WEEKLY BUSINESS ROUNDUP

Financial Markets and Economic Overview, Weekly Trends, and Data

The week closed on a positive note for the stock market, with the Dow Jones index climbing an impressive 700 points, its highest gain this year. Investors showed relief following the approval of a debt ceiling bill, averting a potential U.S. default. The main catalyst for this rally was a strong jobs report for May, indicating that U.S. companies added 339,000 jobs, exceeding forecasts. However, the unemployment rate saw a slight uptick, rising from 3.4% to 3.7%.

These developments eased fears regarding a recession and possible interest rate hikes, at least for now. U.S. Treasury yields saw a rise, with the two-year note increasing by 18 basis points to 4.51%, and the benchmark 10-year yield climbing by 8 basis points to 3.69%. Over the week, the Nasdaq gained 2%, marking its sixth consecutive week of growth. The Dow also recorded a 2% increase, while the S&P 500 saw a notable rise of 1.8%.

A robust U.S. jobs report allowed the dollar to recover from prior losses, as the benchmark dollar index (DXY) ended the week on a high. On Thursday, DXY dipped below the 104.00 threshold, breaking the Fibonacci 23.6% retracement of the downward trend observed from November to February. The crucial support level of 103.00, represented by the 100-day Simple Moving Average (SMA), is now in alignment.

Should there be a weekly close below this level, it might attract more sellers, potentially leading to a prolonged decrease towards 102.40 (50-day SMA) and the psychological barrier of 102.00, where the 100-day SMA and the 20-day SMA converge. Conversely, if DXY can rise above 104.00 and establish that level as support, it could gain bullish momentum towards targets at 104.50 (static level) and 105.00 (psychological level).

Despite a promising start on Monday, following the U.S. government's debt ceiling agreement and Bitcoin (BTC) reaching a two-week high of $28.5k, the week proved challenging for the cryptocurrency. BTC faced resistance at that level, causing its price to initially fall to $28,000. Subsequently, a significant drop of $1,000 pushed it further down to $27,000. In the following two days, BTC experienced additional declines, hitting a weekly low of $26,500 by Friday.

However, BTC quickly rebounded from this low and regained the $27,000 mark by the end of the day. Since then, it has remained relatively stable, hovering just above that level. Similarly, altcoins have shown a calm trend over the past 24 hours, reflecting Bitcoin’s performance. Ethereum, for example, briefly dipped below $1,900 during the week but managed to reclaim that level after several minor daily gains.

Graphene, an atomic-scale lattice structure, is revolutionizing the materials industry and drawing considerable investor interest. Analysts predict its market value will exceed $1 billion by 2027 and could soar to an astonishing $3.75 billion by 2030. In today's featured infographic (above) by HydroGraph, we delve into essential insights for investors regarding this dynamic sector and its future outlook.

Before transitioning to other statistics, let's review the weekly and year-to-date figures from various markets and assets.

Top Unicorn Investors

The count of unicorns—private companies valued at $1 billion or more—has surpassed 1,200. Out of the 7,300 investors with equity stakes in these unicorns, only three have portfolios exceeding 100 unicorns each, showcasing a remarkable achievement. However, even at the top, challenges persist. Leading investor Tiger Global and second-ranked SoftBank have both faced considerable markdowns in their portfolios. This decline has occurred as many unicorns, which emerged during the 2021 venture boom, are undergoing painful adjustments in their valuations.

Nvidia’s AI Surge

Last week, Nvidia's market capitalization exceeded $1 trillion, briefly placing it among the elite companies like Apple, Amazon, Alphabet, and Microsoft. As businesses aim to integrate artificial intelligence (AI) into their operations, Nvidia has secured a strong position. Its graphics processing units (GPUs) are pivotal for AI and machine learning algorithms, as well as powering generative AI applications such as ChatGPT. The company’s stock saw a notable rally following a series of AI product launches, further solidifying its market standing.

Drone Delivery Companies

DroneUp, a leading player in the drone delivery market, has recently opted to reduce its workforce, signaling the challenges faced by the industry at large. In their research brief, CB Insights uses funding, valuation, and other data to illuminate both the obstacles and opportunities present in the drone delivery sector.

