Tag: U.S.

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What evidence is there that the U.S. stock market is overvalued right now?

U.S. overvalued stocks

High Price-to-Earnings (P/E) ratio

The P/E ratio of the market is a common measure of valuation. Currently, the P/E ratio is significantly higher than historical averages, indicating that stocks are priced much higher relative to their earnings.

Rapid price increases without corresponding earnings growth

When stock prices rise rapidly without a corresponding increase in earnings, it often signals overvaluation. This has been observed recently, especially with some of the major tech stocks.

Comparison to historical market tops

The current market valuations are almost as high as they were at the peak in January 2022, which was followed by a significant correction.

Buffet valuation metric

Metrics like the Buffett Indicator (market capitalisation to GDP ratio) and Tobin’s Q (market value of assets divided by replacement cost) also suggest that the market is overvalued.

While these indicators point towards overvaluation, it’s important to note that markets can remain overvalued for extended periods, and other factors like strong earnings growth can sustain high valuations for some time

U.S. stock market could be overvalued by as much as 68%

The U.S. stock market, according to some analysts suggests that the current market appears to be overvalued by around 68%.

By comparison, at the peak of the Dot-com bubble, on 24th March 2000, the market was 89.5% overvalued. When the market bottomed out 2.5 years later, it had dropped around 50% from its previous all-time high and was undervalued by nearly 21%.

The fact that the market currently appears overvalued does not necessarily mean it will correct any time soon. The forces pulling the market toward the long-run equilibrium are relatively weak and allow the market to stay over or undervalued for extended periods of time.

From 1954 to 1970, the market stayed continuously overvalued for over some 15 years, and from 1973 until 1987, it stayed undervalued for about 14 years.

The analysis clearly suggests that U.S. stocks are overvalued – but that doesn’t necessarily mean a downturn any time soon – but it will, in time, adjust.

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Dow Jones hits new record high

The Dow Jones Industrial Average (DJIA) reached a new record high on Monday 26th August 2024, closing at 41240. 

Investors have responded positively to the Federal Reserve’s recent indications that interest rate cuts are highly probable to commence in September 2024.

Market dynamics and sentiment

The rise of the DJIA was propelled by advances in sectors like materials, utilities, and energy. Conversely, the broader market exhibited mixed outcomes. The S&P 500 declined by 0.3%, and the Nasdaq Composite dropped by 0.8%, contrasting with the Dow’s notable performance. This disparity is largely due to the lagging of technology stocks, especially with significant drops in firms such as Nvidia and Tesla.

Federal Reserve

Federal Reserve Chair Jerome Powell’s recent address at the Jackson Hole Economic Symposium was pivotal in bolstering investor confidence. Powell’s remarks indicated that the Fed is ready to cut interest rates, which many investors believe will foster economic growth and stabilise the markets. The expectation of rate cuts has played a significant role in the recent market rally, with predictions of potential reductions up to 1% by the end of 2024.

Dow Jones one day chart at record high

Dow Jones 1 day chart

Despite varied performances across sectors, the Dow reaching a new high signals a wider optimism in the market. As the year unfolds, the dynamics among Federal Reserve policies, corporate earnings, and economic indicators will continue to influence market directions.

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U.S. jobs data revision creates economic concern and political argument

U.S> jobs data revision

Job growth in the US last year was weaker than previously believed, according to a statement from the Labor Department on Wednesday 21st August 2024.

This revelation has intensified the ongoing debate regarding the health of the U.S. economy. The department’s updated figures indicate that there were approximately 818,000 fewer jobs added over the 12 months leading up to March than initially estimated.

This preliminary revision suggests a 30% decrease in the total number of jobs created during that period, marking the most significant adjustment since 2009.

The revised data points to an average monthly job increase of about 174,000, a reduction from the previously estimated 240,000.

Downward revisions affected most sectors, including information, media, technology, retail, manufacturing, and the broad category of professional and business services.

Analysis by Oxford Economics noted that this indicates the job growth for the period relied more heavily on government and education/healthcare sectors than previously understood.

Despite the revisions, hiring remained robust, albeit not at levels sufficient to match the growth of the working-age population.

