Bitcoin & Ether Set New Record Highs As Crypto Market Tops $3trl

Okay, very good morning. It is Tuesday, the 9th of November. Hope you're doing well. In the briefing, I'm going to talk about crypto, where Bitcoin has surpassed $68,000 for the first time, Ether record highs, the market cap of the crypto world now topping $3 trillion. In the equity space, Alphabet as well joins the $2 trillion club. The S&P 500 closes higher again yesterday for the 8th consecutive session, and that marks the longest winning streak since 2017. We're also going to talk about why Goldman Sachs is buying distressed Chinese property debt and what they're thinking and rationale is there. And then we'll also have a look at the charts in general. There's some other news as well to talk about where potentially a secondary candidate to Jerome Powell for the Fed chair, Lael Brainard, has also surfaced last night. As well. But as per usual, quick look before we get into those stories in a bit more detail at the charts this morning. And it's a relatively quiet open, um, FX markets probably reflecting that the most. Um, both currency pairs top left, EUR/USD and Cable, relatively unchanged. Equity index futures pretty much in a period of consolidation at the moment. The calendar today generally is quite light. There's not really much in the way of any major economic data. You've got the German ZEW survey later at 10 AM this morning, US PPI at 1:30, olive entries in the API at 9:30. But there's quite a few speakers which we'll look at coming out this afternoon. Otherwise, gold on the daily chart just looking fairly interesting here from a, a broader context from where we've been trading. I mean, this is looking at gold over the year-to-date perspective, and you can see that FOMC markup that I've got. That was that infamous June meeting where they made that quite distinct hawkish shift where they were talking about the increase in rate rises sooner. And that was what really weighed on gold in that move. But we're coming back up to the top end of the trading range that has really held prices since this— well, after that move since July in the summer. You can see through the period of late July and through August crossing into September, that's been a key area of upside resistance. And we're within sight of that at the moment, trading at around those levels. So something to just be aware of. Otherwise then, let's get straight into the news and let's talk about— I'm going to kick things off with crypto actually, because some pretty interesting stuff that's been happening. And as I said, Bitcoin has passed $68,000 for the first time. Ether tops $4,800. This is a look at the, the general price movement. You can see here Bitcoin just seeing further extensions of the breakthrough the highs that we're seeing at the end of Q1 and just a few weeks ago. And from a market capitalization point of view for the crypto space, now it has momentarily crossed the $3 trillion mark. And quite phenomenal really to see, you know, from a timing perspective, this was really that low that we saw beginning of 2020 here was the onset of the global pandemic, and it was really going through into what has been this year, really year to date, we broke out from a, from general crypto activity influencing then the overall market size through that peak of what we had through 2017-18. And that was through that $700 billion marker. And that was really right at the beginning of the year. We had some of the breakouts in, in Bitcoin at the time. And you can say, see here, most recently we had that retest up at around the same similar size to market that we saw in August to what we had in April of this year. And since then, we've really seen the next leg of the move higher, um, at the moment. But a couple of things just to talk about here. Bitcoin aside, a lot of people being drawn into the crypto space or the crypto economy for so-called decentralized financial services, as well as non-fungible tokens or NFTs. Which allow for digital collectibles like online art, for example. That's seen a massive explosion specifically this year. Blockchain networks like Ethereum, Solana continue to upgrade to deliver such functionality. And the nascent metaverse, which of course has been brought back to the forefront— it's always been around but really accelerated through Facebook's almost necessity to shift and accelerate its move in that direction. For lots of different reasons specific for that company. But that's again highlighted just the, the dependency that an immersive online environment could create in virtual reality for further adoption of cryptocurrencies, particular things like Ether, for example. Meanwhile, concerns around Ether's blockchain scalability and high transaction fees to move parts of the market's attention to so-called Ethereum alternatives. And what we've actually been seeing is tokens like Solana, Polkadot, Terra, Avalanche have all been seeing some really good, um, gains. Um, data from blockchain data firm Keiko shows that Ethereum is actually losing market share to other popular layer 1 blockchains since the beginning of the year. Layer 1 blockchain is essentially a set of solutions that improves the base protocol in itself to make the overall system a lot more, a lot more scalable. And Ether's trading volume on Binance, the largest crypto exchange in the world, has actually been decreasing and is now around 42% from 76% in the beginning of the year, with the loss volume shifting to those other Layer 1 tokens, for example. So yeah, some really interesting things happening at the moment that's causing this kind of bullish sentiment at the moment for the crypto space. On a much more individual news story that's, uh, quite funny. As much as it is, I'm sure it's going to be the next kind of, um, ridiculous gains that we'll see from a cryptocurrency. But this is AMC. They had their earnings last night, but away from the earnings, they, their kind of share price chopped around in aftermarket trade. But the world's largest theater chain is exploring the creation of its own cryptocurrency. So really trying to just take advantage of the the obviously retail interest that that stock has generated for some time now as part of the original kind of stocks in, in play. Um, the company is also talking to Hollywood studios about creating commemorative non-fungible tokens, so NFTs related to major films essentially. So they're definitely looking to take advantage of that surge in interest that that's seeing at the moment. And who's to say that that doesn't take off massively, particularly on— in NFTs related to major films. Can imagine a lot of interest for people to pick up little segments of very notorious screenplays and moments from those films. So yeah, be interested to see how that plays out. Just wrapping up kind of crypto into some single stock news, another kind of one that came out last night was Robinhood. Um, their shares dropped about 4%, actually finished down about 3.4%. Uh, Robinhood said personal information of millions of customers, circa 7 million, was compromised in a data breach last week and that the culprit demanded a payment from the firm. So their shares were under pressure last night. But moving off crypto and back to the world of macro, and I guess I just want to have a quick chat about the overall equity space really. And