Trends in Housing Affordability: Who Can Currently Afford to Buy a Home?

Economic

Summary:

Housing affordability has long been a critical issue in the housing market, affecting individuals, families, and entire communities.

Housing affordability has long been a critical issue in the housing market, affecting individuals, families, and entire communities. While the challenges associated with affording a home are not new, they have remained one of the main concerns in the housing market, particularly as higher mortgage rates have exacerbated the situation. The widening gap between income levels and housing costs makes homeownership increasingly out of reach for many. However, with mortgage rates recently falling below 6.5%, there has been an improvement in housing affordability. Rates below 6.5% make it possible for American families to afford to purchase a median-priced home. This article delves into the trends in housing affordability and examines how the number of households who can afford to buy a home has changed over the years.

Housing affordability has often been associated with broader economic cycles and demographic trends. For instance, in the late ’70s, the economy was struggling significantly. Inflation surged to 14%, driving up consumer prices and home prices. When mortgage rates reached 17% in 1981, many people could no longer afford the higher mortgage payment, slowing down demand for housing. Does this ring a bell? Starting in 2022, the Federal Reserve raised its interest rates a total of 11 times to combat elevated inflation. As a result, mortgage rates have reached 7% on average in 2023, driving home buying out of reach for many people.

While there are various ways to track affordability, the National Association of REALTORS® monitors monthly housing affordability trends using the Housing Affordability Index (HAI) and the payment-to-income ratio. These two measures are critical tools used to gauge the accessibility of homeownership for average households. Specifically, they provide insight into whether the typical family can afford to buy a home and maintain mortgage payments relative to their income.

HAI definition and trends

The Housing Affordability Index is a measure that reflects the relationship between median home prices, median family income, and mortgage rates. It is calculated by comparing the income needed to qualify for a mortgage on a median-priced home to the actual median family income. An index value of 100 indicates that a family earning the median income has exactly enough income to qualify for a mortgage on a median-priced home, assuming a 20% down payment. Values above 100 suggest housing is more affordable, while values below 100 indicate it is less affordable.

Looking back at the entire historical data since 1989, housing affordability hit a record low in 2023, with an index of 98.2, indicating that the American family earns less than the income needed to purchase the median-priced home. Historically, however, the typical family generally earned about 40% more than the qualifying income, meaning they could afford a home costing 40% more than the median price. In 2012, as both mortgage rates and home prices dropped in the aftermath of the housing downturn, Americans could afford homes priced nearly twice the median price. Affordability has improved since the end of the first half of 2024, with mortgage rates recently falling below 6.5%. While the Federal Reserve is anticipated to begin cutting rates as early as September, the downward trend in mortgage rates will continue. Rates below 6.5% bring the American family back to the market, as, at these rates, they can afford to buy a median-priced home without spending more than 25% of their income on mortgage payments.

The HAI is even lower for first-time buyers, reflecting the increased challenges they face in their journey to purchase their first home. Given that the income of first-time buyers is generally lower1 than that of all buyers, first-time buyers earn just 63% of the income needed to qualify for the purchase of a starter2 home. As of the year's second quarter, first-time buyers can afford to buy a home priced 38% less than the median starter home.

Payment-to-income ratio definition and trends

The payment-to-income ratio is another key metric the National Association of REALTORS® uses to assess housing affordability. Specifically, this ratio represents the percentage of the typical family's gross income spent on mortgage payments (including principal and interest). While the rule of thumb indicates that housing costs shouldn't exceed 30% of the income, NAR assumes that the payment-to-income ratio should not exceed 25%. Thus, a lower ratio suggests housing is more affordable, as a smaller portion of income is attributed to housing costs. Respectively, a higher ratio indicates that a larger share of income is required to cover the monthly mortgage payment. However, if the ratio rises above 25%, the typical family is considered “cost-burdened.”

Over the years, the payment-to-income ratio has averaged 18.5%, indicating that historically, the typical family spent about 18.5% of their income on mortgage payments. However, mirroring the trend seen in the HAI, the payment-to-income ratio reached its highest level in 2023 at 25.4%. This exceeds the 25% threshold, showing that the typical family is now considered cost-burdened when purchasing the median-priced home. By contrast, in 2012, the ratio was just 12.7%, marking the lowest level ever recorded.