The U.S. Labor Department issues monthly job creation estimates based on employer surveys and regularly updates these figures as more data becomes available, with an annual reset at the beginning of each year.

The report from Wednesday offered a glimpse into this process, incorporating data from county-level unemployment insurance tax records. This year’s revision is notably larger than those of previous years.

The Biden administration has highlighted strong job growth as evidence that its policies have positioned the U.S. as the world’s leading economy post-pandemic.

However, Republicans have used the latest figures to contend that the Democrats have misled the public about the economic situation. The Republican Party took to social media to announce: “BREAKING: 818,000 jobs that the Biden-Harris administration claimed to have ‘created’ do not actually exist.”

Over the past year, the U.S. has consistently reported robust job growth, defying both economists’ expectations and public sentiment. These gains have been particularly surprising given the highest borrowing costs in a generation, which typically hinder economic growth.

The recent revisions have lent weight to the argument that the labour market is less stable than previously thought, as highlighted by the Republican response.

Analysts believe these new figures will reinforce the case for the U.S. Federal Reserve to lower interest rates at its upcoming September 2024 meeting, a move that is widely anticipated to prevent further weakening of the job market.

These revisions have not caused widespread concern

Despite earlier economic anxieties this month, financial markets have largely absorbed the latest data without significant turmoil.

But that doesn’t mean there will be zero fallout – turmoil may follow. The data believed to be correct is incorrect – so, can we believe the data? Are there cracks appearing in the U.S labour market?

This data helped the U.S. economy – but it wasn’t right?

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All roads lead to Fed rate cut as minutes point to ‘likely’ September 2024 reduction

Fed prediction

No surprise here then as the Fed have been signalling a cut for some time now

The Fed summary stated: “The vast majority” of participants at the July 30-31 meeting “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.”

Markets have fully factored in a rate cut for September, marking the first such move since the initial emergency reductions during the early stages of the Covid crisis.

See more about Fed rate cut signals here

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U.S. stocks extend gains as S&P 500 and Nasdaq post eighth positive day

U.S. stocks

Highs and lows of one volatile week in the U.S. stock market

U.S. stocks climbed on Monday 19th August 2024, continuing the market’s rebound as investors prepared for the highly anticipated Federal Reserve symposium at Jackson Hole later in the week.

The S&P 500 ended the day at 5608

The S&P 500 ended the day at 5608

The Nasdaq Composite surged to finish at 17876

Both the S&P 500 and Nasdaq achieved their eighth consecutive day of gains, a record for 2024

The Dow Jones Industrial Average gained 236 points closing at 40896.

The day’s activity extended the recent rally, signalling another twist in what has been a volatile period for stocks. Last week saw the largest gains of the year for the three major indexes.

August began shakily with disappointing data igniting recession fears and intensifying concerns that the Federal Reserve was lagging in interest rate reductions. This led to a worldwide sell-off, culminating in the S&P 500’s worst day since 2022 on 5th August.

However, encouraging data last week appeared to calm the markets and raised hopes for a ‘soft landing’ of the economy. Positive figures in retail sales and initial jobless claims, along with robust earnings from Walmart, contributed to this optimism. Additionally, the annual inflation rate for July’s consumer price index reached its lowest point in over three years.

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U.S. and China reportedly reach agreement to cooperate on financial stability

U.S. & China flags

The U.S. and China recently signed an agreement to cooperate on financial stability. This agreement was part of a meeting of the U.S. – China Financial Working Group held in Shanghai. 

The discussions were reportedly described as professional, pragmatic, candid, and constructive.

The agreement includes measures for both countries to collaborate on capital markets, cross-border payments, and monetary policy. Representatives from various financial institutions and regulatory bodies from both nations participated in the meeting.

This cooperation aims to enhance financial stability and address potential financial risks more effectively. It’s a significant step towards fostering economic collaboration between the two largest economies in the world.

See full report here

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Comeback rally gains steam – Nasdaq, S&P 500 and Dow up

U.S. stocks rally

U.S. stocks surged on Thursday, buoyed by investor confidence bolstered by positive consumer and labour data, which alleviated fears of a recession.

