⭐️ BRICS+: De-Dollarization Gathers Pace

Good Morning!

As we wrap up this week, there's a temporary lull in market tension with yields cooling off and both the yen and euro finding their footing against the dollar. But don't get too comfortable – next week's lineup is intense. We're looking at earnings drops from tech titans like Apple and Microsoft, crucial U.S. employment figures, and mounting election momentum with Trump odds rising on betting platforms. The dollar's riding a four-week winning streak while Treasury yields keep climbing, partly fueled by expectations of Trump's proposed tariffs and tax policies.

In today’s email:

• BRICS: De-dollarization gathers pace

• Bitcoin: Still consolidating around $67k

• TSLA: Pops 22% on earnings!

• Gold: $2730 even on “pullbacks”!

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THE BIG IDEA

BRICS+ nations are making strategic moves to reduce dollar dependence, with their strongest potential lying in FX reserves and fuel trade, though complete de-dollarization remains a distant reality

Here's what's cooking in the BRICS+ kitchen: While everyone's buzzing about de-dollarization, the real story is in the numbers. The expanded bloc (now including Egypt, Ethiopia, Iran, and UAE) controls a whopping 42% of global central bank reserves and 37% of emerging market fuel trade. Not too shabby.

But here's where it gets interesting – BRICS+ nations are playing a long game with gold. Their central banks have been stashing the shiny stuff like it's going out of style, raising their share of global gold holdings from 5% to 22% since 2008. Still, gold only makes up 10% of their reserves (half the global average), suggesting there's room to double down.

The trade story?

BRICS+ accounts for a steady 20% of global trade (about $10T annually). They're increasingly trading among themselves – mainly with China – with intra-bloc trade jumping from 22% to 28% since 2008. The fuel trade is where they're really flexing, nearly doubling their EM market share to 37%.

Yet, let's keep it real. The bloc controls just 30% of global oil production (matching North America's share), and their piece of the overall trade pie is dwarfed by developed markets' 60% share. The dollar isn't exactly shaking in its boots either – while BRICS+ is actively reducing dollar dependence in cross-border banking and debt, they're starting from a higher dollarization level than most.

The bottom line? BRICS+ is making waves in de-dollarization, but don't expect a tsunami. Their biggest impact will likely be in challenging other developed market currencies rather than dethroning King Dollar anytime soon.

MARKETS AT A GLANCE

TOP NEWS

Fed's latest Beige Book reveals a steady economy with moderating inflation, though businesses face margin pressures and election jitters

The Fed's latest pulse check shows our economy's holding steady through early October with a slight hiring uptick. The plot twist? Companies are watching their margins shrink as input costs outpace selling prices. While inflation's cooling and hiring remains solid, many businesses are playing it cautious with the election looming. The silver lining? There's growing optimism about long-term prospects.

Tesla's stellar earnings catapult Musk's wealth by $30B+ in single-day stock surge

Talk about a payday! Tesla's stock rocketed 22% after crushing Q3 earnings, adding a cool $30B+ to Elon's piggy bank. The surge came as investors cheered beefier margins and Musk's promise of a budget-friendly Tesla by 2025. With SpaceX and his other tech ventures in tow, our favorite rocket man's net worth now sits pretty at $270B.

Russia's central bank set to match post-invasion rate peak of 20% as inflation woes persist

Moscow's money maestros are about to crank interest rates back to 20%, matching the emergency levels set after Putin's Ukraine invasion. With inflation expectations hitting 13.4% and government spending surging for military needs, the central bank's struggling to hit its 4% target. Most economists see no choice but to tighten further.

CRYPTO

Circle CEO predicts stablecoins will command up to 10% of global money supply within a decade, with USDC seeing remarkable growth in emerging markets

The stablecoin revolution is scaling faster than many anticipated. Circle CEO Jeremy Allaire just dropped a bombshell prediction: stablecoins could capture a whopping $5-10 trillion slice of global money flows within the next decade. What's turning heads? USDC is gaining serious traction in emerging markets, with real-world use cases spanning from African energy trades to Latin American remittances. With Stripe's recent USDC integration attracting users from 70 countries in just 24 hours, we're witnessing digital dollars going mainstream. Meanwhile, global stablecoin regulations are expected to crystallize across G20 nations by 2025.

Microsoft’s shareholders will vote on a proposal to assess Bitcoin investments, though the board advises against it

For the December 10 shareholder meeting, Microsoft added "Assessment in Investing in Bitcoin" to the agenda, proposed by a conservative think tank. The board recommends voting against the measure, citing existing processes to evaluate crypto assets like Bitcoin. They highlighted concerns over volatility and noted that past cryptocurrency evaluations already informed their approach. If passed, Microsoft could become the largest publicly-traded Bitcoin investor, surpassing Tesla and MicroStrategy.

A US government-controlled wallet linked to the 2016 Bitfinex hack may have been exploited for over $20 million in crypto

On October 24, a dormant wallet tied to seized Bitfinex hack assets moved $1.25 million in USDT, $5.5 million in USDC, and $13.7 million in aUSDC from Aave, raising suspicions of theft. Additionally, $446,000 in Ethereum was transferred to a new wallet, with $320,000 sent to exchanges. The Department of Justice has not yet commented on the incident.

Altcoin season could take off once Bitcoin crosses $80,000, says Hashkey Capital, with BTC dominance key

Hashkey Capital analysts suggest altcoin season may begin once Bitcoin surpasses $80K, about 18% above its current price. Bitcoin dominance needs to hit 62-70% for altseason to gain momentum, with current dominance around 59%. Some altcoins, like GOAT and MEW, already show significant gains, but analysts warn this altseason might differ from previous cycles due to early speculation in 2024.

GOLD

Central banks are increasing gold purchases to hedge against uncertainty amid geopolitical and economic risks

Gold demand by central banks has surged, with officials citing factors like lower interest rates, political tensions, and de-dollarization as reasons for boosting reserves. Institutions such as the Bank of Mexico, Central Bank of Mongolia, and Czech National Bank plan to increase gold holdings, viewing it as a safe, tangible asset. This trend, driven by concerns over future currency stability, reflects a broader push to safeguard financial systems.

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