Day: February 13, 2024

The iShares MSCI Mexico is seeking support at its 30-day moving average.

Posted on by Ignacio Teson

The iShares MSCI Mexico is seeking support at its one-month moving average

After several days of decline, the most representative ETF of the Mexican market is looking for a support level.

After a couple of days of steady decline, EWW looks for a support level.

A tough day for global markets highlighted by US inflation; emerging markets also felt the impact. EWW, Mexico’s most representative ETF, is seeking support.

The one-month trading moving average (22 days) aligns with the current price. Given the bullish trend that led to a rise of over 174% in recent years, this signal has served as a buying indicator. Could this be a new opportunity?

The price of $66 seems like an acceptable level to enter what has been called “the LATAM star” due to the significant increase in growth, investment, and the price of Mexican assets derived from nearshoring.

The so-called “nearshoring” of a significant portion of the American and Canadian industries explains this phenomenon of high demand for Mexican industry, employment, and services.

Nearshoring refers to the practice of transferring business operations, such as manufacturing or service centers, to a nearby country rather than a distant one.

It is often done to take advantage of lower costs, reduce logistical dependence, and avoid the dependency of countries with different values.

The United States’ objective is to reduce dependence on China, in what is called the “decoupling” of its economy. The increasing tensions surrounding Taiwan, trade barriers, and China’s growing influence in the world have given the United States enough reasons to rethink how its economy distributes its supply chains.

Nearshoring for the USA involves the relocation operations to Mexico or other countries in Central or South America. This trend is also expected to reach countries like Argentina, Brazil, and Colombia.

Mexico is undoubtedly the most benefited country. The demand for its industry in health, auto parts, and other critical supplies is leading to significant economic growth. Mexico has experienced a growth of 3.2% during 2023, and a similar figure is expected in 2024.

The second-largest Brazilian bank has lost 20% of its value in one week

Posted on by Ignacio Teson

The second-largest Brazilian bank has lost 20% of its value in one week

Bradesco Bank has fallen 20% in the last week due to its poor results and an unhelpful context.

Bradesco is the second-largest Brazilian Bank.

The bad news for Banco Bradesco continues. After falling 16% due to poor results and proposing a business restructuring, Brazil’s second-largest bank dropped 2.5% today, reaching its lowest values since April 2023.

The bank reached $2.67 per share on Wall Street, down from around $3.40 just a week ago. Bradesco’s shares are approximately 50% below pre-COVID values.

Brazilian bank Bradesco has reduced its net profit by 21.2% in 2023 compared to the previous year. According to the institution, this decline in profit is attributed to the provisions set aside for potential losses and the contraction of interest income per client. Additionally, the operating result has decreased by 36.4% compared to the previous year.

Despite the bank’s expectation of a year-on-year increase in interest income between 3% and 7% and between 4% and 8% for the insurance, pension plans, and capitalization bonds segment, investors perceived the news as a turning point. They punished the bank’s stocks by 16% on Wednesday.

Bradesco, with ticker BBD, prepares for a year of transformation, focusing on strategic initiatives to regain market share and improve profitability.

Banco Bradesco is Brazil’s second-largest private bank, holding approximately 15% of deposits, and the largest insurance provider in Brazil, commanding roughly 20% to 25% of the market share.

Bradesco’s stocks are currently in a “buying opportunity” zone if we consider their historical performance and price-action. Bradesco is a consistent dividend payer and might be suitable for investors seeking exposure to LATAM equities.

Its stock performance is closely tied to the economic trajectory of Brazil, which has faced challenges in sustaining consistent growth in recent years.

The Brazilian economy has faced challenges in terms of fiscal deficit and public debt. Lack of fiscal discipline and the need for structural reforms have been recurring themes in the country’s economic discourse.

Investors and market observers will be attentive to how Banco Bradesco navigates the challenges and opportunities in the fintech-dominated landscape, as well as the bank’s efforts to enhance its competitiveness and market position.

Holidays in Brazil and Argentina: Reduced activity despite declines

Posted on by Ignacio Teson

Holidays in Brazil and Argentina: Reduced activity despite declines

Carnival holidays keep markets closed in Brazil, Argentina, and even China.

It’s the last day of Carnival in Brazil and Argentina.