First-time buyers must allocate a substantially larger share of their income to the monthly mortgage payment. As of the second quarter of the year, the payment-to-income ratio for first-time buyers was 40.0%.

How many households can afford to buy a home now versus in 2021 and 2019

Based on the two metrics discussed, the pool of people who can afford a home has shrunk considerably compared to previous years. Households that once could comfortably afford a median-priced home are now finding it increasingly difficult, as they must allocate a larger portion of their income to mortgage payments.

Currently, one in three households (33%) can afford to purchase a median-priced home without spending more than 25% of their income on their mortgage payment. By contrast, in 2021, when mortgage rates were around 3%, 55% of households met the income requirements. In 2019, before the pandemic, housing was even more affordable, with nearly 60% of households able to purchase a home. That means that since 2021, 28.4 million households have been priced out of the market, and 30.4 million households can no longer afford a median-priced home since 2019.

Only 17% of potential first-time buyers—i.e., current renters—can afford to buy the median-priced starter home. In 2021, 37% of renter households earned the qualifying income, and in 2019, 42% of renters were able to transition to homeownership. As a result, 8.7 million renter households have been priced out since 2021 and 10.6 million since 2019.

This weakening affordability in recent years has far-reaching implications for individuals and families. Homeownership has historically been proven to be one of the primary ways of building wealth as home values appreciate over time. In the last decade, homeowners built over $200,000 in wealth from price appreciation. When people are priced out of the housing market, especially first-time buyers, they miss out on this opportunity to accumulate wealth. Instead of building wealth, they spend a substantial amount of their income on rent, which doesn’t contribute to asset accumulation.

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Glendon

Economic

The Walt Disney Company, a global leader in entertainment, has been a staple on investors' radars for decades. Disney’s diverse portfolio, which includes theme parks, movies, television networks, and streaming services, makes its stock a fascinating subject for analysis. This article delves into Disney's stock performance on FintechZoom, examining its recent trends, financial health, and strategic direction.

Disney’s Diverse Business Segments

Disney's business model spans several key areas:

Media Networks: This includes Disney’s flagship ABC network, ESPN, and various cable channels. These segments generate significant revenue through advertising and subscription fees.

Parks, Experiences, and Products: Disney’s theme parks and resorts, including Disneyland and Disney World, contribute substantially to its revenue. The company's merchandise and licensing activities also fall under this segment.

Studio Entertainment: Disney’s film division produces some of the most recognizable franchises, including Marvel, Star Wars, and Pixar. This segment drives box office revenue and contributes to the company's brand value.

Direct-to-Consumer (DTC): This includes Disney+, ESPN+, and Hulu. The direct-to-consumer model has become increasingly important, as streaming services continue to grow in popularity.

Recent Stock Performance and Market Trends

Disney's stock has experienced significant fluctuations in recent years. The COVID-19 pandemic had a substantial impact on its operations, particularly in its theme parks segment, which faced prolonged closures and reduced visitor numbers. Additionally, the shift towards streaming services has introduced new dynamics for Disney’s stock, as investors weigh the success of Disney+ against traditional revenue sources.

In recent months, Disney's stock has seen periods of recovery, reflecting the company's efforts to adapt to the changing entertainment landscape. Innovations in its streaming services, successful film releases, and a gradual rebound in park attendance have all contributed to a more positive market outlook.

Financial Performance and Strategic Initiatives

Disney's financial performance is closely watched by investors, with key metrics such as earnings per share (EPS), revenue growth, and profit margins providing insight into the company's health. Disney has been focusing on several strategic initiatives to drive growth:

Expansion of Streaming Services: Disney+ has been a major focus, with the company investing heavily in original content and international expansion. The growth of Disney+ is seen as a crucial factor in the company’s long-term strategy.

Theme Park Recovery: As the world emerges from the pandemic, Disney’s theme parks are gradually recovering. The company has implemented new safety protocols and attractions to attract visitors.

Content Creation and Franchise Management: Disney continues to leverage its strong portfolio of intellectual properties. The success of recent films and the expansion of existing franchises are central to its content strategy.

