Markets Daily: Bitcoin Below $40K, Geopolitical Risks Loom

Today's Markets Daily podcast begins with a market update, followed by an interview with Ben Emons, senior portfolio strategist at NewEdge Wealth, discussing his outlook for the U.S. economy and markets in this election year.

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Market Overview

Bitcoin: Traded below $40,000 at $39,867, a slight drop.
Ether: Fell over 1%, sitting at $2,210. The CoinDesk Indices Ether trend indicator shifted from uptrend to neutral—its first time since October 24th. Amberdata shows options suggesting price weakness over the next three months.
CoinDesk Market Index Mover: Slacoin (SC) was down 30%.
Traditional Markets: The NASDAQ was up 0.3%, and the S&P 500 rose slightly, reaching a record high for the fourth consecutive day.
Commodities: Brent crude oil rose to $80.65 a barrel due to disruptions in refinery operations. Gold traded at $2,015 an ounce.

Interview with Ben Emons, Senior Portfolio Manager at NewEdge Wealth

Jennifer Sanasie: Ben, given the current market uncertainty, how are you advising on portfolio allocation this January?

Ben Emons: This year looks uncertain. We're seeing both good and bad economic data reflected in the markets. Geopolitical uncertainty in the Middle East and the upcoming US election add to this complexity. I recommend a balanced approach: offense and defense. We favor financials, emerging markets, and technology, but are cautious about small caps due to their sensitivity to interest rates. We believe there won't be a recession, but small caps could be affected by higher interest rates. Therefore, a portfolio should include high-growth companies, even those trading at high multiples, alongside assets like bitcoin and gold to hedge against uncertainty.

Jennifer Sanasie: From a geopolitical perspective, what key factors will most impact markets in Q1?

Ben Emons: The Federal Reserve's decisions, especially regarding interest rate cuts in March, will dominate the narrative. However, we shouldn't overlook events in the Red Sea, escalating tensions in the region, and developments in China which are trying to stabilize its economy without much success. Increased trade tensions are also a concern, particularly if a Trump presidency returns. Finally, the domestic US economy's response to ongoing stimulus and whether inflation bottoms out will be critical.

Jennifer Sanasie: You don't anticipate a US recession this year; why?

Ben Emons: This is due to ongoing fiscal stimulus ($80-$150 million daily) across infrastructure projects. Real-time data shows a productivity effect, and weekly jobless claims remain low, indicating a healthy labor market. A significant change in this fiscal spending pattern, unlikely in this political climate, would be needed to trigger a recession.

Jennifer Sanasie: You mentioned election-year ETF baskets. Can you elaborate?

Ben Emons: In previous elections, investors traded based on anticipated policy changes. This time, it's less clear-cut. While Trump's policies are somewhat predictable, a Biden win likely means a continuation of current spending patterns. I suggest a thematic approach, focusing on sectors such as banks and technology. Banks benefit from stabilized rates, while technology remains a growth driver regardless of election outcomes.

Jennifer Sanasie: What is your bitcoin outlook following potential spot bitcoin ETF approval in the US?

Ben Emons: This should be bullish. Increased ETF products require bitcoin accumulation, which, combined with the scarcity of bitcoin, will likely drive price increases. Institutions will buy ETFs, leading to more bitcoin accumulation. The arrival of other crypto ETFs (e.g., Ether) is also likely.

This episode was hosted by Jennifer Sanasie. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Booking Producer Melissa Montañez. All original music by Doc Blust and Colin Mealey.

Audio Transcript: This transcript has not been edited and may contain errors.

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Markets Daily: Bitcoin Below $40K, Geopolitical Risks Loom