Summing Up The Week

The S&P 500 traded within a range this week leaving no clear winners between the Bulls and the Bears. A series of mixed inflation reports and other differing economic data left many market participants wondering if we should just wait for the Santa Claus Rally that typically comes later in the month.

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

Market News

Small Business Optimism Hits 3-year High

On Tuesday, the National Federation of Independent Business (NFIB) released its Small Business Optimism Index which showed a rise to 101.7 in November, its highest level in three years, reported Benzinga Finance. November’s figure was also a significant increase over the pullback  down to 93.7 seen in October.

Pundits pointed to the election of President-Elect Donald Trump as the catalyst as his economic policies spur hope for additional disinflation. “The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners,” said NFIB Chief Economist Bill Dunkelberg.

CPI rose 0.3% in November, as expected

On Wednesday, the Consumer Price Index (CPI) came in showing a year-over-year increase in inflation of 2.7% and a single-month increase of 0.3% for November as expected, reported CNBC.

Earlier in the week, the stock market had been getting a bit jumpy ahead of the CPI’s release implying that market participants may have been concerned the CPI would come in hot. When the figures were in-line, the futures jumped in premarket trading.

PPI rose 0.4% in November, more than expected

On Thursday, the Producer Price Index (PPI) showed a bigger rise than expected in November of 0.4% versus the estimate for 0.2% and an annual increase of 3%, the biggest increase since February 2023, reported CNBC.

When excluding food and energy, the “core PPI” increased 0.2% which met estimates. However, many experts (including myself), feel that excluding the more vital elements of survival from any inflation-measuring index is disingenuous at best: “See? There’s no inflation as long as you take out all the good and services that are seeing their prices increase!”

As expected, the futures markets pulled back a bit on the release of the PPI since a combination of both the CPI and PPI are used to calculated the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred gauge of inflation, and that number will be released a week from this Friday.

Next Week’s Gameplan

While we will be getting additional economic datapoints next week in the form of the flash services and manufacturing PMI on Monday; and the U.S. retail sales and the home builder confidence index on Tuesday, the two biggies are the Federal Reserve interest rate decision and Personal Consumption Expenditures (PCE) index.

On Wednesday, the Fed will decide whether to cut the benchmark interest rate by another 0.25% or to leave it where it stands. The prediction markets still point to a rate cut, however the probability of no rate cut has increased substantially over recent weeks as data continues to reflect a strong economy not in need of a rate cut.

On Friday, we get the PCE for November which happens to be the Fed’s preferred gauge of inflation. The timing is slightly odd since the PCE could very much influence the Fed’s decision one way or another. Some experts suggest that in times like this the Fed will actually receive the PCE earlier than its public release so the governors can use it in making their decision.

So, even though the year is winding down, there’s plenty to get excited about when we head into next week, and I’ll see you back here next Friday, friends!

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Crytpo Corner

Bitcoin Price Action

Bitcoin is home, home on the range.

Bitcoin traded in a range last week, unable to break the all-time high at $104,000.00. Bitcoin made an attempt on Thursday, but stopped short and create a lower weekly-high at $102,595.00. However, Bitcoin also set a new higher weekly-low at $94,220.80, potentially a promising start to a bullish series of higher-highs and higher-lows.

The Bullish Case

Bulls are out in full-force. With Bitcoin resounding making higher lows, many Bulls are calling for extreme price targets. Tom Lee (@fundstrat) said in a CNBC interview that he believes Bitcoin will hit $150,000 by the end of 2024 (yes, this year) and that he expects Bitcoin to hit $250,000 in 2025.

The Bearish Case

Bears are still screaming for a crash. Some point to odd liquidity calculations while others have become the Internet equivalent of the crazy homeless man wandering the streets with breadboards that read “The end is nigh.” As I always say, I’d love to see a significant pullback of up to -40% since that would simply provide an excellent buying opportunity, but I have no reason to think we’ll see anything like that without an unexpected negative catalyst.

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.
• In December, Bitcoin rallied +112% to a new all-time high of $104,000.00.

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.