let's have a look at, um, the actual heat map and how things closed yesterday. And as you can see, uh, relative gains seen particularly semiconductors, pretty decent, uh, basic materials, financials. But overall, I mean, Tesla came off in the end, closed down about close to 5%. Um, yeah, remember it did gap down and hit lows down around 7.5% following that Elon Musk poll about selling shares, but their, their stock price generally recovered. I mean, 5% is a flash in the pan compared to the 37-odd percent that they rallied in 2 weeks. So one could argue it's a very masterful stroke from, from Musk, of course, to forward guide the market towards the potential of him offloading some shares. And, and we talked about that in length yesterday. But one of the other stocks here was Alphabet, finished up just marginally, 0.1%. Um, but that does mean that they breach now $2 trillion on a market cap, um, valuation, fueled by rebound in spending and digital ads and also ongoing growth in its cloud business. Alphabet, we've said before, has kind of been the real outperformer of the mega-cap tech stocks. It's up about 70% on the year alone. Um, and of 49 analysts tracked by Bloomberg who cover the stock, I read last night that all but one recommend buying Alphabet shares. That's even at this current state of play. And the average 12-month price target for the stock is $3,321, which suggests around an 11% return from its current, current share price. The other thing to mention here, I don't have a preset kind of article to flash to you right now. Actually, I might do if I go to And this is a good time to shout out the Amplify Me Twitter account, which I do share, I'd say, a good 10 to 12 articles a day of kind of must-read articles relevant to what's moving markets across the macro space, single stocks, crypto, and so on. But there was one last night that I would have shared. I would imagine if I just scroll back down, this is it. And this is Goldman Sachs. And what, what the deal was here is that obviously there's still a lot of concerns about the Chinese property market at the moment, but Goldman Sachs Asset Management came out with an interesting comment yesterday, uh, and they said they're buying Chinese real estate debt, which perhaps sounds incredibly risky, but the firm says they're adding a, quote, modest amount of risk through high-yield bonds issued by Chinese property developers and denominated in US dollars. China Evergrande Group obviously has moved closer to potential default, and that has created fears over the last several months about that might reverberate across the entire sector, if not beyond into the domestic economy and beyond in China. But from GS's point of view, they state that the market is overestimating that contagion risk, and they said in an interview on late on Friday, and thus therefore it's creating opportunities at the moment because they see distress priced in as a significant— is significantly out of alignment. And hence the rationale behind why they're snapping up some of that Chinese property debt at a good value, some might say, if you hold that view. The other article of interest is this. I talked about, I think it was last week, and it was reported in the Wall Street Journal that It was Jerome Powell who was having these meetings with various different politicians on Capitol Hill and meeting with Biden and the administration. Now it's the time of the only real other candidate in the running, which is the Fed Governor Lael Brainard, who was interviewed for the top job at the US central bank when she visited the White House as well last week. It's just emerged according to Bloomberg, according to people familiar with the discussions. Powell's current term, for context, comes to expiration in February. Biden said back at the beginning of the month that he'll make a decision fairly quickly. Most people, the majority of analysts, expect Powell to get the job. And one would suggest that either Powell or Brainard really would support this idea of having more of a mindset of a measured, perhaps then perceived more dovish stance. Stance on monetary policy, which is probably useful for Biden and his administration. Generally, that, that slow pace of normalization is a supportive crutch, if you like, to the market, um, more broadly speaking. And, and obviously management of the economy, the stock market, these sorts of things will have some impact towards the optics on his ability and his success of his administration. Brainard and Powell have obviously worked together on multiple issues. She's a governor, he's Fed chair at the moment. They are viewed as holding fairly similar views. The probably slight disparity is the fact that perhaps Brainard's a little bit more, a little bit more serious, a bit more onerous on, on bank and regulation side, and perhaps holds a slightly more historically dovish view than Powell, albeit not too dissimilar. From her background point of view, she's a PhD Harvard University, seen as highly competent, very experienced macroeconomist. So yeah, a credible candidate, but I don't think it— for me, it really changes the, um, the narrative too far away from Powell at this point. Um, but even if she did get in, I'd say that's probably the smoothest transition to an alternate candidate as you're probably going to get if we get to that point. So just as an update. We did have some comments as well, just pivoting off this, from the Bank of England governor, the unreliable boyfriend of which promises the world and never comes through when it comes to crunch time. Following that kind of really badly managed and poorly communicated press conference most have perceived from Bailey, where, you know, a lack of really acceptance of the fact that that market pricing through none other than really his inability to clearly forward guide in an appropriate fashion. He's been speaking again. He said that much of the rise in inflation has to do with the reopening after lockdown, and they will have to act with rates if they see evidence of higher inflation expectations feeding into, into wages. So playing into this kind of more transitory idea again. So that's more in fitting and keeping with what we heard from the likes of the ECB, uh, the Fed and so on. But certainly is quite a way from where we were just a few weeks ago when the market was obviously very aggressively pricing in rate hikes with the lack of pushback that we were getting from the governor. So he's got to earn his credibility back at the moment. His comments then really brushed aside, not really having any impact this morning. Okay, so quick look to finish off. I've already talked about the data of the day. So the other thing was just speakers. Um, from an ECB perspective, you got ECB's Knot speaking 11:50. Christine Lagarde does speak but only on banking supervision a bit later on at 1 PM, and ECB Schnabel at 4. From the Fed side of things, non-voting member Bullard speaks at 12:50. Fed Chair Powell does speak today but just on diversity, so won't be expecting anything explicit on the economy or policy, but he will be on at 2 PM London time, and then Fed voting member Mary Daly speaks at 4:35. And that is it. So I'm gonna let you guys get on with the session. Have a good day ahead. Any questions at all, feel free to let me know. Otherwise, I'll see you same time tomorrow. Thanks very much.