Bitcoin Surges As Traders Bet on Donald Trump Election Win After Shooting

Economic

Cryptocurrency

Summary:

Trump Media and prison stocks also gain but solar stocks slump.

Bitcoin surged on Monday following an assassination attempt on Donald Trump as traders increased their bets on the former president winning November’s US presidential election.

The price of bitcoin rose more than 10 per cent to $63,595, its highest level in two weeks, after Trump was injured in the ear during an assassination attempt by a gunman at a campaign rally at the weekend. The Republican is seen as the more pro-crypto candidate, having hosted industry executives at Mar-a-Lago and voiced enthusiasm for US-based bitcoin mining.

Trump’s campaign has also accepted cryptocurrency payments, a first for a major US political party, raising hopes of a departure from the US regulatory crackdown on the industry seen in recent years.

“The probability of a Donald Trump victory has increased significantly,” said Grzegorz Dróżdż, market analyst at currency company Conotoxia, adding that a Trump presidency would “positively impact” crypto.

The implied odds of Trump winning in November jumped shortly after the shooting, according to live trading on political betting site PredictIt.

Bitcoin Surges As Traders Bet on Donald Trump Election Win After Shooting_1

Shares in Trump’s Truth Social media company closed 31 per cent higher. Trump Media & Technology Group, which reported a $98mn operating loss for the three months to March 31, was taken public that month in a merger with a blank-cheque company and recently rallied ahead of the debate between Trump and President Joe Biden last month.

Prison operators gained, with Geo Group shares closing up almost 10 per cent and CoreCivic adding 8 per cent. Shares in US gun makers also surged. Sturm Ruger & Co gained as much as 12 per cent while Smith & Wesson Brands rose as much as 14.3 per cent.

“For prison stocks, the expectation is that if Trump wins he’ll get stricter on the border and those companies will benefit,” said Michael O’Rourke, chief market strategist at JonesTrading, who was less convinced guns were a clear Trump-related trade. “Gun stocks always have volatility around the election cycle and it usually winds up being simply a lot of noise in the market.”

The S&P 500 closed 0.3 per cent higher on the day, though just short of a new record high.

“A presidential candidate surviving an assassination attempt is good news in itself so [Monday] has been a fair reaction,” O’Rourke continued. “But I don’t think stocks are going to go on a multi- percentage point run here just because Trump is now favourite to win the election by a larger margin than before.”

The shortening odds on a second Trump presidency did, however, send ripples across broader financial markets. US Treasury yields edged higher in a more muted version of the reaction that followed Biden’s disastrous debate performance.

Many investors believe Trump’s tax-cutting policies would drive up deficits and inflation, hitting US Treasuries and sending yields higher in a similar pattern to the aftermath of his election win in 2016.

The US dollar index, which tracks the greenback against a basket of six other major currencies, was steady, having weakened in July as traders have raised their bets on a September interest rate cut from the Federal Reserve.

Yields on benchmark 10-year Treasuries rose 0.04 percentage points to 4.22 per cent, reflecting a small decline in price.

Bitcoin Surges As Traders Bet on Donald Trump Election Win After Shooting_2

Monday’s moves “chime[s] with the Trumpian theme given the popular narrative of his being good for business and . . . his pro-crypto stance”, said Rabobank analysts in a note to clients.

“For the markets, the complexities of the US political backdrop have been boiled down to the assumption that the weekend events will lead to an increased chance of Trump winning the November presidential election,” they added.

Source:Financial Times

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Samantha Luan

Economic

In a tough year for dealmaking in the Asia-Pacific, Malaysia is proving to be a bright spot.

The volume of mergers and acquisitions has surged 87% from a year ago to $8.3 billion, while APAC as a whole is down 15%, data compiled by Bloomberg show.

Top of the pile is a 12 billion ringgit ($2.6 billion) buyout of Malaysia Airports Holdings Bhd. involving Global Infrastructure Partners and Abu Dhabi Investment Authority, though the deal has faced opposition in Muslim-majority Malaysia due to BlackRock Inc.’s ties to Israel. BlackRock agreed to buy GIP in January.

