November 14th Financial News

SAN FRANCISCO – Donald Trump’s US election victory – and Elon Musk’s role in helping to get him elected – has sent many users of Musk’s social networking service X, formerly known as Twitter, leaving for alternatives.

One of the key beneficiaries of the exodus has been Bluesky, which rocketed to the No. 1 spot on the Apple App Store’s US chart this week.

Bluesky’s user base has doubled in the past 90 days. On Nov 13, the company said it had gained 1 million new sign-ups in the past week alone, bringing it to more than 15 million total users.

What is Bluesky and how does it work?

Bluesky is a social media service with a lot of the same features you might find on X, Facebook and Instagram. Users can create a profile, follow other accounts, like and re-share posts, and send private messages. Bluesky users have the option to see several different feeds based on their interests. They can see traditional feeds made up of posts from the people they choose to follow, for example, or scroll through feeds focused on certain topics, such as science, gardening or “cat pics.”

How many people are on Bluesky?

Bluesky has more 15 million total users and has added more than 1.25 million new sign-ups since the US election on Nov 5. It’s still relatively small compared to competitors such as X and Meta’s Threads, but it’s growing quickly; Bluesky had only 10 million total users in September. One week after the election, it was the top ranked “free” app in Apple’s App Store.

Who is behind Bluesky?

Bluesky started as more of a project than a company. In late 2019, then-Twitter chief executive officer Jack Dorsey announced Bluesky, which was funded by Twitter, as an independent effort to build a new social networking protocol. Dorsey didn’t like that the major social networks – including his own – were all owned and controlled by private companies. A social networking protocol, by contrast, would serve as a technology layer that anyone could build a network on top of, theoretically creating more competition and user freedom. Email is an example of an internet protocol – anyone can make an email service, and send emails that can be received by people who use other providers.

That project morphed into a formal company called Bluesky in 2021. Dorsey left the Bluesky board last year. He has since criticized Bluesky for becoming a more traditional company instead of just creating a technology protocol.

Twitter stopped financing Bluesky once Musk bought the company in late 2022, but Bluesky raised a US$15 million ($20 million) funding round in October.

How do users sign-up?

Bluesky is available to download on both Apple’s App Store and the Google Play store for Android users. Bluesky was initially invite-only when it first launched – executives said that was to keep the service from crashing or experiencing technical glitches, not to be exclusive – but it has since opened the network to anybody and you no longer need a code to join.

So is Bluesky the next Twitter?

It’s too soon to say, but it has a long way to go. Not only is Bluesky significantly smaller than X, which is having its own usage spike, Musk says, but other competitors have also emerged. Threads, another X clone from Meta Platforms, has 275 million monthly users in less than 18 months, and may soon start running ads. Other social networking services like Mastodon have also had brief moments of popularity before falling out of the conversation. Bluesky is having a moment, but it’s unclear if the company will be able to sustain it. 

Source: Straitstimes

The Consumer Price Index (CPI) rose 0.2% month-on-month (m/m) in October, in line with the consensus forecast. On a twelve-month basis, CPI ticked up to 2.6% (from 2.4% in September).

Energy prices were flat last month, as a pullback in gasoline prices (-0.9% m/m) was offset by an uptick in electricity costs (+1.0% m/m). Food prices rose 0.2% m/m, following a sharp 0.4% m/m gain in September.

Excluding food and energy, core prices rose 0.3% m/m, matching the two prior-months’ gains. The twelve-month change held steady at 3.3%, while the three-month annualized shot higher to 3.6% (from 3.1% in September).

Price growth on core services were up 0.35% m/m, in line with September’s gain. On a year-ago basis, services prices are up 4.8% or roughly two percentage points above its pre-pandemic pace of growth when inflation was running closer to 2%.

Primary shelter costs rose 0.4% m/m, following a gain of 0.3% m/m in September. While well off its 2023 highs of over 8%, primary shelter costs remain elevated at 5.1% y/y.

