preface:
The CPI in October was lower than expected, and the market cheered. U.S. stocks showed a long-lost unilateral upward trend. The three major stock indexes were about to challenge new stage highs, and government bond yields fell in response. The stock prices of star stocks in the popular AI track - Microsoft and NVIDIA - have hit record highs, and NVIDIAs Q3 financial report was even better than expected. Both Japanese and European stock markets rose to a certain extent.
In the crypto market, the bullish trend in October has come to an end. Binance punished the boots on the ground, but it did not have a substantial negative impact on the currency market. The market continued the price trend of the Mavericks in October, fluctuating at high levels and building a platform. The Binance incident is a milestone on the road to compliance in the crypto market, which will undoubtedly be beneficial in the long run.
October CPI falls below expectations, sparking cheers from market
On November 14, the U.S. October CPI data was released - the overall CPI was 3.24% year-on-year and 0.04% month-on-month; the core CPI was 4.03% year-on-year and 0.23% month-on-month, both slightly lower than market expectations. The news stimulated global stock markets to rise. The three major U.S. stock indexes all jumped short and opened higher. Stock markets such as A-shares and Hong Kong stocks also opened higher.
Not only CPI, US non-farm data and PMI also indicate that the economy is reducing: In October, the number of new non-farm jobs in the United States was 150,000 (market expectation: 180,000), and the unemployment rate was 3.9% (market expectation: 3.8%). Fed Bostic said he was pleased with the non-farm payrolls data released this time. The preliminary value of the US Markit manufacturing PMI in November was 49.4, which was expected to be 49.9, falling below the boom-bust line. The preliminary service PMI value was 50.8, a new high since July this year, and was expected to be 50.3.
The Federal Reserves aggressive interest rate hike policy has been reflected in economic data, and the market has also used real money to vote for the stock and bond markets: throughout November, the Nasdaq index rose by more than 10% at its highest, while the previous surge in the U.S. Bond yields have been falling, with the 10-year U.S. Treasury yield falling as low as 4.4%.
In fact, the market is increasingly expecting the Federal Reserve to suspend interest rate hikes or even cut interest rates. Prior to this, in September, the Bank of England had already announced a pause in interest rate increases. The rise in global stock markets caused by lower-than-expected CPI this time is obviously a violent catharsis of market sentiment that has been suppressed for a long time. As the economy moderately cools, market expectations for the future will also undergo a fundamental reversal. It is expected that risky assets may usher in a new spring, while the popularity of safe-haven assets will weaken. Take gold as an example. In the past year, the price of gold has continued to rise and has become the new darling of the market. However, looking at the recent trend, the technical side shows obvious resistance and is hovering around US$2,000.
U.S. stocks are enjoying a promising rally, and the AI track continues to gain momentum
U.S. stocks have enjoyed impressive gains this month, and are likely to challenge the staged top reached at the end of July this year. The Nasdaqs highest increase was more than 10%, the SP 500s highest increase was more than 8%, and the Dows highest increase was more than 7%. Indices such as the Nikkei 225, Germanys DAX 30, and Frances CAC 40 also posted encouraging gains.
There is no doubt that AI is still the hottest investment theme in November, and OpenAI’s recent “Palace Fighting Drama” has added countless topics and popularity to AI. Shares of Microsoft and Nvidia both hit record highs this month.
We once thought that although Microsoft was the big brother on the PC side, it had missed the wave of the mobile Internet. Nowadays, Microsoft has taken advantage of the trend of AI and proactively integrated OpenAI, leading the worlds technology trend again, and its stock price has soared. After NVIDIA announced its financial report, its stock price fell for three consecutive days, even though the financial report data was very beautiful. Nvidia’s Q3 total revenue was 18.1B, much higher than the market expectation of 16.2B; gross profit margin was 74%, higher than the expected 72.48%; net profit was 9.2B, exceeding market expectations of 8.4B. But such exceeding expectations was not reflected in the price. Major investment banks have raised their target prices for Nvidia, almost all above $600.
