Elon Musk lays pipe to save mankind
064: Boris resigns, Celsius survival, Elon Breeding Everyone
HAPPY FRIDAY EVERYONE SIZE LORDS.
What a wild week on multiple fronts. Political assassinations, close calls on massive liquidations, and continued volatility in both the equity and bond markets. Elon Musk has also been laying some pipe to save mankind.
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With that let’s get into it.
MARKETS
Investors continue to be wary of a market showing many historical signs of a coming recession. Many moved into cash or treasury positions in the last week after the 4th of July.
Cryptos pop was short lived and fizzled out this morning after big news that lending firm Celsius would be able to pay back an outstanding loan that put them at risk for a sizeable liquidation. *UPDATE - Crypto has rebounded in the last hour.
Around $63 billion flowed into cash in the last 10 days or so, while global equity funds had redemptions amounting to nearly $4.6 billion, according to Bank of America.
Strategy team members at both Bank of America and Morgan Stanley have been warning of a recession coming, despite the fact that some investors seem to be predicting a Fed Pivot as soon as there are signs of inflation topping off.
Despite that - a 75 bps hike is expected this month from the Fed as policy makers back hawkish steps. Let me know in the comments what you all think the Fed is going to do next.
I think it’s too early to expect a pivot but who knows how the numbers are being massaged.
U.S. stock futures moved lower in pre market after the latest labor market data showed that employers actually added more jobs than expected in the month ofJune.
Tesla CEO and Twitter Psycho Elon Musk had twins with one of his executives in a recent announcement
Celsius has finished paying its loan to Maker DAO. This helps the firm narrowly avoid liquidation and should bring some stability to crypto markets
Crypto exchange Blochain.com faces a $270M loss from lending to Three Arrows Capital - CoinDesk
Victims of the infamous Mt Gox crypto hack could receive up to 140,000 BTC in reparations - this will mint many millionaires overnight
UK is looking to introduce legislation on stablecoins by August
US Mortgage Rates plummeted to 5.3% - this marks the largest drop since 2008
The Euro is currently at its lowest level since 2002, down nearly 26% from its peak in 2008
Grayscale has a strong argument the SEC rejection of spot BTC ETF violates the law - Wall Street Journal
Japanese Former PM Shinzo Abe has died after being shot with a crude styled shotgun during a speech at a campaign event for the Democratic Party in the city of Nara
The Billionaire Tim Draper has predicted bitcoin price to $250k by Early 2023 - I will take that prediction as Grade A hopium for my veins
Crypto markets are seeing a brief respite from their down only direction of the last month or so as the global crypto market cap surpassed 1 Trillion again this week. Ethereum reclaimed a $150B market cap last night and Bitcoin is sitting comfortably between $20,500 and $22,500.
Personally? I feel like this massive shake out was necessary for the adoption of tried and true crypto projects and protocols to gain traction. If you’ve been in the space for awhile you know that the downs always come with the euphoric up only episodes. The biggest questions right now that I am focused on are:
How long will this down period last
Will crypto decouple amongst shitty macro on a long enough time frame
I am continuing to DCA into Bitcoin, Ethereum, Link, and Matic.
On the equity side I have been pretty calm - adding to retirement/401ks to lower average entries but not trading much as I wait on the Fed to give me some sort of indication on where they put policy for the next 3 months. Likely some great deals on tech names here on a long enough time frame.
In our post sent out last night we covered some of the more interesting developments in the space and walked through through some of the most straight forward procedures to protect your crypto and maintain possession of your private keys/digital assets.
Some notable security related occurrences and interesting sentiment updates during this most recent crypto crash included.
Russia has cited increased demand for hardware wallets - up nearly 8x
Galaxy Digital CEO Mike Novogratz feels that most of the deleveraging is out of the crypto system
This morning Robinhood enabled deposits and withdrawals of all listed crypto assets on it’s platform
Today the head of the Russian Banking Association has suggested the creation of a crypto trading platform on the Moscow Stock Exchange.
Celsius repaid a critical loan that should remove any liquidation risk in the short term - this is massive
Regardless of what happens next - it is clear that Bitcoin and quality cryptocurrency projects are here to stay.
The amount of institutional activity during this recent downturn confirms that. What we don’t have clarity on currently is regulations and if the market will continue lower in the short to medium term if macro conditions do not improve.
