Don’t Panic! NASDAQ Plunges 5% As 10Y T-Note Yield Rises +16.1 BPS (NASDAQ Simply Back To Before Fed Announcement, But Treasury Rates Higher)

The headline screamed “NASDAQ PLUNGES 5%!

True, it did, but it simply lost the gain’s from yesterday’s surprisingly mild Fed announcement.

But the 10-year Treasury yield is rising faster than my blood pressure. The 10-year Treasury yield is up to 3.09%.

Cryptos? Bitcoin is down -7.27% and Dash is down -8.23%.

Watch out mortgage rates!!

Don’t panic … about the NASDAQ. EVERYBODY PANIC about rising mortgage rates.

GameStop: Rage Against The (Financial) Machine? Or Bidenflation? (Meme Stocks, Gold And Cryptos)

2021 has been a very weird year. Inflation has boomed (highest in 40 years) after the election of Joe Biden as President of the USA (call it Bidenflation). Then we have The Federal Reserve barely acting on the booming inflation (keeping rates at 25 basis points while withdrawing the COVID-related monetary stimulus).

Then we have the rise of cryptocurrency Ethereum and the surge meme stocks such game store GameStop, a favorite of the internet site Reddit.

Given the volatility of GameStop (Reddit-inspired), you can see the strange shape of GameStop’s volatility surface.

By contrast, gold is now where it was was at the beginning of 2021 and the surge of Bidenflation.

Here is volatility surface for gold.

So, there are a number of meme stocks (GameStop is just one example), gold, silver, cryptos such as Bitcoin and Ethereum. But gold seems to be placid with respect to inflation, but the meme stocks and cryptos seem to be motoring. Or is it rage against the financial machine? Or rage against Bidenflation??

The US stock and bond markets are closed today and tomorrow, Christmas day.

Have a Merry Christmas! And celebrate the “Santa Pause” as Powell refuses to raise rates to combat inflation until 2022.

Bitcoin Surges To $62,314.75 On SEC Approval Of Bitcoin Futures ETF

SEC approves first Bitcoin Future ETF, opening crypto to wider investor base. First product will track bitcoin futures, rather than price of bitcoin directly. SEC Chair Gensler indicated he believes futures-based products might provide stronger protections.

The reaction? Bitcoin surges to $62,314.75!

Coming next week!

SEC Chief Gary Gensler (or is this Zen Gesner from “Something About Mary”?)

Eurodollar Futures Volume Surge Anticipates Fed Taper Signal (Are You Ready For Feddy?)

The next Federal Reserve Open Market Committee (FOMC) meeting is next week with an announcement on Wednesday, September 22nd.

(Bloomberg) — Volume in the December 2024 eurodollar futures contract has surged Friday, approaching 200k, highest in the strip. Weekly volume exceeds 800k ahead of next week’s FOMC meeting. The December 2024 contract is a proxy for the Fed’s taper timeline, similar to the belly of the Treasuries curve (aka, the belly of the beast).

As of 2:30pm ET, nearly 197k Dec24 eurodollar contracts had traded, bringing weekly total to 816k, third most in its lifetime; notable flows on the day have included three block trades for 5k each:

The contract also appeared in curve trades including 9.3k Sep24/Dec24 3-month, 18.9k Dec23/Dec24 12-month and 24.8k Dec22/Dec24 24-month

The Dec22/Dec24 eurodollar spread has been in the spotlight since Morgan Stanley recommended the steepener in June as a way to exploit the disconnect between expectations for the pace and timing of Fed rate increases

As of today, we see a kink in the US Dollar Swaps curve at 21m.

With inflation the highest since 2008, and M2 Money still growing at 12.1% YoY, it is time for The Fed to take it foot off the accelerator pedal.

The Fed’s Dots Plot as of the last FOMC meeting indicates a willingness to let the Fed Funds Target rate start rising again after over a decade of rate suppression.

Given the fear of The Fed tapering (eventually), is it any wonders alternative investments such as Bitcoin have risen as The Fed cut rates?

Will Fed Chair Jerome Powell and the gang announce a change on September 22nd? Probably need a fortune teller to answer that question.

Battle Of The Fiats! Bitcoin Hits $50,000 … Again And Backs-off As US Dollar Sinks (What Happened To Bretton Woods?)

Since President Nixon helped take the US off the gold standard, the US Dollar has become FIAT currency. That is, not backed any precious asset such as gold, silver, platinum, etc. What ever happened to the Bretton Woods system?

The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states. The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained its external exchange rates within 1 percent by tying its currency to gold and the ability of the International Monetary Fund (IMF) to bridge temporary imbalances of payments. Also, there was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well.

So much for Bretton Woods. We now live in a FIAT world where The Federal Reserve can print money almost without any limitation.

Enter cryptocurrcies such as Bitcoin and Ethereum.

Bitcoin, the favorite of many, broke through the $50,000 barrier yesterday, only to level off below $50,000 this morning. Ethereum is level after rising yesterday. Meanwhile the US Dollar (the preferred FIAT model of The Federal Reserve) is falling.

Here are some of the cryptos out there, but I only follow Bitcoin and Ethereum.

Since Nixon and dropping off the gold standard, we have seen US Federal debt (and spending) blow out of control with the decline in M2 Money Velocity to its lowest levels.

This should be the new emblem of the US Federal government AND The Federal Reserve.