Solana Dominance Wanes

Initially, Solana positioned itself as the next major decentralized finance (DeFi) hub, capitalizing on its advantages of lower costs and higher throughput compared to its main competitor, Ethereum. In its early stages, DeFi applications on Solana gained rapid popularity, especially among derivatives protocols that rely on efficient throughput. However, since the peak of the bull market in late 2021, the overall DeFi activity on Solana has gradually declined.

Like other networks within the broader cryptocurrency ecosystem, Solana has been adversely affected by unforeseen events in 2022, impacting its total value locked (TVL). As of now, the TVL on the Solana network has decreased by a factor of 20 since January 2022, placing it at a lower level compared to competing chains. Notably, the collapse of FTX significantly affected Solana, causing its TVL to drop by 50%, more than double the rate of decline seen by its competitors.

Tech Layoffs

Analyzing the data on tech layoffs during the 2022–2023 period reveals significant spikes in mid-2022 and early 2023. These layoffs were driven by changes in the market landscape. Essentially, tech companies engaged in a process of “repricing” to adapt to a new risk pricing framework. Consequently, these firms adjusted their cost structures to align with the new reality of shorter runways and a greater focus on profitability rather than growth. It is estimated that around 1 million tech jobs were impacted by these shifts.

However, it's crucial to recognize that this figure constitutes a relatively small portion of the overall U.S. labor force, which stands at approximately 165 million individuals. Thus, what may seem like a significant impact within the crypto/fintech sector is actually a niche market facing repercussions for its specific actions. The broader workforce may view this situation with a sense of schadenfreude, deriving pleasure from the misfortunes of others.

Housing Market Risk Indicators

The COVID-19 pandemic triggered a surge in housing prices across many countries, especially in advanced economies, driven by low-interest rates and limited property supply. However, starting late last year, prices began to decline in several nations, and in others, the pace of growth slowed. This downturn was particularly evident in advanced economies that had already shown signs of overvalued property markets both before and during the pandemic. As central banks responded to rising inflation by increasing interest rates, the average mortgage rate in advanced economies climbed to 6.8% by late 2022, more than doubling since the start of the previous year.

If borrowing costs continue to rise or remain elevated for an extended period, demand and housing prices are likely to weaken further. As shown in the Chart of the Week, countries with high household debt and a significant proportion of floating-rate borrowing are more vulnerable to increased mortgage payments, raising the risk of defaults. According to data from the Organisation for Economic Co-operation and Development (OECD), which comprises mostly advanced economies, countries such as Canada, Australia, Norway, and Sweden are considered to be at the highest risk.

U.S. Electricity Generation Jobs

In 2021, the U.S. electricity generation sector employed a total of 857,579 individuals. To analyze the workforce distribution within this sector, the following visual provided by the National Public Utilities Council presents a breakdown of job numbers for each electricity generation technology, utilizing data from the U.S. Department of Energy’s Energy and Employment Report.

Global Hunger

Globally, there is an alarming rise in hunger levels. The United Nations Food and Agriculture Organization (FAO) reports that up to 828 million people, or 10% of the world's population, face hunger each night—an increase of 46 million from the previous year. This situation has dire implications, particularly for children, as prolonged hunger can lead to health issues and lasting physical and cognitive damage.

It is essential to understand that undernutrition encompasses more than just insufficient calorie intake; it also signifies deficiencies in vital energy, protein, vitamins, and minerals. After a decade of steady decline, global hunger has unfortunately begun to increase again in recent years. Between 2019 and 2021, the number of undernourished individuals rose by over 150 million, primarily due to conflicts, climate change, economic shocks, and the effects of the COVID-19 pandemic.

Gen-Z Banking & Payments

Historically, banking has not focused on younger clients, viewing them merely as a long-term asset acquisition strategy rather than recognizing their unique spending habits and behaviors. However, recent years have seen a surge in venture capital directed towards companies that cater to this demographic with tailored financial services. For Generation Z, there is a strong emphasis on developing healthy money management practices and utilizing influencer marketing for outreach.

Generation Z, comprising individuals born between 1996 and 2010, possesses significant spending power, estimated at up to $143 billion. Nonetheless, they have yet to establish strong brand loyalties regarding where they save and spend their money. For banking and payment providers, attracting these young customers could lead to valuable long-term relationships, as their value increases with age, higher earnings, and greater engagement with financial products. Given that most Gen Zers have only explored basic banking accounts, they present a promising opportunity for industry players.

Market Comic: Nvidia Joins The Exclusive $1 Trillion Market Cap Club

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