The Dow Jones Industrial Average soared 554 points to close at 40563 – one year chart

The S&P 500 ended up 1.61% at 5,543.22, marking its sixth consecutive gain. The S&P 500 index has risen approximately 8% from its intraday low on 5th August 2024 – one year chart

The Nasdaq Composite escalated 2.34% to 17594 – one year chart

Positive U.S. economic data

Retail sales saw a 1% increase in July 2024, significantly exceeding the prediction of a 0.3% rise. Additionally, the number of weekly jobless claims dropped. This data provided a boost to investors and the broader market, which is recovering from an August downturn linked to worries over a slowing economy, sparked by a disappointing U.S. jobs report on 2nd August 2024.

With over a 3% increase this week, the S&P 500 is now just about 2% shy of its record high. All three major U.S. indexes are trading above their 2nd August closing levels, which preceded the global stock market plunge on 5th August.

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U.S. consumer spending improved in July 2024 as retail sales increased by 1% – better than forecast

U.S. retail

In July 2024, U.S. consumer spending exceeded expectations, and inflation pressures continued to ease, as reported by the U.S. Department of Commerce on Thursday 15th August 2024.

Retail sales in the U.S. rose by 1% for the month, with advanced figures adjusted for seasonality but not for inflation. This surpassed the 0.3% increase anticipated. The initially flat reported sales for June 2024 were revised to a 0.2% decrease.

Removing auto-related items, sales saw a 0.4% rise, which was substantially more favourable than the predicted 0.1%.

The number of weekly jobless claims fell to 227,000, a drop of 7,000 from the preceding week, and was below the forecasted 235,000.

Markets have responded positively to all this good news, and together with other favourable developments, it appears increasingly likely that the Federal Reserve will have no reason other than to cut rates in September 2024.

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U.S. inflation slows in July 2024

U.S. inflation

U.S. consumer prices (CPI) increased at the slowest rate in over three years last month, further supporting the argument for the Fed to begin reducing interest rates.

According to the U.S. Labor Department, prices climbed 2.9% in the 12 months leading up to July 2024, marking the smallest yearly rise since March 2021 and a decrease from 3% in June 2024.

The monthly inflation report was under intense scrutiny following indications of weaker-than-anticipated job growth in July, which earlier this month led to upheaval in the stock market and concerns about a recession.

Analysts have suggested that these figures should persuade the Federal Reserve that the elevated borrowing costs are effectively bringing inflation back to its target levels, despite the recent increases in housing and food prices.

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Do falling commodity prices indicate there is trouble brewing with the U.S. economy?

Commodities

Falling commodity prices can be a signal of economic trouble ahead

When commodity prices drop, it often reflects a decrease in demand for raw materials, which can be a sign of slowing economic activity. For instance, the recent decline in copper prices is seen as a potential indicator of economic slowdown.

Sugar, cotton, soybean, oil and iron ore are some examples where demand has fallen during this year.

However, it’s important to consider other factors as well. The global economic slowdown has reduced demand for energy, minerals, and agricultural products. While this trend is evident in many countries, the U.S. economy has shown some resilience.

So, while falling commodity prices can be a warning sign, they are just one piece of the puzzle. It’s essential to look at a broader range of economic indicators to get a complete picture.

Commodity price charts as of: 13th August 2024

Copper one year chart

Iron ore one year chart

Cotton price one year chart

Sugar one year price chart

Soybeans one year price chart

U.S. oil one year price chart

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U.S. wholesale inflation rose 0.1% in July 2024 by less than expected

U.S. economic inflation PPI data

In July 2024, a principal indicator of U.S. wholesale inflation climbed less than anticipated, potentially paving the way for the Federal Reserve to begin reducing interest rates.

The Producer Price Index (PPI), which is a gauge of wholesale inflation, saw a modest increase of 0.1% for the month of July, falling short of the 0.2% prediction. Excluding food and energy, the PPI remained unchanged.

Year-on-year, the headline U.S. PPI ascended by 2.2%, marking a significant decline from June’s 2.7% figure.

Should the Federal Reserve not proceed now with a rate cut VERY soon, it is probable that a ‘frenzy’ of ‘catch-up’ rate cuts will ensue to counteract a struggling economy.

