TheBRRR’s Thoughts

GM.

So far so good.

The Nasdaq has bounced off of its key technical level at 16,000 and sits at 16,700.

16,000 is the level the Nasdaq peaked at in 2021 before falling all throughout 2022, and should serve as support should markets continue to scream higher through the election cycle and into the new year.

Bitcoin has also bounced quickly after briefly falling through support - reaching as high as $62.5k yesterday before retreating to $60k today.

On Wednesday we get July’s CPI data - one of the more important data points that the Fed will weigh ahead of its September interest rate decision.

Today we’re covering some commentary from the big banks on market conditions and a story about yesterday’s meeting between key democrats close to Kamala Harris and crypto execs and left-leaning industry advocates including Mark Cuban and Anthony Scaramucci.

Trump has proposed crypto-friendly policies and has raised tens of millions from the industry. The Harris admin has taken notice, and has called for a reset of relations after four years of hostility from her and Biden’s appointees across regulatory agencies.

Was That The Bottom? JPM & Goldman Weigh In

WHAT HAPPENED

• Market Volatility: The market has experienced dramatic swings over the last two weeks, with the S&P 500 seeing its biggest drop since September 2022 (-9.7% peak-to-trough) and its largest bounce since November 2022.

• S&P 500 Critical Levels: The S&P 500 closed above the CTA medium-term threshold of 5,254, reducing potential sell orders by $15 billion over the next five sessions. It also reclaimed its 100-day moving average at 5,310, signaling potential stability.

• Institutional Buying: Corporates, asset managers, sovereigns, and hedge funds bought into the recent market weakness, particularly in higher-quality defensives, with demand resurging despite higher prices.

WHY IT MATTERS

• Goldman's Take: Goldman Sachs believes the market may have hit a short-term bottom. The successful reclaiming of the 100DMA and reduced CTA-driven sell pressure suggest a less bearish outlook. They noted that buying 5% dips in the S&P 500 has historically been profitable, hinting that we might be in such a scenario again.

• JPMorgan's Caution: JPMorgan is more reserved, noting that while we might have seen the worst of the decline, the Fed's upcoming moves could still shake the market. They highlighted the risk of a hawkish surprise at Jackson Hole, especially if economic data doesn’t weaken further to justify deeper rate cuts. JPM's 3-month momentum level sits at 5,254, a key level to watch for future selling pressure.

• Economic Data and Fundamentals: Despite market jitters, the macro backdrop remains strong. The Atlanta Fed’s GDPNow estimate is 2.9% for Q3, and US real GDP growth has averaged 3.125% over the last four quarters. Earnings are beating expectations with revenue growth at 5.0% and earnings growth at 12.1%, suggesting that fundamentals are still solid.

• Seasonality and Risks: Historically, August and September are weak months for the market, compounded by election year uncertainty and geopolitical risks. The risk of further downside remains if the market fails to sustain its recent bounce, with CTAs potentially triggering more selling if certain thresholds are breached.

Zerohedge

A Heated Meeting Between Kamala & Crypto Execs While Fed Attacks Crypto-Friendly Bank

WHAT HAPPENED

• Heated Zoom Meeting: A virtual meeting intended to mend relations between the crypto industry and the Democratic Party turned contentious. The meeting, hosted by Congressman Ro Khanna, included top Biden administration officials and key crypto executives like Mark Cuban and Anthony Scaramucci.

• Clashing Views: Crypto executives expressed frustration over the regulatory crackdown by Biden's administration. Deputy Treasury Secretary Wally Adeyemo faced pushback when he denied that the industry was being cut off from the financial system. Nearly all crypto participants raised their hands when asked if their firms had been denied banking services due to White House policies.

• Political Implications: The meeting highlighted the challenges facing Vice President Kamala Harris's 2024 presidential campaign as she attempts to regain support from the crypto community, which has seen increasing backing for GOP candidate Donald Trump.

WHY IT MATTERS

• Regulatory Tensions: The crypto industry is facing significant pressure from U.S. regulators, particularly the SEC and the Federal Reserve. This has led to growing resentment within the industry, which could influence political allegiances, especially as Trump has vowed to make the U.S. the crypto capital of the world.

• Crypto's Political Divide: The meeting underscores how crypto has become a partisan issue, with Democrats under the Biden administration taking a tougher stance on regulation, while Republicans, led by Trump, are positioning themselves as crypto-friendly. Kevin O'Leary's surprise at this development reflects a broader concern within the industry about its future political support.

• Fed’s Enforcement Action: Separately, the Federal Reserve targeted Customers Bank with an enforcement action due to its inadequate handling of risks associated with crypto clients. This action highlights the ongoing scrutiny the crypto sector faces from financial regulators, which could further strain relationships between the industry and government.

Takeaway: The friction between the crypto industry and the Biden administration reveals deepening political divisions, with regulatory actions threatening to push the industry further toward the GOP. As the 2024 election approaches, the stance of candidates on crypto regulation could become a pivotal issue for both the industry and voters.

Fox Business, Coindesk

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll