MIXED VIEWS

A recent survey has revealed that many, including economists, strategists, and fund managers, predict a 93% chance of a quarter-point rate cut by the Federal Reserve. However, only 63% believe it is the right decision. Forecasts for two more quarter-point cuts by 2025 have been revised down from three, bringing the funds rate to 3.8% by next year and 3.4% by the end of 2026. Concerns about the incoming administration’s fiscal policies, such as tariffs and deportations, have led to uncertainties about inflation and growth effects. 56% of respondents see these policies as somewhat inflationary, while 41% perceive them as somewhat negative for growth. Additionally, nearly 69% view stocks as overpriced, and the S&P 500 is predicted to rise by 3% next year and 7% by 2026. The probability of a recession in the next year is at a two-year low of 29%, with forecasts showing GDP growth of 2.5% this year, cooling to 2.1% by 2025 and 2026.

POTENTIAL TO MAXIMISE RETURNS

Since many believe that an interest rate cut by the Federal Reserve is very likely to happen this week, financial experts are urging individuals to act swiftly to capitalize on the opportunity to earn competitive returns on cash investments. Current offers on savings accounts, money markets, and CDs continue to outpace inflation, a trend that is expected to endure until at least 2025. By seizing this moment to invest in Treasury bonds and high-yield CDs, which offer yields above 4%, individuals can secure favorable rates and potentially enhance their financial portfolios. Furthermore, options such as Series I bonds and Treasury Inflation Protected Securities provide avenues to combat inflation and diversify investment strategies. Optimal decision-making lies in finding a balance between liquidity and long-term investments, especially in light of projected market conditions for 2025 and the allure of high-yield online savings accounts and longer-term CDs. Taking proactive steps now could lead to better financial outcomes in the future.

ENTERING INTO CORRECTION

Nvidia’s stock fell by over 10% from its recent high, officially entering into correction territory. This comes after a strong year where the company’s shares soared by 166%, driven by excitement around artificial intelligence technology. However, in December, the stock faced a 4.5% decline, prompting some investors to take profits. Moreover, it is worth noting that not all semiconductor companies are following suit as other chipmaking stocks, like Broadcom, have been performing well recently. Furthermore, the broader market, which is represented by the Nasdaq Composite, continues to hit record highs, and this suggests that Nvidia’s correction may be more specific to the company rather than a reflection of the entire sector.

EMBRACING GROWTH

Semler Scientific, which is a small-cap medical device company, is believed to have introduced options trading for its shares following a period of significant growth driven by a shift to a bitcoin treasury strategy and successful capital-raising initiatives. Semler’s stock price has risen to over $74, with a market cap surpassing $600 million. By expanding its share offerings and acquiring a substantial amount of bitcoin, Semler appears to be following in the footsteps of successful companies like MicroStrategy, leveraging convertible notes to raise capital for bitcoin acquisitions without immediate dilution of existing shares. The introduction of options trading could offer additional opportunities for investors to hedge risk and make convertible offerings more attractive for potential buyers looking to capitalize on the company’s bitcoin strategy. It is important to remark that the company has not formally announced this move, nonetheless, brokerage accounts have indicated the availability of options for trading.

VENTURING INTO EURO STABLECOINS

Tether, the company behind the USDT stablecoin, has made an investment in StablR, which is a European stablecoin issuer. StablR issues stablecoins tied to the euro and U.S. dollar, having recently acquired an EMI license in Malta to comply with EU regulations. Tether’s investment in StablR includes providing support through their tokenization platform, Hadron, which offers tools for compliance, KYC, AML checks, risk management, and secondary market monitoring. This investment reflects Tether’s strategy of collaborating with smaller issuers and adapting to the changing regulatory landscape, particularly with the impending MiCA regulations in the EU. As part of this strategy, Tether made the decision to discontinue its own euro-pegged stablecoin and instead invest in regulated entities like Quantoz. Tether’s stance on the new regulations highlights their concerns about the potential impact on the European banking sector and on stablecoin reserves.