🔥 PCE Inflation: Bitcoin Battles, Dollar Weakens

Good Morning!

As August wraps up, the financial world is buzzing with anticipation. The Fed's hinting at a rate cut on September 18 has investors chomping at the bit. Asia's markets are closing the month on a high note, while the dollar's taking a nosedive – its worst monthly performance since last November. Remember that August 5th market panic? Ancient history now. Eurozone inflation data out today is expected to show a cooldown to 2.2% annually. Across the pond, all eyes are on the Fed's favorite inflation gauge and next week's jobs report. These numbers will be key in determining just how far and fast the Fed might slash rates.

In today’s email:

• FedWatch: US PCE, Fed’s favourite inflation gauge out today

• Bitcoin: Bitcoin back down to $59k as we await further clarity

• Dollar: Continued weakness with DXY at 101

• Gold: Holding steady around $2500/oz

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THE BIG IDEA

The Fed's preferred inflation gauge, the PCE index, is due today, potentially influencing the September rate decision amid shifting focus to labor market concerns

The financial world is buzzing as we await the Fed's favorite inflation indicator this Friday. The Personal Consumption Expenditures (PCE) price index is set to drop at 8:30 AM ET, and it's more than just a mouthful - it's a crucial piece of the economic puzzle.

What's on the menu? Experts are predicting a 0.2% monthly increase for both headline and core prices, with annual gains of 2.5% and 2.7% respectively. If these forecasts hit the mark, it'll be business as usual for the Fed's September pow-wow.

But here's where it gets interesting:

The Fed's gaze seems to be shifting. While inflation's been the big bad wolf for a while, Powell and crew are now eyeing the job market with growing concern. It's like they've gone from inflation firefighters to employment cheerleaders overnight.

Powell's recent comments hint at a growing confidence in taming inflation, but he's not popping the champagne just yet. The labor market's showing signs of fatigue, and that's got the Fed's antennae twitching.

So, what does this mean for your wallet? Well, if the PCE index plays nice, we might see that much-anticipated interest rate cut in September. But don't bet the farm on it - the upcoming jobs report on September 6th could steal the show.

In the grand economic theater, Friday's PCE reading is just one act. The real drama might unfold in the labor market. As we navigate this economic tightrope, one thing's clear: the Fed's balancing act between inflation and employment is far from over. Stay tuned - this show's just getting started!

MARKETS AT A GLANCE

TOP NEWS

Dow hits record high amid mixed trading; Nvidia drops despite strong forecast

The Dow Jones soared to a record close Thursday, while tech stocks stumbled. Nvidia's stock dipped 6% despite a solid forecast, trimming its 2024 gains. The U.S. economy's faster-than-expected growth bolstered hopes for a soft landing. Apple climbed 1.5% after Citigroup named it their top AI pick. Investors now eye Friday's PCE report for Fed policy hints.

Asian stocks rise, dollar weakens on Fed rate cut expectations

Asian stocks climbed Friday, eyeing solid August gains. The dollar faces its worst monthly performance in nine months as markets anticipate Fed rate cuts. U.S. PCE and Eurozone inflation data are in focus. Japan's core inflation accelerated, fueling BOJ rate hike speculation. Oil prices edged up, while gold dipped but remains set for a monthly gain.

Key stocks to watch include Marvell Technology, Nvidia, and Apple

Marvell Technology surged 8% after hours on strong earnings. Nvidia cooled 6.4% post-record results. Apple, up 20% in three months, faces iPhone production concerns in China. OpenAI investment buzz surrounds tech giants. San Francisco sees office space shifts as AI firms move in. Ubisoft releases "Star Wars Outlaws". The Dow hit another record, led by non-tech stocks like Nike and McDonald's.

CRYPTO

Solo Bitcoin miner hits jackpot, wins $200K with minuscule hashrate

Talk about a Cinderella story! A solo Bitcoin miner just struck crypto gold, solving a block with a mere 0.012% of the average hashrate. This digital David took on the Goliaths of mining and walked away with a cool $200K. It's like winning the lottery, but with more zeroes and ones. Who says you need a mining rig the size of Texas to make it big in Bitcoin?

House preps crypto blitz for September, tackling DeFi, SEC oversight, and scams

Hold onto your wallets, folks! The House Financial Services Committee is gearing up for a crypto-palooza this September. On the docket: DeFi deep dives, SEC shenanigans, and those pesky "pig butchering" scams. The highlight? A potential SEC showdown with Chair Gary Gensler in the hot seat. With McHenry's retirement looming, could this be crypto's last dance with Congress this year?

Bitcoin's realized volatility hit a 12-month high in August, signaling increased market risk

Bitcoin's on a rollercoaster again. August saw realized volatility peak at levels unseen in over a year. This isn't just numbers - it's a stark reminder of the crypto market's inherent risk. While veterans might shrug, newcomers should take note. As always, Bitcoin's wild swings reflect broader economic trends and internal crypto dynamics.

BlackRock's IBIT logs first daily outflows since May amid broader spot Bitcoin ETF outflow trend

The crypto ETF landscape is shifting, with BlackRock's IBIT experiencing its first outflow since May. Overall, spot Bitcoin ETFs saw $71.73 million exit on Thursday, marking a three-day outflow streak. While most funds felt the pinch, ARKB bucked the trend with modest inflows. Meanwhile, spot Ether ETFs also saw slight outflows, with trading volumes dipping across the board.

GOLD

Gold prices remain steady as traders analyze US economic data and anticipate a crucial inflation report

Gold's holding its ground, as the market digests a buffet of US economic data. GDP growth surprised on the upside, but all eyes are on Friday's inflation report - the Fed's favorite flavor. With Treasury yields and the dollar inching up, gold's resilience speaks volumes. Powell's hinting at rate cuts, but will the data play along? Stay tuned for this economic cliffhanger.

DAILY ECONOMIC CALENDAR (ET)

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