Challenges and Opportunities

Disney faces several challenges, including competition in the streaming market and the ongoing impact of global events on its theme parks. However, the company also has significant opportunities. The integration of technology into its park experiences, continued growth in streaming, and leveraging its strong brand portfolio are key areas of potential.

FastBull’s Insights on Disney’s Stock

For investors seeking comprehensive analysis of Disney's stock, FastBull provides valuable insights. FastBull’s platform offers real-time stock data, historical performance charts, and expert analysis on Disney’s financial health and market position. With FastBull, investors can access detailed reports and forecasts, helping them make informed decisions based on the latest market trends and company developments.

Conclusion

Disney’s stock presents a captivating case for investors, reflecting the complexities of a multifaceted entertainment empire. As the company continues to navigate challenges and seize opportunities, understanding its stock performance through platforms like FintechZoom and leveraging insights from FastBull can provide valuable guidance for investment decisions. Disney’s ability to adapt to changing market dynamics while capitalizing on its diverse portfolio will be crucial in shaping its future trajectory.

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Glendon

Economic

The U.S. dollar (USD) remains a cornerstone of the global financial system, influencing everything from international trade to investment strategies. As of today, the dollar's performance is shaped by various economic, geopolitical, and market factors. This article delves into the current state of the dollar market, presenting relevant data and unique insights to help investors and analysts navigate this crucial component of the global economy.

Current State of the Dollar

As of today, the USD shows a mixed performance against major currencies. Here’s a snapshot of the current exchange rates:

EUR/USD: The Euro is trading at approximately 1.0850 against the Dollar.

GBP/USD: The British Pound stands at around 1.2500 against the Dollar.

JPY/USD: The Japanese Yen is valued at approximately 144.00 per Dollar.

CNY/USD: The Chinese Yuan is trading at about 7.3000 against the Dollar.

These rates reflect the Dollar’s relative strength and volatility, influenced by various economic indicators and market events.

Economic Indicators Impacting the Dollar

Inflation Data: Recent U.S. inflation reports have shown a steady trend, with the Consumer Price Index (CPI) holding around 3.5% year-over-year. Inflationary pressures impact the dollar’s purchasing power and influence the Federal Reserve’s monetary policy.

Interest Rates: The Federal Reserve’s stance on interest rates remains a critical factor. With recent discussions around potential rate hikes or cuts, the Dollar’s value could be swayed by changes in the Federal Funds Rate. Currently, the Fed is maintaining a cautious approach, aiming to balance inflation control with economic growth.

Employment Reports: The U.S. labor market has shown resilience, with the latest Non-Farm Payrolls (NFP) report indicating a robust addition of 200,000 jobs. Low unemployment rates support consumer spending and economic stability, bolstering the Dollar.

Trade Balance: The U.S. trade deficit has widened recently, with exports lagging behind imports. This imbalance can exert downward pressure on the Dollar as it reflects a higher demand for foreign currencies.

Geopolitical and Market Influences

Global Economic Uncertainty: Ongoing geopolitical tensions, such as trade disputes and conflicts, impact global market stability and influence the Dollar’s performance. For instance, tensions between the U.S. and China can create volatility in currency markets.

Energy Prices: As the world’s largest economy, fluctuations in global energy prices can impact the Dollar. Rising oil prices often strengthen the Dollar due to increased revenues from energy exports.

Market Sentiment: Investor sentiment and risk appetite play a significant role. In times of economic uncertainty or market turmoil, the Dollar often serves as a safe-haven currency, attracting investment and increasing its value.

Unique Insights into the Dollar Market

Digital Currency Integration: The rise of digital currencies and central bank digital currencies (CBDCs) could influence the Dollar’s dominance in global finance. While the U.S. has not yet fully embraced CBDCs, other countries are exploring their potential, which could impact the Dollar’s role in international transactions.

Economic Decoupling Trends: The trend towards economic decoupling, particularly between the U.S. and China, may lead to shifts in currency dynamics. As countries seek to reduce their dependence on the Dollar for trade, alternative currencies may gain traction.

