All the information in this letter is not to be considered financial advice; it is the author’s personal views and agreed views of others from their overviews of present markets,
Some of the content will be a summary of articles I have read and believe the author got most or all of it bang on, some will be statistics that have been check for validity, but all will be content I believe is of use or interest to margincall.club members.
Season’s greetings and Hello to all Club members, and for the moment anyone else that comes to the site because the members access only side is yet to be set up
Access will come free with full club membership when you use one of or partner exchanges to trade.
Welcome to the December edition of the margincall.club FinTech Newsletter.
This month, we will provide you with an overview of key financial events and market developments from the past month (November) and what effect those events could have in November, Our goal is to help you stay informed and to make your own well-informed decisions.
I will also visit any of the price predictions given in the November 2023 letter to see what played out and what didn’t and why.
As I write this the news that Charlie Munger passed away at 99 years of age, may he rest in peace and his family find some peace in the fact they had him around for so long, something many in the world at the moment don’t get a chance of, all I have to say to that is, an eye for an eye only leads to the blind leading the blind!
From the feedback on last month’s newsletter the consensus seems to be more condensed and more direct links.
We are coming into December and holiday season, historically a quiet time in most markets, doesn’t mean it will be this month but I only see a few things that could be an issue, so this month will be shorter than last months.
Financial Market Highlights:
- Stock Market:
- Healthcare firms drag
- STOXX 600 set for best month since Jan
- Argenx tumbles after failed Vyvgart trial
- STOXX 600 down 0.3%
On November 28th, European stock markets experienced a second consecutive decline, interrupting the positive momentum seen throughout November. This downturn was triggered by statements from European Central Bank (ECB) policymakers that tempered expectations of interest rate cuts in the coming year.
The pan-European STOXX 600 index (.STOXX) saw a 0.3% decrease, impacted by notable declines in heavyweight stocks like Novo Nordisk (NOVOb.CO) and LVMH (LVMH.PA), which fell by 3.1% and 1.8%, respectively.
The healthcare sector (.SXDP) faced a 1.4% drop, with Belgian pharmaceutical firm Argenx(ARGX.BR) experiencing a significant decline of 10.1% after its advanced study on a treatment for a bleeding disorder failed to meet primary and secondary endpoints.
Despite this setback, the STOXX 600 index remained on track for its most robust monthly performance since January, driven by the anticipation that major central banks, including the Federal Reserve and the ECB, might shift towards easing monetary policy in the coming year.
Joachim Nagel, the chief of the Bundesbank, cautioned that the ECB might need to raise interest rates again if the inflation outlook worsened, advising against hasty policy easing following a series of record-setting rate hikes. ECB President Christine Lagarde echoed this sentiment on Monday, emphasizing that the bank’s efforts to control inflation were ongoing.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, noted that speeches from central bank policymakers were aimed at tempering enthusiasm for imminent rate cuts. She anticipated a similar stance from Jerome Powell, Chair of the Fed, in his upcoming speech on Friday.
Investors were closely monitoring economic data, including euro zone inflation numbers and the U.S. Personal Consumption Expenditures index, for insights into the future path of monetary policy. Market sentiment shifted, with traders now pricing in a 45% chance of a 25 basis points rate cut by the ECB in April, down from approximately 90% two weeks prior.
In other market movements, German consumer sentiment showed a slight improvement heading into the Christmas month, but concerns remained about a sustainable recovery in Europe’s largest economy. Julius Baer (BAER.S) faced a 4.7% decline as Morgan Stanley downgraded the Swiss bank, citing concerns about the quality of some of its assets.
French video game producer Ubisoft (UBIP.PA) witnessed a 9.0% drop after announcing a placement of convertible or exchangeable bonds into shares. On a more positive note, RWE (RWEG.DE), Germany’s largest power producer, stated its intention to increase investments in green energy technologies to 55 billion euros ($60 billion) over the next seven years, leading to a 3.1% rise in its shares.
- Economic Indicators:
Nothing has really changed since last month apart from the bank liquidity and more made up data from major governments. There must come a time the mainstream media gets a trusted third party to check the figures given!
- Cryptocurrency Update:
I agree with about 80% of what Daria Morgen wrote today here https://changelly.com/blog/bitcoin-price-prediction/ on changelly, a good blog to follow. I think her Bitcoin Prediction table is way off as I believe the data it’s based on is missing key information, though I am happy to be corrected, I think it is optimistic in its price stability and too pessimistic in its maximum price declarations.
The Min/max spread shows no respect for historic volatility compression and I feel fails to take into account the effect of Metcalfe’s law on adoption within the narrative of social media awareness, something we have only seen with the adoption of chat GPT.
