Wednesday, July 12, 2023
CPI relevance, stock market vulnerability, defaults, BIS, IMF and more
“Every solution of a problem raises new unsolved problems.” – Karl Popper ||
Hi, all! Happy CPI day! I remember a time when we didn’t get quite so excited about economic releases. Sigh.
You’re reading the premium daily Crypto is Macro Now newsletter, where I focus on the growing overlap between the crypto and macro ecosystem. Thanks so much for being a subscriber! Nothing I say is investment advice. Nevertheless, I hope you find it useful – if so, please consider hitting the Like ❤ button at the bottom, I’m told it boosts the distribution algorithm.
If you’re not yet a subscriber, I hope you’ll think about becoming one to support my work. It would REALLY (really, really) make my day! 😊 It’s currently only $8/month (with a free trial!), although I will be raising the price at the end of the summer.
WHAT I’M WATCHING
Inflation data. A year ago, US headline CPI peaked at an annual rate of 9.1%. Today, consensus estimates have it falling to 3.1%, which would be the lowest level since early 2021. There are significant risks to the upside and downside given the confusion of recent economic trends, but the actual result is unlikely to change the outlook for US interest rates for the rest of 2023. More on this below.
Q2 earnings. Reporting of second quarter earnings kicks off this week (with 165 companies reporting today alone), possibly confirming an activity slowdown or revealing further pockets of corporate strength to justify current valuations. More on this below.
Bankruptcies up. According to a Bloomberg report, US bankruptcies in the first six months of 2023 were the highest since 2010. In Germany, they were the highest since 2016. In England and Wales, they’re near a 14-year high. Swedish bankruptcies are the highest in 10 years. In Japan, the highest in five years. And rate hikes are not yet over. More on this below.
BIS CBDC lessons. To complement its annual CBDC survey published a couple of days ago, yesterday the BIS released its Innovation Hub report on lessons learnt in CBDC experimentation so far. It sees greater innovation potential in domestic wholesale CBDCs than in retail, especially given the difficulty of reaching sufficient engagement. For cross-border CBDCs, the main issue is interoperability, with the BIS seeing more upside in the shared common platform approach than the hub-and-spoke model, despite its potential governance issues.
Innovating too fast. The IMF is unhappy about the Marshall Islands’ plans to register DAOs as legal entities, and urges it to adopt a “cautious approach”, at least until there is “a consensus on best practice globally to draw from”. Because global consensus should decide the Marshall Islands’ innovation policies?
Keep reading with a 7-day free trial
Subscribe to Crypto is Macro Now to keep reading this post and get 7 days of free access to the full post archives.