Thursday, Oct 26, 2023

why China stimulus + US GDP matter for crypto

“The greatest challenge to any thinker is stating the problem in a way that will allow a solution.” – Bertrand Russell  ||

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IN THIS NEWSLETTER:

• How the US GDP data could impact crypto markets

• Chinese liquidity and crypto

• Olive oil

• US politics is very strange these days

WHAT I’M WATCHING:

How the US GDP data could impact crypto markets

Today, soon after this email lands in your inbox, we get the US GDP growth data for the third quarter. And it looks like it’s going to be strong.

Why it matters:

The consensus forecast is for 4.2% annualized growth, vs 2.1% in the second quarter. Yes, double.

There’s more: the Federal Reserve of Atlanta runs a GDP model known as GDPNow which takes in economic data as it is released and spits out a frequently updated growth estimate. They go to pains to specify this is not a forecast, it is an estimate based on actual data. GDPNow has the third quarter growth coming in at 5.4%, more than a full percentage point higher than economists’ predictions.

(chart via the Federal Reserve of Atlanta)

Does this mean that the Fed’s eye-watering rate hikes haven’t worked?