Welcome back to our weekly newsletter! We have things all ready and summarized for you🔥

• Middle East Conflict🔫

• Stars Arena and the $3M Exploit💻

• Where Big Investors Find Shelter🏠

What to know this Week? 📅

📊Market Performance

• S&P 500: 4,308.50 (+0.61%)

• DJI: 33,407.58 (+0.006%)

• Nasdaq-100: 14,973.243 (+1.42%)

• Russell 2000: 1,745.56 (-1.54%)

• Bitcoin: 27,874.60 (+0.31%)

• Gold: $1,851.97 (+0.22%)

Inflation in Focus🔍

As the week commences, the investment world will be keenly watching out for the latest Consumer Price Index (CPI) due for release.

This inflation gauge comes as investors dissect the robust September job data, looking to understand whether the economy is on the cusp of a coveted soft landing or a rough turbulence. The forecast indicates a subtle decrease in headline inflation, a strategic element that could dictate investor sentiment and market swings.

Corporate Earnings Expectations📰

A synchronous event to anticipate is the onset of the third quarter earnings season, with corporations including Pepsi (PEP), Delta (DAL), and JPMorgan (JPM) poised to roll out their results in the coming week.

The banking sector's performance, earning a projected growth rate of 8.7%, might reveal intriguing insights into how corporate America is grappling with higher interest rate scenarios.

Middle East Conflict🔫

This week we look closely at the dramatic unfolding events in the Middle East that are sending waves rippling through the global markets.

Oil Prices See a Sharp Incline📈

West Texas Intermediate surged to over $86 a barrel, causing escalating concerns about potential inflationary impacts. With the US confirming their dispatch of warships to the region, oil traders and investors grapple with an atmosphere of uncertainty. This drastic spike in oil prices is potentially triggering inflation worries and further complicating the Federal Reserve's interest rates decision.

Currency Vulnerabilities💵

As these events transpire, we note significant shifts in global currency values. The greenback witnessed gains versus the euro and pound, while riskier currencies started to falter. The yen, deemed a safe haven by some investors, has fortified amidst the tension.

Not All is Lost: Opportunity in Chaos👀

Despite the surrounding chaos, opportunities for financial growth shouldn't be overlooked. Asian markets, for example, saw energy shares rise in direct response to the elevated oil prices.

Meanwhile, offshore yuan edged higher after the People's Bank of China set the daily fixing at a stronger level than anticipated by traders.

Crypto Market Steady🤑

Bitcoin maintains a steady stride, whilst the Ether experienced a 0.1% dip to $1,634.8. The digital currency market still holds a beacon of hope as investors continue to navigate these stormy financial waters, seeking alternative strategies to safeguard and enhance their assets.

At this point I am convinced that crypto can be a potential hedge against traditional assets or commodities 🤔

Stars Arena and the $3M Exploit💻

Reach for the Stars? Well, Almost!⭐

If you've been following the digital space lately, you might be well aware of the raging excitement around Avalanche's breakthrough social application, Stars Arena. Launched barely a week ago, this dazzling great ball of fire ricocheted across the Avalanche universe, amassing a formidable cult following in its wake.

An Unexpected Detour

However, not all that glitters is gold, or AVAX tokens in our sphere. A sudden twist in the plot saw this much-celebrated space vessel fall prey to a smart contract exploit, resulting in a drain of nearly $3 million worth of Avalanche’s AVAX tokens.

The open secret? 🔐

The attacker walked away leaving Stars Arena with just under a dollar in funds. Turns out the starship wasn't fully equipped with a force-shield!😂

The Downfall: A Quite Not Starry Affair

Once radiant amongst Avalanche community members, Stars Arena allowed users to purchase “keys” or “shares” of popular X users for exclusive chatroom access.

The unexpected breach saw the platform buckle under the security concern, a catastrophe it still strives to recover from.

Looking Through the Starglass

This unfortunate cosmic adventure serves as a stark reminder that vigilance is necessary. Digital currencies like AVAX hold substantial potential for innovation, convenience, and yes, financial autonomy.

Where Big Investors Find Shelter🏠

Investing in tumultuous times can be a tricky business. With long-term interest rates soaring and unsettling the markets, everyone is searching for a safe harbor, including massive institutions and wealthy investors.