Senior investment bankers expect deal activity to be elevated as both local and international buyers pounce on opportunities.

Tech is alluring. Big names including Alphabet Inc. owned Google, Microsoft Corp. and Nvidia Corp. have announced plans to invest billions into helping Malaysia’s ambitions in artificial intelligence. And the government has pledged at least 25 billion ringgit for the semiconductor industry.

“We are seeing a lot of inbound interest from regional and international clients wanting to discuss opportunities in Malaysia,” said Harry Naysmith, a managing director at Citigroup Inc.’s investment banking unit.

Bankers Chase More M&A in Malaysia as Deal Volume Nearly Doubles_1

Malaysia, a member of the Association of Southeast Asian Nations, has drawn interest as investors consider alternatives to China. The country attracted 83.7 billion ringgit of approved investment in the first quarter, up 13% from a year earlier. More should come, helped by an agreement with Singapore to develop Southeast Asia’s first cross-border special economic zone.

Chinese firms are also branching out and eyeing acquisitions, said Ai Chin Tan, a managing director and head of investment banking for Oversea-Chinese Banking Corp. in Malaysia. Strong links between the two countries make Malaysia a good hunting ground for deals by Chinese firms, particularly in areas such as advanced manufacturing, renewable energy and electric vehicles, she said.

“Malaysia has prospered through the proliferation of many entrepreneurs who own small-to-mid-sized firms as well as larger companies and conglomerates, presenting good opportunities for M&A,” Tan said.

Now is a favorable time thanks to Malaysia’s recently-achieved political stability and the strong performance of local equities, said Naysmith, who is based in Singapore and focuses on clients in Asean. The FTSE Bursa Malaysia KLCI Index has risen 12% in 2024, outperforming the MSCI Emerging Markets Index, which is up 9.7%.

“Sponsors have been looking for the right window to exit companies, and with the current economic and political stability, the timing is ripe,” said Naysmith.

Some other countries are still grabbing more international attention due to their size and depth of markets, including India and Japan, where dealmaking activity is booming. South Korea is another busy market, while transactions in Singapore have recently picked up too.

Then there’s the ringgit, which is closely watched by investors and dealmakers as volatility in the local currency impacts transactions. Still, the currency has been resilient recently and is near its strongest in six months.

The government plans to build advanced manufacturing capabilities and increase the country’s renewable energy capacity. While initial public offerings are muted globally, share sales in Malaysia this year have risen 35% from a year ago, led by Johor Plantations Group Bhd., according to data compiled by Bloomberg.

“There is a growing pipeline of activity in the country and we should begin to see bigger IPO deals from Malaysia in the next 12-18 months, particularly around government-owned entities and sectors such as consumer, health care, telecom infrastructure and technology,” Naysmith said.

Meanwhile, tycoon Vincent Tan is considering taking private Kuala Lumpur-listed Berjaya Food Bhd., the owner of Starbucks Corp.’s Malaysian business, Bloomberg has reported.

Malaysia, with a population of about 34 million, has attracted private equity firms including CVC Capital Partners Plc, which has invested in areas such as financial services and retail, and TPG Inc. in health care and education.

“With a more stable macroeconomic environment, including interest rates and improving financing conditions, we do expect to see M&A activity remaining strong,” said Tammi Yong, JPMorgan Chase & Co.’s head of investment banking for Malaysia.

Malaysia is the world’s second-biggest palm oil producer after Indonesia and home to companies including Petroliam Nasional Bhd., known as Petronas, and other industry leaders such as Top Glove Corp., Axiata Group Bhd. and sovereign wealth fund Khazanah Nasional Bhd.

Digital infrastructure assets, particularly data centers, have attracted interest. GDS Holdings Ltd. agreed to sell a stake in its data-center business outside of China, which includes assets in Malaysia, to alternative asset managers Hillhouse Investment and Boyu Capital for $587 million. Last year, DigitalBridge Group Inc. bought a controlling stake in Aims Group from Time Dotcom Bhd.

