision-making.

Professional advice

Consult a financial advisor who can guide you based on your individual circumstances and risk tolerance.

Conclusion

The current stock market rally, though not widely embraced, offers both opportunities and challenges. Investors are tasked with finding the right balance between exercising caution and capitalizing on potential growth. As the market climbs, it’s essential to be aware of our biases and emotions. Only then can we approach the rally with a more informed viewpoint.

Disclaimer: This article provides general insights and should not be considered personalised financial advice. Always consult a professional before making investment decisions.

Remember: Always do your own diligent and careful research.

RESEARCH! RESEARCH! RESEARCH!

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UK hits 2% Bank of England’s inflation target for the first time since 2021

THERE ARE TWO I'S IN INFLATION!

Inflation has reached the Bank of England’s target for the first time in nearly three years, having soared to 11.1% in October 2022, the highest in over four decades – driven by a spike in energy and food prices following the pandemic and Russia’s invasion of Ukraine.

In the year leading up to May 2024, prices increased by 2%, a decrease from the 2.3% rise in the previous month, according to official statistics.

The economy remains a central issue in the lead-up to the general election on July 4th, with all major parties discussing strategies to manage the cost of living.

This discussion precedes the Bank of England’s upcoming decision on UK interest rates this due on 20th June 2024.

The bank is anticipated to maintain the rate at 5.25% – a peak not seen in 16 years – for the seventh consecutive meeting, with the market not expecting a reduction until August 2024.

The decline in May’s inflation rate was attributed to slower price increases for food and soft drinks, recreation and culture, and furniture and household items.

Fuel pump prices remain high.

The inflation target has been achieved – it must be time for a reduction in interest rates.

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Nvidia passes Microsoft in market cap – should investors be concerned about the meteoric rise?

GPU power for AI

Nvidia, traditionally recognised within the gaming community for its graphics chips, has become the world’s most valuable publicly traded company.

On Tuesday 18th June 2024, Nvidia’s shares rose by 3.6%, increasing its market cap to $3.34 trillion and overtaking Microsoft, now valued at $3.32 trillion. Earlier in the month, Nvidia’s valuation reached $3 trillion for the first time, surpassing Apple.

Nvidia $3.34 trillion market cap

Nvidia $3.34 trillion market cap

So far this year, Nvidia’s shares have surged over 170% and saw further gains after announcing first-quarter earnings in May 2024. Since the close of 2022, the stock has increased more than ninefold, paralleling the rise of generative artificial intelligence.

Apple’s shares dropped by 1.1% on Tuesday, resulting in a market value of $3.29 trillion for the tech giant.

Nvidia commands roughly 80% of the market share for AI chips in data centres, a sector that has expanded rapidly as companies like OpenAI, Microsoft, Alphabet, Amazon, and Meta have competed to acquire the necessary processors for constructing AI models and managing growing workloads.

In the latest quarter, Nvidia’s data centre business saw a 427% increase in revenue from the previous year, reaching $22.6 billion and comprising approximately 86% of the company’s total sales.

Established in 1991, Nvidia initially focused on hardware, selling gaming chips for running 3D games. The company has also ventured into cryptocurrency mining chips and cloud gaming services.

However, in the last two years, Nvidia’s stock has soared as investors recognised its pivotal role in the AI boom, a trend that continues to accelerate. This surge has increased the net worth of co-founder and CEO Jensen Huang to an estimated $117 billion, ranking him as the 11th richest individual globally, according to Forbes.

But is the rise too fast and is it time for a share price valuation adjustment in its meteoric rise, to bring it back down to Earth?

Nvidia share price one year chart 18th June 2024

Nvidia share price one year chart 18th June 2024
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Financial advisors are reportedly cautious about Bitcoin ETFs and are adopting them slowly, according to BlackRock

Bitcoin ETF

Bitcoin exchange-traded funds (ETFs) debuted in January 2024, yet their adoption by financial advisors has reportedly been sluggish.

Advisors’ hesitations stem from Bitcoin’s price volatility and its relatively brief history. Bitcoin ETFs serve as a conduit between cryptocurrency and conventional finance. According to a BlackRock spokesperson – financial advisors are cautiously, but progressively, embracing the long-anticipated Bitcoin ETFs since their launch.

Currently, it is estimated that approximately 80% of Bitcoin ETF purchases are being made by self-directed investors who decide their own allocation, frequently via an online brokerage account.

Bitcoin one year chart snapshot 18th June 2024 (am)

Bitcoin one year chart snapshot 18th June 2024 (am)