The current general concern in the market is that Nvidias sales in China will be affected due to the ban, which will in turn affect its performance in 2024. However, Nvidia plans to launch a separate chip design plan for China to bypass the U.S. ban. WealthBee believes that the long-term demand for computing power is unquestionable, and the Cuda ecosystem owned by NVIDIA is also a very high moat. Currently, there are no events that threaten NVIDIAs position, so there is no need to worry too much about its long-term trend.
Binances punishment boots off the ground, compliance has a smooth future
The biggest event in the currency circle this month is Binance’s sky-high fine: Binance pleaded guilty and paid a fine of approximately 4.3 billion, and Changpeng Zhao resigned as Binance CEO. Since then, the eight-month dispute has finally come to an end. However, this incident did not have a serious impact on the currency market. Except for BNB, the decline of other mainstream currencies was not obvious, and the entire encryption market is still on an upward trend.
Although this incident did not disrupt the trend of the currency market, it undoubtedly shook Binance’s market position. Binance’s market share has plummeted since the accusations, from a peak of 60% to just over 30%.
But the penalty imposed on Binance by the U.S. Department of Justice is intriguing. Although the Department of Justices Press Release mentioned that Binance helps money flow to terrorists, the entire article actually emphasizes that Binance has committed money laundering crimes and is not controlled by the United States, and does not characterize Binance as helping terrorism. In the end, Binance reached a settlement with the United States by paying a fine and resigning CEO Changpeng Zhao. The United States did not put the currency to death.
Also mentioned in the Press Release - “U.S. investors, regardless of size, have demonstrated an eagerness to incorporate digital asset products into their portfolios. We have a responsibility to ensure that when they do so, they have the full protection provided by our regulatory oversight in place, and quickly resolve illegal and illegal behaviors.” From here, we can actually see that the United States pays more attention to compliance, and the official vision is to make cryptocurrency, a new investment product, more compliant to reduce various aspects of it. prevent financial crimes and safeguard national security (preventing the flow of funds to terrorism).
As virtual currencies are increasingly recognized by the mainstream and compliance issues are resolved, more OTC funds will inevitably become involved. Binance’s guilty plea this time makes Binance’s future more controlled by the law and more compliant. It is transforming into a regulated crypto entity and tool. In the long run, this will be good for Binance and the entire crypto market.
Judging from recent public opinion trends, the Bitcoin spot ETF is getting closer. On November 23, U.S. SEC Commissioner Hester Pierce stated that the U.S. SEC has no reason to block the launch of a spot Bitcoin ETF. If Binance’s regulation and spot public opinion are looked at together, they seem to corroborate each other. At the same time, public opinion news about ETFs has less and less impact on market sentiment, and the number of long-term holders (Long-term) is increasing, indicating that more and more people have high expectations and do not expect them to. Pay attention to short-term fluctuations.
Bitcoin is currently trading around $38,000. Judging from the trading volume, the current market has not significantly increased its volume, and it has not yet stimulated the entry of OTC funds. If the spot ETF is approved, it will not only bring incremental funds to the ETF, but may also leverage conservative off-market investors. The incremental funds by then may exceed the US$200 billion estimated by BlackRock.
Conclusion:
The Feds interest rate hike is undoubtedly the core issue that has affected the stock market and even the entire secondary market in recent years. Now that the markets concerns about this issue are gradually being lifted, the factors that suppressed market sentiment no longer exist. Binance’s problems have also been resolved, compliance issues have gradually been resolved, and everything seems to be moving in a better and clearer direction. It has been a long time since the market got out of the structural trend of stock and currency double bull in November. In the cold winter, fund holders got the warmth of winter. However, the rise of any market is the result of capital promotion. There is still no obvious influx of off-site incremental funds into the currency circle. The recent rise in the currency market is still the result of the change of hands of on-site funds. It still needs to be Be careful and never aggressively stud.
