U.S. Indices have continued their move higher as the leaders of the pack. Whilst the S&P500 might’ve technically closed the day in red at 6,584; the way in which price is moving makes clear that it only went sideways for the day because of the previous day’s breakout pump. This is healthy and means on smaller timeframes whilst short-term profit taking is happening, buyers keep coming in to ensure another sustained pullback here doesn’t take place. We expect it to keep moving higher, and with a stronger focus now on Risk-on assets, the Tech stocks that comprise the NASDAQ solidified this rotation - closing the day in the green at 24,096, yet another All Time High price.

The FED’s Meeting is less than 5 days away now, and markets continue to keep pricing in the high likely-hood of a rate cut, giving relief to the markets and a strong narrative that despite a weakening labor market, the FED are willing to commit to a pivot on their multi-year hawkish policy stance and give the people what they want. Odds of a 25 basis-point cut keep rising, today sitting at > 93%.

Bitcoin continues to make local Higher Highs as well, along with the rest of Risk-on assets, demonstrating the expected capital-flow is taking place. Not only is Bitcoin looking strong again, but Alt coins are really soaking up the buying volume over night, with the TOTAL 2 Market cap (All Cryptocurrency, excluding BTC) finally getting a juicy pump and making a technical All Time High. This simply means that all of Crypto that isn’t BTC is seeing significant buying volume come in now. Some of you know this as the enigmatic “Alt Season” and if this is the beginning stages of it - in typical “textbook” fashion, it’s right on time.

Bitcoin is showing it’s strength again in the aftermath of much lower than expected PPI data, reaching a peak last night of $114,300. Gold had a green day given the news, closing at $3,640. Silver also closing in the green at $41.16 - again, holding steady and accumulating sideways likely waiting for a FED rate cut next week to solidify a continuation of bullishness.

The Producer Price Index (PPI) data came in for August and rocked the markets; U.S. wholesale inflation cooled far more than analysts expected with the PPI falling -0.1% month-over-month, after a revised +0.7% rise in July. Year-over-year, PPI came in at +2.6%, well below the ~3.3% forecast. The drop in service prices, especially the margins for wholesale and retailers was a major contributor. Energy prices also eased slightly, whilst goods were up a modest amount.

Markets now widely expect the Federal Reserve to deliver a rate cut at its upcoming meeting, with 25 basis points seen as the base case and growing speculation around a potential 50 basis point move as we pointed out to readers in our Morning Note yesterday. While the quarter of a percent cut seems most probable, it’s hard to ignore the increasingly dovish possibility of a larger cut - and what that would deliver to the market in terms of sentiment-shift from the FED and their firm stance on monetary policy. Inflation was their number one concern, and with excellent data coming in thwarting this narrative, it’ll be extremely advantageous for Risk-on markets like Cryptocurrency if we see a larger than expected cut in the short-term.

Bitcoin Bulls held the line yesterday and came in swinging to defend the $110K zone, actually getting us trading above the elusive $112K resistance for the first time in weeks. Clearly the softer-than-expected inflation data helped tremendously with this - and we hope so see the CPI data that comes in tonight sing a similar tune. If so, and we see Bulls keep up the buying strength overnight, we might finally have enough momentum to put the last month of trend chop behind us as we enter clearer skies ahead.