All that glitters is gold — and bitcoin

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Step aside stocks

Bitcoin briefly topped $42,000 Monday, hitting its highest level in more than a year. The world’s largest cryptocurrency was lifted by hopes of approval for a bitcoin exchange-traded fund and growing bets on U.S. interest rate cuts. Spot gold prices touched $2,100 an ounce, hitting a record high as investors rushed into the safe-haven asset.

Wall Street catches a breath

U.S. stocks markets slipped Monday, with investors questioning if markets climbed too fast, too soon following five straight weeks of gains. The Dow Jones Industrial Average inched 0.11% at close. The S&P 500 dropped 0.54% and the Nasdaq Composite slipped 0.84% amid a Big Tech shares selloff. Europe’s Stoxx 600 ended down 0.1%, amid an apparent pause in the recent global rally.

Of Airlines and DoJ

After Alaska Airlines agreed to buy rival Hawaiian Airlines in a $1.9 billion deal Sunday, many argue that the airlines’ executives may now spend many more months trying to convince regulators the acquisition should go ahead. This comes less than a year after the Justice Department sued to block JetBlue Airways’ $3.8 billion cash acquisition of budget carrier Spirit Airlines.

Big costs, bigger layoffs

Spotify announced it was laying off 17% of its workforce, or about 1,500 employees, as it aims to reduce costs and adjust for a slowdown in growth. Shares of the music-streaming service jumped more than 7% Monday. Software provider Twilio also said it would lay off roughly 5% of its workforce, or about 300 jobs, following underperformance of a unit that activist investors have targeted.

[PRO] BlackRock says markets too early to price in rate cuts

BlackRock’s fixed income chief Rick Rieder says markets are pricing in interest rate cuts by the Federal Reserve a little too early and thinks the central bank should start with small rate cuts in the middle of 2024.

There has been much attention given to U.S. equity markets in the last five weeks, which is exactly how long Wall Street’s weekly winning streak has been. 

Wall Street took a breather on Monday after a blowout rally in November, as Big Tech stocks that have done much of the heavy lifting fell.

“Digestion is the word of the day,” said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management, describing the mood during the session.

But that gave way for investors to turn their attention to the new and shiny.

Bitcoin, the world’s biggest and arguably most popular cryptocurrency has staged an incredible rally this year, up more than 150% since the beginning of 2023. The digital coin has also blown past key technical levels which many analysts consider signals the cryptocurrency could rise even further.

Safe-haven asset gold also caught the attention of investors, as its prices hit a new record. There was steady demand for the yellow metal, which investors often buy to during times of geopolitical and economic uncertainty.

The rally in such assets has much to do with how soon the Federal Reserve might start cutting interest rates. Stock markets rallied and Treasury yields fell sharply after Federal Reserve Chairman Jerome Powell’s comments on Friday were perceived to be dovish. Markets are now pricing in about a 60% chance of a rate cut starting March next year, according to the CME FedWatch Tool.

More notably, the fall in Treasury yields is what has driven demand for a riskier play like bitcoin, and rush for a defensive asset like gold.