Bitcoin and Gold Enjoy Twin Rallies. Why That’s Unlikely to Last.

Rate-cut expectations may be the common denominator for Bitcoin and gold, but that’s pretty much where the comparison ends.

Gold’s fresh record levels reflect the role of rate cuts in weakening the U.S. dollar, while rising geopolitical uncertainty is another factor helping the traditional safe haven asset. For Bitcoin, occasionally dubbed digital gold, the reasons differ.

The largest crypto asset has been gaining momentum since mid-October amid hopes that the first spot Bitcoin exchange-traded fund will soon be approved. Rate-cut hopes are adding to that momentum because of Bitcoin’s status as a risky asset, as opposed to a haven. Lower interest rates typically increase investors’ appetite for risky assets.

Investors are currently holding record levels of cash–with $5.7 trillion in money-market funds, according to the Investment Company Institute. They are eager to find places to put it, which helps assets like Bitcoin.

Of the two, it’s easier to make the case for Bitcoin to keep going from here as the precious metal will likely eventually stabilize around its new highs.

For now, both are likely to be supported as investors see a 59% chance of a rate cut by March, according to the CME’s FedWatch tool.

Keep an eye on those odds, though. Friday’s November jobs report, and the Fed’s decision next week could move the dial again.

—Callum Keown

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Spotify Lays Off 17% of Staff After Rapid Growth

Spotify,
the Swedish music streaming service, is laying off 17% of its workforce as it tries to rein in costs. The cuts are equivalent to about 1,500 jobs and are the third round of layoffs this year.

• “A reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” Chief Executive Daniel Ek wrote. “Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option.”

• He announced the measures to staff in a memo Monday, according to the company’s website. Spotify declined to make any additional comment when contacted by Barron’s. Spotify stock has more than doubled this year as it added subscribers and raised prices.

• The job cuts are “about preparing for our next phase, where being lean is not just an option but a necessity,” Ek said.

What’s Next: The measures show how worried management is about future profits after a period of rapid expansion. Analysts at Citi wrote just last week it’s time to be more cautious. It will probably be hard for the company to keep adding subscribers at the same pace, and income per subscriber is likely to slip.

—Brian Swint

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Alaska Air Unveils $1.9 Billion Deal for Rival Hawaiian Airlines

Alaska Air Group
has made the latest consolidation move in the airline industry, a $1.9 billion deal for rival
Hawaiian Airlines.
The two said Sunday the combination would allow them to offer more destinations and expand coverage in the Pacific region, even as antitrust regulators scrutinize other transactions.

• Alaska offered $18 a share in cash and would take on $900 million of debt from Hawaiian. The deal’s premium is significant considering Hawaiian’s $4.86 closing price on Friday. Both brands would be preserved. The headquarters would be in Seattle and it would be led by Alaska CEO Ben Minicucci.

• Honolulu would become an Alaska Airlines hub. Together the carriers offer service to 138 destinations, including nonstop service to 29 destinations in the Americas, Asia, Australia, and the South Pacific.

• The move comes as
  JetBlue Airways
  and
  Spirit Airlines
  face antitrust concerns over their $3.8 billion merger from the Justice Department, which has taken the case to a Boston federal court. Spirit CEO Ted Christie, defended the deal as a way to create a stronger alternative to the big four airlines.

• Alaska Airlines estimated $235 million of increased value in the combination, and said the merger could generate additional earnings in the high single digits in the first two years after it closes, and high-teens after three years, not counting integration costs.

What’s Next: Both company boards have already approved the agreement. Hawaiian Airlines shareholders are expected to vote on it sometime in the first quarter, the companies said, with closing coming in 12 to 18 months.

—Liz Moyer

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Health of Labor Market in Focus Ahead of Fed Meeting

Economists will get fresh data on the health of the U.S. labor market this week, including November payrolls data and the Bureau of Labor Statistics’ latest Job Openings and Labor Turnover Survey, as investors await the Federal Reserve’s December policy meeting.

• Economists expect 9.35 million unfilled job positions as of the last day of October, down from September’s higher-than-expected 9.55 million. There are currently 1.5 open positions for every unemployed worker, down from a peak of two in March of 2022.

• ADP will release its private payrolls report for November on Wednesday. Analysts anticipate a gain of 125,000 private-sector jobs, up from 113,000 in October. Workers who changed jobs received annual pay raises of 8.4% in October, while those who kept their jobs received a 5.7% increase.

