$2.3B Oct ETF flows, More Rate Cuts , & A.I.'s CapEx Concerns

Edition #52! A whole year of our weekly musings. How the time flies when you’re having fun! Right? … Right?

This Week in Crypto

This week was action-packed, yet it still feels like the calm before the storm. Next week brings both the US Elections and an FOMC meeting. Long vol is an obvious trade here, and the implied volatility on options reflects this.

• The election looks like a coin flip depending on which polls you believe, Trump is perhaps a narrow favorite, though his odds have slipped on Polymarket 5% this week alone to 61%.

The corn ETFs have posted a beauty of a week, marking $2.275B for the week so far and $5.3B for the month. Bitcoin pushed up to $73,500 from the buy pressure, which isn’t surprising. What is surprising, however, is that we’re not at ATHs given the massive numbers posted below.

• ETHBTC continues to trend lower, posting only $30M of inflows this month. Depressing.

• BTC dominance has hit yearly highs, topping 60%.

Chief Lunatic Officer at Microstrategy (Saylor) announced plans to raise $42B to buy more BTC (yes with a B). The plan, creatively named the 21/21 plan, aims to comprise of $21B in equity and $21B in fixed-income securities over the course of three years.

• The Investor Presentation is below - I’d love to provide further commentary, but honestly, I’ve not got around to listening to it yet.

$COIN (Coinbase) was one equity that did not fair well this week. Earnings were somewhat lackluster (QoQ), and the stock sold off -19% following the report, which included $1B of share buybacks.

• One would speculate that the move might have gone the other way if they announced a Bitcoin purchase.

Other things that caught our eye this week:

• DyDx laid off 35% of core team, and Consensys laid off 20%. Strange given the market right now.

• Report: Mr.Beast was accused of dumping on retail and insider trading.

• Emory University discloses $16M in Bitcoin holdings.

• And finally, Howard Lutnick, CEO of Cantor Fitzgerald, on the Pomp Podcast is a fantastic listen if you have a spare hour!

This Week in TradFi

Well, we gave you a couple weeks without talking about rate cuts, but they’re back: 

• With inflation very slightly above the Fed’s 2% target and wage pressures starting to ease, economists are confident that we’ll see another round of rate cuts at next week’s Fed meeting. 

• Current expectations are that the Fed will cut rates by 0.25bp at both the November and December meetings. 

• The recent jobs report all but clinched November’s rate cut, which showed that job openings dropped last month to their lowest rate since January 2021. Nonfarm payrolls in the US rose by 12,000 in October, missing expectations by 113,000. The report eases worries that job growth has been too strong (god forbid), given the massive gains we saw in September. 

• The jobs report also had the unemployment rate unchanged at 4.1%, and labor force participation dropped very slightly to 62.6%. Wage inflation rose very slightly from 3.9% to 4%.

A bit of a mixed bag on the international front: 

• UK housing prices rose by 0.1% in October, a big slowdown from the 0.6% monthly increase we saw last month. Prices are 2.4% higher than October of last year, lower than the Reuters forecast of 2.8%. 

• Japan once again lowered its GDP growth forecast for the fiscal year, as weaker exports slow down an already weak economic recovery. The country revised its forecast to 0.7% from its previous projection of 0.9%. This is still higher than private sector forecasts, though, which have the country ending the fiscal year with 0.5% growth.

• Russia’s manufacturing sector is growing again, recovering from its first contraction in two years. Despite this, output and new orders continue to decline, but slower than before. 

• Australian household spending fell last month, with consumers cutting back on clothing and cars. This is bad news for the Reserve Bank of Australia, which had hoped that a recent round of tax cuts would increase consumption in the second half of the year. Australia is not the only economy to struggle with recovery post-COVID - many countries may have to rethink their strategy if consumer sentiment doesn’t bounce back.

This Week in Tech

A rough week for the stock market, with Big Tech earning reports causing shares to tumble.

• Meta dropped 4% and Microsoft dropped 6% yesterday. Though both the companies’ quarterly earnings reports were better than Wall Street expectations, investors were spooked by reports that capital expenditures, particularly in AI, would continue to increase. 

• Investor moodiness affected other Big Tech stock as well, with Amazon, Apple, and Nvidia stock all also dropping. 

• All in all, the Nasdaq Composite dropped 2.7%, while the S&P 500 dropped almost 2%. Rip to the five month streak of S&P and Dow gains. 

• However, it’s not all bad news: Peloton stock spiked yesterday, increasing 25%, after beating earnings expectations and announcing a new CEO. Though revenue fell from last quarter, its net loss decreased significantly to just $1M. 

The big boss fight for search is finally on. On Thursday, OpenAI launched ChatGPT Search, the company’s new challenger to Google. 

• Powered by GPT-4o, ChatGPT Search is designed to give timely answers to questions. 

• Search will bring you information and photos from across the internet, including sports scores, recent news, stock prices, and more. It’ll also provide links to relevant sources, allowing you to fact check just in case. 

• ChatGPT Plus and Team users will get access to Search first, while enterprise and educational customers will get the tool in a few weeks, followed finally by free users. 

• The company has also released a browser extension to make Search the default search engine on Chrome (how’s that for irony?).

As usual, below are some fundraising announcements, M&A, and tech personnel changes that caught our eye:

• Kalshi is allegedly in talks with new and existing investors to raise an equity round of as much as $50M. 

• Dropbox is laying off 20% of its workforce, a little over 500 employees. 

• Nvidia is attempting to acquire AI workload management startup Run:ai for around $700M - the deal is currently held up in review by EU merger regulators.

Arch is building next-gen wealth management platform for individuals holding Alternative Assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services, powered by BitGo.

Disclaimer: None of the above is financial advice, seriously.