Bitcoin's Epic Dance

As Bitcoin hit USD 100,000 it gave us another of it's epic displays of volatility. The price hit USD104,000 before collapsing to USD 88,000 on huge volume before rallying to USD 96,000 at the close, a daily price range of USD 16,000.

It was a fitting display as it would be wrong to hit that milestone like any normal asset. No doubt those still on the sidelines will say it's too volatile to be a store of value but after 15 years of outperforming every single other asset surely it must be the best store of value that has ever existed.

Invented in 2009 in response to the GFC, and as a better monetary policy system (programmed supply and cap) it's also fitting that it hit USD 100,000 in a week that had South Korea declare martial law (only for a few hours) and the French Prime Minister lose a no confidence vote.

The rise of Bitcoin should be interpreted as the death of fiat.

Nowhere is this more apparent than is US M1 and M2 Money Supply. M1 and M2 are measurements of the United States money supply, known as the money aggregates. M1 includes money in circulation plus checkable deposits in banks. M2 includes M1 plus savings deposits (less than $100,000) and money market mutual funds.

In 4 years M1 has increased 5 times or put another way 80% of the US dollars in M1 has been created in the last 4 years.

M2 has increased by 4 Trillion dollars in 4 years

Whichever measure you look at it's shocking. No wonder Bitcoin is going to the moon.

Breaking

Swedish Core Inflation Accelerates to Highest in Six Months [Bloomberg]

Biden says he is pardoning his son, Hunter [Reuters]

Explainer: After China's mineral export ban, how else could it respond to U.S. chip curbs? [Reuters]

South Korea’s Whirlwind Stint in Martial Law Jolts Markets [Bloomberg]

French government collapses in no-confidence vote [BBC]

Russia's Putin questions the need for dollar forex reserves, touts bitcoin [Yahoo! Finance]

In Focus

Europe

The pain continues in Europe as surely the ECB will be considering a 50bps or maybe 75 bps cut next week.

Bundesbank chief calls for softer debt brake to increase investment [FT]

ECB to Discuss Bigger Cut But Uncertainty High, Kazaks Says [Bloomberg]

Europe Must Refocus Capital-Markets-Union Efforts, Lagarde Says [Bloomberg]

EU commissioner pitches ‘Europe first’ in response to Donald Trump [FT}

In France Marine Le Pen finally got her revenge on Macron. A general election is forecast for next year. ?

France 'dangerously exposed' in case of economic shock, national audit office says [Reuters]

French Poll Shows Majority Want Presidential Election in 2025 [Bloomberg]?

What Happens If French Government Falls After Budget Showdown [Bloomberg]

France’s Barnier Offers Final-Hour Budget Concession to Le Pen [Bloomberg]

French PM forces social security budget bill through, exposing his government to a no-confidence vote [Le Monde]

US

The FED's beige book was released this week and it was hawkish. No signs of systemic weakness of it's previous release in October.?

Overall the economic releases this week portray a still growing economy and if some households are hurting there are still plenty that are doing well. This is in sync with the housing markets which are deeply polarised. All is consistent with a huge amount of money printing driving a huge wealth gap.

Monetary Policy

FED chair Powell gave his final speech before blackout for the FOMC policy meeting on the 18th.

Hawkish Powell: "The economy is strong, and it's stronger than we thought it was going to be in September. The downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation is coming a little higher."

Almost every FED Governor was on the wires repeating Powell's hawkish message.

Are markets too optimistic ?

• FOMC MEMBER WALLER (MON. 3:15PM) Fed Governor Waller says he is ‘leaning toward’ a December rate cut, but worries about inflation [CNBC] Top Federal Reserve official warns progress on taming US inflation ‘may be stalling’ [FT]
• FOMC MEMBER WILLIAMS (MON. 4:30PM)
• FOMC MEMBER KUGLER (TUES. 12:35PM)
• FOMC MEMBER GOOLSBEE (TUES. 3:45PM) Fed’s Goolsbee Says US Labor Market Still Looks Stable [Bloomberg]
• FOMC MEMBER MUSALEM (WED. 8:45AM)
• FED CHAIR POWELL (WED. 1:45PM)
• FOMC MEMBER BOWMAN (FRI. 9:15AM)
• FOMC MEMBER GOOLSBEE (FRI. 10:30AM)
• FOMC MEMBER HAMMACK (FRI. 12:00PM)
• FOMC MEMBER DALY (FRI. 1:00PM)

