In the Global Week Ahead, Bitcoin is back in the headlines, having roared to a new record high.

Just as many of the world's major central banks are starting to pave the way towards cutting interest rates, but only if inflation behaves.

A medley of macro matters will also be under the microscope:

• Investment flows into cryptocurrencies
• Inflation numbers from the United States, China and the U.K., as well as
• A potentially market-moving snap election in Portugal

Next are Reuters’ five world market themes, reordered for equity traders—

(1) Bitcoin Is Booming.

Bitcoin has hit a new all-time high above $69,000, bringing it back to where it was in November 2021, when rates were low and "blockchain" and "Web3" were all the rage.

That 2021 boom was followed by a "crypto winter" fraught with bankruptcies and collapses at the biggest crypto firms that left millions out of pocket. Various crypto executives were hit with criminal charges and regulators stepped up their warnings about the risks.

But this does not seem to have deterred a new wave of money from coming in. No one knows for sure what's driving the gains, although analysts point to the billions of dollars that have flowed into U.S. spot Bitcoin ETFs that launched this year.

Crypto fans say the industry has matured, but central bankers and regulators are still wary. Now investors are wondering: how much bigger can it get and is it different this time?

(2) On Tuesday, the U.S. Consumer Price Inflation (CPI) Data for FEB Lands.

Tuesday's U.S. inflation report could help answer one of the key questions hovering over markets: When can the Federal Reserve start cutting interest rates?

The CPI for February is expected to rise +0.4%, after January's CPI rose at a faster-than-expected +0.3%.

Investors have dialed back expectations for the number of interest rate cuts in 2024 amid lingering concerns about strength in the economy reigniting inflation. Fed Chair Jerome Powell told Congress in recent days that rate reductions will still "likely be appropriate" later this year, if officials gain more confidence in the steady decline of inflation.

With the fourth-quarter corporate earnings season ending, economic and inflation data is front and center ahead of the Fed's next meeting later in March.

(3) Mainland China’s Consumer Price Inflation Data Came Out Saturday, March 9th.

Investors weren't throwing any parties after the opening of China's week-long National People's Congress, as Beijing announced a stable and as-expected 5% growth target for 2024, but didn't break down what stimulus it would deploy to get the economy up and dancing.

The ailing property sector may be getting worse instead of better, with bonds in state-backed developer Vanke having sold off sharply. New home prices could fall further this year as support measures so far have had little impact, with the latest data due on March 15th.

There is potentially room to loosen monetary policy, because although Chinese interest rates are already low compared with the U.S., the deflationary environment means real rates could come down.

Inflation data out on Saturday March 30th offered fresh hints on how long this trend will continue:

• The PPI for FEB was down -2.7% y/y, consensus was for -2.5% y/y
• The CPI was up +0.7% y/y, while consensus was for +0.3% y/y

(4) U.K. Macro Data a Focus.

Britain's economy has narrowly avoided recession, as business activity is expanding at a healthy clip and consumers hit the shops in earnest — even with interest rates at 16-year highs and persistent inflation.

The Bank of England is less concerned about growth and far more focused on inflation. The jobs market is showing signs of moderating. Vacancies fell for the 19th time in a row in the three months to January. But businesses are still struggling to find and retain staff. High levels of long-term sickness are also hampering employers.

Average regular pay — key for the BoE — decelerated to a rate of -6.2% in December, the slowest pace of growth in over a year, but not slow enough to convince policymakers rates will need to fall sooner rather than later.

Data on March 12th might shift that thinking.

(5) Snap Elections (Again!) in Portugal.

Portugal held its second snap election in two years on Sunday.

In the past, such uncertainty and political instability would have unnerved investors.

Yet the premium they demand to hold Portuguese bonds over top-rated Germany is at the lowest in a year, around 134 bps. Sentiment towards Portuguese debt (and southern Europe) is positive.

Ratings agency S&P Global just raised Portugal's rating to "A-" from “BBB+," citing an improved debt outlook and saying a change in government shouldn't alter that trajectory.

So, is this a "nothing to see" election? Not exactly.

Portugal's center-right Democratic Alliance (AD) won Sunday's general election, its leader Luis Montenegro said, though it was unclear if he could govern without the support from far-right Chega, with whom he again refused to negotiate.

Chega's parliamentary representation more than quadrupled to at least 48 lawmakers in the 230-seat legislature, giving the combined right a majority.

The result underscores a political tilt to the far right across Europe.

Portugal, which only returned to democracy after the fall of a fascist dictatorship 50 years ago, had long been considered immune to the rise of right-wing populism across the continent, which is expected to result in gains for far-right parties in European elections in June.

Zacks #1 Rank (STRONG BUY) Stocks

(1) PACCAR (PCAR Quick QuotePCAR - Free Report) : This is a $114 stock with a market cap of $59.9B. It is a domestic truck maker found in the Zacks Domestic Auto industry. I see a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of C.

