Bitcoin Powers Higher

Thoughts of the Day

Bitcoin prices have been steadily rising since the year’s beginning, gaining strength weekly since October. Factors contributing to the rally include increased chances of ETF approval, geopolitical tensions in the Middle East & the upcoming Bitcoin Halving in April 2024.

This is happening without media frenzy & excessive leverage, likely the market is not overly long. We believe the rise is likely to continue in the weeks ahead

This is an abridged version of our CIO’s daily writeup for the day, to view the full version, please login or subscribe to a membership plan.

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Week Ahead

Monday: – 

Tuesday: The Reserve Bank of Australia is expected to keep interest rates at 4.35% in its monetary policy meeting.

The US JOLTS job openings are expected to contract to 9.35M in October from 9.553M previously.

Wednesday: The US ADP Employment Change is expected to show +128k jobs being added to the economy in November, an increase from +113k previously.

The Bank of Canada is expected to keep interest rates at 5% in its monetary policy decision.

Thursday: – Friday: The US Nonfarm Payrolls is expected to show +180k jobs being added to the economy in November, up from +150k previously. The unemployment rate is expected to remain at 3.9%.

The preliminary print for the University of Michigan Consumer Sentiment (61.8 exp, 61.3 prev) and inflation expectations for the year ahead (4.5% prev) will be released.

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What Happened Yesterday

Market Movements as of New York Close 1 Dec 23 (4 Dec for Crypto)
  • In the  fireside chat titled “Navigating Pathways to Economic Mobility”, Federal Reserve Chairman Powell noted that inflation is still well above target but moving in the right direction. He added that the pace at which the economy is creating new jobs remains strong, and has been slowing toward a more sustainable level. Also, he said that it would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance and the Fed stands ready to hike if it becomes appropriate to do so.
  • The Canadian Unemployment Rate increased slightly to 5.8% in November as expected, compared to 5.7% in October. The Employment Change showed that +24.9k jobs were added compared to +15k expected and +17.5 previously. The CAD did not react much to the data release.
  • US manufacturing contracted in November for the 12th consecutive month, with the ISM Manufacturing Purchasing Managers Index at 46.7 (vs 47.6 expected), unchanged from October.
  • The US Treasury Yield curve inversion narrowed to 0.34% as the US 2-year bond yield fell -0.17% to 4.56% while the 10-year bond yield slipped -0.15% to 4.22%.
  • The US stock futures traded sideways through the Asian trading hours. It then started to trade in a more volatile fashion when the London trading session began, trading higher (4583.5, +0.26%) in the early session before making a reversal and trading to a low of 4563.75 (-0.17% on the day) before the New York session started.
  • The US stock market opened lower from Thursday. It then climbed higher through the early New York session on the back of the weaker US manufacturing PMI. However, the climb stalled following hawkish remarks from Powell.  Consequently, the S&P 500 closed +0.59% higher (high: +0.69%, low: -0.29%), the Dow Jones rose +0.82% (high: +0.87%, low: -0.10%) while the Nasdaq increased +0.31% (high: +0.41%, low: -0.71%).
  • News of attacks by Iran-backed Houthi forces on commercial vessels in the Red Sea in the early hours of the Asian Monday morning, dented in risk sentiment. As a result, the S&P 500 futures fell -0.14%, gold spiked +3.72% while Bitcoin leapt +2.40% in immediate reaction. 
  • The crypto market continues to climb higher due to optimism in the Crypto market with Bitcoin climbing above 40,000 and Ether touching the 2,200 level intraday. Bitcoin closed +1.23% higher at 39,986 while Ether closed +1.30% higher at 2,193. Bitcoin and Ether has since climbed above the 40,000 and 2,200 levels respectively in Asian Hours on Monday.
This is a partial analysis of what happened yesterday, for a more detailed analysis, subscribe to a membership plan.

Headlines & Market Impact

Meta’s AI chief doesn’t think AI super intelligence is coming anytime soon, and is skeptical on quantum computing

Notable Snippet: Meta’s chief scientist and deep learning pioneer Yann LeCun said he believes that current AI systems are decades away from reaching some semblance of sentience, equipped with common sense that can push their abilities beyond merely summarising mountains of text in creative ways.

His point of view stands in contrast to that of Nvidia CEO Jensen Huang, who recently said AI will be “fairly competitive” with humans in less than five years, besting people at a multitude of mentally intensive tasks.

“I know Jensen,” LeCun said at a recent event highlighting the Facebook parent company’s 10-year anniversary of its Fundamental AI Research team. LeCun said the Nvidia

 CEO has much to gain from the AI craze. “There is an AI war, and he’s supplying the weapons.”

″[If] you think AGI is in, the more GPUs you have to buy,” LeCun said, about technologists attempting to develop artificial general intelligence, the kind of AI on par with human-level intelligence. As long as researchers at firms such as OpenAI continue their pursuit of AGI, they will need more of Nvidia’s computer chips.

Society is more likely to get “cat-level” or “dog-level” AI years before human-level AI, LeCun said. And the technology industry’s current focus on language models and text data will not be enough to create the kinds of advanced human-like AI systems that researchers have been dreaming about for decades.

“Text is a very poor source of information,” LeCun said, explaining that it would likely take 20,000 years for a human to read the amount of text that has been used to train modern language models. “Train a system on the equivalent of 20,000 years of reading material, and they still don’t understand that if A is the same as B, then B is the same as A.”

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Oil prices could reach $100 a barrel in 2024 if OPEC+ members fulfil pledges for voluntary cuts

Notable Snippet: The way the production cuts were announced also fueled traders’ confusion and skepticism. In previous announcements, the OPEC+ press release contained all relevant information. But on Thursday, individual member states issued separate statements on their voluntary cuts.

If members do fulfil their pledged cuts, crude prices are set to climb.

When the cuts expire at the end of the first quarter, these removed barrels will only return gradually, “which should help keep the oil market in deficit in 1H24,” UBS strategist Giovanni Staunovo wrote in a note following the decision, adding that he expects prices to rise in the undersupplied oil market.

“If the compliance rate of the group improves from here, even more barrels could get removed,” Staunovo added.

Similarly, Goldman Sachs forecasts higher prices, adopting a wait-and-see approach on OPEC+ members adhering to the proposed cuts.

“We estimate a modest mechanical boost from the extra cut to Brent Dec24 prices of around $4/bbl relative our prior OPEC+ assumptions,” the investment bank said in a note, adding that it expects the group “can maintain Brent oil prices in the $80-$100 range in 2024.”

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Multiple commercial vessels attacked in Red Sea

Notable Snippet: Three commercial vessels came under attack in international waters in the southern Red Sea, the U.S. military said Sunday, as Yemen’s Houthi group claimed drone and missile attacks on two Israeli vessels in the area.

The Carney, an American destroyer, responded to distress calls and provided assistance following missile and drone launches from Houthi-controlled territory, according to U.S. Central Command.

Yemen’s Houthi movement said its navy had attacked two Israeli ships, Unity Explorer and Number 9, with an armed drone and a naval missile. A spokesperson for the group’s military said the two ships were targeted after they rejected warnings, without elaborating.

In a broadcast statement, the spokesperson said the attacks were in response to the demands of the Yemeni people and calls from Islamic nations to stand with the Palestinian people.

The U.S. military said the Carney shot down three drones as it helped the commercial vessels. It was not clear if the warship was a target.

It said the attacks were a threat to international commerce.

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord