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Bitcoin enthusiasts get a stamp of approval

A huge day for Asia-Pacific data, bitcoin futures on the way, and U.S. stocks rise with tax bill due out. Here are some of the things people in markets are talking about.

Coming Up…

It’s a huge day for data in the Asia-Pacific region. The October edition of the Caixin China purchasing managers’ index, forecast to hold steady at 51 after the official figure reported on Tuesday dipped by more than anticipated, headlines the economic events. We’ll also get updates on the state of the manufacturing sector across the region, with releases from Japan, South Korea, Australia, India, Indonesia, Thailand, Vietnam, and Malaysia due out. South Korean headline and core inflation is also on deck, with each expected to moderate by two tenths of a percentage point to annual rates of 1.9 and 1.4 percent in October, respectively. Trade data is anticipated to show the nation’s trade surplus moderated in October.

CME Goes Full Crypto

Crypto-enthusiasts received a massive stamp of approval on Tuesday, with CME Group Inc. announcing plans to introduce bitcoin futures by the end of the year. It’s an about-face for the world’s largest exchange owner, which said the move was in response to investor demand just one month after it had ruled out such a plan. Bitcoin rose as much as 5 percent to a fresh record on the decision. The creation of futures could spur a wave of institutional entrants to the asset classBitcoin ETFs are probably coming next.

Small Caps Jump

House tax writers are nearly done with the tax overhaul bill they’re scheduled to release on Wednesday, a sign of concrete progress towards one of U.S. President Donald Trump’s campaign pledges. House Ways and Means Chairman Kevin Brady said that the pretax contributions that American workers are eligible to make towards their retirement plans “will either be strengthened or enlarged or left pretty much as is” – words that were met with a sigh of relief on  Wall Street. The top individual tax rate will reportedly remain unchanged at just shy of 40 percent. Other details on how the tax plan will raise a sufficient amount of revenue to garner the support of deficit hawks within the Republican caucus and adhere to the 2018 budget adopted by Congress remain murky. U.S. indexes moved higher on Tuesday, with small caps leading the way.

Fed Decision

Traders in Asia will be at their desks late as the Federal Reserve delivers its interest rate decision after the close of regular trading hours. Policy makers are universally expected to keep rates unchanged at a range of 1 to 1.25 percent. As the central bank begins to pare its balance sheet, passive funds like Vanguard and BlackRock are seen as forced buyers of U.S. Treasuries. Heading into the meeting, the Bloomberg Dollar Spot Index has booked back-to-back monthly gains for the first time this year. Speculation over Trump’s announcement of who will succeed Janet Yellen as Fed chair – with current Governor Jerome Powell seen as the pick – has largely overshadowed this meeting.

Futures Up

Japanese and Australian equities are poised to bounce back from a down day on Tuesday, with Nikkei 225 and S&P/ASX 200 futures trading to the upside ahead of the open. Technology stocks spared Asian bourses from a worse fate, with Samsung Electronics Co. gaining almost 2 percent as it nominated CFO Lee Sang-hoon to become chairman of the firm and outlined plans to increase its dividend.

And finally, here’s what David’s interested in this morning

Following Samsung’s constantly-changing business is almost like following men’s haircuts. The creature evolves too slowly but a quick glance over time shows that changes are all but comprehensive. A nice, crisp old-school mullet looks almost nothing like today’s fade and taper. And Samsung’s earnings release Tuesday had markets fixated on all the usual things: top-line results, the stellar performance for the chip unit, leadership changes, doubling the dividend, a surge in capex etc. While obviously all those things are important, one part of the Samsung’s future story is whizzing by relatively unnoticed – its growing clout in the next generation of smartphones. Fittingly, the best example of this is with Apple.

The iPhone X uses Samsung’s OLED displays. Mark Newman of Sanford C. Bernstein was with us on the show when the preliminary results first came out. He notes (pun intended) the company controls virtually the entirety of the OLED segment. Short-term, it’s almost a perfect hedge. If consumers pick the new iPhone, Samsung wins. If they don’t, there’s a decent chance they pick the Note 8. Further down the road, he says the majority of smartphones might just migrate to OLED since the technology provides so much upside to manufacturers. And the full extent of this has perhaps yet to be priced in. Anyway, for a deeper dive into all these complex supply chain relationships, our clients can run SPLC on the Bloomberg. That’s the screen shot above.

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