🔥 Trump's Triumph Triggers Bitcoin Bonanza!

Good Morning!

The markets are doing their own electoral dance today, and they're speaking volumes. Early results favoring Trump have sent shockwaves through global trading - Treasury yields are surging to 4.449% (highest in 4 months), while the dollar's flexing its muscles with the biggest daily gain in over a year. Wall Street's feeling optimistic about potential tax cuts, with S&P futures up 1.2%. But it's not all champagne and confetti - European markets are more cautious, eyeing potential trade wars and NATO implications. Meanwhile, China's yuan took a hit as traders price in possible tariff turbulence ahead. The Fed's still expected to cut rates Thursday, but 2024's outlook is getting a serious revision.

In today’s email:

• Election: Trump looks set to be the next US President

• Bitcoin: Bitcoin new highs already, now hovering over $73k

• Crypto: The election has been a win for crypto industry

• Gold: Some profit taking on a stronger dollar here but set to remain elevated

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THE BIG IDEA

The stark contrast between US economic vigor and global weakness could set the stage for a worldwide downturn, with the next president inheriting this precarious balance

As Americans cast their votes in what's shaping up to be one of the closest elections in recent memory, the global economy is telling a tale of two very different worlds. Here at home, our economic engine is roaring - the service sector just posted its strongest growth in 28 months, with employment numbers jumping to 13-month highs. It's the kind of performance that had The Economist recently dubbing the US economy "the envy of the world."

But beyond our borders, the picture gets considerably murkier. Europe's economy is actually contracting for the second consecutive month, while China's showing only modest signs of improvement. Their latest PMI data might be the best since June, but it's still worlds away from matching American prosperity.

Think of it as a three-player game where one participant's success might inadvertently be making life harder for everyone else

This divergence is creating a fascinating but potentially dangerous dynamic. Our domestic strength is keeping Federal Reserve hawks circling, pushing Treasury yields higher and, by extension, driving up global borrowing costs. With betting markets confirming a near-certain Trump victory, he isn't just winning an election - he's inheriting an economic puzzle box.

The incoming president will need to thread a particularly tricky needle: maintaining US economic momentum while preventing our success from becoming the rest of the world's burden. As global PMI data hits nine-month lows and worldwide growth continues its slide since May, the stakes couldn't be higher. The next occupant of 1600 Pennsylvania Avenue might find that balancing American prosperity with global stability is their most challenging campaign promise to keep.

MARKETS AT A GLANCE

TOP NEWS

Markets surge across multiple assets as Trump claims victory, with Bitcoin hitting record highs and significant moves in stocks, bonds, and currencies

Trump's apparent victory is sending shockwaves through global markets - S&P futures are hitting record highs while Bitcoin smashed through $75,000 for the first time. The dollar's flexing its muscles, but it's not all roses - Treasury yields are jumping near 4.5% as markets digest potential tax cuts and tariffs. The Mexican peso's taking a hit, while Tesla and Trump Media stocks are riding the red wave higher.

Leading analyst warns of ongoing recession and unsustainable debt levels, claiming current economic indicators mask deeper structural problems

The U.S. economic situation mirrors the significance of the 1971 gold window closure, according to Piepenburg. Despite optimistic official indicators, alarming signs are everywhere - 13-year high in bankruptcies, record credit card delinquencies, and manufacturing weakness. The real kicker? We're facing an impossible choice: support bonds or save the currency. You can't have both when debt's this high.

Credit markets respond enthusiastically to Trump's lead, showing the strongest bullish signals in nearly two months despite potential long-term trade concerns

Asian credit markets are having their best day in seven weeks, with credit-default swaps tightening significantly. While Trump's potential win is driving Treasury yields and the dollar higher, investors seem unfazed by deficit concerns. The real plot twist? Chinese dollar bonds might weather potential tariff storms, thanks to robust state support and strong balance sheets.

CRYPTO

Crypto industry scores major victories in Congressional races, marking significant shifts in regulatory landscape regardless of presidential outcome

The crypto sector flexed its $169 million political muscle to reshape Congress, notably ousting crypto-skeptic Senator Sherrod Brown and securing wins for over 30 pro-crypto candidates. With Republicans taking the Senate and fresh crypto-friendly faces in the House, the industry's secured a legislative fast track - all before knowing who'll sit in the Oval Office.

Prediction markets show near-certain Trump victory as crypto markets respond with historic rallies

Polymarket's election betting odds for Trump have exploded from 58% to 99%, with trading volume hitting $3.5B. As Trump leads with 247 electoral votes to Harris's 214, the crypto market's celebrating - Bitcoin's shattered records at $75K, while Dogecoin, backed by Trump ally Musk, surged 26%. Talk about a prediction market nailing it.

Pro-crypto candidates made substantial gains in the U.S. elections, with 220 pro-crypto House members and 14 Senate seats leaning crypto-friendly

Notably, crypto advocate Bernie Moreno won Ohio’s Senate seat, and strong crypto backers in Arizona are leading the race. Meanwhile, Elizabeth Warren retained her seat, maintaining a key anti-crypto voice. With Republicans likely regaining control and Bitcoin at a record $75K, the election signals a potential shift in legislative support for digital asset regulation.

Bitcoin hits record $75K amid election volatility, causing massive losses for short sellers as spot demand drives the surge

Short sellers got crushed as Bitcoin smashed through $75K, with a staggering $180 million in positions liquidated in just hours. This rally's different - it's driven by spot buying, not derivative speculation, suggesting real staying power. With Trump potentially clinching victory, analysts are eyeing $100K, though some warn of potential corrections ahead.

GOLD

Gold will need robust, multi-regional demand to sustain a $3,000 per ounce price in 2025, according to Natixis’ Bernard Dahdah

While he forecasts gold to average around $2,725 in 2025, Dahdah emphasizes that a $3,000 target would require both strong Western investor interest and a rebound in Chinese demand. Although central bank buying and U.S. rate cuts support prices, Chinese demand remains uncertain amid local market concerns and potential economic stimulus measures. Dahdah highlights that while the Federal Reserve’s easing cycle has boosted demand, its future impact may be muted as rate cuts conclude.

DAILY ECONOMIC CALENDAR (ET)

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