Morning Update: Wed 15th March
It's so bad it's good, but how much worse can it get before it gets better?
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 - We saw a strong rally in equities yesterday with SPX and NDQ closing 1.7% and 2.3% higher respectively. This came after we saw CPI numbers come in line; 6% on headline inflation and 5.5% on core inflation. That marks a 0.4pp decrease on headline inflation since last month, which is certainly encouraging to see and I feel like markets were fearing the number would come in higher than expected. IMO this number gives the Fed a little bit more breathing room to not hike later this month, but the market still expects a 25bp hike. This morning, we're seeing futures back down about 2% and a huge rally in interest rates which sees 2Y all the way back to 4.07% and 10Y back to 3.55%. This comes after European banks are getting destroyed this morning, with Credit Suisse plummeting by over 20% before the stock got halted. Allegedly there are rumours that CS's largest investor (Saudi National Bank) has communicated that it will not provide any further financial assistance to the struggling Swiss bank. It's certainly concerning times in the banking world and something not to be ignored IMO - I don't really like what I'm seeing but it's hard to judge what's going to happen here because there is a real chance of the Fed stepping in to pivot...the question is...will it get worse before it gets better?
CRYPTO - Yesterday we saw some insane price action with BTC almost breaching 26k and ETH knocking on the door of 1800...both hit YTD highs which is rather astonishing given everything that's happened, but perhaps also a testament to how failures in the banking world are actually bullish for crypto. We have retraced some of these moves in line with macro, and BTC is now 24.5K and ETH back to 1670. It's notable how much the majors have outperformed alts, for example, on a 2-week basis most alts are down 20-50%, while ETH and BTC are unchanged or possibly even higher if you take yesterday's levels. That to me is a sign that people are getting more comfortable with ETH/BTC as stores of value; of course, it's difficult to say the same thing for most altcoins. The other thing that's once again clear to me is crypto has a high correlation to interest rates, and if we do see any Fed pivot or further dovishness, I think you can expect crypto to keep going higher. If you think about it, it's actually a good narrative for crypto; banks failing, sticky inflation and the prospect of rate hikes being paused or indeed lower rates.
NFTs - Uhhh yeah so not looking great this morning with pretty much everything in the red except remarkably Doodles. We saw $67m of marketplace volumes with Blur maintaining a 69% market share. It looks like most NFTs are down anywhere between 5-15% and I can only imagine this is as a result of perhaps a few farmers throwing in the towel. The other thing worth noting is Punks once again flipped Apes yesterday - the former has benefitted from wrapped punks now being on Blur and experiencing decent trading volume. You would have done well to buy this weekend's NFT dip as things bounced back with a vengeance - I'm curious to see whether this dip is here to be bought or we have more room to drop. We also have Yuga's "Summoning" today so we'll get more information as to what that is and how the Sewer Passes will fit in. I'm also interested to see if there is any meaning for $APE as part of this mint.
Still very volatile times so stay safe and GL out there.