Impact of Fiscal Policies: The U.S. government's fiscal policies, including stimulus measures and infrastructure spending, can have significant effects on the Dollar. Increased government spending can lead to higher deficits and influence inflation expectations, thereby impacting the Dollar’s value.

Technological Advancements: Innovations in financial technology and blockchain could reshape currency markets. Advances in cross-border payment systems and financial infrastructure might alter how the Dollar is used in global trade and finance.

Conclusion

Today's dollar market reflects a complex interplay of economic indicators, geopolitical events, and market sentiment. As the Dollar continues to navigate these influences, its performance will remain a key area of focus for investors and analysts. By understanding the current trends and unique insights, stakeholders can better anticipate the Dollar’s trajectory and make informed decisions.

For those seeking real-time data and deeper analysis on the Dollar and related financial instruments, platforms like FintechZoom and FastBull offer valuable resources and expert insights. These tools can help in staying abreast of market movements and making strategic investment choices.

To stay updated on all economic events of today, please check out our Economic calendar

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Glendon

Economic

When considering investments in the tech sector, Qualcomm Inc. (QCOM) often emerges as a key player due to its pivotal role in the semiconductor industry, particularly in mobile technology. As investors weigh the prospects of Qualcomm stock, it’s essential to evaluate the company's financial health, market position, growth potential, and broader industry trends. This article delves into these aspects to determine whether Qualcomm Inc. stock is a good investment opportunity.

Overview of Qualcomm Inc.

Founded in 1985 and headquartered in San Diego, California, Qualcomm Inc. is a leading technology company specializing in semiconductor and telecommunications equipment. Qualcomm’s primary business involves designing and manufacturing chips for mobile devices, including smartphones, tablets, and increasingly, automotive and Internet of Things (IoT) applications. The company is renowned for its Snapdragon processors, which are widely used in a variety of devices.

Financial Performance and Metrics

To assess Qualcomm’s investment potential, it's crucial to look at several key financial metrics:

Revenue and Earnings Growth: Qualcomm has demonstrated strong revenue growth over the years. In its fiscal year 2023, Qualcomm reported revenue of $40.7 billion, reflecting a steady increase from previous years. Its earnings per share (EPS) have also shown resilience, with a notable EPS growth trajectory driven by its robust portfolio and efficient cost management.

Profit Margins: Qualcomm's operating margin and net profit margin are indicators of its profitability. Historically, Qualcomm maintains high profit margins due to its dominant position in the mobile chipset market and its licensing business. The company’s ability to maintain these margins in the face of market competition and technological changes is a positive sign for investors.

Balance Sheet: Qualcomm's balance sheet is strong, with substantial assets and manageable levels of debt. The company's debt-to-equity ratio is relatively low, which indicates financial stability and lower risk for investors. Moreover, Qualcomm’s cash reserves provide it with flexibility to invest in research and development (R&D), strategic acquisitions, and return capital to shareholders.

Dividends and Share Buybacks: Qualcomm has a history of returning value to shareholders through dividends and share buybacks. The company pays a consistent dividend, which is attractive for income-focused investors. Additionally, Qualcomm's share buyback programs help reduce the number of outstanding shares, potentially increasing the value of remaining shares.

Market Position and Competitive Advantages

Qualcomm’s market position and competitive advantages are critical in evaluating its investment potential:

Leadership in 5G Technology: Qualcomm is a leader in 5G technology, which is a significant growth driver. The company’s Snapdragon X70 and X75 modems are essential components in 5G smartphones and other devices. As 5G adoption accelerates globally, Qualcomm stands to benefit from increased demand for its advanced technologies.

Strong Patent Portfolio: Qualcomm’s extensive portfolio of patents, particularly in wireless communication technologies, provides a competitive edge. Licensing fees from its patent portfolio are a substantial revenue stream for Qualcomm. This intellectual property strength allows Qualcomm to negotiate favorable terms with device manufacturers and technology partners.

Diverse End Markets: While Qualcomm is well-known for its mobile chipsets, it is expanding into other markets such as automotive, IoT, and edge computing. The automotive sector, in particular, presents significant growth opportunities with the increasing integration of advanced driver-assistance systems and autonomous driving technologies.

