Bitcoin’s upward price trajectory throughout 2023 and into 2024 has already been record breaking. The latest milestone on this run is the fact that bitcoin is now more valuable than silver. This makes bitcoin the 7th most valuable asset in the entire world with gold still holding the #1 spot for now.
The Key to the Markets in 2024
The January 2024 Consumer Sentiment Index data was released. The reading was 78.8, which was the highest since July 2021. It showed Sentiment rose 13% from December. Interestingly enough, December saw a 14% rise in sentiment from November.
This is the most important metric to watch in 2024, in my opinion.
We have earnings that are above trend and valuations are not cheap. The simple fact is that we need optimism to prompt consumers and businesses to spend. If they are excited to spend, they should be excited to invest if they see prices being pushed higher and higher in the market. Even if the prices are being pushed higher by their own spending habits.
Quite frankly, this is the type of reflexive response that can send markets on incredible bull market runs.
It’s all about Liquidity
The Fed can say what they want, the pundits on television can do the same, but the bottom line is a debt-based global economy can not function without constant liquidity. The Fed talks about quantitative tightening, but when push comes to shove they will have to do what they have to do: provide liquidity. If not, game over.
Last part of this article from the Market Insider, says the following (with the part in the parenthesis being my edit)…
But while this is true (Fed performing quantitative tightening) for short-term assets such as T-bills, the Fed has actually been picking up long-duration bonds since QT started in June of last year.
Market veteran Ed Yardeni pointed out in a note last month that the Fed seeks to moderate the impact of its QT program with continued purchases of Treasuries with maturities of 10 year of more.
Though QT has reduced the Fed’s balance sheet by $1 trillion overall since beginning last year, the central bank has added around $77.5 billion in bonds with maturities of 10 years or more, according to St. Louis Fed data.
I think understanding this concept is crucial.
$10 trillion asset manager Blackrock links up with Coinbase for crypto
Regulations have not been set for crypto, but that isn’t stopping Blackrock from getting things in place. They signed a deal with Coinbase last week to begin to offer their clients access to crypto trading. Given that the entire crypto market is about $2 trillion, as this is being typed, and Blackrock manages about $10 trillion, this could have a big impact on the crypto markets.
Russia’s ruble hit its strongest level in 7 years despite massive sanctions. Here’s why
In our recent newsletter, we mentioned how we believe the Russian Ruble will be gaining some momentum… here’s an article that was recently released and we find to be interesting:
Inflation
After a 5.4% reading last month, today’s release saw the Consumer Price Index post a 6.3% gain. Nice to see the number officially put out by the government, but we’ve all seen this inflation when we fill our cars up, go to the grocery store, or grab a dinner out with friends and family.
For a quick write up on the data release, here is an article posted on CNBC.com
https://www.cnbc.com/2021/11/10/consumer-price-index-october.html
Central Bank Digital Currency Update
We mentioned a “game changer” in our latest research report. This article, which just came out, provides us some insight as to where they are in the process.
Earnings Above Trend
As readers of our research know, we track four main inputs in our macro model. One of those inputs is “current earnings versus potential earnings.” When COVID shut the economy down, earnings versus potential fell off a cliff and bottomed out about 40% below potential. However with the earnings numbers released this quarter, our model shows that earnings are now 17% above potential.
This fact is a very important piece of information and we will be monitoring it very closely.
The Dawn of a New Era
One of the most interesting things I’ve ever seen is occurring right now.
The European Investment Bank (EIB), according to Bloomberg, is selling “Digital Bonds” on the Ethereum blockchain. The EIB is the lending arm of the European Union. They are the biggest multilateral financial institution in the world and one of the largest providers of climate finance. Ethereum is the second largest cryptocurrency blockchain protocol, with only Bitcoin having a larger market capitalization.
This digital bond offering is the first of its kind. Goldman Sachs, Banco Santander, and Societe Generale are underwriting the offering, which consists of €100 million (roughly $121 million) issuance of two-year notes that are set to be priced next Tuesday.
The Ethereum protocol’s unique value-added proposition in the cryptocurrency/decentralized finance space focuses on their “smart contracts” which are embedded in the transactions on their blockchain. The long-term usefulness of these smart contracts are being tagged as revolutionary to the business world as they could save time and expense on any transaction that involves any type of contract between buyers and sellers. For instance, these digitized contracts could streamline the home buying process.
I find it beyond fascinating that the world’s largest multilateral financial institution, with a very large focus on combating climate change, has teamed up with some of the most powerful global investment banks for the first ever digital bond offering through a cryptocurrency protocol.
This is a clear sign that the dawn of a new era in finance is upon us.
Bitcoin Going Mainstream?
This is a piece from CNBC regarding the famous investor Bill Miller’s take on Bitcoin. Frankly, we agree with him.