Discover more from ARB Letter
BTC ETF Delay, August Jobs Report
218: Global News & Markets Update
Good morning — ahead of the long weekend in the US wanted to synthesize global news and markets trends that will impact outlooks next week.
Tuesday will be a deep dive into Africa — from a geopolitical perspective and macroeconomic lense focusing on many of the countries dealing with internal strife and the influence of larger powers like China and Russia.
Crypto markets retraced this week after positive Grayscale ruling news with yet another decision by the SEC to delay spot ETF approvals until November at the earliest (45 days). Currently, the S&P 500 is up by nearly 18% so far this year and around 26% from its lowest point last October (Motley Fool).
Investors are broadly split at the moment with a large contingent of those who are still hopeful of a bullish reversal through year end and another group who is more skeptical that the recession won’t officially hit until Q1 of 2024, when student loans have kicked back in and severance runs out from tech and other sector layoffs in Q3/Q4 of 23.
The SEC has once again delayed the decision for BlackRock and other large institutional Spot Bitcoin ETFs (Invesco, Galaxy, and Valkyrie)
PayPal has worked on successfully converting crypto to cash for the Colorado DMV
Nonfarm Payrolls in August were 187K, Exp. 170K
Millennium Management has deployed a $320mn bet against Mexican billionaire Carlos Slim’s America Movil, which has a 60 per cent share in Mexico’s mobile market (FT)
WTI Oil Hits 2nd-Highest Closing Price of 2023, Ending Up 2.5% at $83.63 (Zerohedge)
Cemex is beginning to strengthen its aggregates supply in Europe with the purchase of two new quarries near Madrid as part of its strategic bolt-on acquisition strategy (World Cement)
Gaming publisher Activision (maker of Call of Duty) announced it will begin to deploy AI to monitor voice chats for "hate speech" and "harassment" during online matches — Sky
Jamie Dimon of JPMorgan, JPM 0.00%↑ has asked President Biden for help on the growing number of asylum seekers in NYC, per (Bloomberg/Unusual Whales)
The average monthly payment for a new car in the US has hit an all time high at around $733/month in July 2023 (CNBC)
The median US home price is $410,200 right now (CNBC)
Italy's factory activity has slowed down for the 5th straight month (Spectator Index)
The Monetary Authority of Singapore has been a significant gold buyer this year and that trend continued in July. The central bank announced that it bought 2 tonnes of gold last month, according to updated reserve data. Singapore has been the second most active gold buyer this year, behind only China. (Kitco.com)
China has cut its holdings in US Treasuries to $835bn, lowest level since 2010 (@Schuldensuehner via TwitteR)
Delinquencies on car loans, credit cards and consumer loans have hit their highest levels in a decade according to Barchart
Popular retail trading platform Robinhood App has reached an agreement with the United States Marshal Service to buy back $605.7 million in stock previously owned by Sam Bankman-Fried (Coindesk) — we also highlighted the immense size of Robinhood’s BTC wallet last week
The August jobs report will be the focus of traders today with futures slightly up as of the time of this post (8:44 am ET).
As of this morning the unemployment rate has jumped to 3.8%, Exp. 3.5%, last 3.5% — fueled by more tech layoffs and firings across different sectors in the US. Companies with recent layoffs include Barstool Sports, ESPN, Farmer’s Insurance, Fortinet, Atlas, Intel, Shutterfly, Coindesk, BMO, and T Mobile among others.
U.S. 2yr Yields are getting clobbered at the moment and DXY (US Dollar Index) seems to be struggling to maintain its current level.
Aside from retirement contributions and opportunistic buys I am relatively flat in my activity on the equities front.
I remain long and strong on my core NVDA 0.00%↑ MSFT 0.00%↑ and AMZN 0.00%↑ positions with a slightly underwater position on PLTR 0.00%↑ though, as I touched on last month, I expect this name to recover substantially by Q2 of next year — driven by additional government contracts and more hype around AI.
The primary questions at the moment are : will the Fed continue to raise rates through the end of 2023?
How will student loans compound negative momentum of consumer trends, car prices, home prices, and growing consumer debt?
Will we see a black swan event between now and the end of the year that sends risk on assets much lower and by extension crypto to the depths of hell?
"Monetary policy implications are relatively straight forward -- it just got a lot harder to justify a hike in the fourth quarter.”
—Ian Lyngen at BMO (ZH)
If you missed it yesterday — I put out a guide to where we stand in crypto right now — both from a cyclic perspective and a regulatory perspective. Everything covered is still relevant despite yesterday’s decision by the SEC. It’s more likely we are seeing shake outs ahead of a decision in November or early 2024.
