The U.S. Bureau of Labor released the October CPI report on the evening of the 14th, showing that U.S. inflation continued to cool down, and then released the U.S. October Producer Price Index (PPI) on the 15th.
The annual growth rate slowed further to 1.3% from 2.2% in September, lower than the expected 1.9%, the biggest drop since April 2020; excluding food and energy prices, the annual growth rate of core PPI in October also slowed to 2.4% from 2.7% in September, also lower than market expectations.
According to the October CPI and PPI reports, it can be seen that the inflation pressure in the United States seems to be continuing to cool down, which makes market investors more confident that the Federal Reserve will maintain its decision not to raise interest rates at the December FOMC meeting and push up the U.S. stock market, with all four major stock indexes closing higher.
However, financial giants hold different views on the US economic outlook. Jamie Dimon, CEO of US banking giant JPMorgan Chase, poured cold water on the market, warning that although US consumers and businesses are currently in good shape, US inflation will not subside quickly as the US economy is currently facing major headwinds such as quantitative tightening and global tensions.
In fact, this is not the first time Dimon has expressed concerns about the U.S. economy. In the third-quarter earnings report in mid-October, Dimon issued a strong warning, pointing out that the Ukrainian war, coupled with the Israeli attack, could have a profound impact on energy and food markets, global trade and geopolitical relations: This may be the most dangerous moment in the world in decades.
Unlike Dimon, Goldman Sachs, another Wall Street financial giant, is optimistic about the U.S. economy. In the recently released "2024 U.S. Stock Market Outlook" report, Goldman Sachs stock strategists said that the U.S. economy will not fall into recession, but will continue to expand at a moderate pace.
Goldman Sachs predicts that by the end of 2024, the S&P will reach 4,700 points, which means that in the next 12 months, the index will rise by 5%, and the total return including dividends will reach 6%. At the same time, corporate earnings will increase by 5%, and the valuation of US stocks will reach 18 times the price-earnings ratio. Goldman Sachs also emphasized that this value is still slightly lower than the typical return of 8% in the presidential election year. In addition, Goldman Sachs also pointed out that the "Big Seven" US stocks, including Apple, Microsoft, and Huida, will continue to deliver excellent results in 2024.
As for the crypto market, Bitcoin remained strong above $37,700 in the Asian market on Thursday (November 16), and after a healthy correction at the beginning of the week, it staged a crazy rise overnight. The US Securities and Exchange Commission postponed the deadline for Hashdex to convert the Bitcoin spot ETF application, but this does not seem to hinder the bull market from rebounding. The CoinShares report proves to investors that institutional funds are flowing into Bitcoin in large quantities recently before waiting for the approval of spot ETFs such as BlackRock, and looking back at 2022, it accounted for 19.8% of all Bitcoin transactions.
It can be seen that despite facing a series of macro resistances, Bitcoin prices continue to rise, with a year-to-date increase of 126%, and options market data shows that traders are targeting the $40,000 level. The price action in the past two weeks has placed the Crypto Fear and Greed Index firmly in the "Greed" category, indicating that market sentiment has improved.
Will, co-founder of Reflexivity Research, pointed out on the 15th that the open interest (OI) of Bitcoin options has exceeded a staggering $16 billion, setting a record high.
According to data from The Block, the current ratio of put options to call options is less than 1, which means that most investors in the market hold bullish call options, reflecting the expectation of rising Bitcoin prices. However, the new high in open interest also indicates that volatility may be very high.
In a highly bullish scenario, Bitcoin price could extend towards the psychological level of $40,000, a move which would represent a 10% gain from current levels. The relative strength index (RSI) is sloping up, indicating that momentum is picking up, while the Awesome Oscillator (AO) remains in positive territory, adding credence to the bullish thesis.
Summarize
Overall, the market is divided on the Fed's expectations for a rate hike in the short term, and the bullish sentiment on Bitcoin is more obvious. However, global tensions and economic uncertainty may have an impact on the cryptocurrency market and Bitcoin. Therefore, investors must also recognize that the market still faces some uncertainties and risk factors, and should remain vigilant when making investment decisions and formulate corresponding strategies based on their own risk tolerance.
