Thursday, June 8, 2023

Inflation weakens, oil price outlook, crypto counter-offensive and more

“The inevitable is always certain but not always punctual.” – Jim Grant  ||

Hi all! If any of you reading this are in New York, I hope you can breathe better today. So weird.

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WHAT I’M WATCHING

Inflation is surprising to the downside. This is great news, but it doesn’t mean rate cuts are around the corner. More on this below.

China easing? Not yet, but signs are it’s getting close. Earlier today, four of the country’s largest state banks dropped their deposit rates, which many analysts see as a precursor to lowering official lending rates, possibly as soon as next week – by paying less on deposits, banks will be able to better weather the higher interest rate costs. Monetary easing in China to stimulate sluggish economic growth could encourage more flows into “risk assets” in the region… yes, including crypto assets.

The counter-offensive. The volley is being returned to the SEC’s side from various angles of the public opinion court. More on this, and why it matters, below.

Anti-CBDCs. A recent poll by YouGov and the Cato Institute shows that only 16% of US respondents approve of the idea of a central bank digital currency. Almost 50% don’t have an opinion, which probably means they don’t know much about the concept, but the striking difference along the political divide – with 22% of Democrats and a whopping 53% of Republicans opposed – suggests that, even if everyone surveyed had an opinion, popular support would be almost impossible to achieve.

(chart via the Cato Institute)

MARKETS

Return shots

Of course the crypto arena wasn’t going to roll over with the SEC lawsuits, and the counter-offensive is just getting warmed up.