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Our quick take:
S&P 500: Support at 4350 is crucial
VIX topped
Bond yields are topping for now at 1.65% (important for equity support)
Digital Assets are gaining traction
Stagflation is a popular topic (not likely)
Dollar basing
Option dealer gamma exposure is carrying the market higher
Add to heavy weighted Nasdaq names here.
10 year yields still have room to run towards 1.65
US Dollar is starting to build a solid base. This doesn’t mean it is bad for bitcoin.
Stagflation (not likely)
Digital Assets
The rotation out of Gold and into Bitcoin.
Here is what JPM believes has triggered the bitcoin recovery:
“the recent assurances by US policy makers that there is no intention to follow China’s steps towards banning the usage or mining of cryptocurrencies;
the recent rise of the Lightning Network and 2nd layer payments solutions helped by El Salvador’s bitcoin adoption. According to President Bukele 2.7m Salvadorians had onboarded by early October the Chivo wallet which uses the Lightning Network. We have to admit we are skeptical of this second explanation; and
the reemergence of inflation concerns among investors has renewed interest in the usage of bitcoin as an inflation hedge. Bitcoin’s allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation, behaving more as a real rate proxy rather than inflation hedge.”
Key Upcoming Regulatory Items by Agency
source: galaxy digital
Here are ALL the major uncertainties to focus on:
Will the recent rise in inflation prove to be temporary or more sustained?
Will the Fed raise rates sooner than markets expect?
Will the labor shortage resolve itself or has something structurally changed?
Will China's issues spillover to global growth?
Will the latest wave of the virus remain contained?
Will the spike in commodities suppress earnings growth?
Can corporate earnings overcome the headwinds of supply chain bottlenecks?
Will Washington DC reach a longer dated agreement o raising the US debt?
Will Congress be able to pass an infrastructure bill?
Can the S&P 500 Index go up if the FANG underperforms?
Return always wants its risk payment.