SignalPlus Macro Analysis Special Edition: Be Like Mike

avatar
ODAILY
a day ago
This article is machine translated
Show original

With NASDAQ's announcement that MSTR will be officially included in the iconic technology stock index on December 23, Microstrategy has finally completed its long and arduous transformation journey, successfully transforming from an internet-era software company to a leveraged BTC financial company. The decision to include the index marks the first time the controversial Michael Saylor has been officially accepted by TradFi, and MSTR will become the only cryptocurrency concept stock to benefit from the stable and large-scale passive capital inflows of QQQ (index ETF), meaning that all index investors and passive investors will indirectly become long-term BTC investors, and the participation of the mainstream group is accelerating!

Inspired by the MSTR news, investors opened a FOMO buying mode over the weekend, and BTC easily broke through the historical high to $106,000, driving the cryptocurrency market to rise. MSTR's stock price rose 8% after hours, but the real test will come during today's New York trading session.

It is worth noting that the liquidation of short futures positions in this rally was relatively mild, indicating that cryptocurrency investors may have already prepared for this market trend, or are still in a low-allocation state (or were forced to exit as early as early December). Will the price have the opportunity to break through $110,000 before the end of the year? The current market sentiment clearly affirms this possibility.

On the macro front, the last important event of the year will be the FOMC meeting on Wednesday. The market currently expects a nearly 100% (~ 95%) probability of a rate cut on Wednesday, and a pause in rate cuts in January (about a 15% probability). With recent key data showing weak employment growth but inflation still above the Fed's target, Chairman Powell naturally wants to keep all options open, neither completely ruling out nor completely affirming the possibility of a January rate cut.

The core PCE inflation at the end of the year is expected to be around 2.9%, higher than the Fed's forecast of 2.6%, but some economists believe that economic momentum has further slowed in the fourth quarter. Similarly, even though recent employment growth is close to the cyclical low, the unemployment rate is expected to be 4.4%, also higher than the Fed's forecast of 4.2%.

As Fed officials are currently in a quiet period, the focus of this meeting will be on Powell's press conference, to observe his stance on economic balance and risks. Any attention to upward adjustments to the dot plot may be seen by the market as a hawkish signal, which would be detrimental to risk sentiment; if he emphasizes "committee confidence" and "trust in the Fed" in soft language, it will be beneficial for the continuation of market risk sentiment. We lean towards the latter, but are not very confident.

As the market enters holiday mode in advance (take a look at the asset performance in 2024!), the implied market volatility on the FOMC meeting day is at the lowest level of the year, and the forward implied volatility of the SPX index also shows that December will be a calm month.

The downside is that long-dated US Treasury yields have risen by 20 basis points in the past 1.5 weeks, reflecting fixed income investors' concerns about the Fed's overly accommodative policy and the upcoming Trump 2.0 policies. However, all this is happening against the backdrop of bond volatility (MOVE index) at multi-year lows, meaning that investors see this as a controlled bond sell-off and normal repricing, allowing the risk-on party to continue.

Finally, we summarize the article with a few charts showing record inflows into the US stock market. December's inflows have once again broken recent records, with nearly $150 billion in new money flowing into the US stock market since the beginning of the month, while consumer confidence has soared to a 4-year high, buoyed by Trump policy expectations and economic performance. It's hard to remember the last time risk asset optimism was so high and widespread, across all asset classes.

In such a strong market, it is really difficult to , so should we just keep the "music playing, the dance steps never stop"? After all, we are in a joyful season, and I sincerely wish everyone a happy holiday!

You can use the SignalPlus trading compass function at t.signalplus.com to get more real-time cryptocurrency information. If you want to receive our updates immediately, welcome to follow our Twitter account @SignalPlusCN, or join our WeChat group (add the assistant WeChat: SignalPlus 123), Telegram group and Discord community to interact with more friends.

SignalPlus Official Website: https://www.signalplus.com

Source
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
Like
Add to Favorites
Comments