🗳️ Elections and Fed Rate Cut: Market Jitters This Week!

Good Morning!

The dollar's taking an unexpected dive after a pivotal Iowa poll placed Kamala Harris ahead of Donald Trump by 3 points. This isn't just another poll - the Des Moines Register's track record makes it a serious market mover. The greenback's down 0.9% against the yen and 0.6% versus the euro, while betting markets have dramatically shifted in Harris's favor. Why does this matter? The consensus is that Trump's policies would push the dollar and yields higher than Harris's would. While the Fed's likely to cut rates this Thursday regardless (100% chance priced in), December's potential cut hangs in the balance. Meanwhile, OPEC+ just postponed their December output hike, sending oil up 1.4% - a clear signal they're sweating about global demand.

In today’s email:

• FedWatch: 25bp rate cut this week virtually guaranteed

• Bitcoin: Sitting tight below $69k but brace for election volatility

• Warren Buffett: Sitting on $325B of cash! 🔥

• Gold: Profit taking results in slight pullback to $2730 area

👇Join: Our exciting community subreddit to join the conversation:

THE BIG IDEA

Fed's poised for a rate cut this week regardless of election drama, with markets bracing for significant policy shifts through 2025

Here's what's cooking in the world of monetary policy: The Fed's about to serve up a 25-basis-point rate cut this Thursday, and not even Tuesday's nail-biting election can derail this train. While markets have been doing the Trump tango lately (hello, rising stocks and yields), here's the real kicker – we're looking at two very different monetary futures depending on who takes the White House.

Trump's playbook? Lower taxes could juice up short-term spending, but his proposed tariffs and immigration clampdown might eventually put the brakes on growth. Over in Harris's corner, we're talking continuity with a twist – though a split Congress could clip her wings, leaving the Fed to do more heavy lifting with rate cuts.

Speaking of rates, let's talk numbers

The Fed's eyeing a "neutral" rate around 3%, but with the deficit flirting with 7% of GDP, they might need to keep rates higher to keep inflation in check. Our crystal ball? If Trump wins, expect rates to hover around 3.5% by summer. A Harris victory could push them down to 3% in late 2025.

Here's where it gets spicy for markets: October's dollar dominance might be showing cracks as traders wonder if they've been too dovish on the ECB and not dovish enough on the Fed. But Tuesday's election is the real wild card. A red wave? Dollar might keep its mojo. Any other outcome? We could see the greenback giving back some gains, especially if the Fed keeps its dovish tone.

Bottom line: While the Fed's definitely cutting this week, the long game depends heavily on Tuesday's outcome. The markets are betting on red, but in this game, anything's possible.

MARKETS AT A GLANCE

TOP NEWS

Warren Buffett's Berkshire Hathaway amasses record $325.2B cash pile while trimming major positions and pausing buybacks

The Oracle of Omaha's making waves with some eyebrow-raising moves: Berkshire's cash stash hit a mind-boggling $325.2B after Buffett trimmed his Apple stake for the fourth straight quarter and cashed out $10B+ from Bank of America. Despite a stellar 25% stock gain this year, Berkshire's hitting pause on buybacks while operating earnings dipped 6% to $10.1B.

Prediction markets experience dramatic shift as Harris gains momentum in final days before election

The betting tables have turned: Harris's odds are surging on prediction platforms, with PredictIt now pricing her at 54 cents versus Trump's 51, a sharp reversal from last week. The pivotal moment? A controversial MSG rally comment about Puerto Rico that sparked widespread backlash. With Iowa polls showing Harris ahead and swing state momentum building, markets are rapidly recalibrating their bets.

Market sentiment shifts as latest polls challenge 'Trump Trade', triggering significant moves in dollar and Treasury markets

The 'Trump Trade' is showing cracks after weekend polls put Harris ahead in key states. The dollar's taking its biggest tumble since August (down 0.7%), while Treasury yields retreat across the board. Markets are rapidly unwinding positions built on Trump's expected policies, with betting odds now at a dead heat after favoring Trump last week.

CRYPTO

Experts compare Ethereum's current trajectory to Amazon's early days, suggesting massive untapped potential despite slow ETF adoption

Like Amazon's evolution from bookstore to tech titan, Ethereum's transforming from smart contracts platform to a $320B powerhouse. While spot ETF flows remain tepid, experts point to its 200,000+ developers (vs Amazon's 7,600 employees in the '90s) and growing institutional adoption from BlackRock and UBS as signs of future growth.

Crypto market braces for significant volatility as election outcome looms, with analysts projecting potential $6K-$8K Bitcoin swings

This election week could pack a punch. Analysts are eyeing potential $6K-$8K Bitcoin moves as election uncertainty peaks. Options markets are flashing bullish signals, with traders scooping up calls at $70K-$90K strikes. Meanwhile, ETH's expected to see even wilder swings, with DEX data suggesting up to 10% price moves ahead.

Crypto mergers and acquisitions (M&A) are on the rise, fueled by strategic positioning, regulatory clarity, and fintech interest

Key recent deals include Stripe's $1.1 billion acquisition of stablecoin platform Bridge, Robinhood’s purchase of Bitstamp, and Crypto.com’s acquisition of Watchdog Capital. Industry experts like Pantera’s Lauren Stephanian and Cypher Capital’s Bill Qian highlight stablecoins’ profitability and the appeal of regulatory-ready crypto solutions as catalysts. Predictions point to continued consolidation in payments, gaming, and on-chain protocols, with traditional financial giants increasingly targeting crypto assets to broaden their reach.

Donald Trump’s DeFi project, World Liberty Financial, will limit U.S. token sales to $30 million, with nearly 90% of its $288.5 million token sale targeting offshore buyers

Utilizing Regulation D, World Liberty can sell to qualified U.S. investors while meeting SEC compliance. Overseas, the project plans to use Regulation S, which eases requirements for foreign-only sales. So far, it has raised $2.7 million domestically, with fewer than 350 U.S. investors participating.

GOLD

India is quietly positioning itself as a global powerhouse in precious metals, with recent gold repatriations and soaring silver demand

Following a 102-ton gold transfer from London—its second this year—India’s gold reserves now exceed 855 tons, marking growing economic confidence. Demand for silver, fueled by industrial applications in solar energy, EVs, and healthcare, has also surged. Notably, Indian households collectively hold 27,000 tons of gold, underscoring the deep cultural and economic significance of precious metals in the nation.

DAILY ECONOMIC CALENDAR (ET)

MEME OF THE DAY