Bitcoin halving is soon, what next? – Copy

Thoughts of the Day

Explosions at Iranian nuclear sites triggered market turmoil during Asian morning trading hours today. US bond yields dropped, gold rose, stocks and oil spiked, while Bitcoin fell sharply. The market recovered partially when Iran denied the attack, despite US officials confirming there was an Israeli attack. The situation remains highly uncertain, stay nimble amid the volatility.

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Day Ahead

Nothing noteworthy on the horizon today.

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What Happened Yesterday

Market Movements as of New York Close 18 Apr 24

Bostic (current voter, known hawk):
“Inflation is going where we want it to go, but it’s slow.” “We won’t be able to reduce rates until towards the end of the year.” “Open to a rate hike if inflation progress stalls.”
Williams (current voter, slight hawk): “I don’t feel urgency to cut rates.” “Eventually interest rates will need to be lower.” “Rate cuts will be determined by economic activity.”
(Bostic expectations of rate cuts at year end remains but the fact that he is now open to rate cuts is bad news. Williams is reiterating that there is no need to change rates for now.)

The US Treasury Yield curve inversion remained at 0.34% as the US 2-year bond yield and the 10-year yield rose +0.05% to 4.98% and 4.64% respectively.

The US stock futures traded within a small range through the Asian and London trading sessions The S&P 500 futures was up +0.20% when the New York session began.

The US stock market opened slightly higher from Wednesday. It then attempted to climb higher in the early New York session before it succumbed to hawkish comments from Fed officials and fell in the latter half of the session. The S&P 500 finished -0.22% lower (high: +0.69%, low: -0.40%), the Dow Jones was almost unchanged at +0.06% (high: +0.88%, low: -0.19%) while the Nasdaq fell -0.57% (high: +0.56%, low: -0.67%).

[Earnings, aftermarket hours]
TSMC (NYSE: TSM, -4.85%) stock price fell despite beating revenue and profit expectations in Q1 ’24 due to high demand for advanced semiconductor chips related to AI applications.Net revenue: 592.64 billion New Taiwan dollars ($18.87 billion) vs NT$582.94 billion expected. Net income: NT$225.49 billion vs NT$213.59 billion expected. However, TSMC scaled back its outlook for a chip market expansion as the smartphone and personal-computing markets remain weak.
Netflix (Nasdaq: NFLX, -0.51%) added 9.33 million net new subscribers (vs 5.1 million expected). Revenue: $9.37 billion vs $9.27 billion expected. Earnings: $5.28 vs $4.51 expected. However, the stock price fell as Netflix warned that it would stop reporting subscriber tally.

Explosions were heard in Isfahan in central Iran, in the As-Suwayda Governorate of southern Syria, and in the Baghdad area and Babil Governorate of Iraq. A U.S. official confirmed to ABC News Israeli missiles have hit a site in Iran, indicating that this might be a retaliation following the strikes by Iran last weekend. However, Iranian authorities mentioned that the explosion was merely a result of the activation of Iran’s Air Defense Systems a few hours later and that their nuclear sites are safe.
Market Reaction:
– Stock futures fell during Asian morning trading hours (S&P 500: 4963.50, -1.66%) following the initial reports but has since bounced to being down just -0.92% and reduce the losses after Iran reiterates their nuclear sites are safe in an attempt to de-escalate the conflict.
– Gold spiked to a high of 2,417.92 (+1.63%) but has since fallen from the highs to 2,383.50 (just +0.19% on the day).
– Brent Oil spiked to a high of 89.95 (+4.10%) but has since fallen to the 88 level (+2.2% higher on the day).
– US 2 year yield fell as low as 4.88% from 4.99% but is currently at 4.93%. US 10 year yield fell to 4.50% from 4.64% but is now at 4.56%.
– Bitcoin fell to 59,691(-6.1%) but has since recovered to the 62,180 level (-2.2% on the day).

The crypto market managed to climb higher yesterday to the 64,000 level possibly due to the imminent Bitcoin halving.
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Headlines & Market Impact

Japan’s March inflation slows to 2.6%, eyes are now on Bank of Japan move

Notable Snippet: Japan’s core inflation slowed in March due to mild rises in food prices while staying comfortably above the central bank’s 2% target, government data showed on Friday.

The nationwide core consumer price index (CPI), which excludes fresh food items, rose 2.6% in March from a year earlier after rising 2.8% in February. It matched the median market forecast.

The “core core” index, which excludes both fresh food and energy costs and is closely watched by the Bank of Japan as a key gauge of broader inflation trends, rose 2.9% after increasing 3.2% in February. It was the first time since November 2022 that the index fell below 3%.
Japan’s National Consumer Price Index (CPI) for March climbed 2.7% YoY as expected, compared to a 2.8% uptick in February, according to the latest data released by the Japan Statistics Bureau on Friday.

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Netflix to stop reporting subscriber tally as streaming wars cool

Notable Snippet: Netflix (NFLX.O) on Thursday unexpectedly announced that it will stop reporting subscriber numbers each quarter, a decision seen as a sign that years of customer gains in the streaming wars are coming to an end.

Shares of the streaming video pioneer fell after it reported a large batch of new customers in the first quarter but gave a revenue forecast that missed analyst targets. The stock was trading at $585.41 after-hours, down 4.2% from its closing price.

Netflix said its ad-supported streaming plans helped attract 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG. That brought its global total to 269.6 million at the end of March.

Netflix executives have urged investors to focus on revenue and operating margins when assessing the company’s progress, rather than customer additions. Netflix said it will stop disclosing subscriber additions each quarter starting with the first quarter of 2025, and instead will announce them only when major milestones are reached.

“This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business,” co-Chief Executive Greg Peters said in a post-earnings video.

Analysts said the decision to end quarterly reporting of subscriber numbers would likely rankle investors and make it harder for Wall Street analysts to model the company’s business, going forward. They also said it was unclear what would drive new sign-ups once Netflix has pulled in as many users as possible from its crackdown on password sharing.
Other companies similarly have stopped reporting familiar metrics — monthly active users, in the case of Meta’s (META.O) Facebook and social platform X, previously known as Twitter — as growth slowed.

“The movement to no longer disclose quarterly subscriptions from next year will not go down well, more so given (subscriber) growth that the streaming king has seen over the last year,” said PP Foresight analyst Paolo Pescatore.

In a letter to shareholders, Netflix said it would fuel future growth by working to improve the variety and quality of its entertainment and scale its advertising business. Netflix, which once eschewed commercials, is preparing to host its second annual presentation to advertisers in New York.

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Canada’s capital gains tax rise will further knock productivity, say economists

Notable Snippet: Canada’s plan to raise taxes on the savings of wealthy people and corporations is likely to hold back investment, potentially adding to the productivity malaise that has held back economic growth in recent years, say economists.

In a bid to increase revenue to pay for housing and other programs, Canada’s annual budget on Tuesday proposed increasing the share of capital gains that is subject to taxation to two-thirds from one-half for people with annual investment profits greater than C$250,000 ($181,752) as well as for companies and trusts.

Raising capital gains taxes could discourage savings, say economists, a key driver of business investment, which fell in the fourth quarter for the sixth time in the last seven quarters and has been unable to sustain a move above the 2014 peak.

“The Canadian economy needs savings and it’s the relatively wealthy that now have less incentive to save — or more incentive to move those savings out of the country,” Derek Holt, head of capital markets economics at Scotiabank, said in a note.

“Less reward after-tax is likely to discourage risk-taking. Discourage investment. Discourage anything that might address Canada’s productivity problems.”

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Stock Indices

Phan Vee Leung
CIO & Founder, TrackRecord