Money & Markets Daily: The 5
It’s impossible to keep up with everything going on in financial markets and the economy these days. That’s where “The 5” comes in…
Let’s start your week off right by exploring the most significant trends and opportunities you need to know now.
1. Trump’s Strategic Bitcoin Reserve
$14,555,100,000.
That’s roughly the current value of the 210,000 bitcoins currently in the U.S. government’s possession.
Many of these coins were seized from cybercriminals. And former President Donald Trump just pledged to make this stockpile the cornerstone of America’s new Strategic Bitcoin Reserve.
This is obviously a sharp reversal from Trump’s previous statements that bitcoin is “not money” and that it’s “highly volatile and based on thin air.” His opinions may have been temporarily swayed by the fact that he was speaking at America’s largest crypto conference on Saturday, Bitcoin 2024.
But if you look past the politics of the situation (difficult during an election year, to be sure), you’ll see this is yet another major milestone for crypto…
Earlier this year, bitcoin finally became accessible for your brokerage account through a slew of new spot market ETFs. And now, just a few months later, it’s being discussed as a potential reserve asset. Both are massive leaps forward for the acceptance and credibility of crypto.
2. Summertime Volatility Heats Up
Just like the lingering humidity here in South Florida, volatility has made a strong return to the market.
From the beginning of July to last week’s sell-off, the CBOE Volatility Index (VIX) — the measure of expected volatility based on S&P 500 Index options — rocketed up 51%.
The S&P 500 was down 1% over the same time.
Last Wednesday, the VIX rose more than 22% — the first time the index rose that high in one session since June 2022.
This doesn’t necessarily indicate a long-term pullback in the market, as all three indexes posted a rebound on Friday. But it does suggest some bumps in the road ahead.
3. Dear Jerome, Can We Make It Official?
With inflation decelerating and the labor market now back in balance, it’s widely believed that Federal Reserve Chair Jerome Powell will soon announce an interest rate cut for September.
This is a critical turning point for the market and an understated victory for Powell’s legacy. Over 16 difficult months, Powell hiked interest rates by 525 basis points — the fastest rate hiking cycle America had seen in four decades.
Now, economic data indicates the coast is clear. Inflation seems to be defeated. The Fed may well have engineered a soft landing, and it’s time to announce his first rate cut.
According to the experts, there’s currently a 95% chance rates will stay the same after this week’s meeting. But the majority of those experts also believe Powell will announce a rate cut headed our way come September.
So what kind of impact will this news have on the stock market?
Well, the answer is complicated…
4. Worst Day on Record for the “Magnificent Seven”
Last Wednesday, the Roundhill Magnificent Seven ETF (Nasdaq: MAGS) recorded its single worst day on record.
After bombshell earnings reports from both Tesla Inc. (Nasdaq: TSLA) and Alphabet Inc. (Nasdaq: GOOGL), investors engaged in extensive profit-taking across the market’s biggest mega-cap tech stocks.
The total damage was minor. The Mag 7 still had $16 trillion by the time the closing bell rang. However, with these stocks weighted so heavily in the S&P 500 index, their underperformance was hard to miss.
You can expect continued gridlock as more investors shift away from overvalued mega-cap stocks … and toward the small-cap stocks that will inevitably benefit from lower rates and borrowing costs.
5. Do YOU Think the Olympics Should be Free to Watch?
Let’s close out today’s edition of “The 5” with something completely different…
Cord cutters across America were left in the dark when the Olympics kicked off its Opening Ceremonies on Friday…
Either you shelled out the $7.99 subscription fee to watch the Olympics on NBC’s streaming platform Peacock, or you were out of luck. There was no “free trial” opportunity like they’ve offered in the past.
Our managing editor, Chad Stone, decided to pay up. He says watching heavy metal band Gojira headbang along the river Seine with a backdrop of beheaded Marie Antoinettes was totally worth the price of admission.
But Editor-at-Large Matt Collins disagreed. He thinks NBC should’ve extended the proverbial “olive branch” and made the games free to watch for everyone instead of nickel-and-diming its subscribers.
Offering the games for free would help Peacock stand out in an extremely competitive industry. It would also be an important show of solidarity during an especially divisive year.
So what do YOU think? Should the Olympics be free to watch?
Vote in our poll below.
Bonus: If you want to us why you voted the way you did, we’d love for you to email us at Feedback@MoneyandMarkets.com. We’ll feature some of your responses in next week’s edition of the “The 5.”
— Money & Markets Team