🚨 ECB Today: Back-To-Back Rate Cut Incoming

Good Morning!

European Central Bank's about to make history with its first consecutive rate cut since 2011. While that's basically a done deal, all eyes are on what's next. The euro's already down 2.4% this month, with markets betting on more aggressive European cuts than U.S. ones next year - despite the latter's higher rates (4.75% vs 3.5%). Meanwhile, TSMC's earnings could either calm or rattle tech markets after ASML's gloomy forecast sent semiconductor stocks tumbling. China's keeping things interesting (or frustrating) with yet another underwhelming policy announcement for their property sector, sending iron ore prices and real estate shares south.

In today’s email:

• ECB: First back-to-back rate cut since 2011 incoming

• Bitcoin: Right around $67k, ready for leg up on ECB news?

• Ethereum: Vitalik envisions 100,000 TPS with "The Surge"

• Gold: Another day another record high 🚀

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THE BIG IDEA

ECB pivots from inflation hawk to growth guardian with its third rate cut of the year, marking a historic shift in monetary policy amid economic headwinds

Time to talk about the ECB's latest power move. After playing inflation whack-a-mole for what feels like forever, our friends in Frankfurt are finally hitting that rate-cut button for the third time this year. But here's where it gets interesting - this isn't just another Thursday at the ECB. We're looking at their first back-to-back rate cut since 2011, and boy, does that tell us something about where things are headed.

Why the change of heart? Well, the euro zone's economic engine has been sputtering while inflation's finally behaving itself (down to 1.8% - below the sacred 2% target for the first time in three years). The data's been rolling in like a series of gentle nudges: business activity? Down. Economic sentiment? Meh. September inflation? Lower than expected. Even the usually bulletproof job market is showing some wear and tear.

The markets are already three steps ahead, pricing in a deposit rate drop to just over 2% in the next year

And while ECB chief Christine Lagarde is playing it cool with the whole "meeting-by-meeting" mantra, most analysts are betting on cuts becoming as regular as European coffee breaks through spring.

But here's the kicker - while lower rates might help grease the economic wheels, they're not a miracle cure for Europe's deeper issues. Germany, the continent's industrial powerhouse, is still wrestling with sky-high energy costs and competitiveness challenges that make U.S. growth look like it's on steroids. The ECB's toolkit can help, but it can't fix structural problems any more than a hammer can bake a cake.

So what's the bottom line? The ECB's shifting from inflation fighter to growth supporter, and this rate cut is just the opening act of what promises to be an interesting economic show in 2024.

MARKETS AT A GLANCE

TOP NEWS

Wall Street's resilience shines as the Dow hits another record, backed by strong earnings from financial and airline sectors

The market's showing its muscle again - the Dow just strutted to a fresh record, climbing 337 points to close at 43,077. Morgan Stanley flexed with a 6.5% jump after crushing Q3 expectations, while United Airlines soared 12.4% on stellar results. Early earnings season's looking promising, with 79% of reporting S&P 500 companies beating forecasts.

Oil markets maintain stability despite Middle East tensions, with API reporting unexpected inventory drops while Iran faces export terminal challenges

Oil's playing it cool - Brent's hovering below $75 while WTI's camping around $70. API threw us a curveball with a 1.6M barrel crude draw (versus expected 1.5M build), plus hefty drops in gasoline and distillate stocks. Meanwhile, Iran's dealing with a mystery leak near Kharg Island, their prime export hub.

A pioneering debt-finance instrument created by Credit Suisse is gaining unprecedented traction among major Wall Street banks for sustainable project funding

Wall Street's catching sustainability fever as debt-for-nature swaps go mainstream. What started as Credit Suisse's niche financial experiment is now attracting heavy hitters like JPMorgan, Goldman Sachs, and UBS. Over $1.6B in new debt has already been issued, with fresh deals brewing from Latin America to Africa. Sure, there are critics, but investors like Nuveen are all in.

CRYPTO

Ethereum's founder sets an ambitious vision for massive network scaling, targeting 100,000 TPS while maintaining decentralization

Vitalik's dreaming big for Ethereum's next chapter, dubbed "The Surge." The goal? Ramping up to 100,000 transactions per second across L1 and L2s. His playbook includes boosting data bandwidth to 16MB per slot and possibly tweaking gas limits, though he's keeping decentralization front and center.

Asian private wealth managers show increasing confidence in crypto, with a significant jump in institutional adoption and bullish price predictions

Asian wealth's crypto fever is hitting new highs - 76% of family offices are now in the game, up from 58% in 2022. While most keep their crypto holdings under 5%, the big money's eyeing Bitcoin at $100K by year-end. DeFi, AI, and DePin are stealing the spotlight, though regulatory fog keeps some players cautious.

Game developer Fracture Labs sues Jump Trading over alleged DIO token "pump and dump"

Fracture Labs has filed a lawsuit accusing Jump Trading of manipulating its DIO gaming token in a "pump and dump" scheme. The game developer claims that Jump sold borrowed tokens after their value peaked at $0.98, profiting millions before rebuying the tokens at a much lower price and returning them to Fracture Labs. The alleged scheme devalued DIO, hindering Fracture Labs' ability to attract investors. The lawsuit seeks damages and alleges fraud, breach of contract, and breach of fiduciary duty

EU watchdog pushes for mandatory cybersecurity audits for crypto platforms

The European Securities and Markets Authority (ESMA) has proposed amending the Markets in Crypto-Assets Regulation (MiCA) to include mandatory third-party cybersecurity audits for crypto companies, amid a surge in cyberattacks. The recommendation follows a $1.5 billion spike in crypto thefts in the first half of 2024 and recent high-profile breaches like BingX and WazirX. While the push for stronger regulations has faced some resistance, ESMA argues that rising threats justify the need for enhanced security measures.

GOLD

Gold approaches record high amid US election and Fed rate anticipation

Gold is nearing a new record high, driven by investor focus on the upcoming US election and shifting expectations for Federal Reserve rate cuts. The metal's appeal as a safe-haven asset, combined with significant central bank buying, has fueled a roughly 30% rise in prices this year. Although a stronger US dollar and elevated interest rates could create headwinds, many expect the pivot to looser monetary policy to sustain gold’s momentum. A survey at the London Bullion Market Association event projects gold could reach $2,917.40 per ounce by late next year.

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