Brazil and Argentina continue their Carnival holidays, so their markets are closed. However, we can observe declines in their ADRs on a negative day for global markets.

The celebrations in Brazil and Argentina also coincide with the Chinese New Year. Chinese markets have been closed since Friday and will resume activity tomorrow.

The same will happen with the Latin American markets.

As of today, the observed volume is much lower than usual, with declines of around 30% in the daily volume of ETFs and ADRs related to Latin American countries.

Carnival holidays in Argentina and Brazil are popular festivities celebrated in both countries, often with a significant impact on economic and social activity. It generally is a public holiday that includes two days of the week and the weekend.

In Argentina and Brazil, the days when Carnival is celebrated may vary slightly from year to year. Still, they generally occur around the beginning of the year and can last for several days.

In both countries, the holidays typically include Carnival Monday and Tuesday.

The most representative ETF of emerging markets, the iShares MSCI Emerging Index fund (EEM), maintains a 2% decrease, indicating the general momentum of the day.

Regarding Latin American markets specifically, EWZ, the most representative ETF of the Brazilian market, falls by 3%, while EWW (Mexico) and GXG (Colombia) decline by 0.8% and 1.1% respectively.

The overall context doesn’t help today, as inflation in the United States saw a higher number than expected, especially concerning core inflation, which rose by 0.4% month-on-month.

Is It Time to Buy S&P 500 After the Inflation Retreat?

Posted on by Skerdian Meta
Will we see another bounce off the 50 SMA in S&P 500?
Will we see another bounce off the 50 SMA in S&P 500?

Stock markets have had an incredible rally since late 2022, with US equities leading the Way. S&P 500 moved above 5,000 points last week but fell back below today as investors absorbed a hotter-than-expected January inflation report that showed prices decreasing less than predicted.

US Inflation Rate Remained Elevated in January

The Consumer Price Index (CPI) data for Tuesday came above expectations, with core CPI which exclude the volatile food and energy categories, revealing a 0.4% increase last month, marking the highest monthly advance since April 2023. The headline CPI figure showed that prices rose by 3.1% on an annualized basis, surpassing analyst expectations of 2.9% but showing a slowdown from the 3.4% annual increase seen in December. Core CPI on the other hand remained at 3.9%, above the projected 3.7% and as as the previous month’s 3.9%. Core CPI MoM increased by 0.4% (unrounded 0.39%), exceeding estimates of 0.3% and matching the previous month’s rate of 0.3%.

Today’s Stock Market Crash Has Stopped

The tightening monetary policy by central banks haven’t deterred the bullish momentum in stock markets durong these two years, and the prospect of a soft landing for the global economy have been fuelling the uptrend in stocks recently. S&P 500 made the big leap last week, peaking above 5,000, although all other major indices have made considerable gains.

Dow Jones (DJI) was approacbhing 40,000 points, although it opened with a big bearish gap today after the US CPI numbers. NASDAQ moved above 18,000 points but retreated 500 pips lower today. Although, despite the inflation retreat, this looks like a good opportunity to go long on stocks, as they are already starting to creep higher again.

The aftermath of the announcement saw all three major indexes experiencing declines of more than 1%, with the S&P 500 down by 1.1%, flling from its record climb above 5,000 points. The Dow Jones Industrial Average (DJI) also fell 1.1% from its record closing high, while the Nasdaq Composite recorded a 1.3% decline. This marked the worst day of this year for both the Dow and the Nasdaq Composite.

S&P 500 Live Chart 

[[SP500-graph]]

Brazil: Public accounts registered a deficit of US$ 47.4 billion in 2023

Posted on by Ignacio Teson

Brazil: Public accounts registered a deficit of US$ 47.4 billion in 2023

It’s equivalent to 2.12% of the GDP. This result represents the worst performance since 2020.

Brazil’s budget doesn’t look good.

Public accounts recorded a deficit of R$ 230.5 billion (U$ 47.4 billion) in the first year of Luiz Inácio Lula da Silva’s government (PT) in 2023, equivalent to 2.12% of the Gross Domestic Product (GDP). However, excluding COVID-19 years from the analysis, this has been the worst year since 2015.

In comparison, only the second term of Dilma Rousseff’s presidency (PT) had a worse outcome in the first year of her administration. In 2015, the deficit was R$ 183.1 billion (US$ 37 billion).