Market Sentiment
"We are about halfway through the fall."
Michael Burry
"The June employment report reassuringly showed that despite increasing recession concerns, the labor market remains strong"
Kathy Bostjancic, chief US economist at Oxford Economics (Yahoo Finance).
GLOBAL NEWS
The world was shocked this week with several high profile developments including the assassination of former Japanese PM, Shinzo Abe.
As the world continues to trudge through an ongoing war in Europe, global inflation increases, and heightened political tension, we can expect further focus on monetary policy, trade regulation, and government.
I still expect social unrest to continue in the United States as hot button issues play out like Roe V. Wade, Gun Rights, and soon political rallies/gatherings for candidates involved in the mid term elections.
There seems to be a large political shift swelling throughout most of the world as government’s struggle to appease people that are sick of Covid lockdowns, high inflation levels, and crippling supply chain issues.
Japanese Former PM Shinzo Abe has died after being shot with a crude styled shotgun during a speech at a campaign event for the Democratic Party in Nara
Daily Mail Online
Boris Johnson has resigned as PM of the UK and has committed to help find a replacement/serve his time until one is found
Brazil is expecting highly contentious presidential elections in October - as President Jair Bolsonaro faces off against former President Luis Inacio Lula da Silva. Societal unrest and riots will likely occur.
Elon Musk continues to be the center of pop culture as it was revealed he had twins with one of his top executives at NeuraLink shortly before having another child with Grimes. But the updates move past pure horni-ness, as it looks like the acquisition of Twitter is running into roadblocks and delays.
The Washington Post reported that Elon Musk’s $44 billion deal to buy Twitter was “in peril,” referencing three anonymous sources.
One of the anonymous sources told the Washington Post Musk’s team has “stopped engaging in certain discussions around funding” for the takeover of Twitter.
While the world economy continues to feel the impacts of war, inflation, and issues in major supply chains, here at home job growth grew at a much faster pace than most expected in June, showing that the main component of the U.S. economy remains strong despite negative macro factors.
As I mentioned earlier the big thing to understand about the economy right now whether you’re speaking to clients, interviewing for a job, or giving a presentation, is to understand many are torn on what exactly we are seeing and what it means.
Job growth is great, but it also puzzles economists and investors because we are seeing many red flags in bond prices, treasuries, inflation, and equity markets.
The big component to monitor moving forward is how the Fed either doubles down on hawkish moves to combat the high inflation we are seeing or if for some reason they decide to pivot and potentially start printing money again. If that happens, we will see entrenched inflation as well as stagflation.
I do not envy the Fed here. Both decisions have short term consequences. Another catalyst that will impact all of this is the coming mid term elections in the US.
“The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession,”
Andrew Hunter, senior U.S. economist at Capital Economics
The war in Ukraine continues to increase global commodity supply chain issues, chiefly the export of wheat to Africa and other developing nations. As the Russian army makes progress in the North and East of Ukraine they are burning grain fields and setting fire to Ukrainian villages, food sources, and equipment.
The quagmire in Ukraine is interesting to me. Putin has resolved to his commitment in the region while the United States continues to pour resources, money, and CIA agents (true story) into Ukraine.
A massive propoganda campaign has been playing out on both sides through the internet and social media since the War in Ukraine began. Depending on the source (Western vs. Eastern) you will get an entirely different update on how the conflict is progressing.
A senior Ukrainian official has responded to Russian President Vladimir Putin's assertion that the offensive in Ukraine was only just beginning.
Mykhailo Podolyak, an adviser to the head of President Volodymyr Zelensky's office, said on Twitter: "37,000 dead Russian soldiers. Total sanitary losses [injured] of 98-117 thousand people. 10 generals were eliminated. 1605 tanks, 405 planes/helicopters were turned into scrap."
"Has Russia not started fighting yet? Is [the] Kremlin considering war only by Stalin's mathematics - 20 million losses?"
CNN is unable to verify Ukrainian claims of Russian losses (CNN).
So while the situation is unclear - we likely can confirm that the Russians have lost significant amounts of soldiers (likely uneducated poorly trained conscripts) and the Ukraine has put up a decent defense due to Western backing and training.
The outcome remains to be seen but we can rest assured that any sort of diplomatic outcome could be an excellent bullish catalyst for a variety of sectors including commodities, certain energy names, and potentially global equities.
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