Fed’s Collins Says December Rate Cut Still on the Table [Bloomberg]

Fed's Daly: December rate cut is absolutely not off the table [Forex Live]

Fed’s Daly Says No Sense of Urgency to Lower Interest Rates [Bloomberg]

Powell says no need to rush rate cuts [AFR]

FED'S DALY: WE ARE READY TO RAISE RATES IF INFLATION BREAKS OUT AGAIN. [XTB]

Housing Market Alarm as Homebuyers 'Most Pessimistic' They Have Ever Been [Newsweek]

?Fiscal

Trump’s Brewing Battle Over Government Spending Cuts [Bloomberg]

Trump Vows to ‘Impound’ Money Congress Appropriates. Can He Do It? [Bloomberg]

Japan

Lots of hawkish rhetoric from regulators but they don't dare hike rates (or cut).

BOJ Weighs Case for First Triple Hike Since Japan’s Bubble Burst [Bloomberg]

Japan Needs Wake-Up Call on Debt, Government Advisor Warns [Bloomberg]

Yen Carry Trade That Rattled Markets Shows Signs of a Comeback

BOJ’s Leading Dove Calls for Careful Approach to Tweaking Easing [Bloomberg]

China

The IMF estimates Chinese ''hidden'' local government debt sitting in financing vehicles amounts to 60 trillion RMB or 8 trillion USD. It's 47% of GDP.?

China kicking the can down the road again.

China unveils $1.4 trillion local debt package but no direct stimulus [Reuters]

Wall Street Banks Predict Biggest China Rate Cuts in a Decade [Bloomberg]

SHANGHAI TO DISTRIBUTE CONSUMPTION VOUCHERS TO BOOST ECONOMY [South China Morning Post]

China’s 10-Year Yield Sinks to Record Low on Bets PBOC Will Ease [Yahoo! Finance]?

Bitcoin (& Crypto)

XRP is another beneficiary of the next US Government's policy of light regulation.

Bitcoin is a competitor for gold, not the U.S. dollar, Fed Chair Jerome Powell says [Yahoo! Tech]

Strategic Bitcoin Reserve Legislation Will Be Introduced In 10 US States, Says Insider [Bitcoinist]

In The Background

CRE / Banks / CLOs

Commercial Real Estate Bond Distress Reaches Record High [Zerohedge]

Office CMBS Delinquency Rate Spikes to 10.4%, Just Below Worst of Financial Crisis Meltdown. Fastest 2-Year Spike Ever [Wolf Street]

Canada

After a few months of better news, Canada is now lurching towards recession again. More cuts will be on their way.

At least Statistics Canada aren't lying with the numbers, unlike in the US.

United Kingdom

The UK is doing better than Europe (thanks to Brexit) but a weak and ineffective government is letting the country down. And they just lied yet again to the population as they will be raising taxes further despite promising not to do so in the budget.

Every financial advisor in the UK is helping those with money leave the country.

Starmer Says Shocks Could Spur Tax Rises, Softening Reeves Line [Bloomberg]

BoE governor expects four UK rate cuts next year as inflation eases [FT]

UK Fiscal Stance Unsustainable Without More Tax Rises, OECD Says [Bloomberg]

UK Business Activity Set to Shrink in Wake of Budget, CBI Says [Bloomberg]

UK Housebuilding Falls Most in Five Months in Wake of Budget [Bloomberg]

Australia

The economy is now a problem. One and a half years of slowing GDP growth with the RBA and Feds dithering.

Australian Household Spending Jumps on Sporting Events, Concerts [Bloomberg]

House values tumble in Sydney, Melbourne as economy struggles [Sydney Morning Herald]

Victoria’s debt levies haul in far more than expected [AFR]

ASIC moves to expand its oversight of crypto and digital assets [AFR]

Rural MP Bob Katter rages after bank’s latest attack on cash [News.com.au]

Australia is now an economic ‘problem child’: McKinsey [AFR]

What's Next ?

US CPI will have every number scrutinised and beware an uptick unsettling overly bullish markets.

RBA won't cut (they should) as they are too busy fighting the federal government.?

Bank of Canada will surely keep cutting.

ECB needs a big cut

It's nearly Xmas so expect thin markets with some profit taking. It's been a good year.

This Week's Important Economic Indicators [London time]