Risks and Challenges

Investing in Qualcomm stock is not without risks. Here are some challenges investors should consider:

Intense Competition: The semiconductor industry is highly competitive, with major players like Intel, AMD, and MediaTek. Qualcomm must continuously innovate to maintain its market share and technological leadership. Competition could impact margins and market position.

Regulatory and Legal Risks: Qualcomm has faced legal challenges and regulatory scrutiny related to its business practices and patent licensing strategies. Ongoing litigation and regulatory investigations could impact the company’s operations and financial performance.

Supply Chain and Geopolitical Risks: Global supply chain disruptions and geopolitical tensions, particularly involving China and other key markets, can affect Qualcomm’s ability to source materials and manufacture products. These factors could impact the company's financial stability and growth prospects.

Technological Change: The technology sector is rapidly evolving, and Qualcomm must adapt to changes such as shifts in consumer preferences, advancements in alternative technologies, and new standards. Staying ahead in innovation is crucial for maintaining a competitive edge.

Market Sentiment and Analyst Opinions

Investor sentiment and analyst opinions can provide additional insights into Qualcomm's stock potential. Market analysts generally view Qualcomm as a solid investment due to its strong position in 5G technology and its consistent financial performance. Analysts often highlight the company's growth potential in emerging markets and its ability to deliver shareholder value through dividends and share buybacks.

Conclusion

Qualcomm Inc. stock presents a compelling investment opportunity for those interested in the technology sector, particularly with its leadership in 5G technology and diverse revenue streams. The company’s strong financial performance, robust competitive advantages, and strategic market positioning contribute to its attractiveness as an investment.

However, investors should also consider the risks associated with competition, regulatory challenges, and technological shifts. A balanced approach that includes thorough research and consideration of personal investment goals and risk tolerance is essential.

Ultimately, Qualcomm Inc. stock may be a good investment for those who believe in the long-term potential of 5G and related technologies and are comfortable with the inherent risks of the tech sector. As always, consulting with a financial advisor and conducting in-depth research are recommended steps before making investment decisions.

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ING

Commodity

Energy

Shifting away from coal

The steel industry stands at a pivotal crossroads. With traditional coal-dependent production methods contributing significantly to global carbon emissions, industry leaders are actively exploring ways to reduce their carbon footprint.

We focused specifically on the capturing and storage of CO2, a solution that integrates seamlessly with existing steelmaking methods. We also examined the use of green hydrogen in steel production, which could revolutionise the process by eliminating reliance on fossil fuel.

Many executives in the steel industry agree that hydrogen-based steelmaking is essential for a net zero economy. But they are cautious about its near-term viability due to the nascent state of the hydrogen market, particularly for green hydrogen. As a result, they are considering gas-based alternatives as a transitional solution towards the ultimate green hydrogen method.

For example, Geert van Poelvoorde, CEO of ArcelorMittal Europe, said to HydrogenInsight that it cannot operate its European plants using green hydrogen, despite being granted billions of euros in EU subsidies to install equipment to do so, because the resulting green steel would not be able to compete on international markets. Instead, the Luxembourg-based steelmaker appears to be intending to use fossil gas. While other steelmakers emphasise the future shift to green hydrogen, they are less outspoken about the fact that their transition plans heavily rely on natural gas for at least the next 10 to 15 years.

Moreover, the industry's transformation is driven not solely by concerns over carbon emissions and costs but also by the principles of a circular economy. In the UK, for example, both Tata Steel and British Steel plan to replace the last coal-based blast furnaces at Port Talbot and Scunthorpe by electric arc furnaces that solely melt scrap steel into new steel. This shift is further influenced by external entities, such as NGOs, advocating for a complete transition from carbon-intensive production of virgin steel to steel recycling.

We have now included data on gas-based steel production and recycling in our analysis. We find that both approaches can significantly reduce emissions relative to traditional coal-based methods without CO2 capture and storage. They also present a more economically viable alternative to the costly green hydrogen approach. However, they are not without their own drawbacks, such as increased reliance on gas and lower steel quality.

