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NOVEMBER 24, 2023

SHORT SESSION

Stocks are set to close out the trading week with a half-day session, ending at 12:00 P.M. CST; and it is worth remarking that if the market closes today with gains, it will mark four consecutive weeks of growth for each major average.

TALKS OVER BITCOIN ETF

BlackRock and Nasdaq recently held discussions with the U.S. Securities and Exchange Commission (SEC) regarding the potential listing of a spot Bitcoin exchange-traded fund (ETF). The talks included BlackRock proposing two potential redemption models for its iShares Bitcoin Trust: one involving in-kind transactions and the other using cash. In addition, around the same time, representatives from Grayscale also convened with the SEC officials as they too seek to list their own Bitcoin ETF. Following these discussions there is an increasing speculation that the SEC may be nearing a decision on approving a spot Bitcoin ETF for U.S. markets, however, despite the positive engagements, uncertainty remains due to the history of delays and rejections in this area. Let’s remember that among BlackRock and Greyscale, other firms such as Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, and Bitwise have also submitted applications for spot crypto ETFs and all continue to await a response from the SEC.

HOUSING MARKET REMAINS STALLED

Fannie Mae economists have cautioned that the US housing market’s current downturn is expected to continue, with existing home sales down 18.9% year-over-year in June and mortgage applications hitting a 28-year low. The primary driver behind this slowdown is the high mortgage rates, which are anticipated to persist, even if the US avoids a recession in the next year. Additionally, if a recession does occur, the housing market is expected to face challenges due to a weakened labor market, credit constraints, and reduced consumer confidence. Fannie Mae does not foresee a significant recovery in existing home sales under any likely scenarios, with a projected economic downturn by 2024. These projections imply that housing conditions are unlikely to improve until mortgage rates reduce to the 5% range, a significant issue given that the current average rate for a 30-year fixed mortgage is at a 23-year high of 7.48%.

INTERNATIONAL NEWS

In November, a glimmer of hope emerged for Germany’s economy as businesses showed improved outlook for the third consecutive month. This development was reflected in the latest Ifo institute’s report, which suggested a potential recovery for an economy mired in recession and facing a budget crisis. However, despite this, the country remains embroiled in political turmoil and is struggling to rebound from last winter’s downturn, while also grappling with the mounting impacts of higher borrowing costs. As a result, Germany stands as the only major economy expected to contract this year, with the recent report confirming a 0.1% GDP decline in the third quarter, and challenges such as high energy prices and weak global growth have cast a shadow over the country’s large manufacturing sector, leading several major industrial firms to implement cost-cutting measures. Moreover, high interest rates are still impacting demand, and the easing of monetary conditions is unlikely in the near future, despite a significant slowdown in inflation.

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