Invictus Capital: Weekly Wrap 15.01

Despite the drama at the Capitol this week, with Trump being impeached for a second time by the House, the biggest story driving markets was Biden’s $1.9 trillion stimulus proposal, which includes $1,400 stimulus checks for all citizens. In the bill’s current form it’s very unlikely that every Democratic senator would vote to pass the bill, and that is a requirement for it to get through the all-important Senate. But by aiming high, Biden avoids the mistakes made by Obama in 2008 in starting the bidding too low — failing then to even pass a bill anything close to that low-ball opening gambit.

The proposal served to perk up stock markets on Thursday and Friday — helping stem the decline that had begun to set in earlier on the back of continued pandemic worries and disappointing US employment data; with fears of a bubble beginning to grow. Most regional stock indices still ended the week slightly down. Declining inflation expectations meant a stronger dollar, with not even safe-haven gold able to stand up to its strength, despite some safe-haven flows.

The crypto market bounced strongly from its Monday lows as Bitcoin led a rally towards a retest of all-time highs. This has so far proven bearish, while some altcoins have posted stronger performances. IML capitalized on the market volatility returning an annualized rate of 36% this week. In terms of political developments, the ECB’s Christine Lagarde mentioned that Bitcoin may need regulation, although markets showed little reaction for this characteristic stance. More positively, Gary Gensler is expected to be Biden’s appointee for SEC head. Gensler, a former banker and vocal Wall Street critic, currently lectures on Blockchain at MIT Sloan’s school of management.

Indicators (8–15 January)

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