The result in 2023 was worse than the informal target set by Minister Fernando Haddad, the Minister of Economy, who promised to present a deficit of up to 1% of the GDP in the first year of the administration.

This occurs in a context where it was revealed this week that there are at least 10,000 public servants holding obsolete positions in Brazil.

Professions such as butcher, cowboy, recreation worker, and crafts seller are not usually associated with the public sector.

However, at least 10,000 employees in the federal Executive, or 2% of the total permanent workforce, hold positions in functions like these, ranging from obsolete areas such as videotape editor to others currently performed by subcontractors, such as cooks.

Currently, Brazil’s long-term bond yield stands at 10.75%, reflecting growing distrust in its long-term repayment capacity. While its currency remains stable, the Brazilian real has suffered significant inflation in recent years.

Brazil’s political instability threatens both its fiscal accounts and potential repayments of its external debt, which are mostly denominated in US dollars.

According to most media outlets, the President of Brazil plans to reduce the 250 pay tables and over 300 career groupings to a more “rational” number, yet to be determined.

According to the secretary, the department will have to publish a resolution this month with guidelines to guide this process and seek the adherence of agencies and employees throughout the term.

[[USD/BRL-graph]]

LATAM markets: US downturn drags everything down

Posted on by Ignacio Teson

LATAM markets: US downturn drags everything down

On an extremely negative day for international markets, LATAM is no exception

LATAM is being dragged by the general market feeling.

All Latin American markets fall today, with declines ranging from 1 to 3%. The effects of higher-than-expected inflation in the United States drive the decline in international markets, and LATAM is no exception.

Brazil, Mexico, Argentina, and Colombia are losing ground in today’s session. Declines are led by the energy sectors, including Petrobras, Edenor, YPF, and Centrais Eletricas Brasileras, among others.

Inflation eased once more in January but exceeded the expectations of Wall Street, indicating once again that the Federal Reserve’s trajectory toward interest rate cuts remains uncertain.

According to the report by the Labor Department on Tuesday, consumer prices increased by 3.1% in January compared to the previous year, a slight decrease from the 3.4% gain seen in December. This represented the lowest figure since June.

However, the consumer price index surpassed the anticipated 2.9%, which disappointed investors banking on an earlier rate cut by the Fed.

As a result, emerging countries mirror the declines in the United States with even greater volatility. The markets in China, Brazil, and Argentina are still closed for holidays. Nevertheless, their assets trading on Wall Street reflect declines likewise.

Central banks often respond to high inflation by raising interest rates to control it. Higher interest rates make borrowing more expensive, which can reduce consumer spending and business investment. It can also increase the cost of servicing debt for businesses.

Inflation in the United States has been persistent since late 2021, and currently, the Fed aims to bring it to 2% in the long term. Higher-than-desired inflation can continue to erode the purchasing power of American consumers, something that has been happening since 2022.

The Dow was down more than 400 points and 10-year Treasury yields rose to 4.27%.

Binance’s Former CEO Won’t Be Sentenced Until Late April

Posted on by Sophia Cruz
Sentencing for the former Binance CEO has been rescheduled

The sentencing for the former Binance’s CEO Changpeng Zhao on February 23 has been postponed until late April.

After a series of investigations, the US prosecutors charged Binance’s former CEO, Changpeng Zhao, for violating the Bank Secrecy Act. Zhao stepped down from his role as CEO of Binance and as Chairman of the Board of Directors of the US division of Binance last November. This is to resolve the conflict between the US regulatory authorities and Binance. The former CEO has pleaded guilty and consented to a personal fine of $50 million.

However, the sentencing for the former Binance CEO has been rescheduled to April 30 instead of February 23. CZ will be facing 18 months in prison. However, the federal prosecutors are seeking a longer sentence. 

“The defense claims that Mr. Zhao faces merely a “brief” sentence and has no incentive to flee. The reality is that the top-end of the Guidelines range may be as high as 18 months, and the United States is free to argue for any sentence up to the statutory maximum of ten years.”

CZ is currently out on bail on a $175 million bond, still residing in the US, awaiting his sentencing. This is after the court rejected his request to return to the U.A.E in December 2023. According to the prosecutors, there’s a “substantial risk” that Zhao will not return to the US as the UAE doesn’t have an extradition treaty with the US.