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Slower and smaller-than-expected rate cuts. A slowing U.S. economy and a potential AI bubble – does this all add up to a coming bear market?

Witches' stocks cauldron

The stock markets mix of toil and trouble is in the cauldron ready for a bear market in 2025, if not before.

Why?

  • Fed to resist reducing rates to the market’s desired 3.50%.
  • Profits unlikely from now on to fulfill expectations, because the U.S. economy is slowing.
  • AI sector is in or close to ‘bubble territory’.
  • Debt.
  • Geopolitical concerns.

These concerns are now all combining, and it will likely add-up to a bear market of around 25% in 2025 (this is my best guess).

Remember – make your own decisions and always, always do your own careful research. Seek professional financial advice if in doubt.

RESEARCH! RESEARCH! RESEARCH!

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S&P 500 enjoys its best day since 2022 after market rout just 4 days before

Stock chart S&P 500

Stocks rose on Thursday 8th August 2024 as the latest U.S. employment data bolstered investor confidence in the economy, following a significant market downturn earlier in the week.

The S&P 500 increased by 2.3%, closing at 5319.31, marking its best day since November 2022. The Dow Jones Industrial Average jumped by 683.04 points to 39446.49.

S&P 500 5-day chart as of 8th August 2024

S&P 500 5-day chart as of 8th August 2024

The Nasdaq Composite climbed to 16660.02. And all these gains just 4 days after the market rout on Monday 5th August 2024.

The most recent weekly unemployment claims were lower than expected, easing some of the recent worries about the U.S. labour market.

The initial claims for unemployment benefits last week were 233,000, a decrease of 17,000 from the previous week.

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Is the Fed fighting its own shadow?

Shadow boxing

Has the Fed over-cooked it this time by waiting too long to reduce interest rates?

U.S. stock markets threw a wobbly after the latest employment data and after the Fed delayed its first rate cut… again. September 2024 now looks likely for that first cut – but by how much: 0.25% or as high as 0.50%?

The latest batch of bad news for the U.S. economy has actually became bad news for stocks this time. For too long the ‘bad news’ has been taken as ‘good news’, especially regarding the likelihood of a Fed interest rate cut – and for the markets in general.

The Federal Reserve (Fed) is grappling with several challenges, including inflation, interest rates, and the broader U.S. and global economies.

Inflation

The Fed has been trying to control high inflation rates, which have been a significant concern. To combat inflation, the Fed has raised interest rates multiple times. Higher interest rates can help reduce inflation by slowing down borrowing and spending, but they can also slow economic growth.

Interest rates

By increasing interest rates, the Fed aims to make borrowing more expensive, which can help cool down an overheated economy. However, this can also lead to higher costs for consumers and businesses, potentially leading to reduced investment and spending.

Economic growth

The Fed’s policies are a balancing act. While they aim to control inflation, they also need to ensure that the economy doesn’t slow down too much. This balancing act can be challenging, especially when external factors like global economic conditions and geopolitical events come into play.

In essence, the Fed’s efforts to manage these issues can sometimes feel like ‘fighting its own shadow,’ as the consequences of their actions can create new challenges.

The timing of interest rate adjustments by the Federal Reserve is a topic of much debate among economists and policymakers.

Inflation control

The Fed’s primary goal in raising interest rates has been to control inflation. If inflation remains high, the Fed might be cautious about reducing rates too quickly to avoid a resurgence of inflation.

Economic indicators

The Fed closely monitors various economic indicators, such as employment rates, consumer spending, and GDP growth. If these indicators suggest that the economy is still strong, the Fed might delay reducing rates to ensure that inflation is fully under control.

Market reactions

Rapid changes in interest rates can cause volatility in financial markets. The Fed often aims for a gradual approach to avoid sudden shocks to the economy.

Global factors

The Fed also considers global economic conditions. For example, if other major economies are experiencing slow growth or financial instability, the Fed might be more cautious in adjusting rates.

Ultimately, the decision to reduce interest rates involves balancing the need to support economic growth with the risk of reigniting inflation. It’s a complex decision with significant implications for the U.S. and global economies.

