Monday, Dec 19, 2022
“The strongest of all warriors are these two - Time and Patience.” – Leo Tolstoy ||
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MARKETS
What recession?
After the glorious catharsis of a spectacular World Cup final yesterday (in some areas of Madrid last night, you’d be forgiven for thinking you were in Argentina judging from the street celebrations!), markets seem to be shrugging off dire economic figures. Just some recent examples:
On Thursday we learnt that US retail sales for November fell by the most in nearly a year.
On Friday, US PMI figures showed a steeper-than-expected contraction, delivering the lowest index level since 2009.
And UK factory orders out this morning are down for the fifth month in a row.
Yet expected growth in 2023 seems to be the driving factor, in spite of inflation well above the 2% target, which means interest rates are unlikely to start coming down any time soon unless there’s a system break somewhere along the line, which surely nobody wants. Supporting this growth theory is labor data, which is still looking robust – the latest initial US unemployment claims figure was the lowest since September, and the slowdown in CPI increases appears to be boosting hopes for a soft landing.
(chart via the St. Louis Federal Reserve)
Crypto bands
BTC and ETH continued to consolidate their current band, as hints of a floor bring in enough interest to maintain prices in the face of some selling, but not enough interest to move them up just yet.
(chart via TradingView)
The market appears to be waiting for a catalyst for a leg lower or to start moving up. Either could come from the same source: the uncertainty around the fate of Binance and the DCG group. Any sort of clarity, whether good or bad, on their respective situations could be enough to move the market forward, and until we get it, the current high level of uncertainty is likely to continue to dampen price moves in any direction.
Who is driving volumes?
One significant way in which this bear market is different from that of 2018 is the behaviour of large vs small investors.
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