📈 Trump's Return: Markets Boom, Bitcoin Soars!

Good Morning!

The markets are having quite the week, and it's not just about spreadsheets anymore. Germany's political scene just went nuclear – Finance Minister Lindner got the boot, the coalition's crumbling, and now we're staring down snap elections. Add Trump's comeback with his proposed 10% tariff on European goods, and we've got ourselves a real market-moving cocktail. European stocks are already feeling the heat, with the DAX down 1.13%. Today's the day we find out if the Fed, BOE, and other central banks have any tricks up their sleeves to steady this ship.

In today’s email:

• Trump: Dominates headlines given his triumphant return

• Bitcoin: New highs, blue skies! Smashed $75k! 🚀

• Nvidia: World's most valuable company at $3.58T market cap!

• Gold: Slides to $2660 as safe-haven demand declines

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THE BIG IDEA

Fed faces pivotal moment as Trump's victory reshapes monetary policy landscape amid market euphoria and inflation concerns

The Fed's stepping into what might be the most consequential rate decision of 2024. While markets have already priced in a 25-basis-point cut with near certainty (97.5%), the real story isn't about today's move – it's about the dramatic shift in expectations following Trump's decisive victory over Harris. Wall Street's initial reaction? Pure euphoria. The S&P 500 surged 2.45%, marking its best single-day performance in eight months and hitting record highs, as investors cheered Trump's pro-business stance on corporate taxes and deregulation.

But here's where it gets interesting: Treasury yields are shooting higher and the dollar's strengthening, suggesting markets are bracing for potential inflationary pressures under Trump's proposed policies. His trademark combination of tax cuts, deficit spending, and aggressive tariffs could throw a wrench into the Fed's plans.

Rate-cut expectations for 2025 have already been slashed in half – from 123 basis points post-September meeting to just 59 basis points now

Powell faces a delicate balancing act. With recent economic data beating expectations and Trump's inflation-friendly policies on the horizon, the Fed might need to reconsider its dovish stance. Markets are particularly nervous about December, with the probability of another cut dropping from 80.2% a month ago to 70.6% post-election. Adding to the complexity, the Fed's $2 trillion balance sheet reduction continues in the background, though Wall Street expects this runoff to end by early 2025.

The stakes couldn't be higher for Powell, who must navigate these waters while maintaining the Fed's political independence – a particularly challenging task given Trump's history of criticizing Fed policy. Against the backdrop of the slowest global expansion since January, any hawkish signals from today's meeting could quickly dampen Wall Street's optimism and test the market's resilience.

MARKETS AT A GLANCE

TOP NEWS

Trump's potential return threatens Fed's 70-year independence, raising economic stability concerns

Imagine your central bank getting a backseat driver – that's what Trump's proposing for the Fed. Despite Powell's defense of independence, citing its role in controlling inflation, Trump's insisting on having "a say" in monetary policy. Drawing from his business success, he claims better instincts than Fed officials. While he's softened his stance slightly, the implications for monetary policy and inflation control are raising eyebrows across financial markets.

Trump's victory sparks market rally, but expert warns of looming debt crisis and banking sector vulnerabilities

Markets are riding high on Trump's return – Bitcoin smashed past $76k on his "crypto capital" promises, and the Dow's celebrating with a 1,500-point surge. But MacroMavens' Pomboy's not popping champagne yet. She's spotting red flags: $36 trillion in federal debt, banks sitting on $500B in unrealized losses, and a potential "doom loop" of rising rates amplifying deficits. While Trump's pro-growth policies might help, she warns this party could end with a dollar crisis and gold surge.

Nvidia surpasses Apple as world's most valuable company amid post-Trump tech rally and AI boom

The AI juggernaut just hit another milestone: Nvidia's stock jumped 5% to a record $146.47, pushing its market cap to a jaw-dropping $3.58 trillion and dethroning Apple as the world's most valuable company. Since ChatGPT's debut, Nvidia's added $3.2 trillion in value – an 800% surge. With Bank of America eyeing $190 per share and a Dow Jones debut coming Friday, this AI-powered rocket ship shows no signs of slowing.

CRYPTO

Fed faces tricky balancing act between planned rate cuts and Trump's inflationary policy promises

Bitcoin just smashed past $75k on Trump's crypto-friendly promises, but Thursday's Fed meeting could shake things up. While the 25bp cut is basically a done deal (99% priced in), all eyes are on Powell's response to Trump's economic cocktail of tax cuts, loose fiscal policy, and hefty tariffs. Having learned from their 2021 "transitory" mistake, the Fed might pump the brakes on future cuts if inflation risks resurface.

BlackRock’s iShares Bitcoin Trust (IBIT) hit a record $4.1 billion in trading volume, leading to a cumulative $6 billion across 12 spot bitcoin ETFs, the highest since March

Market enthusiasm followed Donald Trump’s pro-crypto presidential win, with bitcoin reaching a new peak above $75,350. Major funds saw robust inflows, including Fidelity’s FBTC with $308.7 million. The ETFs’ net inflows now total $24.1 billion, underscoring heightened interest in crypto investment amid regulatory optimism.

JPMorgan is set to launch instant euro-dollar conversions on its Kinexys blockchain using its JPM Coin, which already processes $2 billion in daily transactions

Aimed at reducing costs and speeding up liquidity, the new service will allow institutions to settle dollar-euro transactions instantly, which traditionally take up to two days. Plans are in place to add sterling transactions post-approval. Despite rapid growth, profitability for JPMorgan’s blockchain division, Onyx, may still be years away.

Ethereum’s price is surging, reaching $2,880, driven by Trump’s pro-crypto election victory and institutional investments

Trump’s support for crypto policies, coupled with his personal Ethereum holdings, has boosted market sentiment, leading to a “Trump Trade” rally. Additionally, Michigan State Retirement System’s significant Ethereum ETF investment highlights growing institutional interest. Ethereum’s price broke above critical resistance, aiming for $3,600 in November within a bullish ascending triangle pattern, supported by technicals like the 200-day EMA.

GOLD

Gold and silver plunged, with gold down 2.67% and silver 4.41%

As safe-haven demand declined amid rising equities and concerns that Trump's tariffs could dampen industrial metal demand. Meanwhile, the U.S. dollar surged to a four-month high following Donald Trump’s election victory driven by expectations that his tax cuts and tariffs will boost inflation and temper Fed rate cuts. The 10-year Treasury yield increase also supported the dollar, pressuring the euro, which fell to a four-month low.

DAILY ECONOMIC CALENDAR (ET)

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