Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner and Ben Strack. Here’s what you’ll find in today’s edition:

• Casey has an inflation week preview on this calm trading day. 

• A shareholder proposal called on Microsoft’s board to consider holding BTC. The vote is in.

• What crypto industry players are saying about whether the SEC’s Caroline Crenshaw should get another term.

Traders brace for key inflation data this week 

US equity markets were muted Tuesday as traders await key inflation data. November’s consumer price index (CPI) report will drop tomorrow before the open, followed by the producer price index (PPI) report on Thursday morning. 

A quick recap of expectations for tomorrow: 

Analysts are anticipating November’s annual CPI figure to come in at 2.7%, a moderate uptick from October. Core CPI, which excludes volatile food and energy prices, is projected to show a 3.3% annual increase and a 0.3% month-over-month increase in November. 

Housing costs will be in focus tomorrow after the shelter index in October increased by 0.4% from the prior month. Other indexes that saw monthly increases in October were used cars and trucks (+0.3%), medical care (+0.3%) and airline fares (+3.2%). The significant rise in airline fares specifically can be attributed to higher fuel prices and increased demand in the weeks leading up to holiday travel. 

As we wrote about yesterday, the background for this week’s inflationary numbers is a (generally speaking) Goldilocks jobs report from last week. Goldilocks jobs report + as-expected CPI and PPI reports = rate cut. Right? Well, probably. 

Let’s rewind to that “Goldilocks” jobs report from last week. 

The economy added 227,000 jobs in November. That was more than the expected 202,000 and a big increase from the 36,000 positions added in October (upwardly revised from a previously reported 12,000). All in all good, right? Ah, but there were some pesky figures included in last week’s report, too. 

Hourly wages are still on the rise. They were 4% higher annually in November, coming in just above expectations of 3.9%. Unemployment also increased, hitting 4.2% in November, up from 4.1% in October. 

Plus, even as positions appear to be increasing, it’s getting harder to find a job. Latest initial jobless claims figures showed that continuing claims increased by 9,000 to 1.91 million for the week ended Nov. 16 — hitting the highest level since November 2021. 

So, not the prettiest picture for the labor market. 

Still, Fed funds futures markets appear pretty certain (86% sure, to be exact) that FOMC members will opt to cut interest rates by 25 basis points next week. This would be in line with what Fed officials told us earlier this year, and we know Chair Jerome Powell doesn’t like to surprise the market. 

What’s going to be more of a wild card is what we see from the Fed in 2025. We’ve already seen officials start to prime markets for a slower-paced cutting cycle. Governor Michelle Bowman — who, you might remember, dissented on the FOMC’s decision to cut by 50bps in September — mirrored Powell’s language last week, saying the central bank needs to move “cautiously” going forward. 

Plus, 2025 will bring a new (old) president with some familiar and some not-so-familiar economic policies. Buckle up.

— Casey Wagner

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The performance of Oracle shares on Tuesday, as of 2 pm ET. The stock price dip comes after the tech giant reported earnings on Monday evening that showed growth, but still missed expectations. 

Oracle reported earnings per share for the fiscal second quarter of $1.47, just shy of the anticipated $1.48 figure. Revenue is up 9% year over year at $14.06 billion, but still below the expected figure of $14.1 billion.

There was a proposal asking Microsoft’s board of directors to assess whether holding bitcoin on the company’s balance sheet would benefit shareholders long-term. 

Shareholders voted against it, the company revealed Wednesday. This wasn’t really a surprise, as the board had pushed for that result, giving the following rationale:

Still, bitcoin bull Michael Saylor got some face time (sort of) with company directors and shareholders via a pre-recorded presentation played at today’s meeting.

Saylor has creatively described bitcoin in many ways over the years — from an “apex property of the human race” to “a city in cyberspace that is 276 blocks wide, 276 blocks high [and] 276 blocks deep” (referencing its supply cap of 21 million).

During the Microsoft presentation, the MicroStrategy founder referred to bitcoin as:

• “The greatest digital transformation of the 21st century”

• “A revolutionary advance in capital preservation”

• “Highest performing uncorrelated asset”

• “Outperforming Microsoft by 10x annually”

• “An asset without counterparty risk”  

“It makes a lot more sense to buy bitcoin than to buy your own stock back, or to hold bitcoin rather than holding bonds,” Saylor argued. 

The proposal rejection was not the result many in the crypto industry wanted. But Microsoft claims its management already carefully considers investing in bitcoin. And with more companies adopting BTC as a reserve asset, maybe the tech giant will follow suit another time. 

If nothing else, Saylor got to say his piece to a different audience. 

— Ben Strack

The Senate Banking, Housing and Urban Affairs Committee on Wednesday is set to vote on whether Caroline Crenshaw will remain an SEC commissioner.  

While the crypto industry has criticized SEC Chair Gary Gensler, crypto lobbyist group Cedar Innovation Foundation (and others) have called Crenshaw even more anti-crypto than him.

Coinbase’s Emilie Choi last week pointed out that Crenshaw "embarrassingly" opposed spot bitcoin ETFs. Those have amassed combined net inflows of $33.9 billion and counting.

Indeed, Crenshaw called the SEC’s approval of the products in January “unsound and ahistorical” — adding “they put us on a wayward path that could further sacrifice investor protection.”

Cody Carbone, president of The Digital Chamber, argued in a letter to committee members that Crenshaw — in her dissent on spot bitcoin ETFs — cited outdated studies and ignored the industry’s maturity. 

Judges ruled in August 2023 that the SEC had arbitrarily and capriciously denied such products after greenlighting bitcoin futures funds.

Crenshaw was sworn in as an SEC commissioner in Aug. 2020. Carbone pointed out what many have before: During her tenure, “the agency leaned heavily on a regulation-by-enforcement approach, creating an unpredictable environment that has stifled innovation and undermined investor confidence.”

I asked a representative for Crenshaw whether the commissioner has had any change of heart on bitcoin ETFs or the crypto space more broadly. I did not get an immediate response. 

Gensler said last month he would depart the SEC on Jan. 20 (Inauguration Day). Fellow Democrat Commissioner Jaime Lizárraga is also set to leave the agency that day.  

That leaves crypto-friendly Hester Peirce and Mark Uyeda as commissioners — with terms ending in 2025 and 2028, respectively. 

— Ben Strack

• Bitcoin faltered a bit Tuesday after hitting a new record high last week. The largest crypto asset was hovering around $95,480 at 2 pm ET.

• Check out the latest episode of the Forward Guidance podcast featuring Richard Byworth to learn more about MicroStrategy’s convertible bond strategy.