Breakfast Bites - Bitcoin's Headfake

Rise and shine everyone.

The big news this morning is the spike in crypto prices after a false post on the US SEC's official Twitter account claimed approval for the first-ever US spot bitcoin ETF. The post was picked up on social media and Bloomberg TV. However, the SEC chair, Gary Gensler, vehemently denied the approval and attributed the unauthorized access to an unknown party. The SEC plans to investigate the matter. Bitcoin reversed the gains and is now gradually stabilizing around 45,000.

US Equity Futures are marginally higher led by a +1% increase in Nvidia in the pre-market. Yields are also off their lows while the US dollar index is flat. Oil and Gold are higher. The market continues to remain in positive gamma.

Fed's Williams (voter) to speak later today and present their 2024 outlook.

KB Homes reports before the open so look out for homebuilder stocks.

Asia and Australia

• Asian markets close higher with Japan taking the lead followed by India and China. South Korea and Australia closed lower.

• Nikkei continues its rally closing at +2%. As we discussed yesterday, after we saw a decline in Tokyo inflation data Bank of Japan (BOJ) futures are currently pricing 15 bps in rate hikes for the whole of 2024 vs. the previous level of over 30 bps by Apr 2024. We also saw average cash earnings drop to 0.2% YoY vs. 1.5% in Oct. Real Cash Earnings YoY: -3.0% v -2.0% est. Finally, we got the results of the 10Y JGB auction.

• Australia’s monthly CPI for November 2023 increased by 4.3% YoY. This marked a decline from October's 4.9% and fell slightly below market expectations of 4.4%. It represents the second consecutive month of easing in annual inflation, reaching its lowest point since January 2022. The moderation came from a slowdown in food prices, which increased by 4.6% compared to 5.3% in October, and a decrease in transport costs (3.6% vs. 5.9%), particularly in fuel prices. This is a good sign and opens the door for an extended pause in rate hikes.

Europe, the Middle East, and Africa

• European markets start the day with a general dip; real estate and consumer discretionary sectors show stronger performance, while health care and financial sectors experience declines. UK grocery stocks are affected following Sainsbury's disappointing results. Sutton and East Surrey Water are acquired by Pennon, while Belvoir and Property Franchise agree to a merger.

• Saudi Arabia's Nov Industrial Production declined by 11.2% YoY, marking the seventh consecutive month of contraction. The reduction was driven by a 15.8% decrease in mining and quarrying output, attributed to the country's decision to limit oil production to 8.8 million barrels per day.

• ECB’s Guindos speaking today - “The rapid pace of disinflation that we observed in 2023 is likely to slow down in 2024 and to pause temporarily at the beginning of the year. A technical recession is possible in 2H 2023.”

• ECB’s Villeroy (France) stated that must remain vigilant on inflation data. Short of any surprises, 2024 would be the year of our first rate cuts. Decisions will be based on data, and will not be stubborn or rushed.

• European sovereign and corporate bond issuance remains heavy amid expectations that interest rates have peaked; Spain syndicate drew over a record €130B in bids.

The Americas

• Bank of America reported a modest 0.2% year-on-year increase in household credit and debit card spending for December, down from the previous year's 0.5%. Holiday spending, while strong initially, tapered off with a 1.5% year-on-year decline in December. Gen Xers and Millennials had weaker holiday spending compared to more solid spending by Baby Boomers. Notably, the share of services spending in total card spending in 2023 exceeded 2019 levels.

• Hewlett Packard Enterprise (HPE) has officially announced the acquisition of Juniper Networks in an all-cash deal valued at $40.00 per share, totaling around $14 billion. This strategic move aims to bolster HPE's portfolio with high-growth solutions, particularly in the networking sector, aligning with its sustainable profitable growth strategy. The transaction is projected to enhance non-GAAP EPS and free cash flow within the first year after completion. Juniper's CEO, Rahim, will lead the combined HPE Networking unit. This acquisition is expected to double HPE's networking business, constituting approximately 31% of the total revenue on a pro forma basis.

• US weekly mortgage applications rise by 9.9% week-on-week - the sharpest increase in the past year.

Stocks to Watch Today with Strong Momentum:

CTLT, NTRA, UAL (Analyst Upgrade)

Chart of the Day: After the reaction we saw in Bitcoin already, we wonder whether the actual approval will have that effect once again.

Calendar

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)