Australian Crypto Investors ‘sitting on the Sidelines’ for Clearer Laws: Swyftx CEO

Source: Reuters

Several regional private equity firms have banded together to establish a Vietnamese alliance, aiming to facilitate US$35 billion (S$45.73 billion) of investment into the Southeast Asian country over the next decade.

The newly established Vietnam Private Capital Agency, founded by five partners from funds including Golden Gate Ventures, Do Ventures and Monk’s Hill Ventures, will organise seminars, support private equity firms and both lobby and work with the government on policy. Its goal is to facilitate investment in sectors from agriculture to education and health care, said Mr Vinnie Lauria, a board member for the agency.

It is unclear how the association arrived at its investment projection, which is several times higher than Vietnam’s tech sector attracts annually, at present. But many investors tout the country’s potential at a time US-China tensions are prompting businesses to relocate factories and target new markets for growth. Vietnam’s digital economy is expected to surpass US$90 billion in 2030 from US$30 billion last year, according to a joint report from Google, Temasek Holdings and Bain & Co. 

“Vietnam is a hot market,” said Mr Lauria, a Golden Gate founding partner. “The motivation to establish the VPCA stemmed from key developments in Vietnam, including rising wages and GDP, increasing FDI, export growth post-Covid-19, government innovation programs, and rapid infrastructure development.”

The industry association hopes to broaden its membership to 100 individuals by the end of 2025, from more than 40 now. Existing member firms also include Vertex Ventures, Ascend Vietnam Ventures and Mekong Capital.

Vietnam’s startup scene has exploded in past years, driven by the rise of firms such as games developer VNG Corp. But as with much of Southeast Asia, the country’s tech sector has struggled to raise capital since a post-Covid-19 economic downturn. 

In 2021, Vietnam drew a record US$2.6 billion through 233 private deals, up from US$700 million via 140 deals a year prior, according to the Google report. But total capital invested in Vietnamese tech startups in 2023 plunged 17 per cent to US$529 million, placing it third among Southeast Asian countries, according to a separate report from Do Ventures and the Vietnam National Innovation Center. 

Source: Straitstimes

Coal India Ltd is planning to invest about 670 billion rupees (RM34.65 billion) to build coal-fired power plants close to its mines, signalling the fast-growing economy will remain reliant on the fossil fuel for decades to come.

The state-owned miner has already won approval for 4.7GW of generation to be built over the next six to seven years, with most of the facilities to be in the state of Odisha on India’s east coast, Business Development Director Debasish Nanda said in an interview. Another 2GW are currently under discussion and may take longer to complete, he said.

The new power stations are in addition to a plan, announced by New Delhi late last year, to add 88GW of thermal generation capacity through 2032. The world’s most populous country is forecasting electricity demand to surge over the next few years, making it tough to wean itself off coal, which accounts for around three-quarters of the power mix.

The fossil fuel will remain relevant to the country’s electricity mix for at least three decades, Nanda said. Putting these plants near mines will allow the company to avoid transport costs, keeping them competitive, he said, adding that Coal India is also looking to build renewable power stations and get into mining critical minerals.

India has a goal of getting to net zero by 2070, later than other major economies, reflecting the fact that both its population and economy are still growing quickly. However, environmentalists say the government should be doing more to decarbonise the power system.

“Coal is already unsustainable on the four key parameters of climate, environment, social justice and economics,” said Sunil Dahiya, a New Delhi-based analyst at the Centre for Research on Energy and Clean Air. “The government needs to form policies that allow wise use of resources instead of burdening the power system and the economy with expensive coal-fired electricity.”

Source: Theedgemarkets

Over the past century, after a significant Fed rate hiking cycle which resulted in an inverted yield curve — as we have seen over the past couple of years — there has been a major recession and stock bear market.

With investor sentiment towards stocks at historically high levels, most investors are either unaware of this phenomenon or believe this time is different for some reason.

I believe most investors are in for a major surprise… and not in a good way.

Declining employment is a key hallmark of recessions and leads to significant declines in spending and production, which leads to significantly lower corporate earnings, which leads to significantly lower stock prices.

In this article, I will show that the latest employment data suggests a recession is coming soon or is here already.

Jolting JOLTS Data

Every month, the US Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey, known on Wall Street as the JOLTS report. This report provides data on job openings, hires and separations, including quits and layoffs.

