💥 Powell and Jobs Report Set to Shake Markets! Bitcoin Ready to Blast Off?

Good Morning!

The financial world's abuzz with Nikkei's >4.6% tumble as markets price in higher interest rates under new PM Shigeru Ishiba. Known for criticizing BOJ's easy policies, Ishiba's weekend comments were surprisingly conciliatory. Markets show minimal chance of October tightening, but a 24% shot at a December hike. Meanwhile, Chinese stocks are on a tear, up 5% after the central bank hinted at lower mortgage rates.

In today’s email:

• FedWatch: Sir Powell speaketh today, all eyes on Friday jobs data

• Bitcoin: back around $65k, getting ready for next leg higher?

• Cantor Fitzgerald: CEO argues Bitcoin should be regulated as a commodity like gold and oil

• Gold: Relentless stockpiling by central banks 🚀

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THE BIG IDEA

Wall Street's rally broadens as investors bet on rate cuts and economic resilience

Move over, tech giants—there's a new sheriff in town on Wall Street. The S&P 500's latest climb isn't just riding on the coattails of the usual suspects like Apple and Nvidia. This time around, it's a full-blown party, and everyone's invited.

As we wrap up Q3, more than 60% of S&P 500 stocks are outpacing the index itself—a stark contrast to earlier this year when only a quarter could keep up. The market's getting a facelift, and it's not just skin deep.

What's behind this financial makeover? The Fed's signaling rate cuts, and investors are eating it up like free pizza at a college dorm. Regional banks, industrials, and even the oft-neglected small caps are having their moment in the sun.

It's like watching the nerdy kid in high school suddenly become prom king

The equal-weight S&P 500—think of it as the index's scrappy underdog cousin—is up a whopping 9% this quarter. That's not just beating the regular S&P; it's lapping it.

But don't write off the tech titans just yet. The "Magnificent Seven" may have loosened their iron grip on the market, but they're still very much in the game. Their combined weight in the S&P 500 has dipped from 34% to 31% since mid-July. It's less "tech or bust" and more "tech and friends."

Looking ahead, Federal Reserve Chair Jerome Powell speaks today on the economic outlook, with all eyes are on the upcoming jobs report and earnings season. Will this broader rally have legs, or is it just a brief cameo in the tech-dominated show? Only time will tell, but for now, Wall Street's giving us a blockbuster with an ensemble cast, not just a one-man show.

MARKETS AT A GLANCE

TOP NEWS

Oil prices rise on Middle East tensions and China's economic stimulus efforts

Crude oil's inching up as geopolitical chess moves keep traders on their toes. Israel's strike on Hezbollah's leader in Beirut has ratcheted up regional tensions, while China's throwing economic lifelines to boost demand. But don't get too excited – the market's grown somewhat numb to Middle East drama. The real game-changer? It might just be Beijing's stimulus playbook.

China's central bank orders mortgage rate cuts to boost struggling property market

Beijing's throwing a lifeline to its sinking property market. The People's Bank of China's ordering banks to slash existing mortgage rates by up to 50 basis points before Halloween. It's part of a broader push to revive the real estate sector and kickstart the economy. Meanwhile, major cities like Guangzhou are lifting home-buying restrictions. Will this be enough to turn the tide?

Japan's industrial production drops unexpectedly, while retail sales continue to rise

Japan's Industrial production nosedived 3.3%, blindsiding analysts who expected a mere 0.5% dip. Blame it on auto industry hiccups and natural disaster jitters. But don't panic – experts see a rebound coming. Meanwhile, retail sales are on a six-month winning streak, up 0.8%. This mixed bag has the Bank of Japan eyeing a potential rate hike.

CRYPTO

Bitcoin and ether retreat as markets await Powell's speech and US jobs data

Bitcoin's down 2.09% to $64,403, while ether's dipped 1.69% to $2,626. Investors are eyeing Fed Chair Powell's Monday speech and Friday's non-farm payrolls report for market cues. Despite the dip, analysts remain bullish, citing friendly macro conditions and potential political support. The crypto world's holding its breath – will Powell's words spark a rally or a rout?

Bitcoin notches first three-week winning streak since February, bulls eye $75K

Bitcoin's on a hot streak! It's just wrapped up its first three-week winning run since February, fueled by China's stimulus and ETF inflows. Traders are betting big, snatching up $75K call options like hotcakes. The buzz? A breakout could send BTC rocketing past its all-time high, with some dreamers eyeing $100K by year-end. Is this the start of crypto's next moon shot?

Jesse Walden, managing partner of Variant Fund, predicts that smart contract blockchains will become less aligned with their original "cypherpunk" values over the next decade

Initially inspired by ideals like censorship resistance and permissionlessness, he believes these platforms will prioritize speed, cost-efficiency, and legal compliance due to increasing institutional adoption. While this may dilute some of the values that attracted early blockchain enthusiasts, Walden argues that such changes will broaden crypto's impact, signaling that the commercialization of blockchain technology is just beginning.

Cantor Fitzgerald CEO Howard Lutnick argued that Bitcoin should be regulated as a commodity like gold and oil during an appearance on Fox Business

Lutnick criticized regulators, claiming they don't understand crypto and are failing to supervise the industry effectively. He expressed confusion over why Bitcoin's status as a commodity isn’t more widely accepted. Lutnick also highlighted Cantor Fitzgerald's recent move to launch a $2 billion financing service for Bitcoin investors, emphasizing that traditional finance is increasingly interested in transacting with Bitcoin.

GOLD

Surge in gold prices, doubling since 2019, can be attributed to various factors despite traditionally bearish conditions like rising real interest rates and a strong dollar

Central banks from emerging markets, particularly Russia and China, have driven demand, seeking to diversify away from the dollar amidst geopolitical tensions. Additionally, increasing demand from households in China and India, along with gold-backed ETFs, has further bolstered prices. Geopolitical risks and inflationary concerns have enhanced gold’s appeal as a safe-haven asset, overshadowing the influence of rising interest rates and dollar strength.

DAILY ECONOMIC CALENDAR (ET)

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