U.S. SEC Can Approve 19b-4 for Spot Ethereum ETF, What It Means?

Cryptocurrency

Summary:

Even if the SEC approves the 19b-4 filings, it may delay the approval of the S-1 registration statements for the spot Ethereum ETFs.

As the decision for the spot Ethereum ETF looms around, Nate Geraci, the President of the ETF store shares his views on what can happen going ahead this week. For the spot Ethereum ETFs to trade on Wall Street, the SEC needs to approve both – the 19b-4s (exchange rule changes) & S-1s (registration statements).

Spot Ethereum ETH Approval

As we know, the spot Ethereum ETF will directly hold Ether as its underlying asset, and will trade on the stock exchanges just similar to stocks. However, for them to trade on exchanges, they must receive the SEC nod for both – 19b-4s as well the S-1 filings.

Rule 19b-4 refers to the filing that a national securities exchange, such as the NYSE or Nasdaq, submits to the SEC when proposing to change rules or introduce new products. For Ethereum ETFs, the exchanges need SEC approval on these filings to list the ETFs. Essentially, this process involves the exchange requesting permission to add these new Ethereum products to their trading platforms.

The S-1 is the initial registration form required for new securities offered to the public. It provides the SEC and potential investors with detailed information about the company’s business operations, financial condition, and management. For ETFs, this document details the structure of the fund, its management, and how it intends to replicate the performance of Ethereum.

The SEC must approve both the 19b-4 filings and the S-1 registration forms in order to legally sell the ETFs to the public. The SEC typically has a statutory timeframe of 45 days, extendable up to 240 days, to make an initial decision on the 19b-4 filings. Approval of the 19b-4s permits the ETFs to be listed on exchanges. However, without approval of the S-1s, the ETFs cannot be legally sold to investors.

Chances of A Delay

Even if the U.S. SEC approves the 19b-4s, it can go slow with the approval of the S-1s. This also means that the regulator can take even longer in order to review and approve these documents. Also, the lack of engagement among the issuers and the SEC highlights that the regulator could undertake a more cautious approach due to the complexities and risks involved with crypto products.

The decision on Ethereum ETFs is crucial, as approval could boost mainstream adoption of Ethereum and offer a more regulated and secure investment environment for those interested in cryptocurrency. Conversely, a delay or denial might indicate ongoing regulatory concerns about the stability and security of cryptocurrency investments.

As the decision looms around, the Ethereum price has given a partial bounceback to $3,100 over the last weekend.

Source:Coingape

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Alex

Economic

Commodity

Asian stocks rose, bolstered by shares of commodity-related firms as the price of copper and gold both climbed to record highs. Optimism over eventual Federal Reserve interest-rate cuts supported the rally.

MSCI’s gauge of regional equities advanced for a seventh day, with the materials sector posting the biggest percentage increase. Japanese shares led gains, while those in China, Hong Kong and Australia also marched higher, as did European and US futures.

Traders refining bets on the Fed finally pivoting toward rate cuts has shaped trading across financial markets in recent days. The Dow Jones Industrial Average of blue chips closed above 40,000 for the first time on Friday, and optimism about US easing helped gold surge to an all-time high on Monday.

Asian Stocks Gain as Copper, Gold Climb to Records_1

“The Japanese market is playing a bit of catch-up,” said Masayuki Doshida, a senior market analyst at Rakuten Economic Research Institute. “While US stock prices are hitting all time highs, Japanese stocks have recovered only about a half of their losses from March to April.”

Investors are also keeping an eye on the Middle East after Iranian President Ebrahim Raisi died in a helicopter crash. President Raisi was seen as a favorite to eventually succeed Supreme Leader Ayatollah Ali Khamenei, who is the Islamic Republic’s top authority.

Bloomberg’s dollar index was little changed, after dropping last week when data showed US inflation in April eased more than economists expected. A number of Fed officials are due to speak this week, including Governor Christopher Waller who is set to talk specifically about the US economy and monetary policy.

Japan’s benchmark 10-year bond yield climbed to the highest since 2013 amid speculation the central bank is committed to normalizing interest rates and supporting the struggling yen.

Copper jumped to a fresh record, extending a rally that’s been driven by investors who have piled into the market in anticipation of deepening supply shortages. Futures on the London Metal Exchange rose above $11,000 a ton for the first time.

Developments in the Middle East have the potential to spur haven demand, even though oil was little changed in Asia on Monday.

Saudi Arabia’s King Salman Bin Abdulaziz will receive treatment for a lung condition, according to the state-run Saudi Press Agency. King Salman has led the world’s largest oil exporter since 2015. His son Crown Prince Mohammed bin Salman was set to meet Prime Minister Fumio Kishida, Japan’s government spokesman said the trip had been postponed due to concerns over the king’s health.

“There could still be lingering fear that tensions in the Middle East could worsen and that can keep the crude prices a tad underpinned for now,” Maybank analysts including Saktiandi Supaat and Fiona Lim wrote in a note.