Image Source: Zacks Investment Research

PACCAR Inc. is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks.

It also designs and manufactures diesel engines and other powertrain components for use in its own products and for sale to third party manufacturers of trucks and buses.

Besides supplying aftermarket parts, PACCAR also offers finance and leasing services.

PACCAR Trucks distributes premium trucks under the Kenworth and Peterbilt nameplates in the United States and Canada.

The company operates in the European light/medium market under the DAF nameplate through its wholly owned subsidiary, Leyland, in the U.K.

The company also exports the DAF vehicles to the Middle East, Australia and Africa. PACCAR International distributes the Kenworth, Peterbilt and DAF trucks outside their primary markets in over 100 countries.

The Kenworth nameplate is also marketed and distributed by foreign subsidiaries in Mexico and Australia.

(2) Spotify (SPOT Quick QuoteSPOT - Free Report) : This is a $270 stock with a market cap of $59.9B. It is found in the Zacks Technology Services industry. I see a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of F.
 

Image Source: Zacks Investment Research

Spotify Technology S.A. provides music streaming services.

The company offers commercial free music and ad-supported services to subscribers.

Spotify Technology S.A. is based in Sweden.

(3) Block (SQ Quick QuoteSQ - Free Report) : This is a $77 stock with a market cap of $47.5B. It is found in the Zacks Technology Services industry, as well. I see a Zacks Value score of D, a Zacks Growth score of D, and a Zacks Momentum score of A.

Image Source: Zacks Investment Research

Headquartered in San Francisco, CA, Block, formerly known as Square, was incorporated in 2015. The company offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers to start, run and grow their businesses.

We combine sophisticated software with affordable hardware to provide sellers powerful payment and point-of-sale solutions. The company provides payment and point-of-sale (POS) services, which include hardware and software to accept payments, streamline operations and analyze business information.

Block’s payments and POS services include In-Person Payments, Online Payments, Square Cash, Square Register, Square Analytics, Square Appointments and Square App Marketplace. The company's financial services include Square Capital and Square Payroll.

Block reported total revenues of $21.9 billion in 2023. The company earns revenues from transactions, subscription and services, hardware and bitcoin.

Bitcoin revenues (43%) are derived from total sales of bitcoin to customers. Cash App users can buy and sell bitcoins.

Transaction-based revenues (29% of total revenues in 2023) include transaction fees that sellers pay for managed payment solutions and services.

Subscription and services-based revenues (27%) include fees that sellers pay for a range of paid services-based products including Square Appointments, Gift Cards, Customer Engagement, Employee Management, Payroll, Instant Deposit, and other subscription and services-based products offered through Square Marketplace. A significant portion of the revenues comes from Square Capital that provides loans to pre-qualified sellers.

Hardware revenues (1%) are generated from sales of contactless readers, chip card readers and third-party peripherals which include cash drawers, receipt printers and barcode scanners. Block’s hardware portfolio is comprised of Square Stand, Magstripe reader, Square Register and Square Terminal, and chip readers.

Geographically, the United States contributed almost 93.2% of revenues, while the rest came from international markets.

The company had 12,985 full-time employees worldwide as of Dec 31st, 2023.

Key Global Macro

On Monday, Mainland China’s FDI for FEB is out. The YTD prior y/y reading was a soggy -11.7%.

There is a Eurogroup meeting.

On Tuesday, the U.S. CPI for FEB lands. The prior y/y CPI was +3.1%. The prior core CPI y/y was +3.9%.  The m/m look is for a +0.3% m/m addition, coming after a slightly ‘hot’ +0.4% m/m reading in JAN.

The U.K. ILO unemployment rate is out for JAN. The consensus is for 3.8%, steady after a prior 3.8% reading.

NFIB small biz optimism in the USA is out for FEB. The prior reading is at 89.9.

On Wednesday, U.S. GDP for JAN comes out. I see a +0.2% m/m addition, rising from a -0.1% m/m prior reading.

On Thursday, U.S. retail sales come out for FEB. The prior retail sales minus autos was down -0.6% m/m in a cold JAN.

U.S. PPI data for FEB comes out. The ex-Autos look is for a +0.3% m/m rise, putting the same amount of pressure on the CPI, as the prior month.

On Friday, U.S. industrial production data for FEB comes out. The prior reading for JAN was up +0.1% m/m.

The preliminary U of Michigan consumer sentiment index for MAR is out. The prior reading was 76.9.

Conclusion

This is worth noting.

In this week’s top Zacks #1 Rank (STRONG BUY) highlighted stocks: The transaction app Block made 43% of its revenues from Bitcoin.

This was their largest consolidated source of revenue.

Is Bitcoin really becoming a major transaction supply route?

Or is it just that the ETF-sponsorship of Bitcoin took up coin demand, on a fixed supply of those items?

For me, I think it is just the latter…

Have a great trading week!

John Blank, PhD
Zacks Chief Equity Strategist and Economist