WEEKLY BUSINESS ROUNDUP

Global Business Week: The World’s Growing Middle Class

The state of Financial markets & Economies, Weekly Charts, Business Trends & Statistics

The S&P 500 and Nasdaq Composite erased early losses to finish higher Friday to conclude their best week so far this year, led by continued strength in quarterly earnings reports and a better than expected January jobs report. Amazon shares surged 13.5% for their biggest one-day gain since 2015, and Snap skyrocketed 58%, suggesting that Meta Platforms’ earnings disappointment that sent shares crashing 26% on Thursday was a company-specific issue. U.S. payrolls came in at a three-month high as employers added more jobs than forecast last month despite a surge in COVID-19 infections.

Crude oil soared to a fresh seven-year high near $93 a barrel, and the average price of gasoline surged to the highest level since 2014. U.S. Treasury prices fell with the 10-year yield briefly topping 1.93%, jumping from about 1.5% at the start of the year as the Federal Reserve has signaled a more aggressive fight against inflation. For the week, the Dow Jones average added 1.1%, the S&P gained 1.5%, and the Nasdaq jumped 2.4%.

The US Dollar Index (DXY) bounces back from a fresh monthly low (95.14) following the 467K rise in Non-Farm Payrolls (NFP), and the update to the Consumer Price Index (CPI) may fuel the recent rebound in the Greenback as the gauge for inflation is expected to increase for the fifth consecutive month. The decline from the January high (97.44) may turn out to be a correction in the broader trend as the CME FedWatch Tool continues to reflect a 100% probability for at least a 25bp rate hike in March.

It was a good week for the cryptocurrencies as the digital assets finally seem to be turning the corner, at least in the short term. Nasdaq churning out gains this week continues to show a growing correlation between the tech stocks and crypto assets, especially Bitcoin. At the time of writing, the premier digital currency is trading in the vicinity of $42k, while Ethereum has just overtaken $3,000. Although there are some significant headwinds in terms of resistance in the medium-term, the extreme bearish sentiment seems to have subsided.

The middle class is already the largest spending group in the world, driving increased consumption of goods and materials. 50 years ago, this group of global consumers lived almost exclusively in Western countries. Today, they are increasingly spread around the world, representing 45% of the global population. The infographic above is based on the data from Brookings Institution — it highlights the global middle class’ impact on the global economy and how this population is expected to grow in the next decade

And finally, before moving on to some other statistics, here are the weekly & YTD numbers from various markets and different assets (Figure 1).

Crypto Usage Around the World

A report by Chainalysis shows which countries are the heaviest users of cryptocurrencies around the world, weighing transaction values by purchasing power and putting a special focus on non-professional and peer-to-peer use to gauge which countries have really made strides in adopting crypto use across a larger swath of their populations. Vietnam is the undefeated winner of the ranking, scoring high on overall crypto transaction value as well as payments made by individuals. The smaller country’s incoming cryptocurrency transaction value wasn’t far below that of much larger India.

Among developed countries, cryptocurrency use was most widespread in English-speaking countries (Figure 2) — first and foremost the United States, but also the UK, Canada, South Africa, and Australia. Emerging economies India, China and Brazil also registered as heavy users. In the case of Russia’s and Ukraine’s intensive use, Chainalysis ties these to widespread mistrust of institutions and possibly capital flight and tax avoidance.

Most Expensive Gaming Acquisitions

Not even a week after Take-Two Interactive acquired mobile game developer Zynga for $12.7 billion, Microsoft claimed the title for the most expensive gaming acquisition in history. The tech giant will acquire the famed gaming company, Activision Blizzard, for $69 billion (Figure 3). This makes them one of the biggest video game development market players (a fact that has not escaped the notice of the FTC). Such multi-billion gaming company acquisitions are quickly becoming a norm. Some of the largest takeovers have occurred in the past three to five years.

Sell-Off in Cryptocurrencies

ETH-Based investing products lead third consecutive month of Sell-offs In January, Bitcoin’s Assets under management (AUM) fell 23.3% to $29.9 billion (Figure 4). However, it gained market share from December (now 69.5% of total AUM vs. 67.8% last month). Ethereum’s AUM also fell 29.2% to $11.0 billion, while Other and Baskets’ AUM were $1.5 billion(down 29.9%) and $673 million(down 24.1%) respectively.

Tesla’s Profitability

With a net income attributable to shareholders of $2.3 billion this past quarter and a total of $5.5 billion in 2021, Tesla has not only surpassed analysts’ expectations but also reached the end of a decade-long journey towards real profitability and getting out of the red on its own terms. As the chart below shows (Figure 5), the road to this goal wasn’t without its bumps. In 2020, for example, Elon Musk’s company for the first time managed to generate net income instead of loss. This indicated an increased interest in battery electric vehicle adoption around the world after its models S and X released in 2012 and 2015, respectively, didn’t generate much revenue for the car manufacturer.

Digital Assets Growth

As the value of cryptocurrencies continues to grow, so too does the demand and amount of digital assets held by custody providers. Since the beginning of 2019, assets under custody (AuC) have grown an impressive ~600% (Figure 6). Of course, this number is taken as an estimate, as it is measured relative to the total cryptocurrency market cap. This does not include the number of assets that are undisclosed by various custody providers, so we expect the number to be potentially higher.

Market Humor: Blowout Apple, Microsoft, Google Earnings Spark Furious Rally In Tech Stocks As Selloff Comes To An End!

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