China’s latest attempt to bolster the nation’s beleaguered property market, announced on Friday, was seen by some analysts as a step in the right direction, though possibly too small to end the crisis. Bloomberg Intelligence’s gauge of Chinese developer shares slipped on Monday.

The week’s agenda includes economic activity readings in Europe as well as inflation prints in the UK, Canada and Japan. Policy decisions in New Zealand, Indonesia, South Korea and Chile are also due, while Nvidia Corp. is set to report earnings.

Source:Bloomberg

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Samantha Luan

Economic

Commodity

Copper is emerging as the next indispensable industrial commodity, mirroring oil's rise in earlier decades, a top commodities analyst said.

This time around, new forces in the economy, namely the advent of artificial intelligence, explosion of data centers, and the green energy revolution, are boosting demand for copper, while the development of new weapons is adding to it as well, according to Jeff Currie, chief strategy officer of Energy Pathways at Carlyle.

“Copper is the new oil,” he told Bloomberg TV on Tuesday, noting that his conversations with traders also reinforce his bullishness. “It is the highest-conviction trade I've ever seen.”

Copper has long been a key industrial bellwether as its uses range widely from manufacturing and construction to electronics and other high-tech products.

But billions of dollars pouring into artificial intelligence and renewable energy are a relatively new part of copper's outlook, Currie noted, acknowledging that he made a similar prediction in 2021 when he was an analyst at Goldman Sachs.

“I'm confident that this time is lift-off, and I think we're going to see more momentum behind it,” he said. What's different this time is there are now three sources of demand—AI, green energy, and the military—instead of just green energy three years ago.

And while demand is high, supply remains tight as bringing new copper mines online can take 12 to 26 years, Currie pointed out.

That should eventually send prices soaring to $15,000 per ton, he predicted. Coppers prices are already at record highs, with benchmark prices in London at about $10,000 per ton, more than doubling from the pandemic-era lows in early 2020.

At some point, the price will get so high that it will create “demand destruction,” meaning buyers balk at paying so much. But Currie doesn't know what that level is.

“But I go back to the 2000s, I was bullish on oil then as I am on copper today,” he added, recalling that crude shot up from $20 to $140 per barrel at the time. “So the upside on copper here is very significant.”

Copper was also a key catalyst in BHP's proposed a takeover of Anglo American, a $40 billion deal that would create the world's top copper producer. But Anglo has rejected the offer and recently announced plans to restructure the group, including selling its diamond business De Beers.

Source: Fortune

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FastBull Featured

Data Interpretation

The Conference Board released the April Leading Economic Index (LEI) for the U.S. on May 17 as follows.

The Conference Board LEI for the U.S. decreased by 0.6% in April 2024 after decreasing by 0.3% in March and the expected reading was -0.3%.

Over the six-month period between October 2023 and April 2024, the LEI contracted by 1.9%, a smaller decrease than its 3.5% decline over the previous six months.

Another decline in the Conference Board LEI for the U.S. confirms that softer economic conditions lay ahead. Deterioration in consumers' outlook on business conditions, weaker new orders, a negative yield spread, and a drop in new building permits fueled April's decline.

Although the rate of growth of the LEI suggests a reduced risk of recession (the LEI did not signal a recession for the 2nd consecutive month), it still indicates significant challenges to economic growth.

While the LEI did not signal a recession for the second consecutive month due to improvement in the six-month growth rate, it still points to serious headwinds to growth ahead.

In light of this, U.S. real GDP growth is expected to slow to under 1% over the Q2 to Q3 2024 period.

Conference Board LEI for the U.S.

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Samantha Luan

Economic

Thailand’s economy grew better-than-expected in the first quarter, fueled by tourism and private consumption, easing the pressure on the central bank to respond to the government’s call for lower borrowing costs.

Gross domestic product in the three months through March increased 1.5% from a year earlier, the National Economic and Social Development Council said Monday. While that’s slower than the 1.7% pace in the fourth quarter, it was well above the 0.8% median estimate in a Bloomberg survey. Only one analyst correctly predicted the print, while the rest expected the slowest expansion since the end of the pandemic.

Quarter-on-quarter, the economy expanded 1.1% compared with a median estimate for 0.6% growth. GDP contracted a revised 0.4% in the October-December period. The baht was up 0.1% against the dollar after the data, poised to extend a four-day rally.

Private consumption jumped 6.9% year-on-year in the first quarter, offsetting a 2.1% decline in government spending. according to the data release.

The better-than-forecast GDP data may ease pressure on Bank of Thailand to cut borrowing costs that are at a decade-high. The data comes as tensions between the government and the central bank appear to have cooled after Finance Minister Pichai Chunhavajira last week said they would leave the monetary decision-making to the BOT, explaining that access to lending and liquidity were more important than the level of borrowing costs.

Thailand’s Economic Growth Slows Even as It Beats Estimate_1

The central bank’s policy rate has stood at 2.5% since September even as consumer prices slipped into negative territory in the fourth quarter of 2023 and GDP growth stuttered.

