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 - Well it seems like JPOW wants to cement his status as this year's Scrooge. Yesterday's FOMC press conference was much more hawkish than I was expecting, and it's not the first time this year I say that. For me, the takeaways were that once again he reiterated that inflation was not down to a level where he wanted it to be by year end, and he seemed in particular to focus a lot on how hot the labour market has been this year. I've talked a lot about how the CPI number would be a much bigger vol event for markets than payrolls, but it makes you wonder if payrolls is the thing the Fed is more focused on here. In Powell's eyes, the economy is not weak enough (yet) to warrant a change in policy, and the risk of inflation is still too high. There's been an interesting reaction to markets, we closed 0.6% and 0.7% lower on SPX and NDQ and futures are 1-1.2% lower this morning. Interestingly, we saw a pretty decent rally in interest rates off their recent highs, which puts 2Y back to 4.22% and 10Y at 3.47%. So here's my read of the situation - Powell saw how aggressively the markets moved on his commentary two weeks ago, and wanted to downplay it (he wants market stability, not 5-10% surges in stocks). The market and interest rates initially sold off, but they are also probably not truly "believing" what Powell said yesterday. Ultimately, the data doesn't lie. Inflation has been lower for 6 months in a row and we know the elevated levels are caused by lagged effects/will be alleviated by easier comps going forward. We're also just 50bps away from the Fed's terminal rate of 5.1%, and while it doesn't sound like there'll be any rate cuts in 2023 unless the data changes, it does mean there are probably only 1 or 2 more hikes left (either a 25bp or 50bp increment). One thing Powell has said is that they can and will start slowing the pace and rate of hikes, the bigger question is when they start to cut. At least next year we shouldn't be coming in every month with a 75bp hike, while inflation will keep trending lower, which psychologically I think is a good thing for markets. I think payrolls will now start to reclaim #1 spot for the biggest datapoint, as Powell has made it clear that's his focus.
CRYPTO - We saw crypto outperform again although we've edged a small amount lower to 17.7K on BTC and back to 1285 on ETH. I'm impressed at how well $APE has held up in all this as it hovers around $4, but indeed we never got that initial demand or pump a lot of people were playing for (although we've had a pretty decent 30-40% rally off recent lows). Seems like crypto back to lack-of-vol mode for now, but certainly curious to see its outperformance vs trad markets in a 48H basis.
NFTs - Volumes definitely a lot lower yesterday. Creepz was the big mover climbing about 50% in the last couple of days to reclaim a floor of 2ETH. We saw Valhalla give up some recent gains to drop back to a floor of 1.25ETH. Elsewhere volumes were lower and we've seen recent winners give up some gains. I think a lot of the bidding on Blur got hit and while it created a lot of liquidity, it's clear a lot of people have the game of buying and turning over very quickly in order to harvest $BLUR. We'll see how that plays out but I'm not changing my tune that that will be a bullish event for NFT volumes and prices.
GL today!
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