WealthBee Macro Monthly Report: Super Earnings Week in US Stocks, encryption Market Significantly Warms Up in October 'Uptober'

In October, the Federal Reserve released the Beige Book, revealing the current stable operation of the US economy, dispelling traders' concerns about the macroeconomic situation. The US presidential election became the main driver of market trading. As the US stock earnings week approaches, tech stocks suffered a big dump at the end of the month. The encryption market has become a safe haven for the uncertainty of the election, with Bitcoin approaching historical highs, and a new encryption bull market may be imminent.

For the U.S. economy, November has been a mixed month: U.S. non-farm payrolls increased by 254,000 in September, higher than the expected 150,000, with a total upward revision of 72,000 jobs in August and July. The unemployment rate in September was 4.1%, lower than the expected 4.2%, compared to 4.2% in August. Average hourly wages in September increased by 4% year-on-year and 0.4% month-on-month, both higher than expected; the preliminary value of Markit Manufacturing PMI was 47.8 (expected 47.5), reaching a two-month high, while the preliminary value of Markit Services PMI was 55.3 (expected 55), also reaching a two-month high. The stable economic data is accompanied by high inflation: U.S. CPI rose by 2.4% year-on-year in September, slightly slowing down from the previous 2.5% but exceeding the expected 2.3%; core CPI rose by 3.3% year-on-year, slightly exceeding the expected and previous value of 3.2%. This inflation data has overshadowed the debate over whether the interest rate cut in November will be 25 or 50 basis points: almost everyone is betting on a 25 basis point cut in November, and the voices calling for a 50-point cut have completely disappeared.

Source: fedwatch tool

The current state of the US economy and mild drop in inflation already indicate that the US economy is experiencing a soft landing, and macroeconomic risks are gradually fading from traders' view. The latest Beige Book released by the Federal Reserve in October mentioned that since early September, economic activity in most parts of the US has not changed significantly, and inflation pressures continue to ease. Overall, the Beige Book depicts a moderate economic picture of 'smooth economic operation, slowing inflation, and some economic indicators that need to be improved', essentially characterizing the US economy as heading towards a soft landing. But is it just like this? The Beige Book also repeatedly mentioned the uncertainty of the November US election, believing that the election is one of the factors leading to consumers and businesses delaying investment, hiring, and procurement decisions. Currently, the support rates for US Vice President and Democratic presidential candidate Harris and Republican presidential candidate Trump are very close, which may lead to both parties using unexpected means to compete for power.

Overall, the US economy has been classified by the Federal Reserve as a soft landing, and the current economic impact on the market is generally expected to be positive, which means that political issues have become the main reason for determining short-term market trends. Therefore, attention should be paid to the temporary risks in trading brought about by political issues. However, what was unexpected is that Halloween also prepared a 'joke'.

Source: S&P 500 Index heatmap.

Following the record high of the Dow Jones Industrial Average last month, everyone is looking forward to the Nasdaq index catching up, especially hoping that the stock king NVIDIA (NVDA) can continue to break through historical highs amidst the bearish sentiment surrounding the 'AI bubble' and start a new wave of market trends.

But unexpectedly, the US stock market suffered a heavy decline in the last trading day of October, the three major indexes closed down, and technology stocks generally declined. Among them, the Dow fell 0.90%, the Dow fell 2.76%, the Pu 500 also fell 1.86%, the fruit fell 1.82%, the Ying Ling fell 4.72%, Micro Fall 6.05%, Google Cfall 1.96%, Qiqi fell 3.28%, Metafall 4.09%, Tesla fall 2.99%. 标浦和纳指双双录得 9 月 4 日以来的最大单日fall幅,抵消 10 月的涨幅。 正如Interactive Brokers 的Steve Sosnick所说:"万圣节给许多投资者带来的是恶作剧,而不是礼物。 市场心态似乎正在转变,从任何AI相关都能激起热情,转变为投资者希望企業业能从巨额支出中获得回报。 ”

However, setting aside market sentiment and looking at the latest financial reports of the "Seven Sisters" of the US stock market, TSL (TSLA) performed remarkably well, surging 21.92% on October 24th. The financial report showed that TSL's third-quarter revenue increased by nearly 8% year-on-year, which was lower than expected, but the profit surprised, and the gross margin increased by 195 basis points to 19.8% year-on-year, with the gross profit margin of the automotive business exceeding expectations and rising to 17.1%. The income from "carbon sales" increased by more than 30% year-on-year, reaching a single-season high. At the same time, the computing power for AI training in the third quarter increased by more than 75%. During the quarter, TSL deployed a cluster of 29,000 NVIDIA H100 chips in its Gigafactory in Texas for training, and is expected to have a production capacity of 50,000 H100 chips by the end of October. AI has also become one of the core driving forces behind TSL's stock price.

