Trading Weekly: 21st October 2024

Welcome to the second edition of Zodia Markets Trading Weekly Newsletter.

Each week, we will provide a concise overview of key global economic events, market data and significant developments in traditional finance and digital assets set to shape the week ahead.

Check the comments for timely updates, insights and analysis from our trading team.

Summary

• BTC holding $66k opens the way to testing and clearing the $70k profit taking hurdle, with a shot to $75k.
• On a break of $66K, we see the $63K level holding.
• Key release this week: we are keen observers of the Fed Beige Book, with Powell a known fan.
• Key earnings from 20% of the S&P, with UPS, Boeing, Coca Cola and Tesla this week.

Crypto:

• Follow the money: the headlines are about an especially strong 6 days of BTC ETF inflows topping $2.1bio and marking the best week since early March. Also playing into the positive narrative: the SEC gave the nod to "accelerated approval" for trading and listing of options on all spot Bitcoin ETFs; positioning in the futures show institutional interest; the US election is also playing into a strong crypto positive narrative.
• What also needs to be factored in is not just the US election, but the US fiscal risks. Debt and interest on that debt cannot be ignored regardless of who is elected to office. The incoming administration will be putting MMT to the test; meanwhile this should be supportive for gold and for BTC.
• BTC has done well to hold over $66k; expect miners/profit taking to lean into $70k; beyond that, this opens the way to $75k (fast if Tump takes any decisive lead in the polls).? Any loss of $66k opens a test of the $60-63K base where we expect bargain hunting.

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Backdrop:

• Last week solid US retail spending, upbeat Atlanta Fed and lower jobless claims added to the narrative of a humming US economy; however, this week’s Beige Book (one of Powell's favourite gauges) and manufacturing are likely to show a more tempered economic pace.
• China remains in the spotlight; having just cut the key one-year loan prime rate and the 5-year LPR by 25bp. Talk is the PBOC may lower the reserve requirement before year end 25-50bp in a(nother) attempt to catch the falling knife.
• Despite what’s shaping up to be a decent earnings season, stocks are jittery pulling back from record highs / over-bought levels.
• Bonds are lower on chatter that the Fed might skip a November cut.
• The USD has been a beneficiary amid US election and geo-political unease, the potential for Trump-tariffs and as investors unwind USD shorts (CFTC is at its least negative since Aug). Flow also reports investors paring back yen longs and extending net Eur shorts; given their weight in the DXY, this flow should help the DXY target 105-107.
• While not a today issue, a Trump victory could have significant impact on EM remittances; with the US Congressional Budget Office estimating c. $70bio in remittances in 2024; depending on the scale of illegal migrant deportations, countries such as Mexico could take anything between a 0.6%-3% hit to GDP.
• Energy faces an interesting dynamic from a Trump victory; expect increased crude-oil supply, this being a headwind to energy prices.
• Around 20% of S&P 500 companies are reporting this week, with highlights from Boeing, General Motors, Tesla, UPS and Coca-Cola.
• Bonds started the week on the back foot; US yields are higher by just under 10bp in the belly to long end; with a similar theme in developed bond markets.

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Key Releases:

Wednesday, Oct. 23 Federal Reserve Beige Book: while disruptions from Hurricanes Helene and Milton will be seen in some of the 12 districts, most districts are expected to show an uptick in economic activity underpinned by income and credit growth supporting retail spending.

Disclaimer

Zodia Markets (UK) Limited (No. 13360649) is registered with the United Kingdom Financial Conduct Authority (Firm Reference 954558) under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 in respect of its activities in cryptoassets only. Registered address: 1 Basinghall Avenue, London, EC2V 5DD.

Zodia Markets (UK) Limited is also a Money Services Business registered with FinCEN in the United States, MSB Registration Number 31000244063837.

Zodia Markets (Ireland) Limited (No. 698195) is registered and supervised by the Central Bank of Ireland for Anti-Money Laundering and Countering the Financing of Terrorism purposes only (Firm Reference C453607) under the Criminal Justice Act 2010 to 2021. Registered address: 36 Dame St, Temple Bar, Dublin, Ireland, D02 EF64.

Zodia Markets (Jersey) Limited (No. 125434) is registered in Jersey and supervised by the Jersey Financial Services Commission as a Virtual Asset Services Provider and for the conduct of Investment Business (Class A), Firm Reference IB7800. Registered address: No 1 Grenville Street, St Helier JE2 4UF.

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