The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
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MACRO - Equities had a very strong close on Friday ending the day 2.4% higher on both NDQ and SPX. Futures are opening unchanged this morning. We saw a pretty substantial rally in interest rates to the tune of about 15-20bps, which now puts the curve back at 448/431/418/430bps. Worth noting there's been some oil weakness in the last few sessions which sees the price back down sub $84. Why did we rally? Well, there was a WSJ article that came out on Friday which talks about the Fed going ahead with a 75bp hike in November, but then potentially debating a smaller increase in December. Apparently there is a a divide within the Fed with some officials signalling more worries about big rate rises given the prospect of a deep recession. The WSJ notoriously has been quite an accurate source of info for Fed policy (if you wanna put a tin-foil hat on you can call it a leak) so the market definitely responded to it. My expectation is that we wouldn't have heard about any commentary of a pivot or easing until the second half of next year. To be clear, a "reduction in the hike" does not equate to a "pivot" but it is certainly a step in the right direction and one that probably comes earlier than most would have expected. Indeed, it is timely such speculation comes right before midterms in a couple of weeks. One thing someone mentioned to me is inflation comps for the months of October/November/December are a lot easier than earlier in the year (inflation went for Sep/Oct/Nov/Dec last year was 5.4%/6.2%/6.8%/7.1%) which are pretty huge moves. So I think the next few weeks will be interesting...time to see if the great Q4 pump thesis will play out or not.
CRYPTO - Definitely seeing some decent strength in the last 24H with a lot of CT commentating on so called "God candles" appearing on Sunday. I think ETH traded as high as 1375 before settling around 1350 now, while BTC is back close to 19.5K. There's been some good altcoin strength too, notably MATIC hitting 90c, APE up over 10% to 4.6 and a few 5-10% moves across the board. What's the reason for the strength? Well I think the above macro backdrop will certainly have an impact. Something that I think is more important is perhaps the positioning in crypto and last week we looked at how the short interest on BTC was close to YTD highs. To me it certainly felt like a bunch of people shorted crypto into last month's inflation print and perhaps we're now finally seeing the unwind of that or better yet a squeeze of it.
NFTs - Quiet volumes on a 24H basis with CloneX leading the charts with just a 200E volume day. Azuki was talk of the town this weekend with roughly $2.5m in sales generated from their golden skateboard auction. I've certainly been impressed with the trajectory of that project in the past few weeks and it becomes clearer that there is a lot going on there with a real community behind it, I would class it in the "too big to die" category now. As many of you have probably read, there is a lot of talk about Reddit NFTs on Twitter. Here's a good tweet from Mando which points you to some useful links and ideas:
There are a total of 3M wallets which is pretty sizeable (this is an NFT on Polygon too which also perhaps explains some of the MATIC strength). The risk aversion to "unknown quantities" in me wants to avoid it but it's certainly hard to ignore the noise and momentum it's been gaining.
GL this week everyone!
-OSF