Summing Up The Week

Stocks rallied for most of the week up until Thursday when worrying economic data came out both regarding inflation (in the form of the Consumer Price Index (CPI)) and the health of the labor market (in the form of bigger than expected initial jobless claims). Overall, the markets held up well, though, not giving back the significant gains they saw during the start of the week.

On Friday, more inflation data (Producer Price Index (PPI)) was released into the wild which was in-line with economist expectations with a slight increase. This was somewhat of a relief after the CPI report, however, when combined, some pundits shared concerns that the Federal Reserve’s worst nightmare – rising inflation and a weakening labor market – may become a reality.

Let’s take a look at the news that moved the markets this week…

Market News

CPI comes in hotter than expected

On Thursday, the Consumer Price Index (CPI) for September showed an increase in prices of 0.2% for the month and an annual rate of 2.4%, both 0.1% higher than expectations, reported CNBC. While a 0.1% miss isn’t the end of the world, even an in-line report would have likely caused the markets to get jittery.

“Much of the inflation increase — more than three-quarter of the move higher — came from a 0.4% jump in food prices and a 0.2% gain in shelter costs,” said the Bureau of Labor Statistics in its press release. “That offset a 1.9% fall in energy prices.”

A higher-than-expected CPI means the Federal Reserve will certainly stick to their announced plans for small rate cuts – not 0.50% cuts like they just performed – with a higher likelihood that they may not cut at all during their next meeting in November.

Jobless claims come in at 257K vs 230K expected

Long-time readers know I rarely report on the weekly initial jobless claims numbers unless they are actually critical, and this week was one of those weeks. On Thursday, the initial filings for unemployment benefits came in at 258,000, quite a bit higher than the forecast for 230,000, reported CNBC.

The combination of the hotter-than-expected CPI report and potential weakness in the labor market is not a good sign for the U.S. economy. Pundits did point out that the jobless claims figures may be a result of Hurricane Helene (and, now, Milton) making landfall and causing immense damage to the Southeast.

JPMorgan blows away earnings but CEO still warns

On Friday, JPMorgan Chase CEO Jamie Dimon remained true-to-form while JPM blew away expectations on earnings, but Dimon stuck to his dour outlook headed forward, reported CNBC.

JPMorgan has been consistently beating expectations on earnings, however Dimon has remained one note – being concerned about the future. Geopolitical risks are  becoming “treacherous and getting worse,” said Dimon in a statement as he also warned about over-regulation of the financial sector. “We believe rules can be written that promote a strong financial system without causing undue consequences for the economy; now is an excellent time to step back and review the extensive set of existing rules – which were put in place for a good reason – to understand their impact on economic growth.”

The markets were less concerned about the moneycenter banks’ earnings this quarter, however, as Thursday’s CPI report left investors looking toward Friday’s PPI for confirmation or denial of the trend of inflation.

PPI increased in September, just like CPI

On Friday, investors’ concerns were confirmed when the Producer Price Index (PPI) came in with a month-over-month increase just like the CPI the day before, reported CNBC. The PPI showed an increased of 0.1%, which, while in-line with economist expectations, still indicates an increase of inflation rather than flat or decreasing prices.

On its own, the PPI report was unsurprising, however after Thursday’s hotter-than-expected CPI, investors were left unsure and stocks kicked off the last trading day relatively flat. 

Next Week’s Gameplan

Next week, we’ll see the economic data take a week off as the earnings season takes over the news cycle. Major financials and healthcare report on Tuesday including Bank of America (BAC), Citibank (C), Goldman Sachs (GS), Schwab (SCHW), Johnson & Johnson (JNJ) and UnitedHealth (UNH) among many others.

The first of the megacap tech stocks, Netflix (NFLX), reports on Thursday along with additional financials like Blackstone (BX). On Friday, we get info on the consumer from American Express (AXP) as well as energy stocks Schlumberger (SLB) and Suncor Energy (SU).

So, we’re headed into idiosyncratic catalysts barring geopolitical or other unexpected news events, but, as always, I’ll meet you back here on Friday to go over everything that happens, friends!

