The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
gm
MACRO - Well, we are in for what I think could be the biggest week of the year. Tomorrow we get CPI. It looks like the consensus is 7.3% vs last month's 7.7% for inflation. I would note that that consensus number has changed from 7.7 to 7.3 as of today. Should it be in line, this would mark the sixth consecutive month of lower inflation, ahead of what will be much easier comps next year after also 6 months of increasingly higher interest rates. Core inflation is projected to be 6.1%, vs 6.3% last month. IMO if these numbers are in line, or indeed lower, the market is going to see a very aggressive rally. If we come above, I think we can see a reasonable pullback although I think people will continue to be fixated on the fact that things are coming in the right direction and will continue to do so next year. On Wednesday we get the FOMC and interest rate decision from the Fed. It looks like current expectations are for a 50bp hike (as opposed to 75bps for the last few months). If the hike comes higher than 50bps, I would expect a big market selloff as it shows the Fed still thinks a inflation is a bigger concern than the rest of the market. As always, what will be most important is the Fed's press conference and given Powell's commentary a couple of weeks ago the market is certainly hoping for some language about a potential slowdown next year. If Powell does not mention anything about this, I would expect markets to react negatively. Futures and interest rates are mostly unchanged this morning, which will be a day of redundant price action before tomorrow kicks off.
CRYPTO - Not much interesting to say here as BTC hovers around 17k and ETH around 1250. I would expect both of these majors to finally "get moving" along with macro as this week progresses. Today is also the day that $APE staking rewards will commence. We saw $APE rally by about 10% over the weekend to a price of. $4.3 so back to recent local highs. At present, it looks like your APR for staking $APE paired with a BAYC is 317%, and for MAYC it's 360%. Indeed, if you have spare capacity of BAYC or MAYC you could also restake the rewards for an even higher yield. The other thing to keep an eye on is the funding rate, it looked like the rate to short $APE over the weekend got to 0.75% a day, which implies a cost of 273% annually in borrow just to short $APE which is insane. Indeed a lot of people might have attempted to play a delta neutral strategy where they short $APE and long $APE that is staked to farm the rewards, but this is not a great strategy IMO given the volatility in the funding rates and potential to get stopped out. I think it's a poor use of capital, might as well just take a directional bet in smaller size. We'll see what happens today, I'm still not really sure, obviously I had the long position on and am bullish, but am also cautious it has become a very big consensus trade.
NFTs - Over the weekend we saw the highest volume day (30K+ ETH on Saturday) we've seen for over 5 months:
To me, there is a pretty clear reason why volume and bid-side liquidity is high. The answer is $BLUR. The process for Airdrop 3 is underway on Blur, and in order to earn points you must place "collection bids". The closer your bid is to getting hit, and the longer you leave it outstanding for, the more points you get. This has created tremendous bid-side liquidity in the market, and I think it continues for the rest of the month. We then have the airdrop itself in Jan which I think will be a tailwind for NFTs. We saw floors up 20-50% over the weekend and IMO the strength continues provided macro doesn't shit the bed this week.
GL!
-OSF