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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:

• US equities may have an abbreviated trading week, but if history repeats, it could be a lucrative few days for investors. 

• An update on the crypto regulatory regime the UK FCA is drawing up.

• Are Charles Schwab-issued spot crypto ETFs just a matter of time?

US stocks head into holiday week with history on their side 

It’s a short week for our US readers with markets closed on Thursday followed by a half day of trading on Friday. Crypto markets, of course, will trade through the holiday. But let’s take a look at how US equities typically perform this time of year and what we might see in the coming days. 

Historically, stocks do pretty well during Thanksgiving week. Since 1928, the S&P 500 has finished higher 60% of the time following the holiday. During presidential election years, returns are even more common; the index closes higher 75% of the time, with an average return of 0.88%, according to Bank of America Global Research. 

The Nasdaq Composite, which debuted in 1971, has generally followed suit. Last year, the Nasdaq Composite ended Thanksgiving week 2.4% higher, building off of an already strong month. The Dow Jones Industrial Average and S&P 500 also closed the week ended Black Friday 2023 higher, posting gains of 1.9% and 2.2%, respectively.

Equities were trending higher Tuesday while President-elect Donald Trump’s latest comments on his tariff plans rocked global currency markets. Trump plans to implement 25% tariffs on all imports from Mexico and Canada, plus an additional 10% fee on goods coming from China, he said in a Tuesday Truth Social post. The Canadian dollar and Mexican peso both fell sharply against the dollar. 

Midway through Tuesday’s session, the S&P 500 was up 0.3% since the start of the week while the Nasdaq Composite was virtually flat. 

Stocks were largely insulated from Trump’s comments — likely an indication that investors are going to hold off on making major trades until they have more information about what the Trump Administration might actually do after Inauguration Day. The S&P 500 and Nasdaq Composite indexes were trending 0.4% and 0.5% higher, respectively, over the day at 2 pm ET. 

If the upward trend continues, stocks should end November well into the green. The S&P 500 and Nasdaq Composite indexes are both up close to 5% since the first of the month. 

Tomorrow’s economic reports should move markets, or at least expectations of an interest rate cut from the Fed come December. Initial jobless claims for the week ended Nov. 23 will drop at 8:30 am ET, followed by October’s PCE index at 10 am. Odds of a 25-basis point interest rate cut next month inched higher Tuesday, hitting 59% (compared with 52% a day ago), according to data from CME Group. 

There’s one and a half trading days (plus another hour in today’s session) left in the week. Here’s hoping the rally lasts.

— Casey Wagner

The volume of onchain bitcoin transactions under $10,000 is up 13% over the past month, according to data from CryptoQuant. The trend indicates increased interest from retail investors amid bitcoin’s latest run. 

Should the largest crypto asset hit $100,000, we’d expect significant profit-taking. BTC was trading around $92,400 at 2 pm ET Tuesday.

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The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon, potentially bringing another big fish into the mix in a more substantial way.

The company currently allows investors to trade spot bitcoin and ether ETFs on its platform, as well as crypto futures contracts and options on certain BTC funds. 

“We also would like to directly offer crypto and Schwabize the crypto market, which is to take a lot of the spread and the commissions out of the crypto area to create a better deal for clients,” incoming Schwab CEO Rick Wurster said in a recent interview with Yahoo Finance.

He added: “We’ve been waiting on a change in the regulatory environment in order to do that and we’re confident…that will come in short order.” 

A Schwab spokesperson essentially echoed his sentiment to me in a Tuesday email, noting Schwab “plans to offer spot crypto trading” once the expected regulatory shifts occur.

“We understand many of Schwab’s clients are interested and engaged in cryptocurrencies, particularly with certain segments of the market, and we are monitoring this space and the regulatory environment closely,” the rep explained.

Charles Schwab’s asset management division launched an ETF that holds crypto-related stocks in 2022. But they were notably absent when a bevy of issuers (including mega competitors like BlackRock, Fidelity and Franklin Templeton) brought to market US spot BTC funds in January.

A Schwab spokesperson told me that month the firm “continues to learn and hear from investors as to their investment needs and considerations for investing in bitcoin ETFs.”

And it seems it has learned something. After all, the US BTC fund category’s net inflows surpassed $30 billion last week (in less than 11 months on the market). 

Neena Mishra, director of ETF research for Zacks Investment Research, said she expects Schwab’s pending deeper dive into the crypto space to be in the form of spot bitcoin and ether ETFs.

“The space is already crowded, and the iShares product has surged ahead,” she told me. “It won’t be easy for a new product, even with a powerful brand name, to compete with the leading products in the market.”

— Ben Strack

New research by the UK’s Financial Conduct Authority (FCA) shows 93% of UK adults have heard of crypto assets. About 12% of those surveyed own them — representing about 7 million people.

These findings point to “the need for clear regulation that supports a safe, competitive and sustainable crypto sector,” said Matthew Long, the FCA’s director of payments and digital assets.

Sounds like a good time for an update on the FCA’s approach. 

We received just that on Tuesday, as Long detailed some of the takeaways from the UK regulator’s chats this year with crypto companies, law firms, government officials and other regulators in the country. Even the US SEC gave its two cents.

A few interesting bits from Long’s report:

• Participants liked the idea of an industry-led disclosures regime proportionate and tailored to different business models (i.e. institutional and retail).

• While some want disclosure rules similar to those in TradFi, others raised concerns about applying this approach to crypto.

• There were discussions around “best execution” criteria for client orders (beyond price, important factors include custody arrangements and asset safety).

• Participants believe exchanges issuing their own tokens or operating brokerage and market-making services pose conflict-of-interest risk.   

An FCA roadmap shows a go-live date for the regime sometime in 2026, with some other steps along the way.

In the meantime, the FCA said it’s working on a market-abuse information sharing platform (to address stated challenges posed by data privacy laws across jurisdictions, for example).

These details came after UK Economic Secretary to the Treasury Tulip Siddiq said last week to expect legislation on stablecoins and staking services soon.   

So there will be plenty more to monitor in the UK as it seeks to catch up to the EU. And the US too is expected to make regulatory moves next year under a more crypto-friendly president and Congress.

Stay tuned.

— Ben Strack

• Tron founder Justin Sun said on X Monday that he invested $30 million in Donald Trump’s cryptocurrency project World Liberty Financial. The controversial entrepreneur is now World Liberty’s largest investor. 

• Certain crypto mining facilities in Texas have until Feb. 1 to register with the state’s grid operator, according to a new rule adopted last week. Mining operations that use more than 75 megawatts of power must inform the Public Utility Commission and the Electric Reliability Council of Texas.