Headline inflation finally quickened in April, showing the first gain in the past seven months. The BOT said last month that holding the rate steady had given it “policy optionality” to deal with currency volatility, geopolitical risks and uncertainty around the Federal Reserve’s pivot to easing.

Southeast Asia’s second-largest economy is expected to pick up pace in the second half, supported by public spending after the much-delayed passing of the national budget. The government is targeting to roll out the $14 billion cash handout later this year to boost consumption. Critics have warned this could fan inflation and set back fiscal consolidation.

Source:Bloomberg

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FastBull Featured

Remarks of Officials

The European Central Bank (ECB) Vice President Luis Guindos said in an interview on May 17 as follows.

Inflation has been performing well, but we still need to pay attention to the risks associated with wage growth. The ECB believes that the fundamental risk to inflation is the evolution of wage growth. Despite the slowdown in nominal wage growth from 5% to 4%, unit labor costs are still rising as productivity remains at a low level.

Inflation is expected to fluctuate around 2.4% in the coming months and will reach the 2% target by mid-2025.

The ECB has been clear that monetary policy decisions in June and beyond will be based on its economic data. The economic growth rate has improved from the previous very low level, the labor market is performing well, and macroeconomic risks are playing a smaller role. However, there is still a need to be wary of future threats to financial stability.

This year's global elections could lead to a stunting of globalization as protectionist measures implemented by some economies could lead to a fragmentation of the global economic environment, which in turn could affect inflation and economic growth.

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ING

Economic

Commodity

Energy

Energy - Specs trim Brent longs

Oil prices remain rangebound. ICE Brent settled 0.85% higher on Friday, but oil prices have traded in less than a $3.50/bbl range since early May. To the upside, the market will likely face resistance along the 200-day moving average. We might have to wait for further clarity from OPEC+ and its output policy for the second half of the year to provide any impetus to the market and for it to break out of its recent range.

A fair amount of speculative selling in ICE Brent occurred over the last week. Positioning data shows that speculators sold 47,146 lots over the last reporting week, leaving them with a net long of 213,502 lots as of last Tuesday. The move was predominantly driven by longs liquidating. However, for NYMEX WTI, speculators increased their net long by 11,095 lots over the week to 128,746, largely due to short covering.

The natural gas market remains well supported. In the US, front-month Henry Hub futures are trading above $2.60/MMBtu. The market has rallied more than 60% since late April with fundamentals looking tighter. While US inventories are still very comfortable, flat supply and stronger demand growth this year should start to tighten up the US gas balance.

More recently, the gap between current inventories and the 5-year average has narrowed due to weaker builds. Speculators have also started covering their shorts in Henry Hub. Speculators bought 44,565 lots over the last reporting week, leaving them with a net short of just 12,701 lots as of last Tuesday. This move was predominantly driven by short covering.

In Europe, TTF remains above EUR30/MWh despite storage being almost 67% full and still above levels seen at the same stage last year. We expect Europe to go into next winter with storage full, which suggests prices should trade lower from current levels. However, large speculative inflows into European gas has kept the market well supported.

Metals – prices surge

Spot gold prices broke above $2,400/oz on Friday, leaving it near the record level reached in April, while silver prices hit an 11-year high on Friday, as softer US data over the last week or so raised expectations of rate cuts. Silver prices surged above US$30/oz for the first time since February 2013 at the end of last week on robust financial and industrial demand, and there are suggestions that physical sales have also picked up.

In addition, the market is set for a fourth straight year of supply deficits. Speculators have increased their positioning in COMEX gold and silver over the last week. CFTC data shows speculators increased their net long in gold by 9,810 lots to 172,942 lots. While for silver the speculative net long increased by 6,707 lots to 41,621 lots as of last Tuesday.

Industrial metals also saw significant strength last week. LME nickel prices settled more than 6% higher on Friday, which took total gains for the week to more than 11%. Reports of unrest in New Caledonia have triggered supply concerns. New Caledonia's nickel output was already slashed earlier this year, following a drop in nickel prices. According to the International Nickel Study Group (INSG), New Caledonia accounted for 6% of global nickel output in 2023.

LME copper rallied almost 7% last week, dragged higher by COMEX copper, which witnessed a short squeeze. Sentiment in the copper market is bullish, reflected by the speculative buying seen in the market. However, short-term fundamentals remain a concern, particularly when it comes to China. SHFE copper stocks are at their highest levels for this time of year in at least 15 years, while premia for imported refined copper into China remains at zero.

Cancelled warrants for aluminium rose by 60,000 tonnes (+15.3% DoD) to 452,175 tonnes as of Friday, the highest since October 2021. The majority of the increase was in warehouses in Malaysia's Port Klang. Cancelled warrants are up by 329,200 tonnes in the last week alone. On-warrant inventories declined for a third straight session to 641,100 tonnes as of Friday.

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