Bitcoin Hits A New All Time High

Welcome to BRC’s Breakdown.

The week’s newsletter comes from all across the world. We start with the US jobs data and the Bank of Japan’s revised inflation forecast. Then we look at – Bitcoin’s rising price in Turkey and Nigeria. And then we close with the biggest company of them all – Apple.

First, let’s see how the markets fared this week:

Here’s a preview of what we’ll cover:

• Macro: US Jobs Data Weaker Than Consensus

• Around The World: BoJ Increases Inflation Forecast

• Crypto: Bitcoin Reached New Highs…But Where You’d Least Expect It

• AI: Apple’s Latest AI Play Is Not What You’d Expect

Macro: US Jobs Data Weaker Than Consensus

On Friday, 3rd Nov, the U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 150,000 in October, and the unemployment rate changed little at 3.9 percent. The report was weaker than consensus expectations. Further, the past two months’ payroll number was revised lower by 101,000.

With signs that the US economy was slowing & in turn the US Federal Reserve was likely to stop hiking interest rates, the S&P 500 rose 5.9 percent with 10-year US Treasury yields declining 20 bps (0.2%).

Another key development last week was the US Treasury announcing a smaller-than-expected increase in the size of long-term debt auctions. 

Around The World: BoJ Increases Inflation Forecast

Globally, the other watched development was the Bank of Japan announcement where the central bank said that the 1% cap on 10-year government bonds will be a reference rather than a hard limit i.e. the BoJ is fine with the bond yields increasing.

Seven years ago, in 2016, the Bank of Japan had put 1% as a cap on 10-year Japanese bond yields as a way to stimulate growth and more importantly get positive inflation (rising prices as against falling/flat prices that had been the case for years before 2016).

The Bank of Japan also raised its inflation forecast, projecting inflation rate would stay near 3% till early 2025. While the full effect of these changes may take a few months to be absorbed by economies & markets, it is a new era for Japanese monetary policy.

Indian markets will look at the results of companies including State Bank of India, Zomato, Indigo, etc that reported after the market close on Friday last week. The Mamaearth IPO listing will be interesting since people have strong views on whether or not it was fairly priced. With the first set of elections in the five states kicking off, also expect opinion polls to gain attention.

The final two months of the year have been favorable for stock markets globally. In India, these 2 months have the highest median and average returns of any two months of the year.

Bitcoin gained 2.7% for the week while Gold prices declined by 0.7%. Lower geopolitical risk has reduced the fear in markets, as seen by a much lower VIX (an index of expected volatility) and the same factor seems to have pushed gold lower.

Ethereum has been lagging behind the move up in Bitcoin & altcoins finally seem to have joined the rally. It rose 5.7% for the week.

The star among large alt coins though was Solana, up a whopping 29% for the week & 80% for the month. In fact, even on a 1-year basis, it has outperformed Ethereum by ~3%. Solana is up 18.1% for the last 1 year compared to Ethereum which is up 14.9% for the last year.

In the US, 81% of the companies in the S&P 500 have reported actual results for Q3 2023 to date. Of these companies, 82% have reported actual Earnings Per Share above estimates as per Factset.

However, commentary by companies combined with other macroeconomic indicators has prompted analysts to cut their expectations for Q4 2023 earnings by 3.9%, the highest cut during the 1st month of the quarter since Q2 2020 (when Covid resulted in large cuts in expected earnings of companies).

Bitcoin Reached New Highs…But Where You’d Least Expect It

Bitcoin is now worth 960,000. Not in US dollars, but in Turkish liras. The largest digital asset is reaching all-time highs in regions where the economies are struggling.

From Eastern Europe to Central Africa, in Nigeria as well the price of Bitcoin has skyrocketed to 27.4 million naira.

This amount is fairly similar to their respective conversion rates to US dollars ($33,000 to $35,000). However, the fact that Bitcoin has achieved its all-time highs now and not in the past tells us two things. First, the Bitcoin and larger crypto fever have not hit these countries yet. Not in 2017 and not in 2021. Second, the Bitcoin fever right now has reached a new high currently.

Combine the global catalysts of – the likely ETF approval, conflict strengthening BTC’s case as a hedge and local economic turmoil has pushed BTC to new highs in these regions.

Apple’s Latest AI Play Is Not What You’d Expect

Apple’s latest technology innovation with the iPhone didn’t turn a lot of heads. The major update was a reversal of their charging port, from Lightning to USB C. It was underwhelming, to say the least. This, however, will not be.

Now, the most valuable company in the world wants to launch a health monitoring service. This service will be powered by artificial intelligence and will soon evolve into health coaching in the coming year.

The way Apple plans to power this is through their – Apple Watch and AirPods – the most closely connected devices to the human body. The watch’s sensor which tracks – heart rate, sleep, breathing patterns, and other biometric markets will track long-term health conditions. This data will be fed into AI models to personalize – workout programs and nutrition recommendations.

Apple’s entry into health is not a surprise. It already has the devices to track and display this information. With distribution in place, all it needed was an added product to upsell to the customer. What better product than health?

Interesting reads/watches:

Top Headlines Of The Week

• Abu Dhabi Enacts DLT Framework for DAOs, Web3, TradFi Firms

• Coinbase Q3 results signal its future as a crypto super app

• Hong Kong considers allowing retail access to spot crypto ETFs: report