Price growth of non-housing services inflation (aka “supercore”) remained firm, rising 0.3% m/m – roughly in line with the average gain recorded over the past three months. The continued strength was primarily driven by another strong gain in airline fares (+3.2% m/m), recreational services (+0.7% m/m) and to a lesser extent, medical care services (+0.4% m/m).

Core goods prices were flat in October, after registering a gain the month prior. A pullback in apparel (-1.5% m/m) and education & communication goods (-1.1% m/m) helped to offset a sharp gain in used vehicle prices (+2.7% m/m).

Key Implications

Progress on the inflation front has slowed to a snail’s pace in recent months as services inflation is looking increasingly sticky, while much of the disinflationary pressure from fallings goods prices is now in the rear-view mirror. All of this suggests that the last leg lower on returning inflation to the Fed’s 2% target is going to occur much more gradually.

From the Fed’s standpoint, there was little in this morning’s data to get excited about. The three-month annualized rate of change on core inflation jumped to a six-month high, while the six-and-twelve-month rates of change held steady at 2.6 and 3.3% respectively. With inflation progress stalling but the economy still holding up, November’s employment report will carry added significance for whether the FOMC continues cutting at its next meeting in December or opts to pause. Following this morning’s release, markets are pricing a 70% probability that the Fed cuts next month.

Source: Ronsco

Market Picture

The crypto market cap fell to $2.88 trillion, down 5% over the day. It appears that the market has started to take profits after a week of rallying. The first target for such a pullback appears to be the March-June resistance area around $2.70 trillion. However, we are optimistic that the market may well pick up cryptocurrencies at higher levels and trigger FOMO.

Bitcoin kept things interesting on Tuesday, starting the day by testing the $90K level, then dropping to $85K before testing $90K again. On Wednesday morning, the price pulled back to $87K, the first significant daily decline in eight days. Technically, a pullback to $84K or even $81K would fit within the correction pattern of the last impulse. In that case, a broader correction could begin. For now, however, we believe the market has stumbled and could quickly return to growth.

News Background

Amid the rapid rise of cryptocurrencies, tech analyst Ali Martinez noted an ‘explosion of institutional FOMO’, citing Bernstein’s recent positive report. ‘We are literally starting the dot-com cycle for cryptocurrencies,’ said Michael van de Poppe, founder of MN Trading.

On 11 November, MicroStrategy shares hit a new all-time high of $351.7, taking its YTD growth rate to 438%. Coinbase shares have been at their highest since November 2021. The exchange’s shares have jumped 75% in the last five days.

Arkham Intelligence notes that 2,500 BTC ($222m) were sent to two unknown addresses from the wallets of the former Mt.Gox. This is the fifth Bitcoin transaction in the last two weeks, totalling more than $2 billion.

Polymarket users are betting that bitcoin will reach $100K by the end of November. The proportion of such bets has reached 57%.

Tesla’s Bitcoin value has exceeded $1 billion. The company holds 11,509 BTC. According to Arkham data, El Salvador’s Bitcoin assets exceeded $500 million. The country holds 5,932 BTC.

Australia’s wage inflation within expectations

Wage inflation in Australia eased to 3.5% y/y in the third quarter, down from 4.1% in Q2 and just shy of the market estimate of 3.6%. This was the weakest wage price growth since Q4 2022. Quarterly, wage growth remained at 0.8% in the third quarter, below the market estimate of 0.9%.

The data is in line with the Reserve Bank of Australia’s projection that wage growth has peaked. The central bank expects wages to continue to easing in the fourth quarter and next year, which supports the case for a rate cut. The RBA has insisted that a rate hike remains on the table as underlying inflation is too high. The decline in wage growth is an encouraging sign as high wages have driven services inflation, which remains much higher than the 2% inflation target.

The RBA’s hawkish stance has put it out of sync with other major central banks are lowering rates in response to falling inflation. The markets have priced in another hold in rates at the December meeting, with an initial rate cut likely in the first half of 2025.