“This is likely going to remain a hot topic in the coming years due to Malaysia’s proximity to Singapore and because it has the resources needed to run data centers, including water and electricity,” said Roe Seann Chong, an executive director at Deutsche Bank AG’s investment arm in Malaysia.

”Malaysian corporates with existing diversified operations are also reevaluating their strategy,” Chong said. “Some that have expanded across many countries and sectors may want to re-optimize their operations, creating market leaders in more focused businesses.”

Axiata plans to merge its telecom operations in Indonesia with conglomerate PT Sinar Mas Group, Bloomberg has reported. AirAsia in April announced a 6.8 billion ringgit deal to create a listed entity that will combine its airline units, with long-haul carrier AirAsia X Bhd. acquiring AirAsia Aviation Group and AirAsia Berhad from sister company Capital A Bhd.

Malaysian firms are also keen to expand abroad via M&A, according to Hsu Jen Chin, who leads investment banking in Malaysia for CLSA Ltd.

“A lot of the corporates that we talk to have overseas expansion aspirations,” she said. “They want to be at the same level as all the other international players and they’re always looking for opportunities to grow.”

Source:Bloomberg

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FastBull Featured

Daily News

[Quick Facts]

1. Fed's Daly says confidence is growing on winning inflation fight.

2. Trump is formally named as the Republican presidential candidate.

3. Fed Chair Powell releases dovish remarks again.

4. WSJ's Timiraos says Powell's speech doesn't change expectations of holding rates steady in August.

5. Goldman Sachs doesn't expect the ECB to cut rates this time.

[News Details]

Fed's Daly says confidence is growing on winning inflation fight

Inflation is coming down, which enhances the confidence that inflation will fall back to the target level of 2%, said U.S. San Francisco Fed President Mary Daly on Monday. Although the economy is slowing and policymakers should now focus on labor market risks and inflation, we need more information before we can make any real decisions.

Policy may be normalized over time, but the likelihood of that normalization depends on available data, not where we are today.

As inflation retreats and the labor market slows over time, we have to make sure that interest rates stay high enough so that we don't lose the battle against inflation. But we won't maintain the high rates for too long, and we won't allow the labor market to deteriorate to the point where it's challenging for people to find work.

Trump is formally named as the Republican presidential candidate

The Republican National Convention opened in Milwaukee with the Republican Party formally nominating Donald Trump as its presidential candidate for 2024, while this former U.S. president chose Senator J.D. Vance as his running mate and vice presidential candidate.

The meeting came hours after a federal judge dismissed a criminal indictment against Trump.

After the assassination attempt, Trump said he was revising his acceptance speech to emphasize national unity, rather than highlight his differences with Biden.

Fed Chair Powell releases dovish remarks again

We didn't gain any additional confidence in the first quarter, but we did gain some confidence in the second quarter on three indicators, including the data released last week, Fed Chairman Jerome Powell said in an interview at an Economic Club of Washington event. But the Fed is waiting for more good data to be confident that inflation is falling.

Now that inflation has fallen and the labor market has cooled, we will be considering both tasks at the same time, and they have come into a better balance. If the labor market unexpectedly weakens, it will also be a reason to adjust rates.

The Fed will not wait for inflation to fall to 2% before lowering interest rates. Waiting until inflation reaches the 2% target may take too long because it takes time for the Fed's tightening policies to affect the economy and bring inflation down to 2%.

WSJ's Timiraos says Powell's speech doesn't change expectations of holding rates steady in August

Federal Reserve Chairman Jerome Powell said that the recent slowdown in inflation and economic activity is generally in line with the Fed's expectations, but he still refused to say whether this is a reason for the Fed to cut interest rates at the policy meeting later this month, the Wall Street Journal reporter Nick Timiraos wrote.

