⚡️ Powell: Economic Thunderbolts at Jackson Hole?

Good Morning!

The financial landscape is shifting faster than a crypto trader's portfolio. The Fed's readiness to cut rates is sparking a global easing trend, with the Bank of Korea and Bank Indonesia already eyeing reductions. This move is sending the dollar on a downward spiral, hitting yearly lows against the euro and sterling. Meanwhile, PMI figures are set to reveal the economic pulse on both sides of the Atlantic. In the commodities arena, metal prices are finding their footing, while oil struggles with demand concerns. It's a financial chess game, and every piece is in play.

In today’s email:

• FedWatch: Dovish FOMC and now all eyes on Jaskson Hole starting today

• Bitcoin: Bitcoin back above $61k, can it break resistance to climb higher?

• Gold: Still strong as private wealth managers increase allocations

• $36.6 trillion: Total value of transactions processed on Bitcoin network in 2023, 54% higher than (MA & V combined $23.8 trillion!)

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THE BIG IDEA

Fed Signals September Rate Cut, Powell's Jackson Hole Speech Looms

The Federal Reserve is gearing up for a potential interest rate cut in September, with the latest meeting minutes revealing a "vast majority" of officials favoring such a move. This shift in monetary policy comes as the central bank faces the delicate task of navigating pre-election economic uncertainties.

Markets have been anticipating this pivot, with expectations of up to a full percentage point in rate cuts by year-end. Some policymakers even considered a quarter-point reduction in July, highlighting the growing consensus for easing. The minutes also noted that many officials view the current rates as restrictive, with concerns about premature tightening reigniting inflation fading into the background.

As the September 17-18 meeting approaches, all eyes turn to Fed Chair Jerome Powell's upcoming speech at the Jackson Hole symposium. Powell faces the challenging task of preparing markets for potential post-election policy reversals without appearing partisan. With the U.S. political landscape sharply divided on fiscal, trade, and regulatory policies, the Fed must tread carefully in its communications.

The economic outlook remains complex

Recent labor market data, including an upward revision in the unemployment rate and a significant downward adjustment in March payroll numbers, have added urgency to the rate cut debate. Some analysts even suggest considering a half-percentage-point reduction.

However, the post-election scenario could dramatically shift the Fed's trajectory. Potential inflationary pressures from fiscal policies, tariffs, and labor market changes might necessitate a return to tightening by mid-2025. Powell's Jackson Hole address presents a crucial opportunity to remind the public of economic realities and prepare the ground for possible policy pivots, all while maintaining the Fed's political neutrality in a charged electoral atmosphere.

MARKETS AT A GLANCE

TOP NEWS

Fed minutes reveal high likelihood of a September rate cut, with officials confident about easing inflation and concerns over labor market

The Fed's latest minutes read like a financial thriller, with a plot twist in the making. Most policymakers are eyeing a September rate cut, marking the first since the Covid crisis. While they held steady in July, some were itching to pull the trigger then. The inflation story is looking rosier, but there's a subplot of labor market jitters. It's a high-stakes game of economic Jenga, and the next move could topple or stabilize the tower.

U.S. job growth revised down significantly, but current economic indicators differ from previous recession periods

The job market just pulled a plot twist that would make M. Night Shyamalan proud. The Bureau of Labor Statistics dropped a bombshell, revising job growth down by 818,000 - the biggest markdown since 2009. But before you start prepping for economic doomsday, let's put on our detective hats. Unlike 2009, we're not seeing red flags in other key indicators. GDP's on a positive streak, jobless claims are steady, and no recession has been declared. It's like the economy is playing a game of 'Spot the Difference' with its past self.

Bank of Korea holds rates steady but signals potential cuts, with growth concerns outweighing inflation worries

South Korea's central bank is playing economic chess, and it just made an intriguing move. While holding rates at 3.50%, they've subtly shifted their strategy. Four out of seven board members are eyeing a rate cut within three months, possibly as soon as October. Governor Rhee's hinting at the "right conditions" for cuts, but he's not throwing caution to the wind. The bank's juggling act includes downgraded growth forecasts, cooling inflation, and the wild card of Seoul's surging apartment prices. It's a delicate balance of economic stimulation without overheating the property market. The global financial dominos are falling, and South Korea's deciding when to tip its own.

CRYPTO

Bitcoin surges past $61,800 as Fed minutes hint at September rate cut

Bitcoin shot up to $61,865 after Fed minutes suggested a likely September rate cut. The debate now centers on cut size, with a 36% chance of a 50 basis point reduction. Revised labor data shows job market cooling longer than expected, boosting asset prices. Despite potential recession fears, history indicates markets often initially climb post-rate cuts. Altcoins followed Bitcoin's lead, with Fantom, Compound, and Polygon seeing significant gains.

Polychain leads $6.7M investment in Corn, a new Bitcoin-centric yield network on Ethereum L2

Corn, a novel Ethereum L2 network, launched with $6.7M backing from Polychain Capital. It uses tokenized Bitcoin (BTCN) for gas fees and incentives, aiming to unlock Bitcoin's $1.1T liquidity for DeFi. Corn generates yield through native emissions, staking bribes, and transaction fees. Unlike other protocols, it launched without a fixed yield, depending on ecosystem growth for returns.

Franklin Templeton CEO reveals TradFi's blind spot on Bitcoin's massive scale

Franklin Templeton CEO Jenny Johnson dropped a bombshell at the Wyoming Blockchain Symposium: Traditional finance is clueless about Bitcoin's true size. In 2023, Bitcoin processed a whopping $36.6 trillion in transactions, dwarfing Mastercard and Visa's combined $23.8 trillion. Johnson, who's steering her firm into the crypto future, is baffled by this parallel financial universe that TradFi seems to ignore. Meanwhile, Franklin Templeton's not just watching; they're diving in with blockchain funds and a new crypto ETF proposal.

Tron's Sundog token surges 25% as SunPump memecoin generator gains traction

Tron's memecoin scene is heating up faster than a crypto trader's laptop. Sundog token skyrocketed 25% as traders flocked to test SunPump, Tron's answer to Solana's wildly successful Pump.fun. With a market cap briefly touching $250 million, Sundog's making waves. Justin Sun's predicting a $3-4 billion revenue tsunami for Tron, riding the meme wave. DWF Labs just hopped on board, adding fuel to the fire. Meanwhile, TRX is up 20% this week. Is this the dawn of Tron's meme era?

GOLD

Wealth managers turn to gold amid geopolitical tensions and market volatility

Private banks are bullish on gold as geopolitical uncertainties rise. The precious metal hit an all-time high of $2,500+ per ounce in August, up 20%+ in 2024. Pictet's Milène Dumont recommends gold to enhance portfolio resilience. UBP's Michaël Lok sees it as a wealth preservation anchor. Analysts cite deglobalization, central bank buying, and potential inflation as drivers. Despite drawbacks, gold's diversification benefits are attracting wealth managers seeking stability in turbulent times.

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