📉 Central Banks Rate Cuts: Gold on Fire! 🔥 Bitcoin to follow?

Good Morning!

The financial world is buzzing with speculation. The dollar's taking a nosedive, hitting its lowest point this year against the yen, while gold's shining brighter than ever. Why? Whispers of a potential 50 basis point Fed rate cut next week are gaining traction. The odds have shot up from 28% to 45%, thanks to some juicy reports from the FT and WSJ. Even Bill Dudley's throwing his weight behind the idea. It's a financial plot twist that's got everyone on their toes.

In today’s email:

• Central Banks: Lowering rates across the board (except Japan)

• Bitcoin: Bitcoin at $58k for now…

• Sky: Formerly MakerDAO is ditching wBTC

• Gold: The true de-dollarisation play

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THE BIG IDEA

Global central banks are shifting gears, with rate cuts becoming the new norm as inflation cools and economic concerns mount

The financial world is buzzing, and it's not just from your coffee maker. Central banks are pulling a 180 faster than you can say "economic pivot." Half of the major players have already hit the brakes on interest rates, and the rest are eyeing the exit ramp.

Switzerland kicked off this monetary dance back in March, and they're showing no signs of stopping. The Swiss National Bank is practically guaranteed to cut rates again this month, with some whispering about a hefty 50 basis point drop. Why? Inflation's chilled to a cool 1.1%, and they're worried about their exports getting as pricey as their watches.

Money printer go "Brrr"

Canada's not far behind, having slashed rates for the third time in a row. Their economy's feeling about as perky as a moose in summer, and they're even talking about undershooting their inflation target. Bold move, Canada.

The ECB just joined the party, cutting rates again as the euro zone economy sputters like an old Vespa. Markets are betting on more cuts to come, but the ECB's playing it cool on future moves.

Even the Fed, the big kahuna of central banks, is eyeing the "cut" button. Next week's meeting has everyone on the edge of their ergonomic chairs. Will they or won't they? The smart money's on a 25 basis point trim, but don't rule out a surprise.

Not everyone's in a rush to lower rates, though. Norway's holding steady at a 16-year high, and Australia's sitting pretty since last November. Japan? They're the class rebel, actually raising rates as inflation finally shows up to the party.

It's a financial soap opera out there! Stay tuned for the next thrilling episode of "As the Interest Rate Turns."

MARKETS AT A GLANCE

TOP NEWS

ECB cuts rates by 25bp, with more cuts expected as growth outlook weakens

The ECB's just slashed rates by 25bp, dropping the deposit rate to 3.5%. Why? Inflation's cooling off, but growth forecasts are looking as gloomy as a rainy day in London. While they're playing it cool for now, we're betting on more aggressive cuts next year. The trigger? A weaker eurozone economy. Lagarde's likely to keep her cards close to her chest in the press conference, but December's looking ripe for the next rate trim.

Deutsche Bank ups S&P 500 target, citing strong earnings and market optimism

Wall Street's crystal ball just got a polish. Deutsche Bank's upped its S&P 500 year-end target to a whopping 5,750. Why the bullish outlook? They're eyeing juicy stock buybacks, robust earnings, and a flood of cash into equities. The bank's betting on double-digit earnings growth, shrugging off recession fears. With AI hype and rate cut hopes fueling the fire, some folks are even whispering about 6,000. Looks like the stock market party might just be getting started.

New US stock exchanges aim to differentiate themselves with unique listing propositions

Move over, NYSE and Nasdaq! There's a new breed of stock exchanges in town, and they're not playing by the old rules. The Texas Stock Exchange and Green Impact Exchange are shaking things up, appealing to companies based on values and long-term strategies rather than just fees and liquidity. It's a bold move into potentially controversial territory, from board diversity to climate change. Will they succeed where others have faltered? Only time will tell, but it's certainly spicing up the listing game.

CRYPTO

UK proposes legislation to classify crypto and NFTs as property, boosting legal protection

The UK's diving headfirst into the crypto pool! New legislation's on the table to officially recognize digital assets as personal property under English and Welsh law. This game-changer covers everything from Bitcoin to digital art NFTs, giving tech-savvy Brits more legal armor. It's not just about keeping up with the Joneses – the UK's aiming to lead the global crypto race. With this move, they're hoping to attract more business and keep their £34 billion legal services industry booming.

Sky (formerly MakerDAO) considers ditching wrapped bitcoin (wBTC) due to Justin Sun concerns

DeFi drama alert! Sky, the lending giant formerly known as MakerDAO, is eyeing the exit for wrapped bitcoin. Why? Jitters over Justin Sun's involvement with the token's custodian. With $200 million in wBTC-backed loans at stake, this vote could shake up the DeFi landscape. Competitors are already circling, ready to fill the potential void. As the crypto world watches, one thing's clear: in DeFi, trust is everything, and even a whiff of doubt can trigger seismic shifts.

U.S. Lawmaker Proposes Joint CFTC-SEC Committee for Digital Asset Regulations

Congressman John Rose has introduced the BRIDGE Digital Assets Act to create a Joint Advisory Committee between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). The proposed committee aims to unify digital asset regulations, reduce regulatory uncertainty, and foster innovation in the U.S. It will include 20 nongovernmental members advising on decentralization, network security, and blockchain technology. The bill mandates a structured timeline, requiring the committee's formation and operations to commence within 180 days of enactment.

ZKsync has launched its decentralized governance model on its mainnet

Introducing smart contracts to support community-driven decision-making. The system features three main bodies: the Token Assembly for voting on changes, the Security Council for reviewing code updates, and the Guardians for vetoing decisions to align with ZKsync's core values. This governance model aims to prevent centralized control and enhance protocol security. Despite this advancement, ZKsync has seen a sharp decline in daily transactions, down nearly 85% from January.

GOLD

Nassim Taleb argues that gold, rather than competing currencies or digital assets, is the true de-dollarization play

Despite the dollar’s dominance in trade settlements, central banks, particularly from BRICS nations, are increasingly shifting their reserves into gold. Taleb points out gold's ~30% annual increase as a sign of this trend. Recent data supports this view: central banks' gold purchases have surged, with 29% planning to increase their gold holdings in the next year. The World Gold Council notes a rising belief that the dollar's role as the world's reserve currency will diminish, driven by geopolitical tensions and expectations of U.S. rate cuts. ING's Ewa Manthey predicts gold could average $2,580 in Q4 2024 and $2,700 in 2025, reflecting its growing importance as a safe-haven asset.

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