Hello Folks,

Today, we take a look at the stellar earnings of McDonald’s, the optimism surrounding Bitcoin, and the significance of the proxy fund rate.

So, let’s get into it.

McDonald’s Thrives In Q3

McDonald’s just announced better-than-expected earnings for Q3. It reported:

• Adjusted EPS of $2.32 billion or $3.19 per share vs. estimates of $3 per share

• Revenue of $6.69 billion vs. estimates of $6.58 billion

The fast-food giant increased revenue by 14% while earnings surged over 19% year over year, showcasing the resilient nature of its business. Sales in the U.S. rose 8.1% due to strategic pricing strategies.

McDonald’s attributed top-line growth to its promotional efforts and a rising online presence. Its international same-store sales growth was also enviable at 8.3%.

The key takeaway

Instead of swallowing rising costs itself, McDonald’s has been serving them up to its money-conscious customers. And it’s not alone: just about every business that can get away with it is doing the same.

The thing is, inflation – and its impact on costs – will come down at some point. When that happens, some firms will need to lower prices again to keep customers coming back, while others will be able to get away with keeping prices where they are and pocketing the difference.

You Think Rate Hikes Are Scary?

The Federal Reserve has three gizmos in its toolbox that it can use to heat things up or cool things down, as needed. Its most important gadget is the fed funds rate – that’s the interest rate banks charge each other for quick loans.

But it’s also got a tool that allows it to pump more money into the banking system by buying securities like bonds (think: quantitative easing), and it’s got its own special loudspeaker, which allows it to influence lending, borrowing and market activity by dropping hints about its next play (that’s "forward guidance").

To provide a better estimate of what the Fed’s been up to, researchers crafted a model that eyes 12 financial markers, from Treasury rates to mortgage rates to added borrowing fees. This “proxy rate” doesn’t track the fed funds rate alone – it also keeps tabs on the Fed’s other devices.

The difference between the two is interesting: from 2010 to 2016, while the Fed funds rate was a flat zero, the proxy rate was even lower because the Fed was juicing the economy with other tricks.

Lately, though, it’s flipped. And with the proxy rate at a lofty 7% versus the fed funds rate’s 5.3%, it’s clear that monetary policy’s been pulling the system’s reins tighter and faster than it otherwise might seem.

That means borrowing money might be even harder for people and companies than what the already sky-high fed funds rate would suggest. We know that economies tend to react to changes in monetary conditions with a delay, so we might soon be surprised by a jolt from these sharply higher rates.

The Bitcoin Bear Market is Over (Hopefully!)

The Bitcoin bull market has officially started 🚀

In the next crypto bull market, Bitcoin's soaring value should captivate investors, reshaping the financial landscape and driving widespread adoption.

BTC prices have more than doubled in 2023, and its resilience shines amidst a sluggish macro economy.

The first Bitcoin ETF in the U.S. should launch in the next six months, driving BTC prices toward all-time highs.

Headlines You Can’t Miss!

U.S. Treasury yields fall ahead of Fed meeting

Oil major BP falls on earnings miss

Apple announces new M3 chips

Oil prices could touch record highs of $157, says World Bank

VanEck amends application for spot Bitcoin ETF

Chart of the Day

Over modern history, a key investment theme has broadly characterized each decade.

In each case, a particular asset class, sector, or region captivated investors for an extended period, driving returns and outperforming the rest of the market.

These decade-defining themes are often the product of a confluence of factors, including the macroeconomic environment, geopolitics, monetary policy, or other structural shifts like technological disruption.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.