The inflation report released last week showed a general improvement in the economy, prompting some investors in the market to wonder if the Fed needs to wait until September before cutting rates. It should be noted that the Fed led by Powell usually avoids surprising the market with short-term policy decisions, so, from this perspective, Powell's wording today did not change the expectation that the Fed will keep interest rates steady at the August meeting.

Goldman Sachs doesn't expect the ECB to cut rates this time

Goldman Sachs expects the European Central Bank (ECB) to hold interest rates steady in July as its statement emphasizes its reliance on data, which suggests no major changes at this week's meeting. We should watch for the ECB comments on the outlook for economic activity, inflation, and policy at this meeting. Despite weaker-than-expected growth in indicators in the June ECB economic forecasts, the forecasts for inflation are firm.

Goldman Sachs expects the ECB to broadly confirm the medium-term outlook to reflect the wording from its April meeting. In addition, the ECB will reiterate its "data-dependent and meeting-by-meeting approach" without pre-committing to a specific rate path. Limited progress on inflation is expected over the summer, before another rate cut in September.

[Today's Focus]

UTC+8 20:30 U.S. Retail Sales MoM (Jun)

UTC+8 20:30 Canada CPI YoY (Jun)

UTC+8 02:45 Fed Governor Kugler Speaks

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Westpac

Economic

China's Q2 activity data again highlighted disparate conditions across the economy. New industry continues to surge ahead, but the consumer is being left behind.

China GDP disappointed in Q2, gaining 0.7% after a 1.6% increase in Q1. Year-to-date at June, growth of 5.0% is down from 5.3% in March, but still consistent with authorities ambitions for 2024. This is despite support from the Government remaining passive.

Aggregate growth remains dependent on trade and business investment, particularly in high-tech sectors of the economy. While the trade surplus narrowed significantly through Q1, creating a headwind for growth in Q2, in May and June the surplus widened again, setting up support for Q3 GDP.

Strength and breadth in export growth continues to justify further investment in capacity across numerous sub-sectors of manufacturing and the infrastructure which supports industry and society more broadly. Year-to-date fixed asset investment at June was a sub-par 3.9%. However, excluding the 10.1%ytd contraction in property, investment was up a strong 8.5%ytd. Underlying this result is 10.1%ytd and 11.7%ytd gains for high-tech manufacturing and high-tech services respectively. Utilities investment (including power generation and transmission) is meanwhile up 24.2%ytd and other infrastructure 5.4%ytd.

The above outcomes speak to the private sector and state-owned enterprises putting the Government's long-term plan to increase value add and efficiency across the economy into action, targeting capacity expansion in areas where China has a nascent global competitive advantage such as goods production tied to the green transition. It is certainly paying dividends for industry, but the extent and timing of gains for ordinary households remains an open question.

The PMI's employment measures and other labour market data make clear that aggregate employment is yet to materially benefit from this capacity expansion, new jobs in the sector at best offsetting weakness in residential construction and manufacturing sub-sectors that have lost their advantage to developing Asia. Firms exposed to local consumer demand also find themselves unable to scale up hiring or investment with spending growth weak and the outlook highly uncertain.

Although employment growth is largely stagnant, the NBS reports that household disposable income rose more than 5% on both a nominal and real basis over the year to June. With retail sales only up 3.7% year-to-date in H1 2024 (and just 2.0% over the year to June), a lack of job creation is clearly not the only factor holding back consumption and housing investment; anxiety over wealth is also critical. The latter is unsurprising given new and existing home prices have been falling consistently for close to three years and property investment is now down more than 20% since mid-2022.

There are two key points to take from the above. (1) Despite the headwinds created by the property sector and wealth, and in the absence of active support from the Government, to date in 2024 China's 'new economy' has achieved authorities' aggregate growth ambitions. (2) But, increasingly risks are skewing to the downside – growth in the new economy inevitably will slow and consumer weakness increasingly looks entrenched. Beginning with this week's Plenum, it is important that authorities show greater initiative and urgency with policy so as to begin to rebuild trust in the property sector and to make clear that the benefits of trade will, in time, flow to all of society. Unlikely this week, but also necessary in time, is confidence in the outlook for China's equity markets. A greater use of equity capital by firms and increased ownership of equities by households is the surest way to transmit trade gains broadly and sustainably across the economy.

