Uptober Off to a Good Start
Macro Update
The narrative in macro-land skewed negative this week until a strong jobs report on Friday morning.
JOLTs data showed a big surprise to the downside, as job openings declined 10% in August. A job opening total of 10 million was materially lower than the 11 million consensus estimate and was the most significant 1-month decline since the start of COVID. Fewer job openings suggested a softening labor market.ISM Manufacturing PMI fell abruptly to 50.9 in September, significantly below market expectations (52.2), and signaled that the economic expansion witnessed in the preceding 28 months is slowing faster than expected. It appears that companies are starting to prepare for reduced economic demand.Despite the JOLTs data rolling over, the economy registered an unemployment rate of 3.5%, below a consensus estimate of 3.7%, as the total nonfarm payroll increase of 263k was above the consensus estimate of 250k. However, of note, fewer jobs were created in September than in both August and July. Ultimately, the market interpreted this as a signal of a persistently strong economy.From a narrative perspective, international markets continue to be disproportionately affected by the Fed’s current tightening endeavors. Australia showed the first sign of central bank capi...Reports you may have missed
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DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...
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