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Crytpo Corner

Bitcoin Price Action

Bitcoin Confounds Bulls AND Bears…

Bitcoin continues to confound both the Bulls and the Bears by making relatively indecisive moves in both directions. Initially, many Bears were baffled when Bitcoin rallied up to $64,467.02 seemingly out of nowhere, confusing many Bears who thought, surely, Bitcoin was going to break down after last week’s outperformance by gold and underperformance in Bitcoin.

For the Bulls, Bitcoin seemed stable for much of the week, not testing last week’s low at $59,824.87… until Thursday. Bullish hopes for a recovery were dashed when Bitcoin sliced right through last week’s low at $59,824.87 and didn’t find support until $58,863.90.

Then, just as quickly, Bitcoin bounced more than +4% from the new weekly-low to nearly $61,300 as this update goes to print.

So, Bitcoin remains questionably rangebound with a distinct Bearish tilt as it remains unable to make higher-highs on a Weekly timeframe, and has now broken to new lower-lows. On the longer timeframes, Bitcoin’s Monthly low is way down at $52,530.00 last seen in September, so the Bears have a lot of wood to chop if they really want to send Bitcoin lower on the Monthly.

The Bullish Case

Bulls remain incredibly bullish with some on X pointing to Bitcoin’s performance during presidential election years as a reason to get excited about Q4. As a statistician, I have to point out that we don’t nearly have enough datapoints on this to make any kind of judgment – Bitcoin’s only been around for three elections in its entire existence: 2012, 2016, and 2020.

There are so many other potential factors that also happen during four-year cycles (the halving, for one) that drawing a correlation, much less causation, between Bitcoin and elections is risky and unlikely to pan out.

The Bearish Case

Bears point out that Bitcoin has been unable to make significant breakouts to the upside. While the Bears will concede that the world’s largest cryptocurrency has maintained a Bullish sequence of higher-lows on the Monthly timeframe, the descending trendline from its All-Time High (ATH) has been putting Bitcoin in its place, and, in light of the inflation and jobs data that released this week, the economic and geopolitical news is hardly constructive for an asset that remains tied to risk-on assets like tech and growth stocks.

Bitcoin Trade Update

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Not Your Keys, Not Your Crypto…

In light of brokerage failures in 2022, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchanges I use to execute my next few buys. I use multiple cold wallets from the brands Ledger and Trezor to hold my crypto (click the links to access the direct sites, and I receive no affiliate benefits from these links).

Additionally, I have now divided my allocated USD between two different exchanges – Gemini and Coinbase – in case one (or both) becomes insolvent. Disclaimer: We both receive a bonus if you use my Gemini referral link to open an account.

I do not trust anyone in the space, even with Coinbase (COIN) being publicly traded (and one of my own Investments in Play positions).

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.

While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (possible moves include drops of -90% or more and gains of +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are some of Bitcoin’s price movements over the past couple of years:

• In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rallied +343% to $13,868.44.
• In December, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• In March , Bitcoin crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
• Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
• Later in January 2021, Bitcoin dropped -32% to a low of $28,732.00.
• In February, Bitcoin rallied +103% to a new all-time high of $58,367.00.
• Later in February, Bitcoin dropped -26% to a low of $43,016.00.
• In April , Bitcoin rallied +51% to a new all-time high of $64,896.75.
• In June , Bitcoin crashed -56% to a low of $28,800.00.
• In November, Bitcoin rallied +140% to a new all-time high of $69,000.00.
• In November 2022, Bitcoin crashed -78% to a low of $15,460.00.
• In April 2023, Bitcoin rallied +101% to a high of $31,050.00.
• In June, Bitcoin dropped -20% to a low of $24,750.00
• In July, Bitcoin rallied +29% to a high of $31,862.21.
• In September, Bitcoin dropped -22% to a low of $24,900.00.
• In January 2024, Bitcoin rallied +97% to a high of $49,102.29.
• Later in January, Bitcoin dropped -22% to a low of $38,501.00.
• In March, Bitcoin rallied +92% to a new all-time high of $73,835.57.
• In August, Bitcoin dropped -33% to a low of $49,050.01.

Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?

DISCLAIMER: Anyone considering speculating in the crypto sector should only do so with funds they are prepared to lose completely. All interested individuals should consult a professional financial adviser to see if speculation is right for them. No Get Irked contributor is a financial professional of any kind.