The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
gm @everyone
MACRO - After what was a crazy day on Thursday, I was impressed to see equities continue their leg higher on Friday, with SPX closing another 1% higher to 4K and NDQ closing almost 2% higher. This morning futures are a small amount lower while rates have started to move a touch higher putting the curve at 439/399/387/406bps respectively across 2/5/10/30y, still meaningfully off YTD highs. Oil has remained relatively stable just below $90. The next FOMC meeting we get is 14-15th December and the market will be looking to see if the Fed may finally change its tune. This meeting fortunately comes AFTER the next CPI number which is on 12th December, so the Fed will have two inflation prints since the last meeting to make a decision and communicate thoughts. I think the best outcome for the market is a weak payrolls number on 2nd December coupled with a low inflation number. In that scenario we would have headline inflation lower for 5 months in a row coupled with a visibly worsening labour market, which surely puts a lot of pressure on the Fed to communicate potential policy changes (or a rethink thereof) for 2023. This is the bull case, and I would keep an eye on how risk assets perform heading into December. We could see a sustained rally in expectation of this which IMO would dampen any impact of it actually happening given how elevated equities already are up here.
CRYPTO - Most commentary I see is that crypto has held in surprisingly well given everything that's happening. BTC at 16.7K, ETH at 1255 and a few alts are bouncing back this morning. I would reiterate that I DO NOT think this is like or "worse than" 3AC. In this scenario, we are not seeing mass forced liquidations like last time. The main thing that has been lost is customer deposits. Even in the case of institutions, if you held $100m of crypto assets in custody of FTX and now that's gone, you theoretically don't have any crypto left to "force sell" right...it's gone already! The key will be the Alameda unwind, and remember these guys had longs AND shorts. If they are really short ETH vs long FTT, for example, and they have to unwind that position, it would cause ETH to jump and FTT to puke further. Just reiterating this is an example only. The main headwind for crypto is more of a sentiment-driven thing IMO which could cause some selling pressure but given the "surprise" factor is out of the way, unless we get more black swan-type events (which let's be honest is very possible lol) then I feel like a lot of the selling could already be done. All of this, of course, depends on sustained macro strength here.
NFTs - Having jumped back to 66E at one stage, we're seeing BAYC back down to a 58E floor while MAYC is also down 7% to a 10E floor. Overall, there continues to be a large amout of selling pressure in the NFT market and I imagine those affected by FTX are trying to salvage what liquidity they can. Interestingly it's mainly the "bluechips" that are affected with Doodles down to 6.2E, Moonbirds down to 7.7E and Azuki back down to 9.69E. It felt like after a long period of consolidation the NFT market was finally coming out of its slumber but sadly the spillover effects from FTX I think means we are probably in for a more prolonged period of selling pressure in NFTS. In the world of crypto art, we also have the RarePass drop by SR Labs today. Although it is not everyone's cup of tea, I think the scale of it certainly means it will be a good barometer for the market.
GL today guys
-OSF