According to Goldman Sachs, their shelter during the storm appears to be in an unexpected place -- short-term U.S. government bonds.

Why Short-term U.S. Government Bonds?🤔

There has been a notable surge of investors piling into short-term U.S. government bonds in an attempt to weather out the chaos initiated by an explosion in longer-term yields.

Lindsay Rosner, the figurehead of multi-sector investing at Goldman Sachs asset and wealth management, affirmed this trend in a recent CNBC interview.

During the last week, the auction for 52-week Treasury bills underscoring a 5.19% rate experienced an unprecedented volume—it was oversubscribed 3.2 times, marking the highest demand this year. "They're saying, 'I'm now being afforded a lot more yield in the very front end of the curve in government paper’,", elucidated Rosner, referring to 1-year T-bills.

So, why is this happening?

The surge in the 10-year Treasury yield has been a source of market unease for weeks, hitting a 16-year high of 4.89% last Friday. Despite this, employers have continued to hire aggressively—prompting investors to inject more than $1 trillion into new T-bills just last quarter.

Rosner explains this investment strategy leverages the assumption that interest rates will continue on the high tide for longer than markets had hypothesized earlier this year.

If this outlook holds water, longer-duration Treasuries such as the 10-year ones should yield more attractive returns next year as the yield curve steepens.

Is the Tactic Paying Off?

Indeed. "You get to collect a 5% coupon for the next year. Then, in a year, you may have opportunities [in longer-duration Treasuries] at greater than 5% in government securities or potentially in corporate bonds that are now correctly valued. You could then secure a double-digit yield, but be confident about valuation, unlike now," Rosner revealed.

Amid this wave of uncertainty, professional managers have been trimming the average duration of their portfolios. Ben Emons, the head of fixed income at NewEdge Wealth, affirmed the high demand for Treasury bills.

He stated, "Anyone out there who needs to manage duration in their portfolio, you do that with the 1-year T bill."

Weekly Forecasts

Gold (XAU)

This week, the price started at the same level it ended at last week, which was at 1832. This level could be seen as our first support level. Today, the price went past the weekly resistance around 1846 - 1849, but it was turned back. So, we need to keep an eye on the price this week to see what it does.

Looking at the daily chart, the price started above yesterday's close and last week's support level of 1832.

This suggests gold may increase in price.

But for that to continue this week, the price needs to exceed our first weekly resistance and the support level from the previous month, both at 1849.

If the price surpasses the resistance level, we can forecast the price continuing to rise until it hits our second weekly resistance level at 1925. There, it might start to put a foot on the brake and start falling again, as the overall trend for gold is bearish.

Remember that last week's gold price respected an important spot we identified: 1810.

This happened because when NFP (Non-Farm Employment) data was released, it caused gold to reverse its downward trend and begin to climb.

After hanging around this key level for a few days, the price finally recognized this support level and increased. So, we can still see this level as our second support for this week.

But if the gold price can't breakthrough the weekly resistance and support from last month at 1847, it will need to retest our significant 1810 level. This time, there might be a chance for a change and to keep falling instead.

We'll have to check in the next few days, because, remember, today is a U.S. bank holiday.

Bitcoin (BTC)

Transitioning to Bitcoin, this week the price started lower than where it ended last week. It tried but failed to get past the resistance area between 28k-29k and was heavily pushed back. This suggests that this week, the Bitcoin price is likely to fall again and maybe head towards a critical support level at 25k in the upcoming weeks.

When we examine Bitcoin's daily chart, we can see that it has attempted to burst through a specific resistance level three times, including two attempts last week, all of which were unsuccessful. As a result, we expect the price to keep dropping for now, aiming for the 25k mark, which is a key level for Bitcoin.

When we take a broader view of Bitcoin's daily chart, we can observe that anytime the price hits the 25k mark—which we've identified as a crucial level— it either rebounds upward (acting as a support) or breaks through and starts declining (acting as a resistance). So, while we expect the price to keep going down for now, we need to keep a close watch on this particular key level.

✨Bonus News✨

Disclaimer: This is not any kind of financial advise. This newsletter is solely informational; it does not constitute investment advice, a solicitation to buy or sell any securities, or a recommendation regarding how to manage your money. Be cautious and conduct your own study, please.