• On Friday, economists expect the Bureau of Labor Statistics to report 175,000 new nonfarm payrolls were added in November, up 17% from the 150,000 in October. They see the unemployment rate staying at 3.9%.

• Jobs growth has slowed to an average of 238,800 a month this year, after two years of average gains of above 500,000 a month. On Thursday, the Labor Department will release initial unemployment benefits claims for the week ended Dec. 2.

What’s Next: The jobs data come a week before the Fed’s last policy meeting of the year, with a decision on interest rates expected Dec. 13 followed by remarks by Chair Jerome Powell. Futures markets put a nearly 99% probability on rates holding steady, according to the CME’s FedWatch tool.

—Nicholas Jasinski and Janet H. Cho

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At COP28, Pledges to Cut Gas, Coal Plant Operations

While President Joe Biden isn’t attending this year’s COP28 climate summit in Dubai, the White House revealed new rules around methane emissions, including a $3 billion pledge to the Green Climate Fund and a plan to achieve 50% to 52% emissions reductions in 2030.

• The new policies by the Environmental Protection Agency ban flaring of natural gas produced by drilled oil wells, force oil producers to watch for leaks around oil well sites, and use remote detection of large methane releases.

• About 50 oil and gas producers, including
  Exxon Mobil
  and Saudi Arabia’s Aramco, pledged to reach near-zero methane emissions by 2030, including ending routine flaring in drilling operations. They aren’t pledging to cut oil and gas production.

• The oil producers making the methane emissions pledge said they have invested $65 billion in low-carbon technologies and have helped companies outside the group also decarbonize. Other participants include
  Shell,

  Occidental Petroleum,
  and Brazil’s state-owned Petrobras.

• U.S. climate envoy John Kerry announced joining the Powering Past Coal Alliance. Along with the U.S., the Czech Republic, Cyprus, Dominican Republic, Iceland, Kosovo, and Norway agreed to not develop new unabated coal power plants and phase out existing ones.

What’s Next: The Paris Agreement’s goal is to prevent global temperatures from rising more than 1.5 degrees Celsius in the next six to seven years. But a report on Sunday said current emissions levels will push temperatures higher than that. It added that current policies could raise temperatures more than 2 degrees Celsius by the end of this decade.

—Liz Moyer

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Beyoncé’s Concert Film Wins Domestic Weekend Box Office

Renaissance: A Film by Beyoncé glittered in theaters this weekend, with an estimated $27.4 million in global ticket sales through Sunday.
Comscore
projected $21 million in North American box office, the highest domestic gross for a post-Thanksgiving holiday weekend in the past 20 years.

• The film, showcasing Beyoncé’s 12-nation, 39-city world tour, was directed, written, and produced by the artist. It was expected to draw 900,000 viewers, at an average ticket price of $23.32 (compared with $20.78 for Taylor Swift’s The Eras Tour), according to EntTelligence data.

• Renaissance is AMC Theatres Distribution second-straight top domestic box office opening after Taylor Swift’s film. Beyoncé’s film also generated $4.6 million of
  IMAX’s
  North American box office and was the second biggest IMAX global opening weekend for a musical concert or documentary, after Swift’s movie.

• The fact that both concert movies opened at number one for
  AMC
  is a testament to the drawing power of popular musical acts, which is great not only for theaters but for artists’ record labels, Comscore’s senior media analyst Paul Dergarabedian told Barron’s.

• Second place domestically this weekend was
  Lions Gate’s
  The Hunger Games: The Ballad of Songbirds & Snakes, with $14.5 million in sales. Toho International’s Godzilla Minus One was third with $11 million. So far this year, domestic box office sales are 23% higher than last year, Comscore said.

What’s Next: Movies are boosting sales for
Mattel,
too, after this summer’s blockbuster Barbie film. Mattel estimates the movie will add at least $125 million of gross billings in 2023 alone, and $75 million in profit, with momentum carrying throughout the holiday season.

—Janet H. Cho

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MarketWatch Wants to Hear From you.

On Tuesday, the Supreme Court will hear arguments about one part of the 2017 Trump tax cuts, which levied a tax on foreign subsidiary earnings of U.S. parent companies. But a decision in the case could have strong implications for wealthy Americans. What are the main points of the case?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to [email protected].

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—Newsletter edited by Liz Moyer, Brian Swint, Rupert Steiner and Steve Goldstein