⭐️ ECB Rate Cuts: Bitcoin & Gold Rally

Good Morning!

China's showing some growing pains with home prices taking their steepest dive since 2015, while their Q3 growth landed at 0.9% - just shy of expectations. Beijing's rolling out their biggest stimulus package since COVID, but investors are still tapping their feet waiting for the juicy details. Meanwhile, the dollar's flexing near 11-week highs after some impressive U.S. retail numbers dropped. What's adding extra spice? The markets are starting to price in a potential Trump comeback, with his proposed policies seen as potential inflation fuel. That's got gold hitting fresh records, while Japanese stocks are getting a nice boost from a weaker yen.

In today’s email:

• ECB: Seems to be evolving its approach

• Bitcoin: Back near $68k, can we start going higher now?

• Buffett: $23 Billion opportunity cost

• Gold: Another day another ATH, now $2710+

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THE BIG IDEA

ECB's latest rate cut reveals a shift towards more frequent policy adjustments, despite Lagarde's measured stance on future moves

The ECB just made quite the power move, dropping rates by 25 basis points mere weeks after their last cut - and here's where it gets interesting. While Lagarde's trying to keep it cool, suggesting this isn't panic mode but rather a calculated step, the timing tells a different story. The rapid-fire rate cuts, especially with minimal new data to justify the move, hint at growing concerns about Eurozone's economic health.

What's particularly fascinating is the ECB's evolving approach. They're shifting from their quarterly forecast-driven decisions to a more nimble, meeting-by-meeting strategy. Think of it as switching from seasonal wardrobe changes to daily weather checks. The Bank seems eager to normalize rates, even if Lagarde's not ready to telegraph their next moves.

The market's reading between the lines here

With the Eurozone's economic momentum still in low gear, we're likely looking at more cuts ahead. The ECB's attempt to balance messaging - "inflation isn't beaten" but "we're still restrictive" - shows they're keeping their options open while trying to avoid spooking markets.

This shift in strategy marks a significant departure from their traditional playbook. The ECB appears to be embracing a more responsive, data-point dependent approach rather than relying solely on comprehensive quarterly forecasts. It's particularly noteworthy given that September's projections anticipated a brief economic slowdown followed by a return to potential growth by early 2025.

The disconnect between the Governing Council's perspective and the ECB staff models is becoming increasingly apparent. While the staff forecasts remain relatively optimistic about growth prospects, the Council's actions suggest a more cautious outlook. This dynamic creates an interesting tension in policy-making, especially as the Bank navigates the delicate balance between controlling inflation and supporting economic growth in an uncertain environment.

MARKETS AT A GLANCE

TOP NEWS

Trump's crypto venture reveals a lucrative family stake, with 75% of revenue flowing to the Trump camp while maintaining zero liability

The latest scoop on Trump's crypto play, World Liberty Financial, is raising eyebrows. A freshly dropped document shows the Trump family's set to rake in 75% of net revenues and 22.5 billion WLFI tokens (valued at $337.5M), all while maintaining zero liability. Despite targeting a $300M raise, they've only secured $12.9M so far. The kicker? The project claims "no political affiliation" despite Trump being dubbed "chief crypto advocate."

Legendary investor Druckenmiller sees markets pricing in a Trump victory, though he personally plans to abstain from voting for either candidate

Market wizard Stanley Druckenmiller is reading the tea leaves, suggesting Trump's got the edge over Harris in next month's showdown. The billionaire macro-investor notes markets are already pricing in a Trump win, with deregulation-friendly sectors gaining steam. But don't mistake his market analysis for an endorsement – he's planning to write in his own candidate.

Berkshire's Apple stock reduction led to a potential $23B opportunity cost, though the investment still ranks as one of Buffett's greatest hits

The Oracle of Omaha might be kicking himself after Berkshire's 55% reduction in Apple holdings this year. That move left about $23B on the table as Apple surged to record highs on AI buzz. Still, don't shed tears for Buffett – his original Apple bet at $39.59 per share has rocketed 485% since 2016.

CRYPTO

Global crypto landscape shows fascinating regional contrasts, with Asia leading adoption while US dominates volume through institutional players

While Asia-Pacific claims the crypto adoption crown with seven countries in the top 20, North America's flexing its institutional muscle with $1.3T in transactions. The 2024 bull run, sparked by US Bitcoin ETFs, painted an interesting picture: high-income markets cooled while emerging economies surged, with stablecoins becoming a financial lifeline in regions battling inflation.

Worldcoin's rebrand to 'World' marks major pivot with enhanced identity verification tech and anti-deepfake solutions

Sam Altman's blockchain ID venture is dropping the "coin" stigma, rebranding as simply "World." They're rolling out a supercharged Orb scanner with 5x more power, plus new verification options using passports. The kicker? Their "World ID Deep Face" tech claims to have cracked the deepfake problem, while boasting 15M users (7M verified).

DEX futures trading sees declining market share despite growth, highlighting persistent challenges in competing with centralized exchanges

Decentralized exchanges are losing ground in futures trading, with their market share dropping to 3.26% from February's 5.18% peak. While Hyperliquid impresses with $1.23B daily volume, it's dwarfed by Binance's $480B monthly bitcoin futures. Key hurdles? Limited liquidity and complex user experience continue plaguing DEX adoption.

Ethereum staking sees strong uptake among institutions, with nearly 70% participating, favoring security and liquidity

Around 70% of institutional investors stake Ethereum, with 52.6% opting for liquid staking tokens (LSTs). Reputation, liquidity, and security are key factors, with the latter rated 9.4/10 in importance. While Lido dominates, concerns over centralization persist as restaking gains traction despite associated risks.

GOLD

Gold hits a record high, surpassing $2,700 per ounce, fueled by central bank demand and lower interest rates

Gold surged to $2,710+ per ounce, marking a 30% gain this year, outpacing the S&P 500’s 22% rise. Central banks' record gold buying and the Fed’s shift to lower rates have bolstered the rally. Goldman Sachs now predicts prices could reach $2,900 by early 2025.

DAILY ECONOMIC CALENDAR (ET)

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