Alternatives Shine In Shortened Session

This holiday season, the talk of the town is the U.S. (and global) consumer. After all, consumer spending is two-thirds of the U.S. economy, so if we stop spending, the economy’s illusive recession could finally appear. 🎃

While many retailers have painted a cautious picture of the fourth quarter of 2023 and the beginning of 2024, some investors point to what they say is an obvious sign of strength. That is, Visa and Mastercard near all-time highs. 👀

These companies have told investors that consumers are continuing to spend, but where they’re spending their money is changing. And the total return chart below shows Visa making new highs today, while Mastercard is not far below its peak set a few months back. 

Whether it’s a sign of a robust economy or just strength in these individual companies’ businesses, these stocks remain on investors’ radars into year-end. Especially with holiday shopping at the forefront of our minds. 🛍️

Wednesday, we discussed that crypto was likely to be a hotter topic than meme stocks at Thanksgiving dinner, given its recent performance. ₿

After the holiday, that trend of outperformance continues, with Bitcoin touching 1.5-year highs and many traders anticipating it will break above $40,000 this weekend.

As for what’s driving the recent strength, the theory remains that a spot Bitcoin ETF is inching closer towards approval. And once that happens, it would open the floodgates to more spot crypto ETFs and drive further industry adoption. More evidence seems to be piling up each week that the market is betting on it happening soon. 📝

For example, Eric Balchunas pointed out that the Grayscale Bitcoin Trust $GBTC is trading at its smallest discount in over two years as traders bet that its conversion could soon occur. Others pointed to Coinbase shares at 1.5-year highs. 🔺

Additionally, a U.S. Securities and Exchange Commission (SEC) Commissioner, Hester Peirce, recently emphasized that there’s “no reason for [the SEC] to stand in the way of a spot Bitcoin ETF.” However, when pressed by the Bloomberg reporter, she could not comment further on the ongoing conversations between ETF issuers and SEC staff. 🤐

We’ll have to wait and see what the coming weeks hold, but the crypto bull run continues for now. And it’s not catching as many people’s attention as we thought it would. 🤷

Precious metals have not gotten much fanfare lately, especially with palladium in a downtrend and platinum and silver stuck in messy ranges. 💤

However, one that continues to pop up on investor and trader radars is gold, which is once again trying to break above $2,000/oz. Below is a chart showing prices stuck in a range for the last 2.5 years, each time failing to sustain a break above resistance. 🔐

With the disinflation trend continuing and rates expected to stay higher for longer, the bullish catalyst many traders are discussing is a possible recession. But as we discussed with the Visa story, the market remains mixed on its recession outlook, as the consensus view is now that the Fed has pulled off a “soft landing.” 🐂

Bears say that gold missed its opportunity to shine when inflation was roaring in 2021 and 2022 and that there’s little reason for investors to seek the perceived safety of gold when the risk-free rate is above 5%. Especially if the economy doesn’t fall into a recession. 🐻

We’ll have to wait and see who is right. But what’s clear is that gold is on people’s radars into year-end as we all wait to see how it handles this $2,000/oz level again. Time will tell… 🤷