☀️☕️ Everything Rally, Including (Or Especially) Bitcoin and Gold

The MFM will be off on Wednesday. See you back here on Thursday!

📝 Focus

• Everything Rally, including (or especially) Bitcoin and gold

📊 In the Markets

• 62% Türkiye 

• PaneraIPO 

• Who Guyana Call?

📖 MoneyFitt Explains

• 🎓️ Bitcoin

💸 Personal Finance Corner

• The History of Cryptocurrency: From DigiCash to Bitcoin - A Journey Through Early Cryptocurrencies

📝 Focus

Everything Rally, including (or especially) Bitcoin and gold

Bitcoin🎓 reached a 20-month high on Monday, carrying it past $42,000, driven by investor optimism of lower interest rates (since the opportunity cost of holding a non-yielding asset would go down, meaning that lower yields in November on ultra-safe US Treasury debt have made other assets relatively more attractive to investors) and relief that more stringent regulations don’t seem to be around the corner. Even after easing back to $41,644, it still managed a 7.4% increase for the day for a year-to-date surge of 151% (but still 35% off the all-time high at the end of 2021.)

Also on Monday, gold hit an all-time peak of $2,135 per ounce, with the USD very weak over the last month (and, again, with the opportunity cost of holding a non-yielding asset going down) before easing back to $2,046. It was only in October that prices were plumbing 7-month lows as yields soared. As we wrote last Monday:

..... ▷ For Bitcoin and the crypto space in general, the recent (almost) conclusion of crypto lawsuit overhangs involving Binance and FTX adds to the widespread expectation that serious money is on the cusp of sending crypto to the moon, especially with the approval of spot bitcoin ETFs from the likes of BlackRock.

 ..... ▷ The (continued) rally in both of these non-yielding assets comes alongside the surge in both stocks and bonds over the last month or so, fueled by speculation of imminent Fed rate reductions. Traders are anticipating a rate cut by March, spurred by declining inflation indicators.

This is despite Chair Jay Powell's cautionary remarks on inflation (“We are prepared to tighten policy further if it becomes appropriate to do so”) that were dissected by traders to mean exactly what the traders wanted them to mean. 

 ..... ▷ As we also wrote last Monday, the sharp November rally also resulted in a brutal short squeeze, leading to some huge paper losses on those positions for numerous hedge funds. S3 upped its estimated losses to over $80bn for the month from about half that in the middle of the month. (These are just losses on the short positions, i.e. not considering other offsetting names in a portfolio.)

Though the current narrative of weaker US growth followed by rate cuts does seem to make a lot of sense, the danger is that it is not uncommon for markets to attribute a sharp move in markets to something entirely different from the original trigger or cause.

Either way, if interest rates are looking like the only way is down, then it would be reasonable to look at the damage done to different asset classes since the start of the tightening cycle some 20 months ago and see the potential for recovery.

🇸🇬 Singapore: Let’s Get MoneyFitt!

📊 In the Markets

Asian stocks mostly fell on Monday as concerns continued over China’s economy, with the mainland Chinese CSI 300 index slipping 0.65% to the lowest level since February 2019. But over in India, stocks hit all-time highs on Prime Minister Narendra Modi’s ruling Bharatiya Janata party’s wins in three critical state elections. Traders greeted the wins as a positive sign ahead of next year’s general election. 

Despite a massive economic and monetary policy U-turn (with six interest rate hikes, including last month’s 500 basis point hike to 40%) on the June appointment of Hafize Gaye Erkan as the new governor of the central bank of Türkiye, the country’s inflation rate remained above 60 per cent in November. Consumer prices picked up from 61% in October to 62% in November year-on-year (i.e. compared to the same month in the previous year.) 

European stocks also closed lower on Monday, taking a breather after November’s broad-based Everything market rally. 

This carried over to stocks in the US, which also closed lower, as investors fretted over upcoming key employment data for November by taking profits on bonds (sending yields higher) and selling down mega-caps, with every one of the Magnificent Seven down by more than 1% and both Nvidia and Alphabet off over 2%. With Bitcoin crossing $40,000 again, shares in cryptocurrency companies like Coinbase rallied between 5% and 9%.

Ride-hailing pioneer Uber rallied 2.2% to bring its market value to $120bn after Friday’s announcement that it will enter the S&P 500 index on December 18th. 

Panera Bread is preparing to make its second debut as a listed company, having been taken private by JAB Holdings for $7.5bn in 2017, 20% above its all-time high price. There was a failed attempt at a SPAC listing in 2021, the same year that JAB stablemate Krispy Kreme IPO-ed after having been private for half a decade. Since the privatisation, ​​the company has been investing in technology and expanding its menu offerings, and with over a hundred of JAB’s Au Bon Pain outlets converted to Panerais (before selling the rest to Yum! Brands), market estimates of a valuation over $10bn could be possible. 

The IPO market, along with the stock markets on which they want to list, seems to be getting hotter after a rather dull couple of years. Besides Panera, extreme fast-fashion giant Shein of China (sorry, Singapore), Reddit and Kim Kardashian’s shapewear line Skims are also prepping for launch in 2024.

And in a referendum on Sunday, Venezuelans backed their nation's claim to a resource-rich area in neighbouring Guyana, escalating a dispute over the Essequibo region intensified by ExxonMobil's 2015 oil discovery. Described by Guyana as a pretext for "annexation," the vote has sparked significant tensions in the region. Venezuelan President Nicolás Maduro praised the outcome, calling for a "standing ovation" for the people. Chevron’s recent $53bn acquisition of Hess was in large part driven by its major presence in Guyana.