Gas-based steelmaking could be an intermediary step, but comes with a geopolitical cost

Simplifying the technical jargon, both gas and hydrogen methods reduce iron ore to pure iron to manufacture various steel types in quite similar ways. Yet gas remains a more affordable option than green hydrogen. Currently, producing steel using gas is approximately 70 euro cents per kilogram in Europe, markedly less than the cost of over 1 euro for green hydrogen-based steel. While costlier than coal-based methods, gas-based steelmaking offers a narrower price differential and benefits from more established technology than its green hydrogen counterpart.

From a purely financial perspective, the shift from coal to scrap or natural gas is more cost-effective than hydrogen

Indicative unsubsidised and pre-tax cost of steel in €/kg for different steel production technologies

The economics and availability of natural gas compared to hydrogen support the industry's view that gas can serve as a transitional phase towards hydrogen-based steel production. The latest gas-based steel mills are often dual-fuel facilities capable of switching from gas to hydrogen—preferably green hydrogen—once it becomes widely available and economically viable, which experts anticipate could occur between 2035 and 2040.

Meanwhile, transitioning from coal-powered steel plants to gas-powered ones could cut emissions by an impressive 75%, from approximately 1.9 kilograms of CO2 per kilogram of steel to around 0.4 kilograms. While this shift from coal to gas is beneficial for the climate and supports Europe’s move away from coal, it also increases the region's reliance on gas. A comprehensive move from the critical steel sector to gas highlights the complex trade-offs and challenging decisions inherent in reality, where one dependency (coal) is exchanged for another (gas). Green hydrogen ultimately provides the opportunity to decrease both dependencies.

A shift from coal to gas can significantly reduce emissions, while the adoption of entirely recycled steel provides CO2 advantages on par with those achieved by green hydrogen

Indicative emissions for different steel production technologies in kilogram CO2 per kilogram steel

Steel recycling is cost-effective and environmentally friendly, but falls short for high-grade steel applications

Recycled steel offers a significant reduction in CO2 emissions, with scrap steel melting processes potentially being powered by electricity, further reducing the carbon footprint. Emissions stand at around 0.1 kilogram CO2 per kilogram of steel compared to 1.9 kilogram for coal-based steel. So steel recycling is already as green as hydrogen-based steel can be in the distant future when it is fully made with green hydrogen.

However, the presence of impurities in scrap steel, such as copper, zinc, and chrome, can compromise the material's integrity, leading to reduced strength. Consequently, while recycled steel is an excellent choice for rail track construction materials like concrete reinforcement, it is not yet suitable for high-demand uses like automobiles, aeroplanes, and precision machinery.

While the UK intends to close its remaining coal-based steel facilities and replace them with electric furnaces to produce steel entirely with scrap steel, this has not yet gained traction on the continent. Executives at European steel manufacturers outside the UK are cautious about modifying their product offerings to include steel of a lower quality, as the competition in those market segments is more intense. Product quality still provides them with a competitive advantage in the global market, even with Europe’s higher energy prices. Yes, they do blend recycled steel into the current production process to the extent that quality is not compromised, sometimes up to levels of 30%. But they insist on making high quality steel from scratch, which requires the use of coal, gas or hydrogen.

Conclusion

Green hydrogen is often touted as the future of steel production, especially within a net-zero economy. Yet, its prohibitive cost and scalability issues currently hinder its ability to replace coal-based methods. Thankfully, a variety of transitional technologies are available to fill this void. An examination of the economics and business cases for these key technologies reveals encouraging news: they align with the societal objective of reducing emissions in the steel sector.

However, the stark economic truth is that these technologies either incur substantially higher costs or necessitate a reduction in steel quality, challenges that are not easily surmounted. Consequently, steel industry leaders are faced with tough decisions that extend beyond mere economics and cost considerations. Government subsidies can steer these decisions, but considering the significant cost disparity and the years required for transformation, a long-term commitment is essential.

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ACY

Economic

Forex

Amid a period of heightened risk aversion, the EUR/CHF currency pair experienced a sharp drop, plummeting from 0.9750 to 0.9300. However, this decline was followed by a quick recovery to 0.9500, only for the franc to start another downward trajectory in mid-August.

