“No longer certain that one ever does win a war, I am.” —Yoda in The Clone Wars ||
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WHAT I’M WATCHING
Production cuts. Earlier today, Saudi Arabia announced a unilateral oil production cut of 1 million barrels per day in July, bringing its output to the lowest level since June 2021. The oil price rallied on the news, but only to where it was a week ago. The main signal here is that Saudi Arabia is worried about the outlook for the oil price, and is willing to take independent steps even within OPEC to stem the downward trend.
Dull markets. Ok, I’m not really watching them, I’m taking advantage of the opportunity to dig deeper into bigger topics. But, yeah, even the aforementioned oil production cut didn’t do much to trader spirits. That’s kind of interesting. More on this below.
Uh oh, bank reserves. The Wall Street Journal reported yesterday that large US banks may face a 20% average increase in capital requirements in a new proposal that could be presented as early as this month. Any increase in reserves would drain liquidity from the market – the end impact would depend on the distribution, conditions and timing. Furthermore, while its purpose is to strengthen bank balance sheets, it could end up exacerbating the industry’s current woes by causing share prices to fall some more, weakening investor and depositor perception.
Bitcoin development. A new type of Bitcoin layer-2 is not only a potential trigger for more adoption ahead, but more importantly, it’s a reminder that Bitcoin’s tech is still evolving – the base layer may be stable and hard to change, but the ecosystem is still coming up with new add-on enhancements and potential applications. More on this below.
More metaverse. Today is Apple’s Worldwide Developer Conference at which it is expected to launch a virtual reality headset. I’m watching this because, unpopular opinion, I love my Quest and find metaverse workouts a lot of fun. And the Wander app which lets you travel practically anywhere, even into space! Zooming out, the more “used” to metaverse applications we collectively become, the more likely funding will increase for decentralized applications within decentralized and centralized virtual scenarios. Expectations are low for this launch, which suggests that while AI hype is overpriced, metaverse hype may now be underpriced.
MARKETS
Ho hum
At the risk of tempting fate, I’ll go out on a limb and say that it looks like it will be yet another relatively quiet week in markets.
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