📈 Fed Post Inflation Data: 25bp Rate Cut A Done Deal?

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China's top leaders are mulling a strategic yuan depreciation to counter potential US trade tariffs in 2025. The currency has already fallen for 10 consecutive weeks, with long-term yields hitting record lows and creating the largest yield disadvantage against the US in 22 years. Markets await further policy signals from upcoming economic meetings.

In today’s email:

• FedWatch: Post CPI, 25bp rate cut is a done deal

• Bitcoin: Back above $100K 🚀

• Elon Musk: Now worth $447B!

• Gold: China resumes buying!

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THE BIG IDEA

US inflation data reveals a complex economic landscape, with consumer prices rising as expected and potential policy shifts looming under Trump's presidency

November's Consumer Price Index climbed 2.7% year-over-year, matching economists' predictions and maintaining a delicate economic balance. Core inflation remained stubborn at 3.3%, driven by persistent costs in shelter, services, and used car markets. The Federal Reserve faces a nuanced challenge: navigating potential interest rate cuts while watching inflation's sticky behavior.

The data unveils intriguing dynamics. Shelter costs, contributing nearly 40% to monthly inflation, showed slight moderation, rising 4.7% annually compared to October's 4.9%. Food prices continued their upward trajectory, with egg prices spiking 8.2% month-over-month. Notable increases emerged in recreation, education, personal care, and apparel sectors.

Trump's potential presidency adds another layer of complexity

His proposed policies—including high import tariffs, corporate tax cuts, and immigration restrictions—could trigger another inflation wave. Economists warn these measures might fundamentally reshape monetary policy, creating unprecedented challenges for the Federal Reserve's strategic planning.

Market sentiment remains cautiously optimistic. Investors currently price a 98.6% probability of a 25 basis point rate cut at the upcoming Federal Reserve meeting. Financial strategists anticipate a more measured approach, potentially slowing rate cuts to every other meeting, reflecting a heightened sense of economic uncertainty.

Energy and communication sectors presented mixed signals. The energy index rose 0.2% month-over-month while remaining down 3.2% annually. Communication costs decreased by 1%, continuing a downward trend from previous months. These granular shifts underscore the complex inflationary environment.

The overarching narrative? A delicate economic dance where inflation, policy, and market expectations intersect, creating a landscape of calculated uncertainty and strategic maneuvering that could redefine America's financial trajectory in the coming year.

MARKETS AT A GLANCE

TOP NEWS

Tech's triumphant rally transforms market landscape as Nasdaq breaches historic 20,000 threshold, riding waves of investor optimism and strategic economic indicators

Nasdaq's electrifying surge past 20,000 marks a watershed moment for tech stocks. Fueled by aligned inflation data and Fed rate cut anticipation, giants like Nvidia and Tesla propel market momentum. Investors bet big on a potentially transformative economic landscape, with Elon Musk's wealth explosion adding rocket fuel to the narrative.

Swiss National Bank boldly slashes rates by 50 basis points, defying economist expectations and signaling aggressive monetary policy to combat franc strength and persistent economic challenges

Switzerland breaks economic ground with an unprecedented 50-basis-point rate cut, bringing key rates to 0.5%. The move underscores strategic efforts to tame currency appreciation, address subdued inflation, and stimulate a tepid economic landscape marked by weak export demand and stagnant business indicators.

Elon Musk shatters wealth records, crossing $400 billion milestone in unprecedented financial triumph driven by strategic investments and political maneuvering

Musk's astronomical net worth surge stems from a confluence of factors: Tesla's 70% stock rally, a massive SpaceX insider sale netting $50 billion, and strategic positioning within Trump's potential administration. His wealth portfolio spans Tesla ($165 billion), xAI ($25 billion), SpaceX ($82 billion), and emerging tech ventures, solidifying his status as global wealth titan.

CRYPTO

Bitwise's bold 2025 crypto forecast predicts unprecedented market transformation, with Bitcoin rocketing to $200K and major cryptocurrencies shattering all-time highs

Crypto's potential explosive growth includes Bitcoin hitting $200,000, ether reaching $7,000, and Solana tripling to $750. Projections suggest ETF inflows will surge, stablecoin market cap could double to $400 billion, and emerging technologies like AI could fuel a new memecoin revolution. Coinbase might even join the S&P 500, signaling mainstream crypto integration.

Vancouver moves to explore Bitcoin in municipal finance as a hedge against inflation and for taxpayer benefit

Vancouver's city council approved Mayor Ken Sim's motion to study integrating Bitcoin into financial systems, including accepting taxes in BTC and allocating reserves to the cryptocurrency. The plan aims to counter traditional currency volatility and inflation. A feasibility report is due by Q1 2025, marking a bold step as Bitcoin surpasses $100,000 amidst rising crypto optimism.

Riot Platforms raises $525M to fuel Bitcoin acquisition amid industry competition and diversification plans

Riot Platforms completed a $525M senior notes offering to expand its Bitcoin holdings, now at 12,000 BTC worth $1.2B. The miner plans to compete with industry leaders like Marathon Digital while exploring AI and high-performance computing opportunities to diversify revenue. Despite a $154M Q3 loss, Riot remains committed to its aggressive growth strategy.

Sygnum Bank forecasts Bitcoin price surges in 2025 fueled by institutional demand, while altcoins may struggle without U.S. regulatory clarity

Sygnum predicts institutional inflows will drive "demand shocks" for Bitcoin, with each $1 billion ETF inflow boosting prices 3-6%. Large investors and potential recognition as a reserve asset could propel BTC, but altcoin growth depends on U.S. laws like the FIT21 Act. Without regulatory support, speculative altcoin bubbles may persist, favoring Bitcoin's dominance.

GOLD

China's gold buying stirs cautious optimism but lacks short-term momentum, Pretiorates suggests

Despite China's renewed gold purchases and recent price strength, Pretiorates highlights a subdued outlook due to tepid investor activity, weak premiums for physical gold, and bearish sentiment in Western markets. While geopolitical tensions may have spurred recent gains, sustained rallies appear unlikely short term. Long-term prospects for precious metals remain positive, with industrial demand supporting silver prices.

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