This strengthening of the franc is particularly intriguing, given that the overall market sentiment remains relatively strong, ruling out risk aversion as the primary cause. Furthermore, yield differentials don't provide much clarity either, as the 2-year yield spread has remained relatively steady despite the ongoing decline in EUR/CHF.

Swiss Franc's Strength: A Curious Trend Amidst Stable Markets_1

One plausible explanation for this phenomenon could be the anticipation that the Swiss National Bank (SNB) might take a more cautious approach in adjusting its monetary policy. This expectation raises the prospect that real yields in Switzerland could remain attractive. Although inflation in Switzerland is still much lower compared to other regions, the Overnight Indexed Swap (OIS) curve suggests that the market is only pricing in modest expectations for further rate cuts by the SNB, with just over two additional reductions expected by mid-next year.

At the same time, the 10-year government bond yield has seen a significant drop, now trading at just 0.40%, which suggests that inflation expectations are declining despite a stable economic outlook. This growing divergence, especially in comparison to Germany, highlights the anticipated differences in monetary policy paths between the two nations.

Adding to the intrigue, SNB President Thomas Jordan is scheduled to speak today in Basel, and his remarks will be closely watched by market participants eager to gain insights into the recent appreciation of the franc, which seems somewhat disconnected from typical trading patterns. There is speculation that the SNB may be reluctant to return to the lower bound of zero percent for its policy rates, a stance that could limit the potential for real policy yields to turn negative. With core annual inflation in Switzerland at just 1.1% and 10-year bond yields pointing to further declines, investors are increasingly anticipating that global policy rates may fall more sharply than in Switzerland. This scenario could potentially continue to support the franc.

Considering this, Jordan may need to be more explicit about the SNB's willingness to take more aggressive measures, whether through rate cuts or other interventions, to address the franc's strength and its impact on the Swiss economy.

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Owen Li

Cryptocurrency

As crypto traders eagerly await a potential altcoin season, one analyst argued it won't unfold as most expect because new crypto traders rush to buy the most speculative assets too soon.

“The joke has been told, everybody knows the punchline, and they’ve just gone straight to the punchline, and it is just not funny anymore,” Glassnode lead analyst James Check said in an Aug. 29 episode of the Rough Consensus podcast.

Traders attempted to outsmart the market

Analyzing trader behavior during the 2021 bull run and comparing it to 2024, Check said traders have tried to outsmart the market by jumping straight to buying the most hyped memecoins as quickly as possible.

In past bull runs, memecoins would typically surge toward the end of a broader market rally, but this time around the assets have been rallying faster than ever before.

“In 2021, we had the everything bubble, where it was this beautiful capital waterfall, Bitcoin, Ethereum, L1s, DeFi, all the way down to monkey JPEGs,” Check explained. He noted that many crypto natives had now learnt the quickest way to make the most money was to “buy the most stupid coin.”

Check claimed that following the approval of spot Bitcoin (BTC) exchange-traded funds (ETF) on Jan. 10, traders began taking advantage of the sharp uptick in the price of Bitcoin to swing for the fences on memecoins.

Traders jumped straight to PEPE

Instead of buying app utility tokens or other assets higher up the risk curve, “they went straight to PEPE token.”

Notably, PEPE (PEPE) posted staggering gains throughout the first half of 2024, with a select few traders making eye-watering profits. On May 15, one savvy PEPE trader made $46 million in profit, a whopping 15,718-fold return on his initial $3,000 investment in April.

PEPE is up 757.37% over the past 12 months. Source: CoinMarketCap

However, despite the price of PEPE and other major memecoins such as Dogwifhat (WIF) soaring, Check said “there was this gap in the middle where no one touched anything.”

On the other hand, other traders and analysts interpret the dwindling prices of altcoins and lower-than-anticipated trading volumes as a bullish signal for future price action.

On Aug. 29, crypto trader Luke Martin told his 331,500 X followers that “altcoins currently at the ‘sell your house to buy more’ level.”

Martin said that when Bitcoin was at this level in the summer of 2020, the price surged sixfold in the second half of the year.

“Price went vertical from 10k to 60k over the next 6 months,” Martin said.