Looks like the Fed overcooked it this time – but by how much?

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U.S. stocks recovery attempt fizzles out

Fizzle

Stocks closed lower on Wednesday 7th August 2024, failing to fully recover from Monday’s sell-off.

The Dow Jones Industrial Average dropped 234 points to 38763.45. The S&P 500 fell to 5199.50, while the Nasdaq Composite closed at 16195.81.

During the day, the Dow had surged around 480 points, the S&P 500 had climbed 1.73%, and the Nasdaq had risen over 2%.

Dow Jones one day chart 7th August 2024

Dow Jones one day chart 7th August 2024

S&P 500 one day chart 7th August 2024

S&P 500 one day chart 7th August 2024

Nasdaq Composite one day chart 7th August 2024

Nasdaq Composite one day chart 7th August 2024

However, a downturn in Nvidia and other major tech stocks, after an initial rise, led to a significant drop in the afternoon. Nvidia retracted by 5.1%, Super Micro Computer plummeted 20.1% following its fiscal Q4 earnings missing analyst predictions, Tesla fell 4.4%, and Meta Platforms decreased by 1%.

Nvidia one day chart 7th August 2024

Nvidia one day chart 7th August 2024

One month chart Super Micro Computer 7th August 2024

One month chart Super Micro Computer 7th August 2024

Nvidia one day chart 7th August 2024

Nvidia one day chart 7th August 2024

The U.S.10-year Treasury yield continued to rise, increasing by about six basis points to 3.95%, returning to its level before the disappointing job figures last Friday, which had sparked concerns of an economic slowdown.

The Volatility Index (CBOE), the so called ‘fear gauge‘ was trading at around 29, having dropped to as low as 22 earlier in the day. This sharp decrease from Monday 5th August 2024 suggests that investor fears are subsiding, however, they remain higher than at the beginning of the month.

The Volatility Index (CBOE) on 7th August 2024

The Volatility Index (CBOE) on 7th August 2024
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U.S. stock markets rise after days of turmoil

Stocks up

U.S. shares gained on Tuesday 6th August 2024, signalling a tentative stabilisation in global markets after a period of significant declines.

The Nasdaq, known for its tech-centric portfolio, along with the Dow Jones Industrial Average and the S&P 500, all ended the day in more positive territory.

This ‘lift’ came after a period of muted activity in UK and European markets, with London’s FTSE 100 experiencing an initial surge before retreating.

In Japan, the Nikkei 225 stock index recorded a substantial rise of 10.2%, or 3217 points, marking its largest single-day point increase following a steep drop the day before.

The recent turmoil in the stock market was triggered on Friday 2nd August 2024 by unsatisfactory U.S. job data for July 2024, which indicated an increase in unemployment, raising alarms over a potential recession.

Additionally, there has been growing apprehension that stocks of major technology firms, especially those with significant investments in artificial intelligence (AI), may have been excessively valued, leading to challenges for some of these companies.

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Global stock market rout intensifies as Dow futures dip over 1200 points

Stock rout

U.S. stock futures slumped Monday 5th August 2024 as global markets sell-off centered around potential U.S. recession fears.

About one hour before U.S. stocks open – here’s the situation

Dow Jones Industrial Average futures dropped 1250 points following a 611point loss on Friday 2nd August 2024.

S&P 500 futures are down 4.6% after the benchmark lost 1.8% on Friday 2nd August 2024.

Nasdaq-100 futures lost 6% as big tech stocks take a hit in early trading.

Japan’s Nikkei 225 plunged 12% in its worst day since the 1987 Black Monday crash.

If the Dow Jones decline continues it would be the first 1000 point decline since September 2022.

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U.S. non-farm payroll job growth comes in at 114,000 in July 2024, much less than expected, as unemployment rate rises to 4.3%

Workers

In July 2024, U.S. job growth decelerated more than anticipated, and the unemployment rate increased slightly, according to a report from the Labor Department on Friday.

Non-farm payrolls expanded by only 114,000 for the month, a decrease from June’s downwardly revised figure of 179,000 and falling short of the Dow Jones prediction of 185,000. The unemployment rate rose to 4.3%, marking the highest level since October 2021.

