🕵 Unemployment Claims Surprise: Market Strength with an Unexpected Twist!

Good Morning!

Japan's economic dance continues, with Tokyo's core inflation climbing to 2.4% in December, slightly under market expectations but still above November's 2.2%. While service prices held steady at 1%, factory output took an unexpected 2.3% dip in November – first decline in three months. The data's sending mixed signals as we approach BOJ's January meeting, where the possibility of a rate hike from the current 0.25% looms large. Higher utility bills and rice prices are driving inflation, but strip those away and the picture gets murkier. Keep your eyes on January 23-24 for BOJ's next move.

In today’s email:

• Jobs: Unemployment claims show resilient job market

• Bitcoin: Back to $96K after unexpected dip

• ICOs: Poised for a comeback in 2025? 

• Gold: Secret Chinese buying continues!

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THE BIG IDEA

US job market shows resilience with dipping jobless claims, but a curious twist emerges as unemployment duration hits a three-year high

Here's what's cooking in America's job market (and it's quite the paradox): Fresh unemployment claims just dipped to 219,000 last week – the lowest we've seen in a month and better than the 224,000 economists predicted. Good news, right? Well, hold that thought.

While fewer people are getting laid off, those who do lose their jobs are stuck in unemployment's waiting room longer than we've seen since 2021. The number of folks collecting unemployment benefits beyond week one has crept up to 1.91 million – highest since November 2021. And here's the kicker: the average unemployment stretch now spans 23.7 weeks, the longest since April 2022.

What's particularly fascinating is how this job market is breaking traditional patterns

Usually, when hiring slows down, layoffs pick up – it's like an economic seesaw. But not this time. Companies are holding onto their workers like rare Pokemon cards, even as hiring cools. Why? Simple: they know good talent is hard to find and about to get even scarcer.

Looking ahead to December's jobs report (mark your calendars for January 10th), we're likely to see fewer new jobs than November's 227,000. Jefferies' economist Thomas Simons is betting on 170,000 new positions, though that's not set in stone.

The Fed's watching all this with hawk eyes as they juggle their next moves. After three rate cuts since September, they're hitting pause – and this jobs data probably won't change their minds. Why? The job market's cooling down just enough to not cause panic, but inflation's still playing hard to get with that 2% target.

Bottom line: We're seeing a uniquely resilient yet gradually cooling job market. It's not your typical economic storyline, but then again, what has been lately?

MARKETS AT A GLANCE

TOP NEWS

Wall Street closes mixed in post-Christmas trading while Treasury yields retreat from 8-month highs in a day of minimal movement

The holiday season's bringing more shrugs than surprises as markets meander in thin trading. While Treasury yields took a breather after hitting an 8-month peak, stocks barely budged – though they're still sitting pretty with the Nasdaq up 33%, S&P 500 up 26%, and Dow up 14% for 2024. In crypto land, Bitcoin's taking a winter dip below $96K, while gold's glittering at $2,633!

Wells Fargo warns of potential 7% market correction as post-election rally appears disconnected from economic reality

The market's post-election party might be due for a reality check. Despite the S&P 500's impressive run, Wells Fargo's spotting some red flags – namely a growing disconnect between soaring stock prices and lukewarm economic data. Their strategists are eyeing a possible 7% pullback to around 5,515, though they're still bullish for 2025 with targets up to 6,700.

Chinese government bonds set for best performance since 2014, with a 9% return as economic challenges persist

Chinese bonds are having their moment, crushing it with a 9% return this year – best showing in a decade. While a planned 3 trillion yuan debt issuance in 2025 raised some eyebrows (compared to 1 trillion yuan this year!), investors aren't sweating it. With 10-year yields at 1.71% and possibly heading to 1.5%, these bonds are looking like a safe harbor in China's choppy economic waters.

CRYPTO

Bitcoin dips 4% following a TradingView glitch that momentarily showed BTC dominance at zero, triggering $33M in liquidated longs

Well, here's a crypto curveball: Bitcoin took an unexpected dive to $95K after TradingView's chart had a moment and briefly showed BTC's market dominance at... zero. That glitch triggered a $33M long liquidation party. But don't panic just yet – analysts are still eyeing $110K-$130K by January's end, while some are betting a dip might actually kickstart that long-awaited alt season.

ICOs poised for a 2025 comeback with enhanced regulatory clarity, market maturity, and improved infrastructure compared to 2017's boom

2025's shaping up to be the year ICOs get their glow-up. This time around, we're looking at a more sophisticated version of crypto's original killer app – one with actual regulatory clarity, mature market players, and infrastructure that doesn't feel like it was built with duct tape. The kicker? We're talking hundreds of billions in potential capital formation, with everyone from legacy media companies to AI projects jumping on board.

ETFs targeting Bitcoin-treasury companies emerge as corporate adoption grows

Bitwise and Strive Financial filed for ETFs focusing on firms with significant Bitcoin holdings. Bitwise’s ETF will weight investments by Bitcoin holdings, while Strive targets convertible securities from Bitcoin-heavy companies like MicroStrategy. Bitcoin treasury strategies are gaining traction, with KULR Technology Group’s $21M Bitcoin purchase boosting its shares and fueling interest in the trend.

BlackRock’s Global Allocation Fund ramps up Bitcoin ETF exposure

BlackRock increased its holdings in its IBIT Bitcoin ETF by 117% since July, now totaling over $17M across 430,770 shares. Despite representing just 0.1% of the $16.5B fund, IBIT is among the 35 largest ETFs ever launched, holding 527,284 BTC and driving $37B in inflows—dominating the US Bitcoin ETF market.

GOLD

China’s Stealthy Gold Accumulation Signals a Shift in Global Monetary Power

China is secretly buying gold at unprecedented levels, with unreported purchases from London alone totaling 1,000 tonnes since 2022. As China scales back U.S. Treasury holdings, its gold reserves are estimated to be 5,000 tonnes—double the official figure. This marks a shift from "dollar recycling" to "gold recycling," reflecting growing global skepticism of the dollar-dominated system. Central banks worldwide are following suit, positioning gold for a larger role in the monetary system.

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