🤑 CPI: Are Risk Assets Likely To Rally? 📈

Good Morning!

The dragon's roaring again! Chinese stocks staged a comeback today, shaking off yesterday's slump like a wet dog. All eyes are on Saturday's press briefing, where we're hoping for some juicy details on fiscal stimulus to jumpstart China's economy. The blue-chip index bounced back 3.5%, while Hong Kong's Hang Seng surged 4%. But let's not count our yuan before they're printed – if expectations aren't met, we might see a steep pullback. Meanwhile, the U.S. inflation report looms large, potentially reshuffling the Fed's rate cut deck.

In today’s email:

• Oil: Prices edging up again, volatility likely to stay elevated

• Bitcoin: Back down to the $60k handle

• Crypto: Retail crypto ownership rising

• Gold: Off highs slightly given change in rate cut expectations 

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THE BIG IDEA

Dollar climbs to two-month highs as markets digest Fed minutes and await crucial CPI data

The greenback's on a roll, hitting two-month highs as we digest the Fed's latest musings. The central bank's September meeting minutes dropped, revealing a majority backing that hefty 50-basis point rate cut. But here's the kicker – it's old news after Friday's job report wildcard into rate cut expectations.

Now, all eyes are on Thursday's CPI report, the next big player in this economic chess game. The market's not buying into aggressive easing anymore, with traders betting on a 25-point cut in November and maybe 50 more by New Year's Eve. It's like the Fed's playing monetary limbo – how low can they go?

Meanwhile, the euro's taking a nosedive, hitting a two-month low against the dollar. Yen volatility has been on the rise after Japan's new PM Ishiba threw a curveball with his stance on monetary policy. Talk about keeping us on our toes!

All eyes on US CPI today

China's economic woes are still the elephant in the room, weighing heavily on the Aussie and Kiwi dollars. Speaking of which, the RBNZ just slashed rates by 50 basis points, sending the Kiwi tumbling like a bungee jumper off the Sky Tower.

In the crypto corner, Bitcoin and Ethereum are feeling the heat, dipping their toes in bearish waters. It's a stark reminder that even digital gold isn't immune to the dollar's gravitational pull.

As we gear up for Thursday's inflation data, the markets are as twitchy as a long-tailed cat in a room full of rocking chairs. Will it be a game-changer or just another day in the economic circus? Stay tuned, because in this financial soap opera, the plot twists keep coming!

MARKETS AT A GLANCE

TOP NEWS

Buffett's S&P 500 bet success sparks debate on index fund investing strategy

Remember when Warren Buffett bet a cool million he could beat hedge funds with an S&P 500 index fund? Well, he won that wager, and now everyone's jumping on the bandwagon. But hold your horses! While the S&P 500's been on fire lately, some experts warn it's not all sunshine and rainbows. Diversification is key. Don't put all your eggs in one index basket, no matter how tempting it looks.

Venture capital deals slow despite stock market rally, with AI companies commanding attention

Despite the stock market's upbeat mood, venture capitalists are playing it cool. Q3 saw a 32% drop in deals compared to Q2, totaling $37.5 billion. Why? Economic jitters have investors demanding tougher terms, causing startups to hit pause on funding rounds. AI companies are still the belle of the ball, though. And while the VC world's holding its breath, a potential Fed rate cut could be the defibrillator it needs.

Oil prices edge up amid Middle East tensions and rising U.S. crude stockpiles

Oil's playing a game of geopolitical hot potato. Brent's hovering near $77, with traders eyeing potential Israeli retaliation against Iran. Meanwhile, U.S. crude stockpiles swelled by 5.8 million barrels – the biggest jump since April. Biden's playing peacemaker, discouraging attacks on Iranian oil infrastructure. But with Iran flexing its missile muscles and China's economy still giving everyone jitters, oil is likely to stay volatile.

CRYPTO

Retail crypto ownership rises despite market volatility, says IOSCO report

Despite the rollercoaster ride of the past few years, retail investors are still piling into crypto like it's the last ticket to the moon. IOSCO reports up to 30% ownership in some jurisdictions, a far cry from the 1-5% in 2020. Who's leading the charge? Young guns under 40, mostly dudes, driven by FOMO and social media buzz. But watch out – with great FOMO comes great responsibility, and regulators are eyeing this trend closely.

Prosecutors charge crypto firms and individuals with market manipulation and fraud

Four market makers and a bunch of individuals are in hot water, accused of pumping up token volumes like they're inflating bouncy castles. The feds say these firms were secretly offering wash trading services, making coins look hotter than a jalapeño popper. Even the SEC's joining the party, slapping charges left and right. And get this – the FBI created their own crypto to catch these alleged fraudsters. Talk about a plot twist!

Dapps hit record usage in Q3, with AI-driven applications leading the surge

Decentralized applications saw a 70% increase in daily unique active wallets (UAW), reaching an all-time high of 17.2 million in Q3, according to DappRadar. AI-based dApps, like DIN and Alaya AI, led the growth, while the gaming sector's dominance declined slightly. Meanwhile, decentralized exchanges like Raydium and Uniswap saw significant user growth, driven by memecoin trading, despite a 12% drop in total value locked (TVL) across DeFi.

Optimism launches its fifth airdrop, distributing $16 million in OP tokens to Superchain users

Optimism has rolled out its fifth airdrop, allocating 10.3 million OP tokens (worth $16 million) to 54,700 users who interacted with at least 20 contracts on the Superchain between March and September 2024. Bonus eligibility factors like delegating OP or engaging with multiple chains increased rewards. This marks Optimism's latest effort in distributing its token, with 265 million OP tokens already airdropped and 550 million more set for future distributions.

GOLD

Strategist advises taking profits on gold as correction looms

Gold’s impressive 27% rise this year, reaching a high of $2,694 per ounce, may be due for a pullback, according to Kathryn Rooney Vera, Chief Markets Strategist at StoneX. While geopolitical instability and a weakening U.S. dollar have boosted demand, Rooney Vera suggests taking profits ahead of a potential correction. Interestingly, Costco’s unexpected success selling gold bars to members has added to the surge in gold demand, with sales reaching up to $200 million monthly.

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