Average hourly earnings, an indicator of inflation, rose by 0.2% for the month and were up 3.6% from 2023, both measures not meeting the increases of 0.3% and 3.7% expected.

Following the release of the report, stock market futures extended their losses, and Treasury yields saw a significant drop.

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ASML and AMD shares climb on positive U.S. geopolitical news

U.S. and China microchips

ASML

Shares in the Dutch company ASML soared by around 10% on Wednesday 31st July 2024 following a Reuters report indicating that the firm might be exempt from the broadened export restrictions on chipmaking equipment to China.

Additionally, it was also reported that the U.S. is contemplating an expansion of the foreign direct product rule.

U.S. chip export restrictions to China could exclude allies such as the Netherlands, Japan, South Korea, Israel, Taiwan, Singapore and Malaysia. Taiwan is the home of TSMC, the world’s biggest chip manufacturing plant.

AMD

Shares of global semiconductor companies surged on Wednesday 31st July 2024, lifted by positive earnings within the sector and reports suggesting potential easing of U.S. export restrictions to China.

AMD emerged as one of the standout performers, with its shares climbing over 9% in U.S. premarket trading following a robust second-quarter earnings report.

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The Dow closed 650 points higher Friday 26th July 2024 – lifted by a positive inflation data

U.S. stock charts and flag

On Friday 26th July 2024, U.S. stocks surged, and Wall Street concluded a volatile week on an upbeat note as investors considered the latest U.S. inflation data.

The Dow Jones Industrial Average soared 654 points to settle at 40589. The S&P 500 climbed to 5459 while the Nasdaq Composite advanced around 1% to close at 17357.

Dow Jones as at: 26th July 2024 – one day chart

Dow Jones as at: 26th July 2024 – one day chart

The upward movement was attributed to a mix of oversold conditions, a U.S. GDP report on Thursday 25th July 2024 that exceeded expectations, and the anticipation that the Federal Reserve will start reducing rates in response to the economy’s demonstrated resilience.

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U.S. rate cut looking more likely as Fed key inflation measure rose 2.5% in June 2024 over the year

U.S. Inflation

The personal consumption expenditures price index (PCE) increased 0.1% in June 2024 and was up 2.5% from a year ago, with the annual rate showing a slight decline from the prior month

Core inflation, which excludes food and energy, showed a monthly increase of 0.2% and 2.6% on the year, both also in line with expectations.

Personal income rose just 0.2%, below the 0.4% estimate. Spending increased 0.3%, meeting the forecast, while the personal savings rate decreased to 3.4%.

This PCE reading may encourage the Fed to cut rates now.

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U.S. economy grew by 2.8% in Q2 – better than expected

U.S. economy

In the second quarter of 2024, the U.S. economy expanded at a strong annual rate of 2.8%, exceeding economists’ forecasts.

This surge was fueled by positive consumer spending, substantial government expenditures, and increased inventories.

The personal consumption expenditures price index saw a 2.6% rise in the same timeframe, a decrease from the prior quarter’s 3.4% climb as core prices, which exclude food and energy, increased by 2.9%.

The data suggests a continued deceleration in the personal savings rate, standing at 3.5% for the quarter, down from 3.8% in the first quarter.

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U.S. stocks slip as Nasdaq tumbles for worst day since 2022 – Tesla and Alphabet fall

Stocks in the red

Stocks sold off Wednesday 24th July 2024, blighted by underwhelming reports from Tesla and Alphabet – leading the Nasdaq Composite and the S&P 500 to post their worst sessions since 2022.

The S&P 500 index dropped to closing at 5427, while the tech-heavy Nasdaq slid around 3.65% to end at 17342. The Dow Jones Industrial Average shed 504 points closing at 39853.

Nasdaq Comp one day chart 24th July 2024

Nasdaq Comp one day chart 24th July 2024

Shares of Google parent company Alphabet fell 5% for their biggest one-day drop since 31st January, when they dropped 7.5%. Although Alphabet reported good numbers, YouTube advertising revenue came in below the consensus estimate causing share to dip.

