The party is just getting started. Think of the possibilities in the days ahead.
There are countless commentaries from experts on why the Bitcoin futures ETF will mark the highs in Bitcoin and lead to a correction. Mostly, it is based on the “buy the rumour, sell the fact” thesis or historical comparisons with other ETFs which have marked the highs in other products.
However, there is no historical comparison as there has been no truly finite product before. Regardless of how expensive BTC becomes, it will always only have 21 million BTC in existence ultimately.
Therefore, the more mainstream it becomes and more accessible to passive investors, the price will just go higher. The haters still don’t get it. For something that has no intrinsic value, whatever the price it is, it will be “expensive”.
What’s the difference between 60k and 80k or 150k? It is all about how many people believe it has a place in their portfolio as a store of value. How do you put a price on the beliefs and the religious fervour of Bitcoin maximalists who will never part with their “precious”?
The party is just getting started. It only took 2 days for the bitcoin ETF to accumulate $1 billion USD of assets. Think of the possibilities in the days ahead.
Do Not Fear at the Highs
Cryptocurrencies and most indices are at their highs or near their all time highs. Surely it might seem like we are at lofty levels but we have to acknowledge the fundamentals that has brought us thus far — incessant money printing. This will continue to hold as economies build their way back out of the crisis and implement more fiscal policies going forward.
Remember, the previous lows were once highs and the current highs will be lows in the future. So, hold on to your hats and continue to ride the trend upwards.
Nothing noteworthy is scheduled for today. Earnings from Intel (INTC) and SnapChat (SNAP) later today.
Keep short USD and long NZD, & CNH. USD is staying on the defensive. Stay short.
2. Commodities: Uranium & Energy — Stay invested.
Key risks: Higher US bond yields, and Fedspeakers’ thoughts on the tapering process
Equity Index: Long Nasdaq futures. Stay long.
Single Stocks: TrackRecord Model Portfolio themes are well underway. Get involved and stay involved.
Key risks : Higher US bond yields, and Fedspeakers on the tapering process in the days ahead.
WHAT HAPPENED YESTERDAY
- The U.S. Dollar Index decreased -0.13% to 93.61. Dollar dipped on Wednesday as risk sentiment improved and as investors focused on rising commodity prices. The greenback has retraced (-0.29%) from the one-year high it hit against a basket of other currencies last week when market participants ramped up bets that the Federal Reserve will raise rates sooner than expected to quell rising price pressures. CAD was +0.30% higher on the day after the country’s annual inflation rate accelerated to an 18-year high in September (0.2% vs expected 0.1%), putting the focus on the Bank of Canada ahead of a rate decision next week.
- The 2-yr yield decreased 1 basis point to 0.40%, and the 10-yr yield was unchanged at 1.65%.
- S&P 500 (+0.37%) and Dow Jones Industrial Average (+0.43%) closed just below record highs on Wednesday, with the benchmark index rising for the sixth straight day and the Dow setting an intraday record high. The Nasdaq (-0.14%) declined modestly, while the Russell 2000 rose +0.6%.
- The underperformance of the mega-caps was a byproduct of some consolidation activity and relatively disappointing Q4 guidance from Netflix (NFLX 625.14, -13.86, -2.2%) and Dutch semiconductor company ASML (ASML 767.70, -33.26, -4.2%). Note, the MGK ETF entered the session up 6.8% since Oct. 4.
- PayPal (PYPL 258.36, -13.34, -4.9%) was another heavily-weighted laggard following reports that the company is in talks to acquire Pinterest (PINS 62.68, +7.10, +12.8%) for $70 per share. PayPal shares fell 5%. Pinterest shares rose 13%.
HEADLINES & MARKET IMPACT
Notable Snippet: The U.S. Food and Drug Administration on Wednesday authorized booster doses of the COVID-19 vaccines from Moderna Inc (MRNA.O) and Johnson & Johnson (JNJ.N), and said Americans can choose a different shot from their original inoculation as a booster.
That means all three vaccines authorized in the United States can also be given as boosters to some groups.
THEMATIC CONTEXT: “We suspect that countries around the world will transition to treating Covid-19 as an endemic in time (ie. Singapore), this is good for Cyclicals, Energy and inflation markers. One interesting development we note is that Bill Gates’ investment firm (one of the most clued in men for Covid-19 development) is betting “big” on a rebound in travel and luxury spending by buying a controlling stake in the Four Seasons hotel.” — 10th Sep 2021
COMMENTS/IMPACT: We believe the development of booster shots and derivative cure for Covid will add to the absolute inflation which appears to be non-transitory as more ppl come out to spend and economies reopen. Equities, Commodities and Energy will continue to do well as fiat is inflated away.
Notable Snippet: “Meta” was one of the more sober trending suggestions, referring to Facebook’s reported desire to assume a name that focuses on the metaverse, a virtual environment where users can hang out.
COMMENTS/IMPACT: The Metaverse was a theme we talked about in one of our webinars early this year and it seems that this trend is starting to become mainstream. We will be looking for more opportunities in this space.
Notable Snippet: U.S. President Joe Biden said on Wednesday he is concerned about Chinese hypersonic missiles, days after a media report that Beijing had tested a nuclear-capable hypersonic glide weapon.
Asked by reporters as he was boarding Air Force One for a trip to Pennsylvania whether he was concerned about Chinese hypersonic missiles, Biden said, “Yes.”
THEMATIC CONTEXT: “We are in an era of great power competition and no amount is too much as economic factions backed by sovereign printing presses are in it to win it. We haven’t even officially begun and commodity prices are already spiking on the back of supply chain issues. We believe that we will see much higher commodity prices in time to come and are invested accordingly.” — 14th June 2021
COMMENTS/IMPACT: We believe that this will be a key reason for larger fiscal spending in time to come. The unlimited money narrative will remain strong and these actions will ultimately be inflationary, stay invested.
Phan Vee Leung
CIO & Founder, TrackRecord