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- US Inflation Is Set to Fade in 2024 as Goods Prices Keep Falling
- Top US Banks Eager for Relief From Rate Pressure After Fed Hikes
- The Big Bitcoin Tease
- SEC’s X Account Hacked to Falsely Say Bitcoin ETF Approved
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Open Interest Changes
How will Bitcoin trade following the approval of a spot Bitcoin ETF? The market got a glimpse of that on Tuesday after the SEC's account on X made such an announcement, with Bitcoin (BTC-USD) spiking to as high as $47,900. The only thing was - the account had been compromised and the tweet turned out to be fake. Confusion ensued as SEC officials tried to get the message out to the media, and it wasn't before long that Bitcoin took a turn south, sliding to as low as $45,145 in volatile trade.
Buy the rumor: The truth is, Bitcoin has been climbing for months in hopes of approval for a spot ETF, extending the gains of the cryptocurrency, which has more than doubled since last January. The thinking here is that a simple-to-understand and well-structured ETF can bring crypto more mainstream and, in turn, result in many institutional investors and retail portfolios allocating percentages to Bitcoin. Buying and reporting would be easier due to liquidity and transparency; it can offer investors another opportunity for diversification; and the product would track the performance of Bitcoin as an underlying asset.
On the flip side, Bitcoin exposure has already been available for years. There are closed-end funds like the Grayscale Bitcoin Trust (OTC:GBTC), as well as ETFs that track Bitcoin futures, such as the ProShares Bitcoin Strategy ETF (BITO). There are also publicly traded companies whose balance sheets are mostly made up of Bitcoin, like MicroStrategy (MSTR), mining firms that include Riot Blockchain (RIOT) and Marathon Digital (MARA), and crypto exchanges like Coinbase (COIN). Retail traders have found additional ways to directly own Bitcoin (BTC-USD) through trustworthy custodians and often don't report profits on their tax returns, which would be a lot harder if they owned shares in a spot Bitcoin ETF.
What to watch: Despite a lot of confusion, a spot Bitcoin ETF is expected to be approved for the first time today following last summer's court ruling involving Grayscale. Big asset managers with skin in the game include BlackRock (BLK) and Fidelity Investments, but even if the product were finally cleared, it wouldn't deter the SEC's critical stance on an industry that is rife with "market manipulation and misconduct" (Tuesday's fake tweet didn't help). "If you're considering an investment involving crypto assets, be cautious," SEC Chair Gary Gensler wrote on X. "Crypto asset securities may be marketed as new opportunities but there are serious risks involved." See pending spot Bitcoin ETFs here. (6 comments)
Sky high ambitions
Walmart (WMT) is set to make the largest drone delivery expansion by a U.S. retailer, with plans to cover up to 1.8M more households in Texas. The expansion will include stores across more than 30 towns and municipalities in the Dallas-Fort Worth metroplex, covering up to 75% of the region. The deliveries will be powered by Walmart's partners, drone startup Zipline and Alphabet's (GOOG, GOOGL) unit Wing, both of which are FAA-approved to fly drones beyond visual line of sight. "With nearly 4.7K stores located within 10 miles of 90% of the U.S. population, we're uniquely positioned to scale when that time comes," Walmart announced in a press statement. (2 comments)
Type of worker
The Department of Labor has issued a final rule that will force companies to reclassify some workers as employees instead of independent contractors. The rule, effective from March, will likely increase costs for industries that rely on contract labor, including healthcare, restaurants, and transportation. However, Uber Technologies (UBER) responded to the classification rule by saying it wouldn't materially change the law under which it operates or impact the over 1M Americans who turn to Uber to earn money flexibly. Note that independent contractors don’t receive federal labor protections like minimum wage and unemployment benefits.
Red Sea barrage
Shipping rates continue to rise steeply as vessels face long delays amid increasing Red Sea attacks by Yemen's Houthi rebels. The average shipping cost for a 40-foot container has nearly doubled since the attacks began, according to Drewry's World Container Index, with $200B in cargo estimated to have been diverted since early December. Late on Tuesday, U.S. and U.K. forces shot down the Houthis' biggest attack yet, with Secretary of State Antony Blinken warning of consequences if they continue. Meanwhile, the U.N. Security Council will vote today on a resolution demanding an immediate halt to the Houthi assaults that have impeded global commerce. (10 comments)
In Asia, Japan +2%. Hong Kong -0.6%. China -0.5%. India +0.4%.
In Europe, at midday, London -0.3%. Paris -0.1%. Frankfurt flat.
Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq +0.1%. Crude +0.3% to $72.44. Gold +0.3% to $2,039.10. Bitcoin -2.4% to $45,584.
Ten-year Treasury Yield -2 bps to 4.00%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
10:00 Wholesale Inventories (Preliminary)
10:30 EIA Petroleum Inventories
1:00 PM Results of $37B, 10-Year Note Auction
3:00 PM Fed's Williams: Economic Outlook
Companies reporting earnings today »
What else is happening...
HPE (HPE) confirms $14B deal for Juniper Networks (JNPR).
Boeing (BA) CEO: We must acknowledge aircraft quality issues.
Tesla (TSLA) reduces driving ranges as EPA beefs up testing rules.
Microsoft's (MSFT) OpenAI investment may face EU merger probe.
BlackRock will cut 600 jobs to shift resources to high-growth areas.
Google (GOOG) sees multibillion-dollar patent suit related to AI tech.
Meta (META) restricts harmful social media content for teen users.
Rite Aid (OTC:RADCQ) gets court nod for sale of Elixir business.
More delays: NASA's crew moon landing pushed to 2026.
BofA lists 10 surprises that could affect markets this year.