WEEKLY BUSINESS ROUNDUP
Global Business Week: How does your personality impact your income?
The state of Financial markets & Economies, Weekly Charts, Business Trends & Statistics
It was a solid first week of Q3 earnings as the largest U.S. banks posted another robust round of quarterly results. This led the S&P 500 to wrap up its best week since July, closing at its highest level in a month. U.S. equity markets closed out the week with gains as the major indices soared for a second straight day. Financial heavyweights Goldman Sachs, J.P. Morgan & Bank of America were among the firms topping consensus estimates.
Economic data also eased some concerns this week, with U.S. retail sales data coming in stronger than expected and initial jobless claims posting their lowest numbers since the pandemic began. U.S. Treasuries fell as the 10-year yield inched above 1.57%, but more telling was the two-year yield climbing to its highest since February 2020. Oil traded above $82 a barrel on rising demand while supplies remained tight in the U.S. and other OECD countries. The Dow, S&P 500, and Nasdaq all climbed more than 1.5% for the week.
USD lost its appeal temporarily as risk appetite remained buoyant on equities. The benchmark dollar index (DXY) closed the week just below 94.00 handle, unable to convincingly penetrate the previous resistance high of 94.50. That said, with the USD ending its streak of five consecutive weekly gains, markets appear to be long-dollars, which in turn raises the risk of greater unwinding heading into next week, should risk appetite remain firm. Looking into next week, with little on the economic calendar besides flash PMIs, risk appetite will likely dictate the state of play across the FX space.
Bitcoin charged above the $62k mark for the first time since April, closing in on its all-time high, in anticipation regulators will soon allow the first ETF for the cryptocurrency. The U.S. Securities and Exchange Commission (SEC) approved the ProShares Bitcoin Strategy ETF on Friday. It is set to begin trading on Monday. Shares of Coinbase jumped 6% on this news and partly due to its announcement of launching an NFT marketplace. Binance is also launching a $1 billion growth fund to accelerate the adoption of digital assets were all positive drivers. Ethereum, meanwhile, just came within a whisker of $4,000. Sunny days ahead for cryptos.
Today’s featured infographic comes to us from Truity, and it outlines the potential relationship between personality type and income. The Myers-Briggs personality test serves as a robust framework for analyzing the connection between personality and income, in a way that is easily understood and familiar to many people. The theory outlines four personality dimensions that are described using opposing traits.
And finally, before moving on to some other statistics, here are the weekly & YTD numbers from various markets and different assets (Figure 1).
Latest Global Economic Growth Projections
Compared to their July forecast, the global growth projection for 2021 has been revised down marginally to 5.9% and is unchanged for 2022 at 4.9%. However, this modest headline revision (Figure 2) masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions. Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labor market recovery to significantly lag the output recovery in most countries.
Overview of the Stablecoin Market
Stablecoins can be divided into fiat-backed, crypto-backed, and algorithmic. Fiat-backed stablecoins are the most popular among the three categories and their dominance shows no sign of abating. The chart below (Figure 3) shows the mains stablecoins in the Cryptocurrency market ranked in order of their market cap, along with their type. Although Tether (USDT) remains the most dominant of the lot, USDC has made some impressive gains recently.
Red Hot M&A
Overall, the Mergers & Acquisitions market could top a record $6 trillion by the end of the year, according to a report by KPMG. Global mergers and acquisition volumes have so far surpassed $4.3 trillion up from $3.6 trillion a year ago (Figure 4). The report says that pent-up demand for deals that didn’t happen during the pandemic last year has helped fuel deal-making this year, and it is expected to continue to the end of the year. KPMG says the technology, financial services, industrial, and energy sectors have accounted for the majority of the deals this year.
Total Value Locked (TVL) in DeFi
Ethereum fees are once again out of control but, unlike previous spikes, there are now many alternative chains ready and willing to pick up the priced-out traffic coming from the dominant DeFi and NFT chain. With much lower fees and faster transaction times, Solana and Terra have grown the quickest, outpacing the earlier challenger, Binance Smart Chain. All three have eaten into Ethereum’s market share since the beginning of 2021 (Figure 5).
Tech Companies — Best Employers
Over the span of just five years, tech companies have taken over all of the top 8 spots of the World’s Best Employers ranking. In 2017, the first year the ranking was published by Forbes in collaboration with Statista, half of the top 8 companies were from the tech sector. Notably, the biggest tech players — Alphabet, Microsoft, and Apple have remained among the top spots of the ranking throughout, but have ranked lower recently. Legacy tech player IBM, however, took the other route and moved from rank 8 in 2017 to rank 11 in 2019 and back into rank 2 in 2021 (Figure 6). In 2021, a South Korean company, Samsung, moved into the first rank, while Chinese technology company Huawei found itself in rank 8, diversifying the ranking in terms of national origin. Both previous entries weren’t from the tech sector, while both 2021 entries are.
Evaluating a Company’s Net-Zero Target
A net-zero carbon target is a climate essential. Companies from Apple to Microsoft are making commitments to halve their emissions by roughly 2030 — and eliminate them altogether by 2050. These targets follow the recommendations set forward by the Paris Agreement in order to avoid devastating climate conditions for future generations. However, not all targets are rigorous, let alone feasible. To shine a light on this problem, MSCI developed a Net-Zero tracker (Figure 7) that helps investors analyze the strength of company targets.
Divergence in Global Recovery
The dangerous divergence in economic prospects across countries remains a major concern. Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024. By contrast, aggregate output for the emerging market and developing economy group (excluding China) is expected to remain 5.5% below the pre-pandemic forecast in 2024 (Figure 8), resulting in a larger setback to improvements in their living standards.
These divergences are a consequence of the “great vaccine divide” and large disparities in policy support. While almost 60% of the population in advanced economies are fully vaccinated and some are now receiving booster shots, about 96 percent of the population in low-income countries remain unvaccinated. Furthermore, many emerging markets and developing economies, faced with tighter financing conditions and a greater risk of de-anchoring inflation expectations, are withdrawing policy support more quickly despite larger shortfalls in output.
Rise of the Super Rich in the U.S
Speaking of economic inequality, America’s middle class now holds a smaller share of U.S. wealth than its top 1% (Figure 9). The middle 60% of all U.S. households by income saw combined assets drop to 26.6% of national wealth, the lowest in Federal Reserve data going back three decades. The super-rich now has 27% of it all.
Market Humor: Stock Market Roller Coaster Continues As Fed Prepares To Taper
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