5-Min Monday Macro & Crypto: 15th July 2024
Trump positive for markets, Sept rate cuts even more positive, small caps take th lead, crypto rising back from the ashes
Hello. Thanks for reading. I’m Sankalp. You can join our telegram channel here for more macro & crypto live updates
I spend hours reading, researching and talking to the smartest founders and investors every week. This is my attempt to give you a short 5-10 minutes summary on how I am thinking about Macro & Crypto markets and what lies ahead. Hundreds of hours summarised, so you don't have to.
You can also hear more detailed thoughts on our podcast “Greed is Good” - with myself Sankalp Shangari & my co-host Geoffrey Chen. Make sure you tune in.
"The first minute of action is worth more than a year of perfect planning."
TLDR;
Macro: Sept rate cuts, Trump wins = 95%
Stocks & Bonds: Small cap noise or trend?
Crypto Majors: Rising back nicely
Altcoins: Old L2s shine
Crypto Narratives: Exhausted for now, back to memecoins
1️⃣ The Big Macro Picture
Sept. FED rate cuts & Trump win are almost a given
The political situation in the United States bears an unsettling resemblance to the tumultuous events often associated with developing nations. India just had elections running over 3 months and not even one single slap was reported (OK OK they had one slap!!!). It's absolutely bewildering that someone would make an attempt for life of a former president in broad daylight. There are numerous unanswered questions and glaring security lapses that we won't delve into here, but suffice it to say, the entire scenario is nothing short of chaotic.
However said this is, this incident has improved, and possibly sealed Trump’s victory. Crypto markets are a bid since the news.
Meanwhile, clear signs of labor market weakness, combined with a lower CPI print, have raised the odds of a September rate cut to about 95%, according to the CME FedWatch tool - Slowing but growing. Well done Federal Reserve - soft landing achieved. We've been predicting the same - September rate cut in our previous newsletters, and now it seems inevitable. Why? Simply put, inflation is nearly back to target levels and the job market is weakening.
The CPI came in at +3% year-over-year, the lowest reading in a year. Meanwhile, the Core CPI print at 0.1% month-over-month is the lowest since January 2021.
The bigger picture here is that the economy is on a steady, albeit slower, trajectory. Inflation is now under control, and the Federal Reserve can afford to be less hawkish than before. We are not on the brink of a recession. Additionally, we have the prospect of a pro-risk president taking office, which could further stabilise and invigorate risky assets.
2️⃣ Stocks, Bonds & FX
Rotation into Small Caps or just Noise?
STOCKS
Small caps rallied last week vs its large cap peers, with the FED rate cut excitement. I believe this trend is going to continue further as we draw closer to Sept and beyond.
Thursday was the beginning of that trend with NASDAQ down and small caps up. But is that a trend or one off divergence based on CPI enthusiasm? My common sense brain says that if you rode the mega tech trend nicely this year, then time to book some profits and look the other way into small caps, especially If you are of the same camp as me - that is Sept rate cuts.
Bonds have been range bound and boring and keeping the USD range bound as well. What effect will Trump have on the dollar, no one knows
3️⃣ The Big Crypto Picture
Good Times for Crypto Ahead
Last week we said it’s time to continue to DCA at those levels. Since then, one of the sellers, the German govt selling pressure is over. And BTC is above $62k levels as I type this. That is extraordinary. The market absorbed over 40K BTC and is now in hand of stronger players hopefully.
This week we would say that its time to grab more exposure to crypto (read macro above) and if there is a further Mt.Gox sell-off in July & August, add more. There is not much bearish news after that.
However, we are not completely out of the woods yet. $64K is the next resistance and a major one.
There is the shining light - uptick in ETF flows this week. After seeing a barrage of outflows in June, we seem to have “bottomed”
Spot Ethereum ETFs Near Finish Line: The past few days we’ve seen Grayscale, Blackrock, Fidelity, 21Shares and Vaneck update their S-1 files for spot Ethereum ETF.
Altcoins - You get down, you get up again, you cannot keep me down
Major L2 alts bounced this week with BTC - OP, SUI, NEAR etc. A lot of people are getting bullish on $MKR since yesterday's Blackrock announcement.
Crypto Narratives
Memecoins - $MOG and $POPCAT are the hottest ones. I am also watching $MICHI, $WIF, $PEPE, $BONK
No new narratives yet, but a nice crypto X AI report below.
