In the U.S., there is a phenomenon where “bad data” can actually be perceived as “good data.” This occurs when weak macroeconomic indicators lead to increased support from the Federal Reserve. A similar situation is unfolding in China, where November trade figures fell short of expectations. Exports grew by 6.7% year-over-year, significantly below the anticipated 8.7%, while imports declined by 3.9%, contrasting with the expected increase of 0.9%. This disappointing macro data (as well as profit taking) resulted in a sharp decline in the market, with the Hang Seng Index (HSI) dropping nearly 1,000 points from a morning high of 21,230 to a low of 20,250 shortly after the market reopened, ultimately closing at 20,435. However, I remain optimistic about the potential positive outcomes from upcoming announcements in China. The Central Economic Work Conference, which begins today, may provide insights into further fiscal support following the government’s commitment to a “moderately loose” monetary policy for 2025.
In the U.S., markets experienced a second consecutive day of decline as investors began to reduce risk exposure after a strong rally that began on November 5. This pullback comes ahead of tonight’s Consumer Price Index (CPI) report, which is expected to show a month-over-month increase of 0.3%, up from 0.2% last month. The outcome of this report will significantly influence the Federal Reserve’s decision-making next week, with market expectations currently pricing in an 85% chance of a 25 basis point rate cut. Additionally, the Japanese yen has fallen back to 152 against the U.S. dollar this morning, while the euro stands at 1.053.
On the cryptocurrency front, Microsoft shareholders voted against a resolution to add Bitcoin to the company’s balance sheet during its annual meeting on December 10. Currently, Bitcoin is trading at $96,600, with the global cryptocurrency market capitalization at $3.6 trillion, down from its all-time high of $3.9 trillion.