CNBC and Bloomberg have extended coverage of Bitcoin on their channels and programs — with some experts on either show predicting $150,000 to $180,000 targets for Bitcoin assuming the spot ETFs get approved.
Bloomberg analysts Eric Balchunas and James Seyffart raised their spot Bitcoin ETF approval odds to 75% "this year" just this week (Bitcoin Magazine).
Our favorite altcoin saw some impressive press drop from recent partnerships with Swift. As a reminder Swift is a vast messaging network used by financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions (Investopedia). Swift has said the interoperability experiment with Chainlink’s CCIP was successful.
BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SDX & DTCC, along with other major financial insitutions all participated in the test run.
Chainlink has the capacity to become the oracle standard for fusing together on chain data and real world data within the financial services and corporate sectors. The outcome from the Swift integration trial is positive and highlights the ease with which Chainlink will be able to bridge the gap between legacy financial institutions and the new smart contract/ on chain economy.
Swift financial messaging platform connects over 11,500 banks and market infrastructure providers in more than 200 countries and territories around the world. More than a dozen top financial institutions, including Citi, BNY Mellon, and DTCC, collaborated with Swift to develop how entities can transact with a variety of public and private blockchains through a single integration with CCIP (Chainlink Today)
Regulatory updates have been plentiful this week.
Judge Katherine Polk Failla made the following statement as part of her dismissal of a case against Uniswap:
“….in the context of a decentralized protocol’s smart contracts, the Court finds that the smart contracts here were themselves able to be carried out lawfully, as with the exchange of crypto commodities ETH and Bitcoin." (Bankless HQ).
By no means are we out of the legal weeds on the crypto front yet — but this is mildly bullish.
Still — other countries including some of the usual suspects in BRICs are clamping down on crypto activity.
Amid growing economic issues within China — it doesn’t seem like the regulatory space is going to become more friendly to crypto anytime soon. Chinese court news said Cryptocurrencies are considered legal property and are protected by law in China.
This comes on the heels of China's Industrial Bank saying it will begin to cut its yuan deposit rates by about 10-25 basis points, effective from Friday, 1 September 2023.
During the annual Group of 20 (G20) summit, Indian Prime Minister Narendra Modi has urged for worldwide cooperation in developing new cryptocurrency regulations. In his role as the G20's president, India has assumed the responsibility of championing the establishment of a comprehensive international structure for overseeing digital currencies and markets (Cointelegraph).
Despite the regulatory quicksand in the US one of our favorite blockchain/Bitcoin analysts Will Clemente highlighted the following on Friday morning:
Stablecoins have now settled over $18.3 trillion
Bitcoin's 4-year CAGR (compounded annual growth rate) is down to 28%
Bitcoin has gone from from $0 to $110 trillion of transactions settled in 14 years
The percentage of Bitcoin supply held by entities with less than 10 BTC continues to reach new highs
I remain convicted in the view that current price action is designed to shake out retail and loose handed holders ahead of an inevitable ETF approval — the big boys just need to get positioned correctly before that happens.
As the US gears up for the 2024 Presidential race, the War in Ukraine continues to drag on complicated by discussions around F-16 fighter jet access for the Ukrainians, renewed ferocity from Russia in commodity and economic structures in Asia and Africa, and the growing concerns surrounding climate change amplified by recent extreme heat in India and Japan and a series of hurricanes impacting the US.
Russia has moved Sarmat intercontinental ballistic missiles into combat duty, RIA reports citing Roscosmos (DiscloseTV) the country has also announced further oil export cuts
Canada's worst wildfire season on record continues, as roughly 1,040 fires are still burning — having consumed approximately 59,230 square miles across the nation, per Axios/Unusual Whales
2 are dead, with several others injured after a shooting in Austin Texas
The Pentagon is set to release new declassified UFO photos, videos and reports on a new website - (Fox News)
Hong Kong‘s weather observatory issued its second-highest typhoon alert over Super Typhoon Saola, which threatened to become the strongest storm to hit southern China in decades (InsiderPaper)
Russia and Burkina Faso have mutually agreed to collaborate in the fields of economics, nuclear energy, and military instruction.
Adults in San Francisco, Seattle, and Atlanta felt the most pressure to move due to unsafe neighborhoods in a recent poll by the US Census Bureau
The head of FEMA says the residents of Maui shouldn't be expecting anymore financial aid any time soon besides the original $700 that was distributed
As the 11th bus of migrants arrived in Los Angeles this week, the City Council is reportedly considering criminal charges against Texas — Border Patrol arrested 7,000 illegal immigrants crossing on Tuesday alone.
