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As markets continue to reprice higher, one thing is clear: we’re at an inflection point packed with opportunity. From record-breaking options expirations to bold political and economic moves reshaping the landscape, the stage is set for risk assets to continue ripping through the end of the year.

Trump’s return has lit a fire under crypto optimism, with the potential for regulatory relief and innovation leading the charge. Meanwhile, the Federal Reserve is signaling cautious resolve—Chair Powell’s hawkish stance may temporarily dampen hopes for rapid easing, but it also underscores the economy’s remarkable resilience. And as inflation inches closer to the Fed’s target, the groundwork for a more accommodative stance in 2025 is being laid.

In equities, we’re seeing intriguing dynamics unfold. The S&P 500 is navigating key technical levels, while small caps on the Russell 2000 present potential bargain opportunities for those willing to take a contrarian stance. Add to that today’s historic $2.9 trillion options expiration, and the market is ripe for volatility.

Crypto, energy, and financials are basking in post-election sentiment shifts, with flows reflecting growing conviction in these sectors. Bitcoin’s retracement from record highs might be the pause that refreshes as the market waits for tangible policy action from the new administration.

The takeaway? Optimism is warranted, but so is precision. With volatility creating opportunities and sentiment shifting in unexpected ways — buckle up.

The newsletter’s portfolio climbed over 10% since we last wrote, thanks in large part to the moves higher in Coinbase, Bitcoin, Tesla, and Solana.

Election & Fed Cut To Drive This Week’s Action

1. SEC Crypto Cases & Trump’s Election (Source: Cointelegraph)

Synopsis: Consensys CEO Joe Lubin predicts that with Trump back in the White House, the SEC’s aggressive stance on crypto enforcement could be rolled back. This could lead to the dismissal or settlement of cases involving major crypto firms, saving the industry substantial costs.

The Details:

• Trump’s election promises included firing SEC Chair Gary Gensler and appointing pro-crypto officials.

• SEC lawsuits, including those against Binance and Coinbase, have racked up significant costs for the crypto sector.

• Consensys had its own SEC lawsuit dismissed in September, and Lubin claims the regulatory agency overreached in its enforcement actions.

• Industry-wide optimism centers on the potential for reduced legal battles and regulatory clarity under a pro-crypto administration.

Why It Matters: A rollback of SEC actions could spark a bullish run in crypto markets and shift the U.S. narrative towards innovation over enforcement. Investors might look to capitalize on reduced uncertainty and potential regulatory shifts.

2. CPI Data & Fed Outlook for December (Source: Blockworks)​

Synopsis: The October CPI report showed inflation at 2.6%, with core CPI at 3.3%, meeting expectations. This has bolstered the likelihood of another Fed rate cut in December, reflecting a continued easing trend.

The Details:

• CPI rose 0.2% in October, with a notable annual rate of 2.6%.

• Core CPI also rose 0.3% month-over-month.

• Market expectations for a December rate cut jumped to 82% post-report (from 58%).

• Fed Chair Powell is set to speak soon, potentially giving further clues on 2024 monetary policy.

• Trump’s return to office in 2025 could complicate monetary policy with aggressive fiscal measures.

Why It Matters: For traders, the prospect of lower rates adds upward pressure on risk assets, especially tech stocks and crypto. However, high inflation relative to the Fed’s 2% target keeps uncertainty in play, especially given geopolitical and fiscal challenges on the horizon.

3. Market Sentiment: DXY, Crude Oil, and Geopolitical Tensions (Source: ZeroHedge)​

Synopsis: The U.S. Dollar Index (DXY) is losing ground, and crude oil prices are down amid ceasefire discussions in the Middle East. Hawkish signals from the Fed are keeping Treasury yields elevated, while equity markets reflect mixed global sentiment.

The Details:

• The DXY slid to 106.50 after hitting highs near 107, as softer U.S. data moderated expectations.

• U.S. equity futures fell, especially in tech-heavy indices, following Powell’s hawkish remarks.

• Crude prices dropped as Israel and Lebanon near ceasefire agreements, reducing geopolitical risk premiums.

• Treasury yields are firming, reflecting tight financial conditions despite potential December rate cuts.

• Gold held steady, while copper prices benefited from the dollar’s weakness.

Why It Matters: Currency and commodity volatility offer trading opportunities, particularly in forex and energy markets. Hawkish Fed messaging complicates the narrative for equities, while a weaker DXY could bolster international markets and commodities.Zerohedge

4. SPX and Russell Weakness Amid Inflows (Source: ZeroHedge)​

Synopsis: Despite record inflows into U.S. equities post-election, key indices like the S&P 500 and Russell 2000 are showing weakness. The Russell, in particular, faces a sharp pullback, challenging investor confidence in small caps.

The Details:

• S&P 500: Reversed at key resistance levels near 6000; first support is at the 5900 range.

• Russell 2000: Down 4.5% from recent highs, with support near the 21-day moving average.

• Record inflows into large-cap equities—sentiment shifts post-election are driving speculation.

• Small caps continue to underperform, reflecting long-term struggles in relative strength.

Why It Matters: This disparity between sentiment and price action indicates potential over-positioning in large caps and weak fundamentals for small caps. Investors may need to assess rotation strategies to navigate the volatility.

5. Largest November Options Expiry in History (Source: ZeroHedge)​

Synopsis: Today marks the largest November options expiration ever, with $2.9 trillion notional set to expire. This massive event is reshaping market dynamics, with volatility metrics and positioning reflecting heightened risk and opportunity.

The Details:

• Breakdown: $1.4 trillion SPX AM expiry, with the rest split across ETFs and single stocks.

• Volatility Trends: Implied volatilities remain low, but realized volatility among individual stocks is at 15-year highs.

• Positioning:

  • Popular trades: Long dollar, crypto proxies, financials, and gold.

  • Under-the-radar opportunities: Energy, European equities, and index downside hedges.

• The VIX put complex sees record open interest—investors favor downside protection as equity markets rally.

Why It Matters: This expiration could lead to heightened market swings, especially in underperforming sectors like small caps. Traders should watch for opportunities in mispriced options and shifts in implied volatility post-expiration.

6. Hawkish Powell Dampens Rate Cut Hopes (Source: ZeroHedge)​

Synopsis: Fed Chair Jerome Powell’s hawkish remarks have tempered expectations of a December rate cut. This has pressured equity futures and bonds while dampening optimism for Trump-fueled "reflation" trades.

The Details:

• Market Reactions:

  • S&P 500 futures: Down 0.5%; Nasdaq futures: Down 0.9%.

  • Treasuries: Two-year yields rise to 4.35%, reflecting sticky inflation.

• Fed Dynamics:

  • Powell emphasizes no urgency to cut rates despite stable economic growth.

  • Rate cut odds for December fall to 59% (from 82% earlier in the week).

• Sector Moves:

  • Vaccine makers drop after RFK Jr.’s appointment as Health Secretary.

  • Bitcoin cools off from record highs ($93k to $87k), needing policy catalysts.

Why It Matters: Persistent inflation and higher-for-longer rates could further strain growth stocks and speculative assets. The hawkish Fed narrative contrasts sharply with market bets on easing, setting up potential volatility into year-end.

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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