BTC MINING BOOM

According to data from Blockchain.com, on November 9, Bitcoin mining revenue reached a new yearly peak, totaling $42,386,514.038, surpassing the previous high of $41,744,197.067 in May 2023. The surge coincided with Bitcoin’s price spiking to over $37,000 on the same day, driven by heightened expectations surrounding the potential approval of a U.S. spot Bitcoin Exchange-Traded Fund (ETF) by the Securities and Exchange Commission (SEC). The upswing in mining revenue is attributed to the combined impact of Bitcoin’s price increase and heightened network activity. Lane Kasselman, President of Blockchain.com, pointed out that increased network congestion leads to higher transaction fees, contributing to miners’ earnings. Moreover, let’s remember that the anticipation of U.S. spot Bitcoin ETF approval has played a pivotal role in the recent price rally, impacting the recent surge in Bitcoin pricing and the related increase in mining revenue. Nevertheless, it is worth noting that as of 8:00 AM CST Bitcoin’s price is below 37,000.

RISE DESPITE DOWNGRADE

U.S. Treasury yields have risen slightly, shrugging off Moody’s latest decision to downgrade its outlook on the U.S. credit rating. Moody’s cited large fiscal deficits and declining debt affordability in its decision to lower the U.S. credit rating to “negative” from “stable,” aligning with a prior downgrade by Fitch over the summer due to political turmoil around the U.S. debt ceiling. As a consequence, the U.S. no longer holds top-notch AAA ratings from two of the three main rating agencies. However, the impact on Treasury yields was minimal, with the benchmark 10-year Treasury yield inching up to 4.64% and two-year yields remaining unchanged, while 30-year yields moved slightly higher. Moreover, looking ahead, the focus now shifts to the U.S. inflation data for October due this week, with analysts expecting a modest increase.

DIVERGENT PREDICTIONS

Morgan Stanley and Goldman Sachs present differing predictions for the Federal Reserve’s expected interest-rate cuts, as although both banks forecast an economic future without recession for the U.S., they diverge in their economic outlook, especially pertaining to unemployment and inflation. According to Morgan Stanley economists, the central bank is likely to pursue a more aggressive series of rate reductions as they expect the Federal Reserve to begin rate cuts in June 2024, followed by additional reductions in September and at each meeting in the fourth quarter, each decrease at 25-basis-point increments. This projected trajectory would bring the policy rate down to 2.375% by the close of 2025. In contrast, Goldman Sachs envisions a more gradual pace of rate cuts, with the first 25-basis-point reduction anticipated in the fourth quarter of 2024, followed by one cut per quarter through mid-2026, totaling 175 basis points, ultimately resulting in rates settling at a 3.5%-3.75% target range. In addition, Morgan Stanley expects the Federal Reserve to initiate the phase-out of quantitative tightening in September 2025, with the process concluding in early 2025. Conversely, Goldman Sachs predicts higher interest rates due to a stronger economy and prolonged budget deficits.

FOMO RESURGENCE

Investors are experiencing a resurgence of FOMO (fear of missing out) in the stock market as the S&P 500 surges by 7.2% in recent weeks, igniting renewed optimism for a potential rally. Many market participants are adjusting their strategies, scaling back bearish bets against major indices like the S&P 500 and Nasdaq-100, while increasing exposure to bullish options, indicative of a year-end rally. A dual boost for stocks and bonds occurred following measures taken by Washington earlier this month, leading to a significant surge in market values. Investors are now eagerly awaiting the forthcoming inflation data, and experts anticipate that the economy will continue to defy earlier projections, fostering a brighter outlook for stocks. This optimism is reflected in strong inflows into individual and mutual funds, with many committed to adopting a bullish stance for stocks.

KEY EVENTS HAPPENING THIS WEEK

Monday: Monthly U.S. federal budget report for October, and speech from Fed Governor Lisa Cook.

Tuesday: NFIB optimism index and Consumer price index (CPI) reports for October, earnings reports from Home Depot, speeches from New York Fed President John Williams, Chicago Fed President Austan Goolsbee, and testimony from Fed Vice Chair for Supervision Michael Barr to a Senate panel.

Wednesday: Mortgage Bankers Association report, Business inventories report for September, Producer price index (PPI) and U.S. retail sales reports for October, earnings reports from Target and TJX companies, speeches from New York Fed President John Williams and Richmond Fed President Tom Barkin, and testimony from Fed Vice Chair for Supervision Michael Barr to House panel.

Thursday: Initial jobless claims for week ending on November 11, Import price index and Industrial production reports for October, Home builder confidence index report for November, earnings reports from Walmart, Macy’s and Gap, and speeches from Fed Vice Chair for Supervision Michael Barr, Cleveland Fed President Loretta Mester, Fed Governor Christopher and Fed Governor Lisa Cook.

Friday: Housing starts report for October, and speeches from Boston Fed President Susan Collins, Fed Vice Chair for Supervision Michael Barr and San Francisco Fed President Daly.