This month, in addition to AI narrative, a new interesting change has emerged in the US stock market, that is, political aspects have surpassed macro aspects and become the core logic of trading. Interestingly, Trump Media Technology (DJT) has surged nearly 250% this month, which seems to indicate that, at least in the US stock market, traders generally bet on Trump's victory. This is also a market's use of real money as a vote, making "Trump trading" the main theme of the current US stock market. Trump's current policy orientation is quite obvious, such as imposing tariffs on imported products from other countries, thus serving the purpose of protecting the country's manufacturing industry. Therefore, traders are generally more bullish on domestic American companies at present, and this is also one of the logics for the continued surge of domestic technology giants.

In October, the US stock market is on the eve of the general election, coinciding with the earnings season, the combination of these two factors further intensifies the volatility of the market. Meanwhile, stock markets in Japan, France, Germany, and other countries are overall in a 'lying flat' state, quietly waiting for the turning point brought by the US election.

在长达七个月的横盘之后,bit币终于迎来了像样主升浪,直逼前高。 尤其是美国bit币ETF,在October "Uptober"迎来了密集流入时期。

Since the beginning of his election, Trump has played the 'encryption card' and firmly courted the votes of encryption investors. In July 2024, he modified the official platform of the Republican Party to include the rights of 'mining Bitcoin' and 'self-custody of digital assets', and boldly advocated for 'government-free monitoring' of transactions. The Democratic Party has also gradually relaxed its hostility towards encryption currencies, passing Bitcoin and Ether futures ETFs during Biden's term. Although Harris is not as outspoken as Trump on the issue of encryption currencies, her campaign team has attempted to attract support from the encryption community in the late stages, expressing a willingness to explore regulatory frameworks that will not stifle innovation. It can be said that regardless of the outcome of this US election, encryption currencies will usher in a new round of development. Therefore, encryption currencies have become a 'promised land' for capital hedging before the election, which is almost a clear logic. Based on past history, the market before the election often experiences a phase of increased volatility, and investors' risk aversion and policy uncertainty will cause frequent fluctuations in the prices of encryption markets. For example, during the 2020 US election, the price of Bitcoin experienced significant fluctuations over a few weeks.

But overall, in the absence of on-chain narratives, political considerations have become the main driving force. The integration of Bitcoin with the traditional world has spread from the financial sector to the political sector, making it an important player in the global order.

It is worth mentioning that, compared to Bitcoin, Ethereum has performed quite poorly. Over the past two months, Ethereum has been in a sideways trend. Looking at the ETF data, its inflows and outflows have been relatively stable.

One of the main reasons for Ethereum's current weakness is the suction of other public chains such as Solana. Currently, the 'meme trading' trend is hot in the encryption community, but Ethereum is not the main battlefield for memes. The US election has also led to the emergence of countless meme coins on the Solana chain with Donald Trump as the image, which has drawn a lot of funds away from Ethereum. These short-term community factors cannot determine the long-term trend of Ethereum. After the US election, when the meme speculation subsides, Ethereum may be able to emerge from the shadow and attract oversold funds.

With the retreat of economic concerns, the market has returned to the AI theme. Despite the anticipation of the US election by many investors, the encryption market has unexpectedly become the optimal choice for investment. Perhaps it is destined that Bitcoin is indeed a superior investment asset, and more and more people will pay attention to its hedging properties. With the arrival and conclusion of the US election and the gradual clarification of the global macro situation, the market may re-enter the narrative of the AI theme, and the encryption market is expected to remain active, possibly ushering in another prosperous scene of 'stocks and currencies soaring' in the first half of the year.