As a result of the weakness in consumption and with considerable trade risks into year end, we have edged down our growth forecasts for 2024 and 2025, from 5.2% and 5.0% to 5.0% and 4.9%, respectively. Achieving these outcomes will require a material near-term policy adjustment to strengthen consumer spending and stabilise both residential construction and household wealth. If achieved, downside risks will abate and may turn net positive in 2025. But, if policy makers continue to hold back, risks are likely to skew further to the downside and begin to crystalise.

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Samantha Luan

Economic

Institutional crypto market data provider Kaiko has projected Ethereum to outperform Bitcoin (BTC) after the launch of spot ETFs in the United States. The market anticipates the launch of spot Ethereum products with bulls projecting new market highs amid institutional inflows recorded pre-launch. ETH is down from the approvals of 19b-4 for several issues by the Securities and Exchange Commission (SEC).

Ethereum Growth to Surpass Bitcoin

A recent report from Kaiko opines that Ethereum ETFs may push the assets above Bitcoin. The firm cited the Ether-Bitcoin price ratio amid recent fluctuations due to macro and industry factors. The price ratio of the asset relative to Bitcoin stands at 0.05 from 0.045 after the approval of 19b-4 by the SEC. A ratio shows the value of Ethereum is getting bigger than the market leader.

“The ETH to BTC, which measures the relative performance of the two assets, remains elevated around 0.05. This is significantly higher than pre-approval levels of nearly 0.045. A stronger ratio suggests ETH could continue to outperform relative to BTC following ETF launches.”

In the last two months, ETH price has plummeted 20% initial frenzy with the SEC approval. While a pullback is linked to macro factors, spit Ethereum ETFs are poised to draw in institutional flows to the market. Traditional investors have become attracted to the altcoin leader because of its smart contract functionality and the number of decentralized applications (DApps) in the ecosystem. Last year. Wealth managers picked the asset with the most growth trajectory.

Market Awaits Spot ETF

This year, spot crypto ETFs have dominated market spaces with billions pouring in from investors. The approval of spot Bitcoin ETFs on Jan 11 opened the gates for renewed market optimism on the heels of a new window for institutional investments. The successes of Bitcoin products drew investors to Ethereum as crypto prices jumped to new highs. The trading of ETH products expected this summer and related optimism led to issuers filing for Solana ETFs.

Source：Coingape

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TD Securities

Economic

Central Bank

According to the Bank of Canada Business Outlook Survey (BOS), Canadian business sentiment remained unchanged and somewhat downbeat in the second quarter of 2024. The BOS indicator, a statistical summary of survey results, was -2.90 in 2024 Q2 (vs. -2.39% in 2024 Q1).

Meanwhile, the share of firms preparing for a potential recession in the coming year declined to 20% (from 27%) with uncertainty around domestic factors, such as weaker demand, economic performance, cost and tax policy outweighing concerns about labour shortages and supply chains.

Firms' indicators of future sales remained weak relative to its historical average and suggests that economic growth will remain sluggish. Expectations of weak demand are especially notable when observed through the lens of firms whose sales are tied to discretionary spending – roughly one-third of firms in this category expect sales to decline in the next 12 months. In contrast, firms whose sales depend on consumers' essential spending and residential real estate expect higher sales alongside still strong population growth and lower interest rates.

Weak consumer demand and strong immigration are contributing to continuous easing in the labour market conditions, driving lower expectations for wage growth. In turn, slowing wage pressures combined with increased competition driven by weak demand continue to limit firms' plans for abnormal price increases, helping to normalize pricing behavior. This should support disinflationary pressures, keeping inflation expectations inside the Bank's inflation-control range.

According to the parallel Canadian Survey of Consumer Expectations (CSCE), consumers' sentiment also remained subdued and broadly unchanged from the previous quarter.

