💥 Powell's Speech: Bitcoin Holds Steady, Altcoin Party Starts!

Good Morning!

French political tensions are reaching a boiling point with potential no-confidence votes threatening the coalition government. Meanwhile, South Korea faces unprecedented political turbulence after a dramatic failed martial law attempt by President Yoon Suk Yeol, causing significant market volatility and investor panic across Asian markets. Oh and Sir Powell speaks later today!

In today’s email:

• FedWatch: Sir Powell speaks today!

• Bitcoin: Still consolidating around $96k

• USDe: Becomes the third-largest stablecoin 

• Gold: May reach $3,000 by 2025 per GS

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THE BIG IDEA

Powell's Potential Market Manoeuvres: Fed Chair Poised to Navigate Delicate Rate Cut Expectations at DealBook Summit

Jerome Powell is set to address the financial world at the New York Times DealBook Summit, potentially influencing market sentiment around interest rate trajectories. Traders have spent months recalibrating rate cut expectations, with current futures suggesting a 73.8% probability of a 25-basis-point cut this month.

The Federal Reserve's recent monetary policy has been a high-stakes chess game of economic management. Since September's initial rate cut, markets have dramatically repriced expectations, with the 10-year Treasury bond falling nearly 6% and the U.S. dollar gaining almost 8% against top currency counterparts. Investors are keenly watching for any signals that might hint at the Fed's future moves.

Powell's presentation comes at a critical juncture

Market participants are currently pricing in 63 basis points in cuts for 2025, which translates to at least two standard reductions and a 52% chance of a third. The FOMC minutes revealed that a "large majority" of participants expect a December rate cut, aligning with previous forecasts of 100 basis points in cuts for 2024.

Inflation remains the key wildcard. While many Fed participants believe inflation is on a sustainable path to the 2% objective, recent data has shown some volatility. Powell will likely maintain a cautious tone, avoiding any statements that could dramatically swing market expectations. His strategy will likely focus on underlying economic trends rather than making bold predictions.

The potential market impact is significant. A benign speech could provide a green light for the cautious correction already taking shape, with bonds edging higher and the U.S. dollar potentially losing some ground. Investors will be parsing every word for insights into the Fed's economic outlook and potential future monetary policy adjustments.

MARKETS AT A GLANCE

TOP NEWS

Wells Fargo predicts robust U.S. stock market performance in 2025, targeting strategic sector investments

Wells Fargo strategist Scott Wren bullish on U.S. equity markets for 2025, recommending investors lean into stocks, particularly financials, industrials, and communication services. Anticipates potential volatility from inflation fears but believes S&P 500 will end higher, favoring domestic over international equities.

South Korean markets reel from President Yoon's abrupt martial law reversal, triggering significant stock market volatility and investor uncertainty

Samsung Electronics, LG Energy Solution, and Hyundai Motor experienced sharp declines, with the Kospi index falling 2% amid government liquidity interventions. The Bank of Korea announced emergency measures to stabilize financial markets, deploying 10 trillion won to counter potential economic fallout from the political upheaval.

Hedge funds recruit medical experts to gain pharmaceutical investment edge

Top multi-strategy hedge funds like Balyasny, D.E. Shaw, and Point72 are strategically hiring doctors and scientists to analyze drug trials, regulatory approvals, and potential breakthrough medications. This approach aims to gain competitive insights in volatile biotech markets, leveraging specialized medical knowledge for sophisticated investment strategies.

CRYPTO

MicroStrategy's potential addition to the Nasdaq-100 could bring $1B in new investment and boost Bitcoin's mainstream integration

Michael Saylor's MicroStrategy, with $37 billion in Bitcoin holdings, is poised for Nasdaq-100 inclusion. If approved, this move guarantees passive capital inflows via the $312B QQQ ETF, bringing Bitcoin exposure to millions of investors. While past returns often precede index inclusions, this would mark another milestone in Bitcoin's adoption within traditional finance.

South Korean crypto trading surges to $34.2 billion amid presidential martial law chaos

Amid President Yoon's brief six-hour martial law declaration, South Korean crypto exchanges saw unprecedented trading volumes, with Upbit processing $27.25 billion alone. Traders rapidly moved assets, causing price volatility and service disruptions, reflecting the market's sensitivity to political uncertainty.

Ethena's USDe becomes the third-largest stablecoin, driven by high APY demand and DeFi appeal

USDe's market cap surged 73% to $4.77 billion, overtaking DAI as users flock to its 29% APY through Ethereum staking. While its rapid growth invites comparisons to Terra-Luna, USDe's success underscores strong interest in yield-bearing assets amid evolving DeFi ecosystems. Critics and supporters alike watch its next moves closely.

A parody "relaunch" of Enron hints at a crypto token, sparking controversy and debate over humor and past scandals

The infamous Enron name resurfaced in a prank revival, with teasers of a potential crypto token and stunts like billboards and ads in Houston. While some former employees decry the mockery as insensitive, others see humor as a way to reflect on history. The fake Enron site declares itself as protected parody and performance art.

GOLD

Gold's rally, supported by central banks and falling rates, may reach $3,000 by 2025

Gold has surged 40% since 2022, defying rising interest rates as central banks diversified reserves following geopolitical tensions. Goldman Sachs predicts continued strong demand, paired with Federal Reserve rate cuts, will attract investors, propelling gold to new highs through 2025.

DAILY ECONOMIC CALENDAR (ET)

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