- Commodities and Forex:
I don’t provide updates in this letter on commodities like oil, gold, and Fiat currencies as these are assets that are affected by market trends and all the above.
Investment Insights:
- Market Analysis:
As I said last month about Black Rock and fidelity have already set up there Bitcoin and Eth profits, and how they are eyeing 8 to 16 X on what they have.
During last month I looked on the block for >1< bitcoin purchases heading for 100+ bitcoin wallets, and worked out what Blackrock would need to buy $7.1Billion of Bitcoin which is 1% of their liquid assets.
Blockchain analysts reported that the bitcoin transfers to one address were coming from Gemini and noted that the first major transaction occurred exactly one month after BlackRock filed for its spot bitcoin exchange-traded fund (ETF), fuelling speculation that the investment manager is behind this rapid accumulation in the wallet.
The amount accumulated in those identified wallets totals 118,000 BTC, leaving around $4.3billion Bitcoin to find to represent 1% of Blackrocks $7.1Billion liquid assets (they will sell those Bitcoin to ETF investors to replenish the $7.1B and pocket the profits, and Larry could be the first CEO to walk away with a $1B bonus!), I wonder where Blackrock would find $4.3 billion of Bitcoin!
- Investment Strategies & Featured Asset:
If you are looking at the Macro and want to have a foot in both traditional and crypto markets you have to look at data miners and companies like Micro strategy, the miners can switch to data storage and Micro Strategy will most probably capitalise some Bitcoin to cover costs of purchase if BTC goes >4X as that would be prudent.
If you see any ATM company looking to use those machines when idle to mine Bitcoin or a company that is using renewables, solar, water and wind to power miners all would be worth doing Due diligence to see if they are investable.
Financial News:
- Global Financial News:
Covered most of the news that could have impact market movement, that remains around the events in Ukraine, Gaza and Iran, escalation there could see a chain reaction in events and that moving US markets down.
1. **Interest Rate Rises Slow Down – But More Still to Come:**
– The US Federal Reserve, European Central Bank (ECB), and Bank of England have recently slowed the pace of their interest rate hikes but indicated that the tightening cycle is ongoing.
– The Fed raised rates by 0.5% in December and plans to continue raising them, projecting a rate of 5.1% by the end of the next year.
– The ECB raised rates by 50 basis points in December and foresees further increases due to an upward revision in the inflation outlook for the Eurozone.
– The Bank of England increased its key interest rate to 3.5% and signaled the potential for additional hikes to counter inflationary pressures.
2. **Food Prices Likely to Remain High in 2023:**
– Global food prices are expected to stay elevated in 2023 due to factors like drought, excessive rain, the war in Ukraine, and high energy costs impacting global farm production.
– Staple crops like rice and wheat may not replenish depleted inventories in the first half of 2023, and adverse weather in Latin America and Southeast Asia affects edible oil production.
– Despite drops in futures for wheat, corn, and palm oil, retail market prices remain high.
3. **FAO Food Commodity Price Indices. Economic News:**
– Recent natural disasters, such as flooding in Australia and drought in Argentina, are anticipated to reduce global wheat availability in early 2023.
– Rice prices may remain high due to export duties imposed by India, and concerns arise about corn and soybeans in South America due to recent dryness.
– The US faces tight supplies of key crops, with global food import costs projected to reach nearly $2 trillion this year.
4. **Rates and Inflation. Economic:**
– While the US shows signs of slowing inflation, producer prices rose more than expected in November, with a moderation trend.
– Japan’s wholesale prices rose by 9.3%, indicating a potential peak in inflation amid easing global commodity prices.
– German households are becoming less pessimistic about inflation, and British inflation fell more than expected in November.
– The UK government is accelerating a consultation on a central bank digital currency, and investors are withdrawing record levels of bitcoin from crypto exchanges.
– Russia is expected to post a record high current account surplus, while Argentina’s inflation is forecasted to cool slightly in November.
– Russia’s central bank held its key interest rate but acknowledged growing inflation risks.
– South Korea expects a deeper economic slowdown, extending sales tax breaks, and exploring the future of cryptocurrencies.
- Regulatory Updates:
Still no hard news on ETF’s, CZ’s deal brings Binance .
Personal thoughts:
Everything stays the same in the markets, Bitcoin could hit $48K by 31st of this month and Eth cracks a stable 0.06 Bitcoin vale, so $2,880.
However, if Gary turns into Santa and drops a surprise day before the holiday and gives the green light to all ETF’s so the fiat outflow to the ETF’s is somewhat restricted then we could see a $50k plus Bitcoin and maybe Eth hitting 0.1Bitcoin and $5k, but that’s only my wild thoughts!
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James,
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