The two major drivers of pessimism remain high inflation and high interest rates. As in the previous survey, households are planning to reduce or postpone purchases, with the share of consumers expecting to cut spending and save more remaining near survey-high levels.

While consumers' perception of current inflation remained high, expectations for inflation one year ahead showed a sizeable improvement from 4.9% to 4.1%. As noted by the Bank of Canada, consumer perceptions of inflation continue to be higher than actual consumer price index inflation, with consumers citing high government spending and elevated housing costs as major causes of high inflation. Meanwhile, longer-term (2- and 5- year) inflation remained mainly unchanged and well-anchored.

Key Implications

Both business and consumers remain pessimistic about future economic prospects. The good news is that businesses are expecting some easing in wage and price pressures, while consumers are also adjusting their near-term inflation expectations. Nevertheless, households continue to be concerned about elevated prices and high interest costs, and are planning to reduce spending in the coming year. Weaker consumer demand remains widespread and is acutely felt by businesses, which are increasingly affected by competitive market pressures.

The overall tone of the surveys released a week before the Bank of Canada's next monetary policy decision, builds a solid case for another rate cut. In the absence of Q2 data from the National Income and Expenditure Accounts, the collective signals from indicators point to easing inflation expectations, moderating wage pressures and a softening economic backdrop. Should June's CPI data (released on Tuesday) indicate an easing of inflationary pressures, the Bank of Canada will have more reason for another rate cut. Markets are currently attaching at 78% probability to a July rate cut.

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Alex

Economic

A defensive tone prevailed on Wall Street last week despite swelling Federal Reserve interest rate cut expectations. Treasury yields plunged across maturities as dovish guidance from Fed chair Jerome Powell and weaker-than-expected inflation data firmed up bets on the start of an easing cycle in September.

Against this backdrop, the bellwether S&P 500 stock index added just 0.8%—the smallest rise in three weeks—while the tech-oriented Nasdaq 100 fell 0.5%. That seemed to mark a tone shift for the markets, whereby recession worries build as the arrival of rate cuts becomes increasingly imminent, as expected.

Against this backdrop, here are the macro waypoints likely to shape what comes next.

Canada consumer price index (CPI) data

Headline inflation held steady at 2.9% year-on-year in Canada last month, according to economists’ median forecasts. The core rate stripping out short-term volatility to get at the central trend in price growth is expected to tick modestly lower to 1.6%, matching the three-year low set in April.

Leading purchasing managers index (PMI) data from S&P Global reported a steep drop in pricing power in June. Input inflation was marked at the lowest level since early 2021, and output prices rose at the slowest pace in 40 months. If that sets the stage for soft CPI, the Canadian dollar may fall amid a dovish repricing of the rate cut outlook. U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_1

U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_1

U.S. retail sales data

Market-watchers expect to see that U.S. retail receipts flatlined in June. Coming on the heels of a standstill in April and a meager 0.1% rise in May, an outcome in line with expectations would complete the weakest quarter for consumption growth since the three months ending December 2022.

U.S. economic data has increasingly disappointed relative to consensus forecasts since mid-April, according to analytics from Citigroup. Stock markets may come under pressure if that sets the stage for a downside surprise as worries about recession continue to mount. U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_2

U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_2

U.K. consumer price index (CPI) data

Inflation is expected to have idled at 2% year-on-year in the U.K. in June, matching the three-year low set in the prior month. Analytics from Citigroup reveal that recent news-flow has soured relative to forecasts, which may foreshadow a print on the low side of forecasts. That might stoke Bank of England rate cut speculation, hurting the British pound.

U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_3

European Central Bank (ECB) policy meeting

The ECB is expected to keep its target deposit rate unchanged at 3.75% at this month’s policy meeting. Nevertheless, the tone from central President Christine Lagarde at the press conference following the sit-down is likely to remain dovish, underpinned by a recent downturn in economic data. That might weigh on the euro and local stocks alike. U.S. Retail Sales, ECB Meeting, U.K. and Canada Inflation: Macro Week Ahead_4