The Everything Bubble: Markets at a Crossroads

Bitcoin Magazine ProAfter Jerome Powell’s speech, markets are caught between the two. Participants hope for a pivot. Are markets stuck in the middle of the market? Participants hope for a pivot. Are we seeing the bottom or more pain? The below excerpt is from Bitcoin Magazine Pro, the premium markets newsletter. Subscribe now to be among the first to get these insights and other on the-chain bitcoin market analysis right to your inbox. We want to zoom out to review the larger macroeconomic picture and analyze some recent data that was released this week. This will greatly influence market direction over the next few month. It’s clear that markets are eager to move higher in any Federal Reserve narrative or pivot scenario after Jerome Powell’s Brooking Institution speech. There is over hedging, short squeezes and options market dynamics. There is also forced buying. It is not possible to know why markets explode with volatility at the mention of any data point or Powell speech. These market movements and events have almost always been a sign that there are unhealthy and volatile swings in bear stocks. Markets perceived Powell’s speech to be more “dovish” than his actual words, despite the fact that he spoke more frequently with little new. However, the comments he made about the possibility of excessive rate hikes were more concerning. However, we are close to another bear market rally for major indices. Markets perceived Powell’s speech as more “dovish” with his comments about the concern of overdoing rate hikes. Today’s release shows a print of 49.0, which is below the market expectations of 49.7. The backlog of orders is shrinking, new orders are declining and prices are falling. These are all signs that demand is declining, conditions are worsening, and the economy is moving into more cautious territory, according to all surveys and measures. The ISM PMI data strongly correlates with the less important Chicago PMI data, which just published contraction lows similar in 2000, 2008, and 2020. This is a sign that an economic recession is brewing in the manufacturing sector. Source: GMI, Julien Bittel. What does economic contraction translate into for the financial markets? It is usually bad news when the ISM PMI falls below 50 or below 40. We are now in the early stages a larger contraction trend is playing out: the despair phase of market. The question is: Was the industry-leverage wiping out and capitulation enough to muffle the potential effects of an equity market meltdown? If equities follow the same past bear market drawdown paths, will bitcoin flatline and form its bottom? This has always been a concern for bitcoin. Our thesis this year was that bitcoin would follow the traditional equity markets to their downside. The biggest story was and is the real-terms magnitude of the long-duration, high-interest debt. What does this mean for asset valuations in the future? Relevant Past Articles:Not Your Average Recession: Unwinding The Largest Financial Bubble In HistoryJust How Big Is The Everything Bubble?Inflationary Bear Market Spells Trouble For InvestorsThe Bond Market Meltdown Continues: Where Are The Buyers For ‘Risk-Free’ Government Debt?Brewing Emerging Market Debt CrisesTagsterms:Federal reservebear marketMarket Cyclebubblejerome powell

 

Add a Comment

Your email address will not be published. Required fields are marked *