The latest JOLTS data shows that job openings, quits and hires are all declining at a rate that historically has only been observed during recessions. Of particular concern is job openings in the construction industry, since it is such a highly cyclical industry. Remarkably, construction job openings have collapsed by a whopping 46% over the past six months.

The chart below shows there has been a strong historical relationship between job openings (orange line) and S&P 500 stock prices (blue line). This relationship has been severed over the past couple of years, as AI-mania over mega-cap tech stocks like NVIDIA has driven the S&P 500 to all-time highs, while job openings continue to decline. Meanwhile, the median stock (as represented by the Value Line Geometric Index) is still 16% lower than it was nearly three years ago!

OVOM Research

Latest Jobs Report Signals Recession

The August jobs report was disappointing. A total of 142,000 new jobs were added in the US during August, missing Wall Street expectations of 165,000. Also, the July and June jobs numbers were revised down by a combined total of 86,000 jobs. This is consistent with prior months, as six of the past seven monthly jobs numbers have been revised down.

Note that this disappointing report came out after the Bureau of Labor Statistics recently revised March 2024 nonfarm payrolls down by 818,000 jobs. That was the second-largest negative payrolls' revision after the revision in 2009. Clearly, jobs growth has been disappointing.

Manufacturing jobs declined by 24,000 in August, which is the second-largest decline in manufacturing jobs in three years. This is concerning, since manufacturing, along with construction, is one of the most cyclical industries in the economy.

Another concern shown in the jobs reports was a decline in full-time jobs, offset by an increase in part-time jobs. Full-time jobs fell by 438,000, while part-time jobs rose by 527,000. In fact, all the net jobs added over the past year have been part-time jobs, with full-time jobs declining by 1.02 million and part-time jobs increasing by 1.05 million. As the following chart shows, full-time jobs (blue line) are declining by 0.8% year-over-year, while part-time jobs (red line) are rising by 14.4%. Such a wide disparity between full-time and part-time jobs is typical in the early stages of a recession. Note that full-time jobs have declined for the past seven months. Historically, a recession has occurred when there has been three straight months of full-time job declines.

FRED

Temporary job losses are another proven leading recession indicator, since it is easier for companies to lay off temporary workers. As with full-time jobs, a recession has historically occurred when there have been three straight months of temporary job declines. So far, temporary jobs have declined for the past twenty-two months.

Another key recession sign is a decline in the total number of workers. Historically, recessions have typically occurred when the number of people employed has declined. In August, employment fell by 66,000 from the prior year, which is the first decline since the covid panic.

Whenever the percentage of total payroll growth over the past year driven by private payrolls (excluding education and healthcare sectors) has fallen below 40%, that has signaled a recession. This measure dropped to 38% in July (as shown below) and 37% in August.

BofA Global Research

Another simple and proven recession indicator is the unemployment rate. The last nine recessions occurred when the unemployment rate rose by at least 0.5%. The unemployment rate in August was 4.2%, which is 0.8% higher than the lows reported in April 2023, 16 months ago. Historically, a recession has occurred 1 to 16 months after the unemployment rate troughs. If history is a guide, that suggests a recession is starting now or has already started.

Fed Rate Cuts Will Not Help

The Fed is widely expected to start cutting rates this month, even though “SuperCore” PCE inflation, Fed Chair Jay Powell’s favorite inflation metric, increased by 3.3% in July, the same increase seen in December 2023. That is more than 50% higher than the Fed’s arbitrary 2% target. In addition, wage growth was 3.8% in August, nearly double the Fed’s target.

Amazingly, most investors appear to believe that Fed rate cuts will prevent a recession and lead to a continuation of the stock market rally, even though rate cuts did not prevent the recessions and bear markets of the early 2000s and 2008-2009. They have forgotten that monetary policy is notorious for having long and variable lags, lasting a couple of years on average.

Indeed, as the following chart shows, whenever the Fed has cut rates after significant rate hikes, the unemployment rate has risen dramatically and there has been a recession.

FRED

Conclusions

Many proven employment-related recession indicators are flashing red right now. So are many stock sectors and asset classes. With stock market valuations and investor stock allocations near all-time highs, many investors will likely suffer in the bear market to come. I recommend not being one of them.

Source: SEEKINGALPHA