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iTrust Daily Insight

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17th October
iTrust Daily Insight
Edition 10.17.2019

October 17 — Market Commentary for October 16, 2019

Market data as of about 5am PT, 8pm ET, 1am London time

  • Bitcoin:  $8,042 (down about 2% yesterday) (Source: Coinmarketcap.com)
  • Digital currency price movement yesterday: generally down 2-4% (Coinmarketcap.com)
  • Number of digital currencies with market cap over $1 billion: 12 (Coinmarketcap.com)
  • Market Capitalization of Bitcoin: $144.7 billion (Coinmarketcap.com)
  • Gold “F” futures contract: $1494 (source: Yahoo Finance)
  • Silver “F” futures contract: $17.42
  • Copper “F” futures contract: 2.5845 (Yahoo Finance)
  • Oil “F” futures contract: $52.88 (Yahoo Finance) 
  • DJIA: $27,002 (down slightly)  (Yahoo Finance)
  • S&P 500: $2,990 (down 0.2%) (Yahoo Finance)
  • FTSE (main London stock index): 7,168 (down 1/2%) (Yahoo Finance)
  • Shanghai stock index: 2,979 (Yahoo Finance)
  • VIX (volatility implied in near contracts of S&P 500 futures in US): 13.68
  • Probability of 25 bps cut at Oct 30 meeting of US central bank (Fed FOMC): 87% — MUCH HIGHER THAN THE 15th OF OCTOBER (source: CME Group’s “CME Fed Watch Tool”)
  • Probability O/N rates are unchanged from current rates (1.75%-2% target range) after Dec 11 FOMC meeting: 10% — much lower than the 15th of October
  • Probability O/N rates are only 25 bps lower than now after Dec 11 FOMC meeting: 67% (source: CME Group’s “CME Fed Watch Tool”)
  • Probability O/N rates are 50 bps lower than now after Dec 11 FOMC meeting: 23% (halved in two days) (source: CME Group’s “CME Fed Watch Tool”)
  • US 10 year Treasury yield: 1.744% (basically unchanged today) (WSJ.com)
  • US 2-10 yield difference: +0.16% (i.e., positively sloped — normal — yield curve) (WSJ.com)

Yesterday’s big news:

  • 1) as inferred from price action in the Crypto- and Digital- currency space , there was big news regarding Facebook’s struggling attempt to launch a new digital currency: for its “big”, much bally-hoo’d meeting in Geneva on Monday (10/14), none of the world’s major “initial” partners (so not PayPal, not Visa, not Mastercard) attended.  The effort to launch the currency was described in the Wall Street Journal as being on “life support” (ie almost dead).  Please see our afternoon note from yesterday for how we knew to look for this news
  • 2) going forward we will introduce readers to the VIX index — what it is, why it may be important and who trades it
  • 3) now that iTrust Capital has announced it intention to launch in December 2019 a 24 hour-a-day ability to trade physical gold we will add market information from Singapore and London.  In doing so, we will be seeking to educate about the differing parts of the global market for gold

Comment market activity yesterday:

We understand there may be a widespread belief among digital currency traders that Facebook’s launching a new digital currency may create a “bellweather” against other digital currencies would trade in new trading pairs (very similar to how many global fiat currencies are referenced against the US dollar for comparison to each other).

This is reasonable and such a bellweather reference system for price discovery would be helpful.

Eventually, we on the economics team at iTrust Capital believe, such a widely recognized price discovery mechanism will very likely exist.

So, even though such a price discovery system may have been delayed by the trouble Facebook seems to be having gaining legitimacy with potential partners and regulators — and thus the fall in values for crypto- and digital- currencies seems to be rational — we also believe the market may have now fully priced in the delay. 

As always, please contact Blake Skadron with any questions.   In the very unlikely event he can’t answer all your questions, our Economics Team will get back to you with answers as soon as possible.

Tim Shaler is Chief Economist of iTrust Capital.  He is a published Real Estate economist, was a portfolio manager and asset allocation expert at his previous firms and is an adjunct professor at Webster University. His MBA (Finance) and MA in Russian Economic History are both from the University of Chicago.

For all media inquiries, please contact Blake Skadron at b.skadron@itrustcapital.com.

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