Australia releases the October employment report on Thursday. The economy is expected to have added 25 thousand jobs, after a sparkling 64.1 thousand gain in September, most of which was full-time employment. The unemployment rate is expected to remain unchanged at 4.1%.

In the US, Minneapolis Fed President Neel Kashkari said on Wednesday that the US economy is in a “good place” and that monetary policy is currently “modestly restrictive”. Kashkari added that economic data would be the guide as to the Fed’s rate path.

AUD/USD Technical

There is support at 0.6505 and 0.6475;

0.6543 and 0.6573 and the next resistance lines

Source: MarketPulse

Trump wins but gold loses

After hitting a record high of around $2,790 on October 30, gold entered a corrective phase due to US data suggesting that the Fed may need to slow down the pace of its future interest rate reductions.

The correction of the precious metal accelerated on the first signs that Donald Trump will be the 47th president of the US, with the bears staying in charge as the financial world continued to pile into the so-called ‘Trump Trade.’

But is the pullback in gold actually part of the ‘Trump trade’? Because ahead of the election, the precious metal was benefiting whenever the chances of Trump returning to the White House were increasing, perhaps due to the uncertainty surrounding a Trump presidency.

Yet, currently, gold seems to be surrendering to the stronger dollar, which is likely benefiting from speculation that Trump’s tax cut and tariff policies will fuel inflation and thereby prompt the Fed to proceed with even slower rate reductions.

Just after the election, the probability for policymakers stepping to the sidelines in December rose to slightly above 30%. Now, it rests at around 15%, with the probability of taking a pause in January rising to around 63%.

Besides Fed, China and geopolitics are also eyed

Before the US election even started being a theme for financial markets, gold’s main drivers were elevated purchases by major central banks, especially the People’s Bank of China, safe-haven inflows due to geopolitical tensions in the Middle East, as well as speculation of aggressive rate cuts by the Fed.

It is worth mentioning that just after September’s 50bps reduction, investors were assigning a strong chance for a back-to-back double cut in November, although this changed later due to the better-than-expected US data and the increasing chances of Trump winning the election.

China refrains from buying for the sixth straight month

According to the World Gold Council, central bank purchases of the precious metal may be set to slow further due to a six-month abstain by the Chinese central bank. Its holdings held steady at 72.8mn troy ounces, although the Bank’s value of gold reserves rose to $199bn from $191bn.

But Trump’s return to the White House is likely adding to the chances of China resuming its purchases. After all, the central bank of the world’s second-largest economy has been piling up gold so that it loosens its dependence on the US dollar in case tensions between the US and China escalate. And with Trump pledging to impose massive tariffs on Chinese goods, a Trade War 2.0 seems increasingly likely.

So, China is unlikely to have changed its strategy. They may prefer to wait and buy more gold at more favorable prices.

Can Trump restore peace in Europe and the Middle East?

In terms of geopolitics, some investors may have started unwinding their safe-haven holdings in hopes that as the new US president, Donald Trump will try to resolve the conflicts in the Middle East and Ukraine. However, anything suggesting that a truce may not be so easily achievable, could very well refuel the yellow metal’s prevailing uptrend.

Broader uptrend remains intact

From a technical standpoint, gold corrected sharply lower this month, but it is still holding above the uptrend line drawn from the low of October 6, 2023. This corroborates the view that the current retreat may be destined to stay limited and short lived.

The bulls may decide to jump back into the action from near the crossroads of the uptrend line and the $2,545 zone and perhaps aim for the high of September 26 at $2,685. Should they not stop there, they could aim once again, and even exceed, the record high of $2,790.

For the outlook to shift to bearish, the metal may need to slide below the crossroads of the $2,545 barrier and the aforementioned uptrend line. Such a technical dip may pave the way for the key pivot zone of $2,390, the break of which could carry extensions towards the $2,285 territory, which acted as a floor between April and June.