Breakfast | Bitcoin re-challenges the 100,000 mark; Morgan Stanley outlook for the US stock market in 2025: Bull market continues!

Market Overview

The Federal Reserve's favorite inflation indicator, the PCE, and other data support a cautious rate cut. U.S. stocks paused their consecutive gains, with the Dow ending a five-day winning streak before Thanksgiving, and the S&P falling from record highs, led by declines in tech stocks, with NVIDIA dropping over 3.6% at one point. Dell, HP, and CrowdStrike saw significant declines the day after their earnings reports. The Nasdaq 100 briefly fell nearly 1.5%.

The yield on the 10-year U.S. Treasury bond fell to its lowest level in over three weeks, rebounding briefly after the PCE data. The dollar index retreated to a two-week low.

The China concept index outperformed the broader market, rising over 2.8%. The offshore yuan briefly rose nearly 280 points to reclaim 7.25. The yen rose 1.7% during the day to a five-week high. Oil showed weak rebounds, roughly flat. Gold moved away from a one-week low, giving back most of its gains after the U.S. PCE data.

Bitcoin rebounds significantly, briefly reclaims $97,000, MSTR surges 10%

Veteran financial regulator and conservative financial figure Atkins has become a popular candidate for SEC chairman, being a staunch supporter of digital assets and fintech companies.

Alex Thorn, head of research at Galaxy Digital, wrote in a note to clients: “Once some leverage is washed out and short-term buyers take profits, we believe Bitcoin may find a strong support base and could attempt to break through the $100,000 level again in the short term.”

Inflation indicator rebounds! U.S. October core PCE price index up 2.8% year-on-year

The Fed's preferred underlying inflation indicator accelerated year-on-year in October, helping to explain policymakers' more cautious stance on rate cuts. Data released on Wednesday showed that the U.S. October core PCE price index, excluding volatile food and energy prices, rose 2.8% year-on-year, the largest increase since April 2024, matching market expectations of 2.8% and up from a previous value of 2.7%; the October core PCE price index rose 0.3% month-on-month, in line with market expectations of 0.3% and unchanged from the previous month.

Additionally, the October PCE price index rose 2.3% year-on-year, matching market expectations of 2.3%, up from a previous value of 2.1% in September; the October PCE price index rose 0.2% month-on-month, in line with market expectations of 0.2% and unchanged from the previous month.

Strong consumer spending drives steady U.S. GDP growth of 2.8% in Q3

The U.S. economy grew by 2.8% in the third quarter, primarily driven by a 3.5% increase in consumer spending. The growth indicators for GDP and Gross Domestic Income (GDI) averaged 2.5%. Trump's economic policies may impact corporate profits and inflation expectations. The Fed's personal consumption expenditure price index grew by 1.5% in the third quarter

Morgan Stanley Outlook for the US Stock Market in 2025: Bull Market Continues, Expected to Reach 6,500 Points by the End of Next Year, Preferred Quality Cyclical Stocks

Morgan Stanley believes that the S&P 500, represented by quality stocks, will benefit from the Federal Reserve's interest rate cut cycle, stabilization of business indicators, policy combinations, and uncertainties in economic data. However, considering that specific policies have yet to be implemented and the US stock market is severely overbought, the market is unlikely to "rise straight up" next year, with key focus on the Trump administration's measures to cut fiscal spending.

What Do Trump's Tariff Threats Mean for the US Economy?

Data from Yale University's Budget Lab shows that Trump's tariff policy and the retaliatory tariffs it triggered will lead to a 0.75 percentage point increase in the US CPI.

On the 25th local time, President-elect Trump stated that he would impose a 25% tariff on all products entering the US from Mexico and Canada.

Import-dependent automakers may be severely impacted, with analysts predicting that General Motors and Stellantis will see a 50% reduction in earnings per share, while Ford will see a 25% reduction.

Is a Black Friday Rally Coming for US Stocks?

On Thursday, November 28, US stocks will be closed for Thanksgiving, and on Friday, they will only open for half a day, with the New York Stock Exchange closing at 1 PM Eastern Time.

Based on the historical performance of the S&P 500 over the past 70 years, investment research firm Bespoke Investment Group analyzed that:

Since 1945, the average increase during Thanksgiving week has been 60 basis points, with the best returns occurring the day before Thanksgiving, and Friday's market performance is also promising.

Elon Musk Targets the CFPB: Suggests Abolishment!

On Wednesday, Musk, who leads the "Government Efficiency Department" aimed at cutting government agencies, called for the abolition of the Consumer Financial Protection Bureau (CFPB). Trump has the authority to fire the bureau's director if they do not resign voluntarily. Under President Biden and CFPB Director Rohit Chopra, the CFPB actively regulates the consumer finance sector and combats abuses, but has faced strong criticism from Republicans and some entrepreneurs, especially those who believe the agency's regulations are too strict and limit business freedom.

OpenAI Secures $1.5 Billion New Investment from SoftBank, Employees Can Liquidate Stock

This investment follows OpenAI's recent $6.6 billion funding round, raising the company's valuation to $157 billion. This funding will allow current and former employees to sell shares in the form of buyout offers. OpenAI expects to allow more such stocks to be sold in the secondary market in the future.

CrowdStrike Falls 4.59%, Earnings Guidance Below Expectations

The company's third-quarter revenue was $1.01 billion, better than analysts' expectations of $983 million; adjusted earnings per share were $0.93, also better than analysts' expectations of $0.81. After a global system outage due to a software update in July, the company recorded an annual recurring revenue (ARR) of $4.02 billion for the last quarter, slightly above the market expectation of $4.01 billion.

Looking ahead, the company expects adjusted earnings per share for the fourth quarter to be between $0.84 and $0.86, below analysts' expectations of $0.87.

Workday shares fell 6.21%, with guidance below expectations

The company's third-quarter revenue grew 15.8% year-over-year to $2.16 billion, exceeding analysts' expectations of $2.13 billion; adjusted earnings per share were $1.89, higher than analysts' expectations of $1.76. Subscription revenue for the period was $1.96 billion, a year-over-year increase of 16%.

Looking ahead, the company expects subscription revenue for the fourth quarter to grow 15% to $2.03 billion, while analysts expect $2.2 billion; it anticipates full-year subscription revenue to grow 17% to $7.7 billion, below analysts' expectations of $8.4 billion