Crypto News: 🟪 Friday Impatient Charts

"Write your obituary the way you want it written and then live your life accordingly."

— Charlie Munger (paraphrased)

Friday Impatient Charts

By making it to 100 years old, Henry Kissinger outlived not only his obituary writer but, remarkably, his obituary writer's obituary writer, too.

It's starting to feel like the US economy may do the same — has any economic expansion ever had its obituary pre-written as frequently as this one?

It was considered a law of economics that recessions are what stop inflation and that the Fed would therefore have to induce one.

Instead, inflation is going down while GDP continues to go up, putting the Fed in the unusual position of being able to reverse its rate hikes without having done any damage to the economy.

This is a happy surprise. The few people who predicted both transitory inflation and a soft economic landing were widely dismissed as Panglossian delusionals.

As it turns out, those hopeless optimists were not optimistic enough. This week's data has confirmed that inflation really is transitory — and suggests the economy is decelerating so gracefully that the term "soft landing" doesn't do it justice.

Let's call it a Mary Poppins landing, instead.

The subject of this week's other most notable obit would remind you that this happy state of affairs won't last forever. Charlie Munger's recipe for investing success was to do nothing for years — or decades, even — and be ready to buy aggressively when bargains finally materialize.

Most of us don't operate on Munger's timeline — we're probably not living to 99 and we don't have that kind of patience, anyway.

So let's check the charts and see what's materializing now.

Inflation really was transitory:

The Fed's preferred measure of inflation, core PCE, rose 0.2% in October. On a quarterly basis (above), we're already back at pre-pandemic norms.

Pre-pandemic worries:

If the recent correlation between money supply and inflation holds, we will soon be worrying about deflation again.

Reversing engines:

New cars, at the nexus of all the supply chain issues, were the face of inflation and used cars may now be the face of deflation. You can get a pre-owned Tesla for just $39,000, down from $68,000 just over a year ago.

As good as it gets?

The S&P 500's 9.8% rally over the last month is one of the best 30-day returns on record — extra impressive as we started from a relatively high level (the biggest market rallies are usually in bear markets).

Bonds, too:

The US bond market has just had its best 30-day return since 2008.

Overdone?

The S&P 500 hasn't been this top-heavy since the nifty-fifty 1960s. If interest rates fall without a recession, however, the other 493 stocks should do a lot better.

Different this time?

The current situation feels unique, but it's not too late for it to start feeling familiar. US GDP growth is usually strong around the time of the Fed's last rate hike and recession usually follows.

Ultimately, everything is transitory, so we'll eventually be writing an obit for this economy

But for now, it looks like it will outlive a few more of its doubters.

Have a great weekend, long-living readers.

– Byron Gilliam

Top Stories

A federal judge says SEC lawyers lied to freeze a crypto company's assets — Read
Ethereum validator and node growth leads to emissions decline: Report — Read
Blast from the past: 3 years on from the launch of ETH staking — Read
Op-Ed: The US watered down crypto when it ousted Binance's Zhao — and that's okay — Read
Grayscale sees positive catalysts on the horizon for bitcoin — Read

We're Watching

Ariel Seidman, CEO of Hivemapper, joins us to discuss how Hivemapper has built the most successful DePIN product in crypto. In just twelve months, Hivemapper has mapped over 6M unique road kilometers (10% of the world's roads!) and has over 25,000 contributors. In this episode, we discuss Hivemapper's origin story, how Hivemapper maps the world, Hivemapper's killer feature, what DePIN projects get wrong, founder lessons and more!

Watch or listen to Lightspeed on Youtube, Spotify or Apple.