Binance, on the other hand, agreed to settle $4.3 billion in fines and restitution as part of the former CEO’s guilty plea to conspiracy to operate an unlicensed money-transfer business.

Shiba Inu Update: SHIB Burn Rate Jumps to 70% And Sheboshi NFT Launch

Posted on by Sophia Cruz
SHIB Burn Rate Jumps to 70%

Shiba Inu, known as the “Dogecoin killer,” has been making waves in the crypto market today, and we’re here to find out why.

Shiba Inu, one of the most significant meme coins on the Ethereum blockchain, has been in the news due to its ongoing developments. Today, data from the burn tracker Shibburn shows that SHIB’s burn rate jumped to 70%. In addition, Shiba Inu’s lead developer, Shytoshi Kusama hints at the most anticipated Sheboshi NFT launch. 

SHIB’s Burn Rate Spikes to 70%

According to data reported by Shibburn, SHIB’s burn rate spiked to 70.68%, with the Shiba Inu community witnessing 410.70 trillion SHIB burned from its initial supply. This gained more attention across the global crypto world, marking the community’s monumental achievement in improving SHIB’s tokenomics. Additionally, the Shiba crypto community recently shifted 25 million SHIB to a dead wallet, marking its share on today’s uptrend. 

Following the spike in SHIB’s burn rate is its current price. As of this writing, SHIB is up by 3.76%, trading at $0.000009611 in the last 24 hours. This trend makes its way to the meme coin’s potential run for $0.00001 as the supply continues to decrease. 

Sheboshi NFT Launch

Meanwhile, Shytoshi Kusama revealed today that the most anticipated Sheboshi NFTs will be launched at last, marking another innovative step in its ongoing developments since last year.

Kusama also shared some details about a potential announcement tomorrow, February 14 which has sparked curiosity from the community. 

Furthermore, Shibarium also recorded an increase in its daily transactions relating to Bitcoin’s current bullish trend pushing transaction volumes to a new highpoint. Shibarium data shows a notable $2 million increase in its transactions. 

Bitcoin Just Hit $50K! Halfway To $100k?

Posted on by Sophia Cruz
Bitcoin Just Hit $50K

The World’s largest cryptocurrency finally reached a massive $50,000 level for the first time in 2 years. What lies ahead for Bitcoin This Year?

The Bitcoin community can’t contain their excitement as Bitcoin (BTC) surged to $50,000 earlier today. This is the first time BTC has reached the $50,000 mark in over 2 years. In fact, over the last 7 days, BTC has surged by over 16%, indicating a strong bullish trend. Although it is still 28% below its all-time high of $69,000 in 2021, this is still good news for Bitcoin enthusiasts and investors.

Talking about the long term, BTC price is expected to remain extremely bullish as it tries to surpass the upper resistance of the expanding megaphone pattern. The volume has shifted in favor of the bulls, significantly increasing the buying pressure. As a result, BTC’s price is expected to break these levels and exceed the interim resistance of $51,900. However, after reaching this incredible milestone, the bulls might face exhaustion, which may urge the price to remain consolidated for a while.

What lies ahead for Bitcoin?

Analysts and experts are wondering about what’s next for Bitcoin. Industry expert Mark Connors has expressed his insights on BTC’s price, stating that BTC could reach $60,000 to $65,000. He also predicted that Bitcoin could reach up to $160,000 by the end of the year and $350,000 by the second half of next year.

Bitcoin’s market capitalization will also likely surpass $1 trillion this week, with its market cap going around $977 billion on Monday. 

At this time of writing, Bitcoin (BTC) is up by 4.44% in the last 24 hours, trading at $50,121.

The Support at 1.07 Holds for EUR/USD After First Test

Posted on by Skerdian Meta
EUR/USD likely to return to 1.07 soon
EUR/USD likely to return to 1.07 soon

The Euro has turned bearish again this week with the Euro to Dollar rate falling to 1.07, which is holding as support. The US inflation numbers for January came in stronger than expected again, giving the USD a boost, wile Treasury yields have jumped around 15 pips higher. Continue reading “The Support at 1.07 Holds for EUR/USD After First Test” →