5-Min Monday Macro & Crypto: 26th August 2024
FED pivots, macro stable leading to Risk ON and from Growth to Value, Crypto trying to break range
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“Every battle is won or lost before it’s ever fought”
– Sun Tzu
We are late by a day. Running extremely busy these days. A short one this week.
MACRO
TL:DR: The FED Pivots, RISK ON
THE MARKET ZEITGEIST
Jerome Powell Gets Ready to Cut Interest Rates. At a Jackson Hole summit, Powell assured markets that rate cuts are coming:
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
More importantly, the market is now expecting FED to also cut at the end of December, March, and July.
Powell also said:
The Time Has Come for Policy to Adjust
We Don’t Seek or Welcome Further Labor Market Cooling
The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions
We will do everything we can to support a strong labor market as we make further progress toward price stability
THE BIG MACRO PICTURE
The macro economic data coming says we are doing just fine
Let’s see what data is telling us:
Stocks and housing assets continue to rise
Moderate rise in unemployment. My take is that we will see employment back on track soon.
ISM services data came out pretty strong
ISM manufacturing is weakening, but that was always the case
Consumers are spending - beating on Retail Sales numbers
High yield spreads are still tight, suggesting low default credit risk
The Fed is was spooked by the Yen / BoJ situation and market forced its hand to make this move. But FED is totally fine with this as we explained in out last weeks newsletter. They will come out as winners by showing off as pro-active and that is what their democratic overlords want anyways before the election. Win-win for everyone.
There is no recession coming and we are entering a new rate cuts cycle. Macro looks primed for RISK ON
STOCKS, BONDS, FX
Growth to Value
The Dow closed at a record high while Nasdaq closed down. A clear growth to value trade that continues since last month. I believe this trend will continue now that market is pricing more rate cuts by FED
CRYPTO
THE BIGGER PICTURE
Time to buy dips on some of the Alts
BTC rallied from around $61,000 to $64,000 this week, and we saw inflows of $252mn in ETFs after Powell's comments, the highest day of inflows in weeks.
ETH and SOL rallied along with BTC but the real rallies were seen in Alts and memes as usual. We continue to keep an eye (and but dips) on $PEPE, $WIF, $BONK, $POPCAT, $MOG & $SUNDOG - the clear winners. We will continue to add on dips. Sell $ETH, buy memes and some clear winning Alts.
May your Monday be filled with coffee.
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