"Treat every day like Christmas." — Buddy the Elf |
|
|
Friday Santa-is-coming Charts Chair Powell gave markets an early Christmas gift this week with an overdue acknowledgement of the long and "uncertain lags" of monetary policy: "The full effects of our rapid tightening so far are yet to be felt." And in case we failed to take that hint, he spelled it out for us: "It makes sense to moderate the pace of our rate increases." We took the hint: With the Nasdaq rallying 4.4% on the day, markets reacted to his invocation of "moderate" like Buddy the Elf being told that Santa is coming to Gimbels. Powell may be in less of a giving mood after seeing this morning's better-than-expected jobs data, but we're still pretty excited — and I think for good reason: It's increasingly clear that the economy and markets may be able to weather higher-for-longer rates just fine. Powell said Wednesday he still thinks there is a "path to a soft or softish" landing, and that no longer sounds like he's just saying what he has to say. With Fed funds near a peak, inflation past its peak, companies still hiring, and consumers still spending, a soft landing is suddenly looking less pipe dream and more base case. Is that too much to ask for, for Christmas? Well, yeah, it might be: Before we have a freakout worthy of Buddy the Elf, let's remember that the Santa that showed up at Gimbels turned out to be an imposter. So, does the market sit on a "throne of lies," like Gimbels' fake Santa? Or have we correctly sniffed out a soft landing? Let's check the charts to find out. The economy generated a lot of jobs in November: |
|
|
The 263,000 payroll print may make Powell think he needs to be more Grinch than Santa at the December FOMC meeting. But if we all have jobs, who really cares what Fed funds is? Do your worst, Chair Powell, we can take it. His worst might be asking us all to take a second job: |
|
|
This morning's most-concerning data point was labor force participation, which ticked down again in November. The tight labor market is now the FOMC's chief worry: On Wednesday, Powell cited a 3.5 million shortage of workers, stemming from a wave of early retirement and the slower growth of prime-age workers (i.e., a result of lower immigration) — so the rest of us may have to take up the slack. Like the Gimbels manager admonishing Buddy — "Make work your favorite. That's your favorite, ok?" — Powell will be telling us to work more, too. Retailers (Gimbels excluded) are less excited for Christmas: |
|
|
The retail sector was a notable standout in today's jobs data, cutting 30,000 workers on the month: Don't they know Santa is coming? They may think we're running out of ammo: |
|
|
The personal savings rate is down to just 2.3%, the second lowest on record (behind 2.1% in 2005). We underspent during the pandemic, and we're making up for it now by overspending, but we won't be able to keep it up forever. Save some money for used car bargains: |
|
|
Used car prices are down 16% from their January peak, and JPMorgan sees them falling another 20% next year. (No data on reindeer sleighs, unfortunately.) Houses are even more of a buyers' market: |
|
|
November pending home sales fell 37% YoY, the biggest decline on record. Powell noted that "housing inflation tends to lag other prices around inflation turning points," but it looks like we won't have to wait too much longer. It's not just cars and houses: |
|
|
The supply of money is falling fast, too, with M2 down 0.4% in October vs. September — near a record decline.
What's not falling?
|
|
|
Corporate profit margins remain around all-time highs. That's a backwards-looking indicator, but it means corporate America is well-placed to absorb higher rates, weather an economic slowdown, and cushion our fall by keeping us employed. Soft landing? |
|
|
The New York Fed's economic model (based on yield curves) puts the probability of US recession at just 23%. Market sentiment unofficially puts the odds at approximately 10,000%. Maybe we should stop worrying so much and start treating every day like Christmas. Have a great weekend, cotton-headed ninny muggins. |
|
|
P.S. — Find this newsletter helpful? Share it! |
|
|
Bitcoin, QQQ Correlation Dips to Lowest Level in More Than 3 Years — Blockworks Latest in Crypto Hiring: MoonPay Recruits Time President for 2023 — Blockworks Hackers Stole More Than $5M From 2 Binance Chain Apps — Blockworks Galaxy To Buy Custody Platform From Bankrupt Celsius — Blockworks Bankless Is Now More Than a Media Company — Blockworks NY Wants Crypto Startups To Pay 5 Times Per Year for BitLicense — Blockworks Stripe Enables Fiat-to-crypto On-ramp — Blockworks OK, You Blew Up Your Crypto Fund. What Do You Tell Your LPs? — Blockworks |
|
|
Hold up there partner, self custody just got a lot easier. With Giddy's new user-friendly mobile app, you can buy, hold, send, and earn crypto all while keeping full custody of your coins. It automates gas transactions, surfaces DeFi staking pools, and breaks down the different yield-generating opportunities. Worried about losing your seed phrase? Giddy even has a recoverable key solution that makes self custody more secure and less intimidating. Download the Giddy mobile app and get $10 once you're granted access.
Terms and conditions apply. |
|
|
It's official. The latest batch of Permissionless sold out! In 2 weeks, 250 new tickets will be dropped. Get notified so you can grab your own. |
|
|
This issue is brought to you by: |
|
|
Looking to harvest crypto losses before the year is over? TaxBit's platform is the enterprise standard in digital asset accounting. Its industry-leading software can help maximize tax savings for you and your customers. Their single system of reporting and cost basis tracking lowers operational costs and can help reduce risk of audit.
Sign up today to partner with the most trusted brand in digital assets tax and accounting.
|
|
|
Blur is dominating the NFT aggregator space, accounting for over 90% of volume. Blur is an NFT exchange with advanced trading tools that aggregates other exchanges' liquidity Receive more insights from the Blockworks Research team |
|
|
What the hell is going on with the US labor market? (Thread) — Alf What projects, sectors, and narratives do we think are going to gain momentum in 2023? (Thread) — Blockworks Research Do you want a simple description of HOW @SBF_FTX did what he did? (Thread) — Compound248 Current thoughts on crypto markets (Thread) — Daniel Cheung 6 advantages of tokenization (Thread) — Blockworks
|
|
|
In this Empire's episode we cover SBF's interview with The New York Times and his attempt to avoid all liability. We also discuss Uniswap's new NFT marketplace, Apple banning NFT transfers on Coinbase, Bitcoin's colossal problem and more! Watch Empire on: Youtube, Spotify and Apple Podcast. |
|
|
Was this email forwarded to you? Join over 175,000 investors who read this newsletter. Sign up for free. |
|
|
Update your email subscription preferences here. |
|
|
Copyright ©2022 Blockworks. All rights reserved. |
|
|
|
No comments:
Post a Comment