Category: Economy

Bitcoin, the world’s first and most popular cryptocurrency, recently received approval for several Bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC). This long-awaited approval has led to significant changes in how both institutions and regular people can interact with largest cryptocurrency. On January 11, 2024, the SEC approved 11 Bitcoin ETFs for trading. Within minutes of the Bitcoin ETFs going live, Bitcoin’s price rose over 8%, reaching a new 22-month high.

The trading volume for spot Bitcoin ETFs was remarkable, with the first 30 minutes of trading recording a $1.2 billion volume. Early reporting suggests that it has easily broken the previous ETF first day trading flow/volume of all time, which was $2.1 billion. The leading ETF, the Grayscale Bitcoin Trust (GBTC), recorded an impressive trading volume of $446 million in the initial minutes. The approval of the Bitcoin ETF has made Bitcoin much more accessible to large institutions, such as hedge funds and financial institutions. These institutions can now invest in Bitcoin through a regulated and transparent platform, reducing the risk and complexity associated with direct investment in the cryptocurrency.

This increased accessibility has the potential to drive further growth in the Bitcoin market as more institutional investors enter the space. For individuals, the Bitcoin ETF has made it easier to invest in Bitcoin through traditional investment platforms. Investors can now access Bitcoin through their brokerage accounts, IRAs, and even company 401(k)s. This ease of access has the potential to attract a new wave of individual investors who may have been hesitant to invest in Bitcoin through more complex and less regulated channels.

The global economy is transitioning into a new “super cycle,” with artificial intelligence and decarbonization as key drivers, according to Peter Oppenheimer, the head of macro research in Europe at Goldman Sachs.

“We are moving clearly into a different super cycle,” he told CNBC’s “Squawk Box Europe” on Monday. Super cycles are characterized by extended periods of economic expansion, accompanied by increasing GDP, high demand for goods leading to higher prices, and low levels of unemployment.

According to Oppenheimer, the most significant recent super cycle began in the early 1980s and was characterized by interest rates and inflation peaking before a decades-long period of falling capital costs, inflation, and rates. This period also saw increased globalization and reduced geopolitical risks.

However, not all of these factors are expected to continue in the same manner

“We’re not likely to see interest rates trending down as aggressively over the next decade or so, we’re seeing some pushback to globalization, and, of course, we’re seeing increased geopolitical tensions as well,” said Oppenheimer.

Despite these challenges, there are forces that could have a positive impact on the economy, namely artificial intelligence and decarbonization.

AI is still in its early stages, but as it is used increasingly as the basis for new products and services, it could lead to a “positive effect” for stocks, according to Oppenheimer. AI and productivity, often linked to debates and concerns about human jobs being replaced or changed, will likely impact the economy.

“The second thing is [that] we haven’t yet seen, and I think we’re relatively positive that we will see, [is] an improvement in productivity on the back of the applications of AI which could be positive for growth and of course for margins,” Oppenheimer said.

While AI and decarbonization are relatively new concepts, there are historical parallels, according to Oppenheimer. The early 1970s and early 1980s, for example, were “not so dissimilar” to current developments. Factors such as elevated inflation and interest rates, as well as growing geopolitical tensions, rising taxes, and increased regulation, are similar to today.

In other ways, current shifts can be seen as reflective of changes even further back in history, such as the late 19th century, which saw modernization and industrialization fueled by infrastructure and technological developments alongside significant increases in productivity.

As we enter 2024, the 30-year mortgage rates have been on a downward trend for the past several months, providing a much-needed respite for prospective homebuyers and homeowners alike. This decline in rates comes after a period of historically high levels, which had negatively impacted the affordability of homes and the ability of individuals to refinance their mortgages.

Throughout 2023, the average 30-year fixed mortgage rate had reached levels not seen in almost 30 years. However, since the peak in October 2023, when rates nearly touched 8%, the trend has reversed. In the last week of December 2023, the average 30-year fixed mortgage rate had dropped to 6.61%, marking the ninth consecutive week of decline and reaching its lowest point since May 2023. This downward trend has been the most significant drop in rates since November 2008-January 2009.

While there have been slight increases in the 30-year mortgage rates in the first few days of January 2024, when compared to the rates seen earlier in 2023, the current rates are still significantly lower. For instance, a 30-year fixed mortgage rate of 6.64% in late December 2023 would result in a monthly payment that is approximately $275 less than an 8% mortgage for a $300,000 loan.

The recent decline in mortgage rates has been a welcome change for the housing market, as it has encouraged potential homebuyers to re-enter the market after a period of uncertainty. Lower rates have also made it more feasible for homeowners to refinance their existing mortgages, potentially saving them thousands of dollars over the life of their loans.

Looking ahead, it would be a great development if this trend of declining mortgage rates continues.

In 2023, the stock market experienced a remarkable year, with the S&P 500 surging by 24%, marking its best performance since 2020. This success was largely driven by the tech and AI sectors, which saw significant growth and contributed to the overall market’s strength.

The Dow Jones Industrial Average also had a strong year, gaining 14%, and even setting multiple record highs in the last few trading sessions of the year. Meanwhile, the tech-heavy Nasdaq Composite index outperformed both the S&P 500 and Dow, with a remarkable 43% gain in 2023.

Despite a challenging year for some individual stocks, such as Meta, Tesla, and Amazon, these companies still managed to make substantial gains. In fact, the “Magnificent Seven” tech stocks – Nvidia, Meta, Tesla, Amazon, Google, Microsoft, and Apple – all experienced significant growth, with Nvidia leading the pack with a 239% increase!

Meanwhile, the vast majority of the media loved to drive recession fears all year…