The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
gm
MACRO - Well what a whipsaw yesterday. We saw inflation come in at 8.2% vs consensus of 8.1%, and core inflation come in at 6.6% vs consensus of 6.5%. That is a narrow miss, in the past I would have said narrow misses will result in market rallies, but given what happened last month and with payrolls, I wasn't surprised to see the initial selloff....and then of course the market came roaring back. US equities started about 2% lower post the inflation number, and ended the day about 2.5% HIGHER on the day, so almost a 5% swing. Once again, it just goes to show how defensively and bearishly positioned people are with equities often seeing constant squeezes. One thing that did move though was interest rates and we're now at 444/418/392/390bps across 2s/5s/10s/30s, it's notable that the curve continues to invert. For the next FOMC I think we'll continue to get a very hawkish/bearish Fed...ironic thing is the inflation atm is being cased by "shelter" which accounts for 1/3 of CPI. The measure for that is a monthly survey which asks primary homeowners what rent they would need to get paid in order to rent their home out. Of course, the main factor affecting this number is mortgage rates for which the main factor is interest rates...so the recent rate hikes are actually driving shelter inflation. Shelter inflation is often lagged by 9-12 months to everything else so we can expect this to eventually come down, but at the moment it's headed in the wrong direction and I expect Powell to once again reiterate this. So we'll see what happens next few weeks, I think probably just more choppy price action.
CRYPTO - A strong rebound after yesterday's price action. I think ETH traded as low as like 1185 or something but we sit back at 1322 today with BTC up at 19.5k. I'm not sure what happened yesterday, kinda feels like we saw some massive shorting ahead of the CPI number and thus this macro rebound will definitely prove to be a tailwind for crypto. The unfortunate thing is I still feel like this current price range is no man's land. Given the opportunities to buy much lower this year, and what I believe is a worsening (or at least more prolonged) macro outlook, it's just not really a super attractive price to buy if you already have good risk on. So for me I think I would need 3-digit ETH to add more, but frankly I'm not sure if we get there.
NFTs - By recent standards, it's been a decent volume day with there being just under 1K ETH in BAYC and MAYC alone where floor prices have slowly climbed higher. We saw some good volumes in Chromie Squiggles (400E or so) which takes their floor price up to 12.5E. Zooming out, it seems like it's the same projects that are actually experiencing any volumes, with the "lesser bluechips" such as Doodles, Azuki, Clonex, Moonbirds often posting <100E days on most but not all occasions. I would note now that we are about 2 weeks out from BAYC/MAYC/BAKC staking which I still believe will be a great tailwind for NFTs, however, post the SEC investigation news we have a fear that it may be delayed. My gut says it won't be delayed and I would imagine the investigation had probably started prior to the date being announced, but of course I am simply just guessing, we will see.
We released Degenz TV Episode 6 yesterday where we talked about the SEC investigation, inflation and the QQL project, be sure to check it out on Spotify and YT!
GL today and have a great weekend.
-OSF