TheBRRR’s Thoughts

Editor’s Note: We sold a stock for the newsletter’s portfolio this afternoon. Premium subs can see the move and the reasoning at the bottom of the email.

GM.

Today we’ve got a flat stock market in the US as Asian markets saw more volatility in the overnight session as the Bank Of Japan signals an end to their long-term negative interest rate policy.

The crypto markets don’t seem to care about anything right now and continue its uncorrelated march to record highs with bitcoin comfortably over $70,000 today, exceeding $72k for the first time ever.

The bitcoin continuation rally is on the heels of Donald Trump’s CNBC appearance this morning. He spoke with cautious acceptance and optimism about the crypto market.

An estimated 20% of Americans own crypto, many of whom are single-issue voters that will not support a politician hostile to the industry, so Trump’s pivot appears to be opportunistic.

Contrast his pro-crypto turn with the Biden admin’s anti-crypto track record (detailed by Nic Carter here), and you can see crypto developing into a major political issue this Fall.

Those are our two main stories for the day, but we’re watching a few others.

1) The Fed’s bank bailout program has reached its 1 year anniversary and is expiring this week.

I was absorbed by the crisis as it was happening last year so I started the newsletter.

Bitcoin screamed higher as banks were failing. This was an anomaly and a clear indication that the market finally understood the asset, so I loaded up and never looked back. 🫡

2) The market continues to punish Apple and Google for their mixed messaging and confused vision for AI integration into their core products

3) Will Ethereum get its ETF moment too? Analysts are mixed on whether Gensler’s SEC will greenlight an ETF for the 2nd biggest asset ahead of its May deadline.

Trump Cautiously Supportive of Bitcoin & Crypto

WHAT HAPPENED:

• Former President Donald Trump, during a CNBC "Squawk Box" interview, expressed favorable views on bitcoin and cryptocurrencies, stating he wouldn't want to "take it away at this point" due to their widespread use. Despite not personally investing in bitcoin, Trump mentioned accepting payments in bitcoin and other "crazy new currencies."

• Trump's comments coincided with bitcoin reaching a new high above $72,000, with Ethereum, Solana, Dogecoin, and other crypto assets also rising.

• The former president maintained his traditionalist stance, emphasizing the importance of the U.S. dollar's status as the global reserve currency and equating the loss of this status to losing a war. However, he acknowledged the significant role cryptocurrencies have come to play, hinting at their inevitability and impact.

WHY IT MATTERS:

• Market Influence: Trump's favorable remarks about cryptocurrencies contributed to their surge in value, highlighting the significant impact of high-profile endorsements on digital asset markets.

• Cryptocurrency Legitimacy: Despite his traditionalist views, Trump's acknowledgment of cryptocurrencies' widespread use and his openness to accepting them as payment indicate a growing acceptance of digital currencies within mainstream financial discussions.

• Political Considerations: Trump's comments represent a staunch change from the current administration’s positioning and may tempt undecided independent voters and technologists.

• Investor Sentiment: The reaction to Trump's comments underscores the sensitivity of cryptocurrency markets to public figures' opinions, potentially guiding investor sentiment and market trends.

Marketwatch

Japanese Markets Fall Amidst Central Bank Pivot

WHAT HAPPENED:

• The Nikkei and Topix indices in Japan took a dive, each falling by around 3% amid speculations of an impending policy change by the Bank of Japan (BOJ). This marked the most significant drop since October 4, sparked by a sharp rise in the yen.

• The move came against a backdrop where the BOJ's Yield Curve Control policy, a fixture for the last decade, is rumored to be on the chopping block, possibly ending as early as this month.

• This policy change is expected as Japan’s economy sidestepped recession at the end of last year, hinting at a possible end to the era of negative interest rates. Speculation is rife that the BOJ may raise interest rates for the first time since 2007, fueled by anticipated larger wage increases.

WHY IT MATTERS:

• The Mirage of Fundamentals: The plummet in the Nikkei and Topix indices is a stark reminder that the recent bull run in Japan's stock market was less about solid economic fundamentals and more about a weakened yen, courtesy of the BOJ's aggressive monetary policies. This scenario exposes the vulnerability of stock market gains that rely heavily on currency devaluation strategies.

• Reevaluation of Investment Strategies: The anticipation of BOJ's policy shift is causing a rapid reevaluation of long-standing investment decisions. Investors, long accustomed to the tailwinds provided by BOJ's negative interest rates and currency depreciation tactics, now face the reality of adapting to a fundamentally different market environment.

• Potential Unwinding of the Momentum Trade: Japan's stock market surge, particularly in momentum stocks, now faces the risk of unraveling. This is especially true if the correlation between U.S. and Japanese momentum stocks continues, highlighting the fragility of gains predicated on continuous monetary easing.

Zerohedge

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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