Russia vetoed UN Draft Resolutions to renew sanctions against Mali
A US Capitol physician had the following to say after Mitch McConnell had his second freeze up moment in 2 months after being asked a question by reports on his thoughts on running again in 2026: "I have consulted with Leader McConnell and conferred with his neurology team.
After evaluating yesterday’s incident, I have informed Leader McConnell that he is medically clear to continue with his schedule as planned. Occasional lightheadedness is not uncommon in concussion recovery and can also be expected as a result of dehydration."
That wasn’t dehydration.
At this point it’s evident that the US political system has become a retirement home for those set on consolidating power, influence, and money — but the catch now is many of them are not physically fit to continue “serving” the American people. President Joe Biden was completely lost after speaking at FEMA HQ in Washington, asking "Where am I going now?"
A sad states of affairs on both sides of the aisle as a critical election approaches.
Neocons continue their undying support for the War in Ukraine with Lindsey Graham leading the pack.
Coverage of the war has faltered substantially in the last several months compared to the beginning of 2023 — with the next direction unclear on the heels of the attempted Wagner coup and the “accident” shoot down of the private jet carrying Wagner commander Yevgeny Prigozhin.
Commentary against the War in Ukraine continues to grow — with Tucker Carlson claiming in a recent interview “There will be a hot war between the United States and Russia within the next year” he went on to detail what he thinks comes next:
"They can't lose. They will do anything to win. So how do they do that? They're not going to do COVID again...They're going to go to war with Russia is what they're going to do. There will be a hot war between the United States and Russia within the next year...They need to declare war footing in order to assume war powers in order to win. I believe that and I think all the evidence suggests that's true." (Chief Nerd on Twitter)
At the moment it’s unclear who has gained the upper hand in this conflict. Russia seems to be more selective in it’s deployment of key units in the region, and there are mixed reports on the efficacy of the Ukrainian counteroffensive — Russia has reportedly deployed its last major reserves of paratroopers to defend the north of Novoprokopivka.
One thing most people don’t understand is that for the most part — the Russians have held back on deploying crack troops en masse on any front in Ukraine. Front line troops have mostly been comprised of conscripts and other ”greener” units supported by more elite units and tanks.
Putin was quoted in the last two weeks saying, ““We haven’t even started yet.”
One factor trending is the increased volume of strikes by Ukraine within Russia — including drone attacks and artillery strikes — a phenomena we didn’t see earlier in the conflict.
As usual we should be weary of these overextensions — as we haven’t yet seen a comprehensive response from Russia to this changing dynamic.
Twitter and social media is rampant with combat footage from every aspect of the conflict but notably the intense trench warfare ( a testament to the current stalemate) that is reminiscent of the Western Front.
Check out the video below of Russian soldier throwing a grenade only to hit a tree and send the frag right back into his own trench. Decent job of smacking it to avoid dying. This guy gets the simultaneous L of the week and W of the week award.
As the US election nears in 2024 — it will be interesting to see how this conflict begins trending and what the Western/NATO response continues to be. We are at war with Russia — through proxy — the American people just don’t know yet.
With a weakening military, plunging retention, and a lack of new enlisted personnel America could find itself in a pickle should a larger conventional conflict break out that requires or demands US troops be present.
China has begun worrisome activity that could indicate they are preparing for conflict — Dozens of school social media accounts, as reviewed by the Daily Caller News Foundation, have reported that in various locations across China this summer, the Chinese military is now instructing young children in kindergartens on firearm handling, fitness, and soldier-like combat skills.
In his recent opinion piece Gordon Chang of Newsweek highlights:
Xi Jinping these days often talks about war, and his regime is fast preparing for one. The Communist Party is implementing the largest military buildup since the Second World War. It's simultaneously trying to sanctions-proof the country, stockpile grain and other commodities, survey America for strikes and sabotage, and mobilize China's civilians for battle. The military indoctrination of children begins during the first years of school.
The traditional world order is being reshuffled and the next 3 years should prove to be highly unpredictable from a geospatial standpoint.
I will see you guys Tuesday morning for a deep dive on Africa — covering investment opportunities, the recent coups in Gabon and Niger, along with the growing social unrest in South Africa.
Never imagine yourself so elevated that you can afford to cut yourself off from even the lowest echelons. By retreating to a fortress, you make yourself an easy target for your plotting subjects, who view your isolation as an insult and a reason for rebellion.
—Robert Greene 48 Laws of Power
Recent Paid Posts
*Disclaimer - None of this is formal financial advice — all investors should do their own diligence and research before investing with their personal risk tolerance in mind. I am a former trader and current enterprise salesmen with a monkey brain