Alphabet one day chart 24th July 2024

Tesla shares declined around 12% – their worst day since 2020 – on weaker-than-expected results and a 7% year-on-year drop in auto revenue.

Tesla one day chart 24th July 2024

Nasdaq Comp one day chart 24th July 2024
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Ether ETFs launched in the U.S. on 23rd July 2024 with BlackRock, Grayscale and others

Ethereum ETF in U.S.

Bitcoin is often likened to a type of digital gold, but Ether is seen more as a native cryptocurrency on the Ethereum blockchain.

It is generally seen as a trade or bet on the growth and of the development of the blockchain and of crypto more widely.

Many of the funds set to launch this week have temporarily waived fees in an attempt to attract buyers.

The Securities and Exchange Commission (SEC) has historically been wary of cryptocurrencies. However, the regulator was defeated in a legal battle last year concerning Bitcoin ETFs, which aided their launch in January 2024.

Given that both Bitcoin and Ether have regulated futures markets, the introduction of ether ETFs was viewed as the industry’s subsequent rational progression.

Bitcoin ETFs have attracted about $17 billion in net inflows since their launch in January 2024.

What is An Ethereum ETF?

An Ethereum ETF, or Ether ETF, is an exchange-traded fund that tracks the price of ether (ETH), the cryptocurrency with the second-highest market capitalization following Bitcoin. Unlike purchasing Ethereum on a cryptocurrency exchange, an Ethereum ETF is bought and sold on traditional stock exchanges.

How an Ethereum ETF works

An Ethereum ETF contains futures contracts linked to Ethereum’s price movements. These contracts enable investors to speculate on Ethereum’s future price without the need to own the cryptocurrency directly.

Investing in an Ethereum ETF offers exposure to Ethereum’s price volatility while eliminating the need to handle wallets or navigate the intricacies of cryptocurrency exchanges. Such ETFs offer traditional investors a practical avenue to engage with the cryptocurrency market, leveraging the conventional environment of stock exchanges.

Ethereum one year price chart as at: 16:10 BST 23rd July 2024 from CoinMarketCAP

Ethereum one year price chart as at: 16:10 BST 23rd July 2024 from CoinMarketCAP
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Which governments hold the most Bitcoin?

Bitcoin cartoon

U.S., UK and Germany hold more Bitcoin than you may think.

According to the Arkham website, the United States’ government holds some 212,847 BTC making it one of the biggest holders of Bitcoin, while the treasuries of the U.K. and Germany reportedly hold around 61,245 BTC and 49,858 BTC each. (These values alter daily).

In addition to Bitcoin, the U.S. government also holds around $200 million in other cryptocurrencies like Ether (ETH), as well as major stablecoins like USDC.

U.S. Bitcoin holding by current value according to Arkham

Data from Arkham (as of 12th July 2024)

Arkham, a crypto intelligence platform focused on deanonymizing entities on the blockchain network, has introduced a dashboard featuring the governments with the largest crypto holdings.

The U.K. government, reportedly ranked second, holds around $3.5 billion worth of Bitcoin at current valuations, according to Arkham’s data. The German government owns roughly $2.5 billion.

UK Bitcoin holding by current value according to Arkham

Data from Arkham (as of 12th July 2024)

Other world governments holding Bitcoin

China, Russia, Ukraine, El Salvador, Finland, Bhutan and many others.

In 2021, El Salvador became the first country to make Bitcoin legal tender and mandated all local businesses to accept payments in BTC. 

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U.S. inflation falls 0.1% from May to June 2024 further adding to speculation of an imminent Fed rate cut

Sale

The Consumer Price Index (CPI), a comprehensive gauge for goods and services costs, saw a 0.1% decrease from May 2024, bringing the annual rate to 3%, which is near its lowest point in over three years.

When removing the unstable food and energy prices, the core CPI rose by 0.1% monthly and 3.3% annually. This year-over-year core rate increment is the least since April 2021.

Inflation for the month was tempered by a 3.8% drop in gasoline (petrol) prices, which balanced out the 0.2% rises in both food prices and housing costs.

Date: U.S. Bureau of Labor Statistics