Morning Update: Mon 16th Jan
Crypto surges further
The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
gm it's good to be back!
MACRO - Equities had a quiet close on Friday ending +0.4% on SPX and + 0.7% on NDQ. It's been a solid start to the year for stocks after we got in-line payrolls and inflation numbers. Headline inflation at 6.5% down from last year's highs of 9.1% is certainly a meaningful move psychologically, and comps continue to get easier throughout the first half of the year. I would reiterate what I said at the end of the last year, in that I think the inflation number is becoming less important in the short term. Powell has made it pretty clear that he is looking at the labour market for signs of alleviating before changing his tune on monetary policy, and thus, increasingly lower inflation I think will not be enough for him to communicate a pivot. Consequently, I think payrolls in the number to watch and that remained elevated beyond expectations for most of last year. All-in, I think we will still see small positive returns this year in equities, it will still be a choppy year and weak corporate earnings + fragile housing market are the two big things to watch out for wrt economic data, but it's somewhat perverse in that these things weakening also pave the way for lower interest rates. It's a constant battle between the two but IMO stocks probably marginally care about lower interest rates than they do anything else, if history is anything to go by.
CRYPTO - It's been a strong start to the year for crypto and we saw the weekend strength sustained as BTC climbed and held over 21K while ETH sits at 1575. SOL has been one of the best performers and is up almost 40% YTD. Additionally, it's impressive to see $APE up about 30% YTD while the staking program continues. Staking your $APE alone has earned you around 8-10% on top of that, so you're looking at north of a 40% return YTD for $APE already while the staking continues. My plan is to continue to hold and max stake everything as I think crypto has more room to run this year, IMO the moment to sell could be before the first VC lockup expires in March. I think the mistake people will make with crypto this year is selling too early. Given we traded in a very narrow range post FTX, the whole market is suffering from recency bias. People feel inclined to sell because "1500 on ETH feels overbought" etc. Well guess what, we're still 60%+ down from the highs and I would never underestimate how parabolic moves in crypto could be. On top of that, it's important to remember the huge changes on ETH supply after the merge. 2022 was about DCAing for me which I felt I did pretty well, 2023 is going to be about having the discipline to hold and not sell or try to trade it.
NFTs - Somewhat quiet volumes which says BAYC at 290ETH (according to OS volumes) taking the top spot maintaining a floor of 74ETH. I did see BAYC pump to around 85 while I was away and it seems that was in anticipation of the Trial of Jimmy the Monkey which appears to me to be more of a "side-quest" type thing rather than a large Yuga drop but I'm not fully an expert on it yet so forgive me if I am mistaken there. We obviously had a very strong start to NFTs in Jan and it seems about 30-40% of that move has cooled off. I think the most interesting thing this month will be $BLUR. The expectation is that everyone is going to dump their airdrop and IMO a decent chunk of that goes into NFTs, the main question is whether the token can maintain any value while everyone sells, and who any buyers would be. Tough to judge and I think the team would have to do something smart to give the token some value. I'm constructive on NFTs with strong communities this year, because you can see clearly what survived 2022, and they certainly aren't dying.
GL this week!
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