BETTING ON BITCOIN
As anticipation surrounds the U.S. presidential election, the crypto markets are bracing for volatility with bitcoin likely to be influenced by the outcome. The historical trend shows that following previous U.S. elections in 2012, 2016, and 2020, bitcoin experienced significant price surges. However, these post-election rallies have shown diminishing returns over time. Nonetheless, projections suggest that if the pattern continues, bitcoin could potentially reach a value of around $103,500 by the fourth quarter of 2025, indicating room for growth. Comparisons to previous cycles show that bitcoin is currently undervalued, leaving the possibility for significant price increases in the future despite diminishing returns observed in post-election rallies. Overall, the outcome of the U.S. election is expected to play a significant role in the short-term price movements of bitcoin, with the potential for substantial gains in the long term if historical patterns persist.
NVIDIA’S DOW ENTRANCE
The leading AI chipmaker, Nvidia, is set to replace rival Intel in the Dow Jones Industrial Average, marking a significant shift in the tech sector. This move comes as Nvidia’s stock has been on a steady rise. The change is scheduled for November 8, along with Sherwin-Williams stepping in for Dow Inc. Meanwhile, Vistra Corp. will take the place of AES Corp. in the Dow Jones Utility Average on the same day. Additionally, Chewy’s inclusion in the S&P MidCap 400 to replace Stericycle reflects the dynamic nature of the market. These alterations highlight the continuous evolution of the tech and utility sectors, showcasing the adaptability and growth potential of companies amid changing market conditions. The anticipation and speculation surrounding Nvidia’s addition to the Dow amplify its significance in the industry, demonstrating the company’s resilience and prominence in the AI chip market.
INCREASING CASH PILE
During the third quarter, Berkshire Hathaway, under the leadership of Warren Buffett, experienced a significant increase in cash reserves exceeding $300 billion. This surge in liquidity stemmed mostly from strategic stock sales, with reductions in holdings of companies like Apple and Bank of America. This decision appears to be influenced by Buffett’s concerns regarding the ongoing economic uncertainties and the expanding fiscal deficit, and signal a preemptive response to potential tax hikes needed to address the escalating deficit. Moreover, it is worth noting that although facing challenges within the insurance sector, Berkshire Hathaway’s operating earnings for the quarter only slightly fell short of projections.
INTERNATIONAL NEWS
UBS analysts are forecasting that the European Central Bank will progressively reduce interest rates by 25 basis points per meeting until June of the following year to reach a target rate of 2%. The analysts project an initial rate cut to 3.0% on December 12th, with subsequent cuts likely to occur at a faster pace than previously anticipated. They maintain a base scenario wherein labor markets remain robust, wage growth decelerates gradually, and GDP growth stays subdued but stable. However, in a risk scenario where labor markets weaken, wage growth slows more rapidly, or GDP shows signs of weakening, the analysts predict that the ECB would expedite its rate cuts to address these potential challenges. Ultimately, the ECB’s monetary policy decisions are being guided by the goal of promoting economic growth and stability within the Eurozone.
KEY EVENTS HAPPENING THIS WEEK
Monday: Factory orders report for September, and earnings report from Paramount (before market opens).
Tuesday: U.S. trade deficit report for September, ISM services report for October, and earnings reports from Yum Brands and Restaurants Brands International (before market opens).
Wednesday: S&P final U.S. services PMI report for October and earnings reports from CVS (before market opens), Qualcomm, Arm Holdings, e.l.f., Virgin Galactic, and AMC (after market closes).
Thursday: FOMC interest-rate decision and speech from Fed Chair Powell, wholesale inventories and consumer credit reports for September, initial jobless claims for week ending on November 2, preliminary U.S. productivity third quarter report, and earnings reports from Under Armour, Tapestry, Moderna, Warner Brothers Discovery (before market opens), Airbnb, Block, Lucid, Capri Holdings, Rivian and Draftkings (after market closes).
Friday: Preliminary consumer sentiment report for November, speeches from Fed Governor Michelle Bowman and St. Louis Fed President Alberto Musalem, and earnings report from Paramount (before market closes).
